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Item 7. Management’s Discussion and Analysis

2025-02-25 compared with 2024-02-27 · 282 added, 221 removed, 396 unchanged (56% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Management's Discussion and Analysis of Financial Condition and Results of Operations ( “ MD&A ” ) should be read in conjunction with our Consolidated Financial Statements and related notes appearing under Part II—Item 8.

This Management's Discussion and Analysis of Financial Condition and Results of Operations ( “ MD&A ” ) should be read in conjunction with our Consolidated Financial Statements and related notes appearing under Part II—Item 8.

“ Financial Statements and Supplementary Data.

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“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of the Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the United States Securities and Exchange Commission on February 27, 2024.

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

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

Huron is a global professional services firm that partners with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses to own their future.

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

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

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COMPONENTS OF OPERATING RESULTS

Our revenues are primarily generated by our employees who provide consulting and other professional services to our clients and are billable to our clients based on the number of hours worked, services provided, or achieved outcomes.

Total Revenues

Revenues before Reimbursable Expenses

Revenues before reimbursable expenses are primarily generated by our employees who provide consulting and other professional services to our clients and are billable to our clients based on the number of hours worked, services provided, or achieved outcomes.

We refer to these employees as our revenue-generating professionals.

Revenues are primarily driven by the number of revenue-generating professionals we employ as well as the total value, scope, and terms of the consulting contracts under which they provide services.

Revenues before reimbursable expenses are primarily driven by the number of revenue-generating professionals we employ as well as the total value, scope, and terms of the consulting contracts under which they provide services.

We also engage independent contractors to supplement our revenue-generating professionals on client engagements as needed.

We generate our revenues from providing professional services and software products under the following four types of billing arrangements:

We generate our revenues before reimbursable expenses from providing professional services and software products under the following four types of billing arrangements:

fixed-fee (including software license revenue);

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We set the fees based on our estimates of the costs and timing for completing the engagements.

Fixed-fee arrangements also include software licenses for our revenue cycle management software and research administration and compliance software.

Fixed-fee arrangements also include software licenses for our research administration and compliance software.

• Time-and-expense:

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

We also generate subscription revenue from our cloud-based analytic tools and solutions.

We also generate subscription revenue from our cloud-based analytic tools and solutions including our cloud-based revenue cycle management software and research administration and compliance software.

Software support, maintenance and subscription revenues are recognized ratably over the support or subscription period.

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Time-and-expense engagements do not provide us with a high degree of predictability as to performance in future periods.

Unexpected changes in the demand for our services can result in significant variations in utilization and revenues and present a challenge to optimal

hiring and staffing.

Unexpected changes in the demand for our services can result in significant variations in utilization and revenues and present a challenge to optimal hiring and staffing.

Moreover, our clients typically retain us on an engagement-by-engagement basis, rather than under long-term recurring contracts.

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Reimbursable Expenses

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

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.

We manage our business on the basis of revenues before reimbursable expenses, which we believe is the most accurate reflection of our services because it eliminates the effect of reimbursable expenses that we bill to our clients at cost.

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

Selling, general and administrative expenses consist primarily of compensation costs for our support personnel.

Also included in selling, general and administrative expenses is third-party professional fees, software licenses and data hosting expenses, rent and other office related expenses, sales and marketing related expenses, recruiting and training expenses, and practice administration and meetings expenses.

Other operating expenses include restructuring charges, depreciation expense, amortization expense related to internally developed software costs and amortization of intangible assets acquired in business combinations.

Selling, general and administrative expenses consist primarily of compensation costs for our support personnel, which includes salaries, performance bonuses, share-based compensation, signing and retention bonuses, payroll taxes, benefits and deferred compensation expense attributable to the change in market value of our deferred compensation liability.

Changes in the market value of our deferred compensation liability are offset with the changes in market value of investments that are used to fund our deferred compensation liability, which are recorded within other income (expense), net.

Also included in selling, general and administrative expenses are third-party professional fees, software licenses and data hosting expenses, rent and other office related expenses, sales and marketing related expenses, recruiting and training expenses, and practice administration and meetings expenses.

Other operating expenses include restructuring charges, other gains and losses, depreciation expense, and amortization expense related to internally developed software costs and intangible assets acquired in business combinations.

Segment Results

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

Other operating expenses not allocated at the segment level include corporate costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment.

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

Unallocated corporate expenses not allocated at the segment level include costs related to administrative functions that are performed in a centralized manner, as well as restructuring charges, depreciation and amortization, and interest expense that are not attributable to a particular segment.

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

Non-GAAP Measures

We also assess our results of operations using the following non-GAAP financial measures:

EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share.

earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues before reimbursable expenses, adjusted net income, and adjusted diluted earnings per share.

These non-GAAP financial measures differ from GAAP because they exclude a number of items required by GAAP, each discussed below.

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Our management uses the non-GAAP financial measures to gain an understanding of our comparative operating performance, for example when comparing such results with previous periods or forecasts.

These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons.

These non-GAAP financial measures are used by management in their

financial and operating decision making because management believes they reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons.

Management also uses these non-GAAP financial measures when publicly providing our business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions.

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These restructuring charges have primarily consisted of costs associated with office space consolidations, including lease impairment charges and accelerated depreciation on lease-related property and equipment, and employee severance charges.

In addition, restructuring charges in 2021 include costs related to the sale of the Life Sciences business in the fourth quarter of 2021.

We exclude the effect of the restructuring charges from our non-GAAP measures to permit comparability with periods that were not impacted by these items.

We do not include normal, recurring, cash operating expenses in our restructuring charges.

2024 litigation settlement gain:

In the second quarter of 2024, we settled a litigation matter in which Huron was the plaintiff for $15.0 million, on a pre-tax basis.

This $15.0 million settlement gain was recorded as a component of other gains, net on our consolidated statement of operations.

We have excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal costs of $3.3 million incurred during 2024 specific to this litigation matter, as this net gain is not indicative of the ongoing performance of our business.

Third-party legal costs incurred for this litigation matter in 2023 and 2022 were $4.0 million and $2.0 million, respectively.

Our third-party legal expenses are recorded as a component of selling, general and administrative expenses on our statement of operations.

Other losses (gains), net:

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

We exclude the effects of other losses and gains, which primarily relate to changes in the estimated fair value of our liabilities for contingent consideration related to business acquisitions and litigation settlement losses and gains, excluding the 2024 litigation settlement gain presented separately, to permit comparability with periods that are not impacted by these items.

These items are recorded as a component of other gains, net on our consolidated statement of operations.

Transaction-related expenses :

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

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

Unrealized losses (gains) on preferred stock investment:

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We believe that these unrealized losses and gains are not indicative of the ongoing performance of our business and their exclusion permits comparability with prior periods.

Losses (gains) on sales of businesses:

Losses (gains) on sale of business:

We exclude the effect of non-operating losses and gains recognized as a result of sales of businesses as they are infrequent, management believes that these items are not indicative of the ongoing performance of our business, and their exclusion permits comparability with periods that were not impacted by such items.

The 2021 gain relates to the sale of our Life Sciences business in the fourth quarter of 2021.

The 2024 gain relates to the divestiture of our Studer Education practice in the fourth quarter of 2024.

Foreign currency transaction losses (gains), net:

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full-time equivalents, which consists of coaches and their support staff within the culture and organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients;

and our Healthcare managed services employees who provide revenue cycle billing, collections, insurance verification and change integrity services to clients.

and our Managed Services professionals who provide revenue cycle management and research administration managed services and outsourcing at our healthcare, education and research-focused clients.

Utilization Rate

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Executive Highlights

Highlights from the year ended December 31, 2023 include:

• Total revenues increased 20.3% to $1.36 billion in 2023 from $1.13 billion in 2022.

• Healthcare segment revenues increased 26.0% to $674.0 million in 2023 from $535.0 million in 2022.

• Operating margin increased to 9.2% in 2023, compared to 8.8% in 2022.

• Adjusted EBITDA as a percentage of revenues increased 70 basis points to 12.3% from 11.6% in 2022.

• Diluted EPS was $3.19 for 2023, compared to $3.64 for 2022.

Results for 2023 and 2022 include a non-cash unrealized loss and a non-cash unrealized gain related to our investment in a hospital-at-home company, which had an unfavorable impact of $0.99 and a favorable impact of $0.96 on diluted earnings per share in 2023 and 2022, respectively.

Highlights from the year ended December 31, 2024 include the following:

• Revenues before reimbursable expenses increased 9.1% to $1.49 billion in 2024 from $1.36 billion in 2023.

• Net income as a percentage of total revenues increased to 7.7% in 2024, compared to 4.5% in 2023.

• Adjusted EBITDA as a percentage of revenues before reimbursable expenses increased to 13.5% in 2024 from 12.3% in 2023.

• Diluted EPS increased 96.6% to $6.27 for 2024, compared to $3.19 for 2023.

Results for 2024 include a litigation settlement gain related to a completed legal matter in which Huron was the plaintiff, which had a favorable impact of $0.60 on diluted earnings per share in 2024;

and results for 2023 include a non-cash unrealized loss related to our investment in a hospital-at-home company, which had an unfavorable impact of $0.99 on diluted earnings per share in 2023.

• Adjusted diluted EPS increased 31.8% to $6.47 for 2024, compared to $4.91 for 2023.

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• Returned $122.2 million shareholders by repurchasing 1,218,434 shares of our common stock in 2024.

Total revenues increased $229.6 million, or 20.3%, to $1.36 billion for the year ended December 31, 2023 from $1.13 billion for the year ended December 31, 2022.

The increase in revenues reflects continued strength in demand for both our Consulting and Managed Services capability and Digital capability across all segments, which demonstrates our focus on accelerating growth in our healthcare and education industries and growing our presence in commercial industries.

In our Consulting and Managed Services capability, revenues for the year ended December 31, 2023 increased 22.6% to $782.0 million, compared to $638.0 million for the year ended December 31, 2022, and reflected strengthened demand in all of our segments.

The utilization rate within our Consulting capability increased to 76.6% in 2023, compared to 75.2% in 2022.

Revenues within our Digital capability increased 17.3% to $580.0 million for the year ended December 31, 2023, compared to $494.5 million for the year ended December 31, 2022, and reflected strengthened demand in all of our segments.

Revenues before reimbursable expenses increased $124.0 million, or 9.1%, to $1.49 billion for the year ended December 31, 2024 from $1.36 billion for the year ended December 31, 2023.

The overall increase in revenues before reimbursable expenses reflects continued strength in demand for both our Consulting and Managed Services capability and Digital capability within our Healthcare and Education segments, and reflects our focus on accelerating growth in our healthcare and education industries.

These increases in demand were partially offset by a decrease in demand for Commercial's Digital and Consulting and Managed Services capabilities.

Revenues before reimbursable expenses within our Consulting and Managed Services capability increased 10.5% to $863.9 million in 2024, compared to $782.0 million in 2023;

and reflected strengthened demand in our Healthcare and Education segments, partially offset by a decrease in demand in our Commercial segment.

The utilization rate within our Consulting capability decreased to 73.6% in 2024, compared to 76.6% in 2023.

Revenues before reimbursable expenses within our Digital capability increased 7.3% to $622.2 million in 2024, compared to $580.0 million in 2023;

and reflected strengthened demand in our Healthcare and Education segments, partially offset by a decrease in demand in our Commercial segment.

The utilization rate within our Digital capability increased to 76.0% in 2024, compared to 75.3% in 2023.

The total number of revenue-generating professionals increased 14.2% to 5,519 as of December 31, 2023, compared to 4,832 as of December 31, 2022, as a result of hiring to support the overall increase in demand for our services within all of our segments.

Our total number of revenue-generating professionals, excluding Managed Services professionals, increased 5.0% to 4,694 as of December 31, 2024, compared to 4,469 as of December 31, 2023, as a result of hiring to support the overall increase in demand for our services.

The number of Managed Services professionals increased 45.7% to 1,530 as of December 31, 2024 from 1,050 as of December 31, 2023.

We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services as employee compensation costs are the most significant portion of our operating expenses.

Operating margin, which is defined as operating income expressed as a percentage of revenues, increased to 9.2% for the year ended December 31, 2023, compared to 8.8% for the year ended December 31, 2022, driven by strong revenue growth that outpaced increases in operating expenses.

Net income was $62.5 million for the year ended December 31, 2023, compared to $75.6 million for the year ended December 31, 2022.

Net income increased $54.1 million, or 86.7%, to $116.6 million, or 7.7% of total revenues, for the year ended December 31, 2024 from $62.5 million, or 4.5% of total revenues, for the same period last year.

Results for 2024 include an $11.1 million litigation settlement gain, net of tax, recognized in the second quarter of 2024 related to a completed legal matter in which Huron was the plaintiff.

Results for 2023 include a non-cash impairment loss of $19.4 million, net of tax, related to our investment in a hospital-at-home company.

and results for 2022 include a non-cash unrealized gain of $19.8 million, net of tax, related to the same investment.

Diluted earnings per share was $3.19 for 2023, compared to $3.64 for 2022.

The non-cash unrealized loss related to the investment had an unfavorable impact of $0.99 on diluted earnings per share in 2023, and the non-cash unrealized gain had a favorable impact of $0.96 on diluted earnings per share in 2022.

See Note 13 “Fair Value of Financial Instruments” within the notes to our consolidated financial statements for additional information on our preferred stock investment and the non-cash unrealized gains and impairment loss recognized to date.

As of December 31, 2023, the investment's carrying value was $7.4 million, reflecting a net unrealized gain of $2.4 million since inception.

Adjusted diluted earnings per share increased 43.1% to $4.91 for 2023 from $3.43 for 2022, driven by an increase in operating income and a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan.

As a result of the increase in net income and a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan, diluted earnings per share increased 96.6% to $6.27 for 2024, compared to $3.19 for 2023.

Adjusted diluted earnings per share, which excludes the impact of the litigation settlement gain in 2024 and the non-cash impairment loss on our investment in 2023, increased 31.8% to $6.47 for 2024 from $4.91 for 2023.

Adjusted EBITDA increased $33.8 million, or 20.2%, to $201.2 million, or 13.5% of revenues before reimbursable expenses, in 2024, compared to $167.3 million, or 12.3% of revenues before reimbursable expenses, in 2023.

Net cash provided by operating activities increased 48.8% to $201.3 million in 2024, compared to $135.3 million in 2023.

The increase in net net cash provided by operating activities was primarily related to an increase in cash collections in 2023 compared to the prior year;

partially offset by an increase in salaries and related expenses for our revenue-generating professionals, an increase in payments for selling, general and administrative expenses in 2023 compared to the prior year, and an increase in the amount paid for annual performance bonuses in the first quarter of 2023 compared to the first quarter of 2022.

The increase in net cash provided by operating activities primarily related to an increase in cash collections in 2024, a $15 million litigation settlement received in 2024, and a decrease in payments for contractor expenses in 2024 compared to 2023;

partially offset by an increase in payments for salaries and related expenses for our revenue-generating professionals, an increase in the amount paid for annual performance bonuses in the first quarter of 2024 compared to the first quarter of 2023, and an increase in payments for selling, general and administrative expenses in 2024 compared to the prior year.

During 2024, we deployed $122.2 million of capital to repurchase 1,218,434 shares of our common stock, representing 6.6% of our common stock outstanding as of December 31, 2023.

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The following table sets forth, for the periods indicated, selected segment and consolidated operating results and other operating data, including non-GAAP measures.

The results of operations for acquired businesses have been included in our results of operations since the date of their respective acquisition.

Segment and Consolidated Operating Results

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2024 2023 2022

Revenues $ 673,989 $ 534,999 $ 444,767

Revenues before reimbursable expenses

$ 756,263 $ 673,989 $ 534,999

Operating income $ 208,928 $ 172,900 $ 131,227

Segment operating income as a percentage of segment revenues 25.7 % 24.5 % 26.6 %

Revenues $ 429,663 $ 359,835 $ 242,374

Segment operating income as a percentage of segment revenues before reimbursable expenses

27.6 % 25.7 % 24.5 %

Revenues before reimbursable expenses

$ 474,221 $ 429,663 $ 359,835

Operating income $ 108,521 $ 99,098 $ 78,924

Segment operating income as a percentage of segment revenues 23.1 % 21.9 % 21.6 %

Revenues $ 258,408 $ 237,621 $ 218,499

Segment operating income as a percentage of segment revenues before reimbursable expenses

22.9 % 23.1 % 21.9 %

Revenues before reimbursable expenses

$ 255,601 $ 258,408 $ 237,621

Operating income $ 51,198 $ 54,202 $ 50,025

Segment operating income as a percentage of segment revenues 21.0 % 21.1 % 15.7 %

Revenues $ 1,362,060 $ 1,132,455 $ 905,640

Segment operating income as a percentage of segment revenues before reimbursable expenses

20.0 % 21.0 % 21.1 %

Revenues before reimbursable expenses

$ 1,486,085 $ 1,362,060 $ 1,132,455

Reimbursable expenses 35,720 36,695 26,506

Total revenues and reimbursable expenses $ 1,398,755 $ 1,158,961 $ 926,958

Segment operating income $ 326,200 $ 260,176 $ 205,018

Total revenues

$ 1,521,805 $ 1,398,755 $ 1,158,961

Items not allocated at the segment level:

Other operating expenses 174,762 136,459 127,020

Unallocated corporate expenses

191,180 175,206 136,459

Other gains, net

(14,466) (444) (218)

Restructuring charges 7,590 8,204 3,686

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2,335 2,263 2,116

Total 5,519 4,832 3,776

Revenue by capability:

Total (excluding Managed Services)

4,694 4,469 3,957

Managed Services (3)

1,530 1,050 875

6,224 5,519 4,832

Revenues before reimbursable expenses by capability:

Consulting and Managed Services (4)(5)

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

Consulting and Managed Services (3)

Consulting (4)(7)

1,729 1,598 1,419

Managed Services (4)(7)

1,530 1,050 875

Digital 2,965 2,871 2,538

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Digital 76.0% 75.3% 71.0%

(1) During the first quarter of 2024, we reclassified certain revenue-generating professionals within our Digital capability from our Healthcare and Education segments to our Commercial segment as these professionals are able to provide services across all of our industries.

This reclassification did not impact the total Digital capability headcount for any period.

The prior period headcount has been revised for consistent presentation.

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

(2) Managed Services capability revenues within our Healthcare segment was $70.1 million, $67.6 million and $47.7 million for the years ended 2023, 2022 and 2021, respectively.

Managed Services capability revenues within our Education segment was $19.5 million, $15.7 million and $9.1 million for the years ended 2023, 2022 and 2021, respectively.

(3) The number of Managed Services revenue-generating professionals within our Healthcare segment was 924, 715 and 509 as of December 31, 2023, 2022 and 2021, respectively.

The number of Managed Services revenue-generating professionals within our Education segment was 103, 106 and 72 as of December 31, 2023, 2022 and 2021, respectively.

(3) We have separately presented the total number of revenue-generating professionals within our Managed Services capabilities of our Healthcare and Education segments.

Our Healthcare Managed Services professionals provide revenue cycle billing, collections, insurance verification and change integrity services to clients.

Our Education Managed Services professionals provide research administration managed services and outsourcing at our education and research-focused clients.

See footnote 7 below for additional information on the number of Managed Services professionals within our Healthcare and Education segments.

(4) During the first quarter of 2024, we reclassified one of the offerings within Education's Consulting capability to Education's Managed Services capability.

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

(5) Managed Services capability revenues before reimbursable expenses within our Healthcare segment was $77.5 million, $70.1 million and $67.6 million for the years ended 2024, 2023 and 2022, respectively.

Managed Services capability revenues before reimbursable expenses within our Education segment was $28.2 million, $29.6 million and $30.6 million for the years ended 2024, 2023 and 2022, respectively.

(6) During the fourth quarter of 2024, we revised the presentation of our revenue-generating professionals by capability to separately present our revenue-generating professionals in our Consulting capability from our revenue-generating professionals in our Managed Services capability.

This change in presentation did not impact the headcount by capability for any period, and the prior period headcount has been revised for consistent presentation.

(7) The number of Managed Services professionals within our Healthcare segment was 1,420, 924 and 715 as of December 31, 2024, 2023 and 2022, respectively.

The number of Managed Services professionals within our Education segment was 110, 126 and 160 as of December 31, 2024, 2023 and 2022, respectively.

(8) Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis.

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2024 2023 2022

Revenues $ 1,362,060 $ 1,132,455 $ 905,640

Revenues before reimbursable expenses

$ 1,486,085 $ 1,362,060 $ 1,132,455

Reimbursable expenses

35,720 36,695 26,506

Total revenues

$ 1,521,805 $ 1,398,755 $ 1,158,961

Net income $ 116,626 $ 62,479 $ 75,552

Net income as a percentage of total revenues

7.7 % 4.5 % 6.5 %

Income tax expense 37,390 21,416 33,025

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Depreciation and amortization 25,663 25,672 28,233

Earnings before interest, taxes, depreciation and amortization (EBITDA) 129,140 148,693 114,533

205,026 129,140 148,693

Restructuring charges 9,913 11,550 9,909

2024 litigation settlement gain

Other losses (gains), net 804 (444) (193)

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Adjusted EBITDA $ 201,168 $ 167,341 $ 130,840

Adjusted EBITDA as a percentage of revenues 12.3 % 11.6 % 10.8 %

Adjusted EBITDA as a percentage of revenues before reimbursable expenses

13.5 % 12.3 % 11.6 %

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

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Restructuring charges 9,913 11,550 9,909

2024 litigation settlement gain

Other losses (gains), net 804 (444) (193)

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Revenues by segment and capability for the years ended December 31, 2023 and 2022 were as follows:

Revenues (in thousands) Year Ended

Revenues before Reimbursable Expenses

Revenues before reimbursable expenses by segment and capability for the years ended December 31, 2024 and 2023 were as follows:

Revenues before Reimbursable Expenses (in thousands)

December 31, Increase / (Decrease)

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Commercial 255,601 258,408 (2,807) (1.1) %

Total revenues $ 1,362,060 $ 1,132,455 $ 229,605 20.3 %

Total revenues before reimbursable expenses

$ 1,486,085 $ 1,362,060 $ 124,025 9.1 %

Consulting and Managed Services $ 863,859 $ 782,020 $ 81,839 10.5 %

Digital 622,226 580,040 42,186 7.3 %

Total revenues $ 1,362,060 $ 1,132,455 $ 229,605 20.3 %

Total revenues increased $229.6 million, or 20.3%, to $1.36 billion for the year ended December 31, 2023 from $1.13 billion for the year ended December 31, 2022.

The overall increase in revenues reflects continued strength in demand for both our Consulting and Managed Services capability and Digital capability across all segments, which demonstrates our focus on accelerating growth in our healthcare and education industries and growing our presence in commercial industries.

• Healthcare revenues increased $139.0 million, or 26.0%, driven by strengthened demand for our performance improvement, financial advisory and strategy and innovation solutions within our Consulting and Managed Services capability, as well as strengthened demand for our technology and analytics services within our Digital capability.

Revenues for the year ended December 31, 2023 included $1.1 million of incremental revenues from our acquisitions of Customer Evolution, LLC and Roundtable Analytics, Inc, which were completed in December 2022 and September 2023, respectively.

The number of revenue-generating professionals within our Healthcare segment grew 20.1% to 2,270 as of December 31, 2023, compared to 1,890 as of December 31, 2022.

• Education revenues increased $69.8 million, or 19.4%, driven by strengthened demand for our technology and analytics services and software products within our Digital capability, as well as strengthened demand for our strategy and operations and research solutions within our Consulting and Managed Services capability.

The number of revenue-generating professionals within our Education segment grew 13.2% to 1,788 as of December 31, 2023, compared to 1,579 as of December 31, 2022.

• Commercial revenues increased $20.8 million, or 8.7%, driven by strengthened demand for our financial advisory solutions within our Consulting and Managed Services capability and our technology and analytics services within our Digital capability, partially offset by a decrease in demand for our strategy and innovation solution within our Consulting and Managed Services capability.

The number of revenue-generating professionals within our Commercial segment grew 7.2% to 1,461 as of December 31, 2023, compared to 1,363 as of December 31, 2022.

Total revenues before reimbursable expenses

$ 1,486,085 $ 1,362,060 $ 124,025 9.1 %

Revenues before reimbursable expenses increased $124.0 million, or 9.1%, to $1.49 billion for the year ended December 31, 2024 from $1.36 billion for the year ended December 31, 2023.

These increases in demand were partially offset by a decrease in demand for our Digital and Consulting and Managed Services capabilities within our Commercial segment.

Additional information on our revenues before reimbursable expense by segment follows.

• Healthcare revenues before reimbursable expenses increased $82.3 million, or 12.2%, driven by continued strength in demand for our performance improvement, revenue cycle managed services, culture and organizational excellence and strategy and innovation solutions within our Consulting and Managed Services capability and our technology and analytics services within our Digital capability.

These increases in demand were partially offset by a decrease in demand for our financial and capital advisory solution within our Consulting and Managed Services capability.

Revenues before reimbursable expenses for the year ended December 31, 2024 included $0.6 million of incremental revenues before reimbursable expenses from our acquisition of Roundtable Analytics completed in September 2023.

On December 31, 2024, we completed the divestiture of our Studer Education practice within our Healthcare segment.

This business generated revenues before reimbursable expenses of $13.7 million and $12.3 million in 2024 and 2023, respectively.

The Studer Education practice was not significant to our consolidated financial statements and did not qualify as a discontinued operation for reporting under GAAP.

The number of revenue-generating professionals within our Healthcare segment, excluding Managed Services professionals, grew 8.2% to 1,218 as of December 31, 2024, compared to 1,126 as of December 31, 2023.

• Education revenues before reimbursable expenses increased $44.6 million, or 10.4%, and includes $18.6 million of incremental revenues from our acquisition of Grenzebach Glier and Associates, Inc.

(“GG+A”) completed in March 2024.

The increase in Education revenues before reimbursable expenses was also driven by continued strength in demand for our technology and analytics services and software products within our Digital capability and our strategy and operations solution within our Consulting and Managed Services capability.

The number of revenue-generating professionals within our Education segment, excluding Managed Services professionals, grew 5.6% to 1,141 as of December 31, 2024, compared to 1,080 as of December 31, 2023.

Our acquisition of GG+A in March 2024 added approximately 70 revenue-generating professionals.

• Commercial revenues before reimbursable expenses decreased $2.8 million, or 1.1%.

Revenues before reimbursable expenses for the year ended December 31, 2024 included $3.1 million of incremental revenues before reimbursable expenses from our acquisition of AXIA Consulting, Inc.

(“AXIA Consulting”), which was completed in December 2024.

The decrease in revenues before reimbursable expenses was primarily due to the decreases in demand for our strategy and innovation solution within our Consulting and Managed Services capability and our technology and analytics services within our Digital capability, partially offset by an increase in demand for our financial advisory solutions within our Consulting and Managed Services capability.

The number of revenue-generating professionals within our Commercial segment, the majority of which provide services across all of our industries, grew 3.2% to 2,335 as of December 31, 2024, compared to 2,263 as of December 31, 2023, including our acquisition of AXIA Consulting in December 2024 which added approximately 130 revenue-generating professionals.

Operating Expenses

Operating expenses for the year ended December 31, 2024 increased $79.6 million, or 6.2%, over the year ended December 31, 2023.

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

Operating Expenses (in thousands, except amounts as a percentage of revenues) Year Ended December 31, Increase / (Decrease)

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

Operating Expenses (in thousands, except amounts as a percentage of revenues before reimbursable expenses)

Year Ended December 31, Increase / (Decrease)

Direct costs $ 1,010,077 68.0% $ 942,697 69.2% $ 67,380

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Selling, general and administrative expenses 286,655 19.3% 257,932 18.9% 28,723

Other gains, net

(14,196) (1.0)% (444) —% (13,752)

Restructuring charges 9,913 0.7% 11,550 0.8% (1,637)

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Total operating expenses $ 1,352,986 91.0% $ 1,273,407 93.5% $ 79,579

Direct costs increased $156.8 million, or 20.0%, to $942.7 million for the year ended December 31, 2023 from $785.9 million for the year ended December 31, 2022.

The $156.8 million increase primarily related to a $143.2 million increase in compensation costs for our revenue-generating professionals as we continue to invest in and grow our talented team to meet increased market demand.

Specifically, the increase in compensation costs is primarily attributable to a $92.7 million increase in salaries and related expenses driven by increased headcount and annual salary increases that went into effect in the first quarter of 2023, a $42.7 million increase in performance bonus expense, and a $6.9 million increase in share-based compensation expense.

Additional increases in direct costs include a $6.2 million increase in technology costs, and a $4.0 million increase in contractor expenses.

As a percentage of revenues, direct costs decreased to 69.2% during 2023, compared to 69.4% during 2022.

The decrease was primarily due to revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals;

largely offset by an increase in performance bonus expense, as a percentage of revenue.

Direct costs increased $67.4 million, or 7.1%, to $1.01 billion for the year ended December 31, 2024 from $942.7 million for the year ended December 31, 2023.

The $67.4 million increase primarily related to a $79.1 million increase in compensation costs for our revenue-generating professionals and a $4.0 million increase in technology costs, partially offset by a $14.4 million decrease in contractor expenses.

The $79.1 million increase in compensation costs reflects our investment to grow our talented team to meet increased market demand and is primarily attributable to a $76.7 million increase in salaries and related expenses driven by increased headcount and annual salary increases that went into effect in the first quarter of 2024 and a $5.5 million increase in performance bonus expense;

partially offset by a $2.8 million decrease in signing, retention and other bonus expense.

As a percentage of revenues before reimbursable expenses, direct costs decreased to 68.0% during 2024, compared to 69.2% during 2023, primarily attributable to the decrease in contractor expenses and revenue growth that outpaced the increase in performance bonus expense for our revenue-generating professionals;

partially offset by an increase in salaries and related expenses for our revenue-generating professionals, as a percentage of revenues before reimbursable expenses.

Reimbursable Expenses

Reimbursable expenses are billed to clients at cost and primarily relate to travel and out-of-pocket expenses incurred in connection with client engagements.

These expenses are also included in total revenues and reimbursable expenses.

These expenses are also included in total revenues.

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Selling, general and administrative expenses increased by $28.7 million, or 11.1%, to $286.7 million for the year ended December 31, 2024 from $257.9 million for the year ended December 31, 2023.

The $48.1 million increase primarily related to a $37.2 million increase in compensation costs for our support personnel driven by a $14.4 million increase in salaries and related expenses, a $12.3 million increase in deferred compensation expense attributable to the change in market value of our deferred compensation liability, a $5.9 million increase in share-based compensation expense, and a $4.8 million increase in performance bonus expense.

The increase in deferred compensation expense is offset by an increase in the gain recognized for the change in the market value of investments that are used to fund our deferred compensation liability and recognized in other income (expense), net.

Additionally, selling, general and administrative expenses increased $10.8 million for non-payroll costs driven by a $3.3 million increase in promotion and marketing expenses, a $2.8 million increase in practice administration and meetings expenses, a $2.6 million increase in legal expenses, and a $1.6 million increase in software and data hosting expenses.

As a percentage of revenues, selling, general and administrative expenses increased to 18.9% during 2023, compared to 18.5% during 2022.

This increase was primarily attributable to the increase in deferred compensation expense attributable to the change in market value of our deferred compensation liability, as a percentage of revenues;

partially offset by revenue growth that outpaced the increases in total non-payroll costs.

The $28.7 million increase primarily related to a $16.1 million increase in non-payroll costs, driven by a $5.9 million increase in software and data hosting expenses, a $3.3 million increase in practice administration and meetings expenses, a $2.7 million increase in bad debt expense, and a $1.3 million increase in promotion and marketing expenses, partially offset by a $1.3 million decrease in training expenses.

Additionally, selling, general and administrative expenses increased $12.7 million due to an increase in compensation costs for our support personnel driven by a $14.5 million increase in salaries and related expenses and a $1.2 million increase in performance bonus expense;

partially offset by a $1.6 million decrease in share-based compensation expense and a $1.2 million decrease in signing, retention and other bonus expense.

As a percentage of revenues before reimbursable expenses, selling, general and administrative expenses increased to 19.3% during 2024, compared to 18.9% during 2023.

This increase was primarily attributable to increases in salaries and related expenses for our support personnel and software and data hosting expenses, as percentages of revenues before reimbursable expenses;

partially offset by a decrease in share-based compensation expense for our support personnel.

Other Gains, Net

Other gains, net totaled $14.2 million for the year ended December 31, 2024 and $0.4 million for the year ended December 31, 2023.

The $14.2 million of other gains, net for the year ended December 31, 2024 primarily consisted of a pre-tax $15.0 million litigation settlement gain for a completed legal matter in which Huron was the plaintiff and $0.5 million of net remeasurement gains to decrease the fair value of our contingent consideration liabilities related to business combinations.

The $0.4 million of other gains, net for the year ended December 31, 2023 primarily consisted of net remeasurement gains to decrease the fair value of our contingent consideration liabilities related to business combinations.

See Note 13 “Fair Value of Financial Instruments” within the notes to our consolidated financial statements for additional information on the fair value of contingent consideration liabilities.

Restructuring Charges

Restructuring charges for the year ended December 31, 2024 were $9.9 million, compared to $11.6 million for the year ended December 31, 2023.

During 2024, we exited our office space previously occupied by GG+A and a portion of our office space in New York, New York resulting in non-cash impairment charges of $1.4 million and $1.2 million, respectively, on the related right-of-use operating lease assets and fixed assets.

Additionally, we exited the remaining portion of our office space in Denver, Colorado resulting in $0.5 million of accelerated depreciation and amortization on the related fixed assets and right-of-use operating lease assets we abandoned.

Furthermore, in the fourth quarter of 2024, we completed the divestiture of our Studer Education practice and incurred $1.3 million of restructuring charges, consisting of $1.0 million of transaction-related employee payments and $0.3 million of third-party legal and professional advisory fees.

Restructuring charges incurred in 2024 also included $2.3 million of severance-related expenses unrelated to the divestiture;

$2.3 million of rent and related expenses, net of sublease income, for previously vacated office spaces;

and $0.8 million related to non-cash lease impairment charges driven by updated sublease assumptions for our previously vacated office spaces.

During 2023, we exited our office spaces in Hillsboro, Oregon and Lexington, Massachusetts, resulting in non-cash impairment charges of $1.9 million and $3.5 million, respectively, on the related right-of-use operating lease assets and fixed assets.

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and $0.3 million related to the abandonment of a capitalized software development project.

The $9.9 million of restructuring charges incurred in 2022 included $5.7 million of severance-related expenses;

$2.3 million for rent and related expenses, net of sublease income, for previously vacated office spaces;

$0.7 million for third-party professional advisory fees related to the modification of our operating model;

and $0.6 million for the early termination of a contract.

Depreciation and Amortization

Depreciation and amortization expense decreased $0.1 million, or 0.3%, to $24.8 million for the year ended December 31, 2024, compared to $24.9 million for the year ended December 31, 2023.

The $2.5 million decrease in depreciation and amortization expense was primarily attributable to intangible assets acquired in business acquisitions that were fully amortized in prior periods and a decrease in amortization of intangible assets acquired in business acquisitions due to the accelerated basis of amortization in prior periods.

Operating Income and Operating Margin

The $0.1 million decrease in depreciation and amortization expense was primarily attributable to a decrease in amortization of intangible assets, largely offset by an increase in amortization of internally developed software.

Operating Income

Operating income increased $43.5 million to $168.8 million for the year ended December 31, 2024 from $125.3 million for the year ended December 31, 2023.

Operating margin, which is defined as operating income expressed as a percentage of revenues, increased to 9.2% for 2023, compared to 8.8% for 2022.

Operating income and operating margin for each of our segments is as follows.

See the Segment and Consolidated Operating Results table above for a reconciliation of our total segment operating income to consolidated Huron operating income.

Operating margin, which is defined as operating income expressed as a percentage of revenues before reimbursable expenses, increased to 11.4% for 2024, compared to 9.2% for 2023.

Operating income and operating margin for each of our segments as well as unallocated corporate expenses were as follows:

Segment Operating Income (in thousands, except operating margin percentages) Year Ended December 31, Increase / (Decrease)

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Commercial $ 51,198 20.0% $ 54,202 21.0% $ (3,004)

Total segment operating income $ 326,200 $ 260,176 $ 66,024

• Healthcare operating income increased $41.7 million, or 31.8%, primarily due to the increase in revenues;

partially offset by increases in compensation costs for our revenue-generating professionals, contractor expenses, and compensation costs for our support personnel.

The increases in compensation costs for our revenue-generating professionals and support personnel were primarily driven by an increase in headcount, annual salary increases that went into effect in the first quarter of 2023, an increase in performance bonus expense, and an increase in share-based compensation expense.

Healthcare operating margin increased to 25.7% from 24.5% primarily due to the revenue growth that outpaced the increase in compensation costs for our revenue-generating professionals;

partially offset by an increase in contractor expenses, as a percentage of revenues.

• Education operating income increased $20.2 million, or 25.6%, primarily due to the increase in revenues as well as decreases in contractor expenses, restructuring charges, and software and data hosting expenses;

partially offset by increases in compensation costs for our revenue-generating professionals, technology expenses, practice administration and meetings expenses, and promotion and marketing expenses.

The increases in compensation costs for our revenue-generating professionals were primarily driven by an increase in headcount, annual salary increases that went into effect in the first quarter of 2023, and an increase in performance bonus expense.

Education operating margin increased to 23.1% from 21.9% primarily driven by decreases in contractor expenses and restructuring charges;

partially offset by increases in compensation costs for our revenue-generating professionals and technology expenses, as percentages of revenue.

• Commercial operating income increased $4.2 million, or 8.3%, primarily due to the increase in revenues as well as a decrease in contractor expenses;

partially offset by increases in compensation costs for our revenue-generating professionals, promotion and marketing expenses, and practice administration and meetings expenses.

The increase in compensation costs for our revenue-generating professionals was primarily driven by an increase in performance bonus expense, an increase in headcount, and annual salary increases that went into effect in the first quarter of 2023.

Commercial operating margin decreased slightly to 21.0% from 21.1% primarily driven by increases in compensation costs for our revenue-generating professionals and non-payroll selling, general and administrative costs, as percentages of revenues;

partially offset by the decrease in contractor expenses.

Unallocated Corporate Expenses (in thousands)

Unallocated corporate expenses

$ 191,180 $ 175,206 $ 15,974

• Healthcare operating income increased $36.0 million, or 20.8%, primarily due to the increase in revenues before reimbursable expenses and a decrease in contractor expenses;

partially offset by increases in compensation costs for our revenue-generating professionals, practice administration and meetings expenses, technology costs, bad debt expense, and promotion and marketing expenses.

The increases in compensation costs for our revenue-generating professionals were primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of 2024, an increase in performance bonus expense, and an increase in share-based compensation expenses;

partially offset by a decrease in signing, retention and other bonus expense.

Healthcare operating margin increased to 27.6% from 25.7% primarily due to the decrease in contractor expenses;

partially offset by an increase in practice administration and meetings expenses, as a percentage of revenues before reimbursable expenses.

• Education operating income increased $9.4 million, or 9.5%, primarily due to the increase in revenues before reimbursable expenses as well as decreases in training expenses and contractor expenses;

partially offset by increases in compensation costs for our revenue-generating professionals and support personnel and amortization of capitalized software development costs.

The increases in compensation costs for our revenue-generating professionals and support personnel were primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of 2024;

partially offset by decreases in performance bonus expense and share-based compensation expense for our revenue-generating professionals.

The increase in amortization of capitalized software development costs primarily relates to the redesign of Huron Research Suite that successfully went live in 2024 and reflects our focus on advancing our Education software products.

Education operating margin decreased to 22.9% from 23.1% primarily driven by an increase in salaries and related expenses for our revenue-generating professionals, as a percentage of revenues before reimbursable expenses;

partially offset by the decrease in performance bonus expense for our revenue-generating professionals.

• Commercial operating income decreased $3.0 million, or 5.5%, primarily due to the decrease in revenues before reimbursable expenses as well as increases in compensation costs for our revenue-generating professionals and software and data hosting expenses;

partially offset by decreases in promotion and marketing expenses and restructuring charges.

The increase in compensation costs for our revenue-generating professionals was primarily driven by annual salary increases that went into effect in the first quarter of 2024 and an increase in headcount due to the acquisition of AXIA Consulting in the fourth quarter of 2024;

partially offset by decreases in signing, retention and other bonus expense and performance bonus expense for our revenue-generating professionals.

Commercial operating margin decreased to 20.0% from 21.0% primarily driven by the increase in salaries

and related expenses for our revenue-generating professionals;

partially offset by a decrease in promotion and marketing expenses, as a percentage of revenues before reimbursable expenses.

• Unallocated corporate expenses increased $16.0 million, or 9.1%, primarily due to increases in compensation costs for our support personnel and software and data hosting expenses.

The increase in compensation costs for our support personnel was primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of 2024 and an increase in performance bonus expense;

partially offset by decreases in share-based compensation expense and signing, retention and other bonus expense.

Other Income (Expense), Net

Interest expense, net of interest income increased $7.7 million to $19.6 million for the year ended December 31, 2023 from $11.9 million for the year ended December 31, 2022, which was primarily attributable to higher interest rates and higher levels of borrowing under our credit facility in 2023 compared to 2022.

See “Liquidity and Capital Resources” below and Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for additional information on our senior secured credit facility.

Other income (expense), net decreased $42.6 million to expense of $21.9 million for the year ended December 31, 2023 from income of $20.7 million for the year ended December 31, 2022.

The decrease in other income, net was primarily attributable to changes in the fair value of our preferred stock investment in a hospital-at-home company.

In the fourth quarter of 2023, we recognized a non-cash impairment loss of $26.3 million on our preferred stock investment based on the valuation established in a new round of financing expected to close in early 2024.

In the first quarter of 2022, we recognized a non-cash unrealized gain of $27.0 million for the same investment, based on the valuation established in a round of financing that closed that quarter.

As of December 31, 2023, the investment's carrying value was $7.4 million, reflecting a net unrealized gain of $2.4 million on the investment since inception.

See Note 13 “Fair Value of Financial Instruments” within the notes to our consolidated financial statements for additional information on our preferred stock investment.

This decrease in other income, net was partially offset by a $12.2 million increase in the gain recognized for the market value of our investments that are used to fund our deferred compensation liability.

During 2023 we recognized a $4.8 million gain for the market value of our deferred compensation investments compared to a $7.4 million loss recognized in 2022.

Interest expense, net of interest income increased $5.8 million to $25.3 million for the year ended December 31, 2024 from $19.6 million for the year ended December 31, 2023, which was primarily attributable to higher levels of borrowing and higher interest rates under our Amended Credit Facility in 2024 compared to 2023.

See “Liquidity and Capital Resources” below and Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for additional information about our senior secured credit facility.

Other income (expense), net increased $32.4 million to income of $10.5 million for the year ended December 31, 2024 from expense of $21.9 million for the year ended December 31, 2023.

In 2024, we recognized a $4.6 million gain for the market value of our investments that are used to fund our deferred compensation liability, a $3.6 million gain related to the divestiture of our Studer Education practice, and $2.1 million of foreign currency transaction gains.

In 2023, we recognized a non-cash impairment loss of $26.3 million on our preferred stock investment in a hospital-at-home company and $0.5 million of foreign currency transaction losses, which were partially offset by a $4.8 million gain for the market value of our investments that are used to fund our deferred compensation liability.

The gains recognized in 2024 and 2023 related to the market value of our investments that are used to fund our deferred compensation liability were offset with deferred compensation expense attributable to the change in the market value of our deferred compensation liability which is recognized as a component of selling, general and administrative expenses on our consolidated statements of operations.

See Note 3 "Acquisitions and Divestitures" within the notes to our consolidated financial statements for additional information on the divestiture completed in 2024, Note 13 “Fair Value of Financial Instruments” within the notes to our consolidated financial statements for additional information on our preferred stock investment, and Note 15 “Employee Benefit and Deferred Compensation Plans” within the notes to our consolidated financial statements for additional information on our deferred compensation plan.

Income Tax Expense

For the year ended December 31, 2024, our effective tax rate was 24.3% as we recognized income tax expense of $37.4 million on income of $154.0 million.

The effective tax rate of 24.3% was more favorable than the statutory rate, inclusive of state income taxes, of 26.0%, primarily due to a discrete tax benefit for share-based compensation awards that vested during the year.

This favorable item was partially offset by certain nondeductible expense items.

For the year ended December 31, 2023, our effective tax rate was 25.5% as we recognized income tax expense of $21.4 million on income of $83.9 million.

The effective tax rate of 25.5% was more favorable than the statutory rate, inclusive of state income taxes, of 26.2%, primarily due to a discrete tax benefit for share-based compensation awards that vested during the year and the positive impact of certain federal tax credits.

These favorable items were partially offset by certain nondeductible expense items.

For the year ended December 31, 2022, our effective tax rate was 30.4% as we recognized income tax expense of $33.0 million on income of $108.6 million.

The effective tax rate of 30.4% was less favorable than the statutory rate, inclusive of state income taxes, of 26.7%, primarily due to tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items.

See Note 17 “Income Taxes” within the notes to our consolidated financial statements for additional information on our income tax expense.

Net Income and Earnings per Share

Net income decreased $13.1 million to $62.5 million for the year ended December 31, 2023 from $75.6 million for the year ended December 31, 2022.

The decrease in net income was primarily attributable to the changes in the fair value of our preferred stock investment in a hospital-at-home company recorded in other income (expense), net;

partially offset by the increase in operating income.

In 2023, we recognized a non-cash impairment loss of $26.3 million related to our preferred stock investment;

and in 2022, we recognized a non-cash unrealized gain of $27.0 million related to the same investment as discussed above.

Diluted earnings per share for the year ended December 31, 2023 decreased to $3.19, compared to $3.64 for the year ended December 31, 2022, driven by the decrease in net income partially offset by a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan.

The changes in fair value of our preferred stock investment in a hospital-at-home company had an unfavorable impact on our diluted earnings per share of $0.99 in 2023 and a favorable impact on our diluted earnings per share of $0.96 for 2022 .

Net income increased $54.1 million to $116.6 million for the year ended December 31, 2024 from $62.5 million for the year ended December 31, 2023.

Net income for the year ended December 31, 2024 includes the $11.1 million litigation settlement gain, net of tax, recognized in the second quarter of 2024 related to a completed legal matter in which Huron was the plaintiff.

Net income for the year ended December 31, 2023 includes a non-cash impairment loss of $19.4 million, net of tax, related to our preferred stock investment in a hospital-at-home company.

Diluted earnings per share for the year ended December 31, 2024 increased to $6.27, compared to $3.19 for the year ended December 31, 2023, driven by the increase in net income and a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan.

The 2024 litigation settlement gain related to a completed legal matter in which Huron was the plaintiff had a favorable impact of $0.60 on diluted earnings per share in 2024, while the 2023 change in fair value of our preferred stock investment in a hospital-at-home company had an unfavorable impact on our diluted earnings per share of $0.99 in 2023.

EBITDA and Adjusted EBITDA

EBITDA decreased $19.6 million to $129.1 million for the year ended December 31, 2023 from $148.7 million for the year ended December 31, 2022.

The decrease in EBITDA was primarily attributable to the changes in the fair value of our preferred stock investment in the hospital-at-home company, as well as the increase in corporate expenses, excluding the impact of the change in the market value of our deferred compensation liability;

largely offset by the increase in segment operating income.

In 2023, we recognized a non-cash impairment loss of $26.3 million related to our preferred stock investment;

and in 2022, we recognized a non-cash unrealized gain of $27.0 million related to the same investment as discussed above.

EBITDA increased $75.9 million to $205.0 million for the year ended December 31, 2024 from $129.1 million for the year ended December 31, 2023.

The increase in EBITDA was attributable to the increases in Healthcare and Education operating income, excluding segment depreciation and amortization;

the $26.3 million non-cash impairment loss related to our preferred stock investment in a hospital-at-home company recognized in 2023;

and the pre-tax $15.0 million litigation settlement gain recognized in the second quarter of 2024 for a

completed legal matter in which Huron was the plaintiff.

These increases to EBITDA were partially offset by the increase in unallocated corporate expenses, excluding the impact of the change in the market value of our deferred compensation liability.

Adjusted EBITDA increased $33.8 million to $201.2 million for the year ended December 31, 2024 from $167.3 million for the year ended December 31, 2023.

The increase in adjusted EBITDA was primarily attributable to the increase in segment operating income, excluding the impact of segment restructuring charges;

partially offset by the increase in corporate expenses, excluding the impacts of the change in the market value of our deferred compensation liability and corporate restructuring charges.

The increase in adjusted EBITDA was primarily attributable to the increases in Healthcare and Education operating income, excluding the impact of segment depreciation and amortization and segment restructuring charges;

partially offset by the increase in unallocated corporate expenses, excluding the impacts of the change in the market value of our deferred compensation liability and transaction-related expenses.

Adjusted Net Income and Adjusted Earnings per Share

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Net cash provided by operating activities increased $66.1 million to $201.3 million in 2024 from $135.3 million in 2023.

The increase in net operating cash flows was primarily related to an increase in cash collections in 2023 compared to the prior year;

Additionally, for 2023, our unbilled receivables increased partially driven by certain large Healthcare and Education engagements where our services performed and revenue recognized exceeded the amounts billed to clients in accordance with the contractual billing terms.

In the future, we may enter into additional client engagements with similar deferred billing terms .

The increase in net cash provided by operating activities primarily related to an increase in cash collections in 2024, a $15 million litigation settlement received in 2024 for a completed legal matter in which Huron was the plaintiff, and a decrease in payments for contractor expenses in 2024 compared to 2023;

Investing Activities

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Our investments include a convertible note investment in Shorelight Holdings, LLC, a preferred stock investment in a hospital-at-home company, and investments in life insurance policies that are used to fund our deferred compensation liability.

Net cash used in investing activities was $36.7 million for 2023 which primarily consisted of $25.7 million for payments related to internally developed software to advance our Healthcare and Education software products;

Net cash used in investing activities was $79.7 million for 2024 which primarily consisted of $49.5 million for purchases of businesses;

$23.9 million for payments related to internally developed software to advance our Healthcare and Education software products;

$8.7 million for purchases of property and equipment, primarily related to purchases of computers and related equipment and leasehold improvements for certain office spaces;

and $2.6 million for contributions to our life insurance policies.

These uses of cash for investing activities were partially offset by $4.7 million of cash received related to the divestiture of our Studer Education practice in the fourth quarter of 2024.

$9.4 million for purchases of property and equipment,

primarily related to purchases of computers and related equipment and leasehold improvements for certain office spaces;

$3.1 million for contributions to our life insurance policies;

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These uses of cash for investing activities were partially offset by $3.0 million of cash received for distributions from our life insurance policies that are used to fund our deferred compensation liability.

Net cash used in investing activities was $20.1 million for 2022.

The use of cash in 2022 primarily consisted of $12.5 million for purchases of property and equipment, primarily related to purchases of computers and related equipment and leasehold improvements;

$11.8 million for payments related to internally developed software;

and $3.4 million for the purchases of businesses.

These uses of cash for investing activities were partially offset by $4.8 million of cash received for the sale of our aircraft in the first quarter of 2022 and $3.4 million of cash received for distributions from our life insurance policies that are used to fund our deferred compensation liability.

We estimate that cash utilized for purchases of property and equipment and software development in 2025 will total approximately $35 million to $40 million;

primarily consisting of software development costs, leasehold improvements and furniture and fixtures for certain office locations and information technology related equipment to support our corporate infrastructure.

primarily consisting of software development costs, information technology-related equipment to support our corporate infrastructure, and leasehold improvements and furniture and fixtures for certain office locations

Financing Activities

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Net cash used in financing activities was $111.6 million in 2024.

During 2023, we borrowed $354.0 million primarily to fund our operations, including our annual performance bonus payment in the first quarter of 2023, and made repayments on our borrowings of $320.0 million.

Additionally, in 2023, we paid $122.8 million for share repurchases, including $1.1 million related to the settlement of share repurchases that were accrued as of December 31, 2022 and excluding $1.9 million that was accrued as of December 31, 2023.

During 2023, we reacquired $10.5 million of common stock as a result of tax withholdings upon vesting of share-based compensation.

We also made deferred acquisition payments of $1.5 million to the sellers of certain businesses we acquired.

These payments were primarily the result of achieving specified financial performance targets in accordance with the related purchase agreements.

During 2024, we borrowed $743.5 million and made repayments on our borrowings of $709.8 million.

The borrowings and repayments during 2024 include the $275.0 million Term Loan proceeds which were used to repay borrowings under the Revolver in the first quarter of 2024.

The net borrowings of $33.7 million were primarily used to fund our operations, including our annual performance bonus payments in the first quarter of 2024.

Additionally, during 2024, we paid $123.0 million for the settlement of share repurchases and we reacquired $22.1 million of common stock as a result of tax withholdings upon vesting of share-based compensation.

We also made payments of $1.4 million for debt issuance costs related to the Term Loan.

These uses of cash for financing activities were partially offset by $1.8 million of cash received from stock option exercises in 2024.

Net cash used in financing activities was $98.3 million in 2023.

During 2022, we borrowed $314.0 million under our senior secured credit facility primarily to fund our operations, including our annual performance bonus payment in the first quarter of 2022, and made repayments on our borrowings of $256.8 million.

The repayments on our borrowings included the repayment of the outstanding principal of our promissory note due 2024 of $2.7 million from the proceeds received for the sale of our aircraft.

Additionally, in 2022, we paid $120.4 million for share repurchases, including $0.2 million related to the settlement of share repurchases that were accrued as of December 31, 2021 and excluding $1.1 million that was accrued as of December 31, 2022.

During 2022, we reacquired $7.8 million of common stock as a result of tax withholdings upon vesting of share-based compensation.

Additionally, we made payments of $2.7 million for debt issuance costs related to the Third Amended and Restated Credit Agreement executed in the fourth quarter of 2022.

During 2023, we borrowed $354.0 million primarily to fund our operations, including our annual performance bonus payments in the first quarter of 2023,and made repayments on our borrowings of $320.0 million.

Additionally, in 2023, we paid $122.8 million for the settlement of share repurchases and we reacquired $10.5 million of common stock as a result of tax withholdings upon vesting of share-based compensation.

We also made deferred acquisition payments of $1.5 million to the sellers of certain businesses we acquired.

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In November 2020, our board of directors authorized a share repurchase program permitting us to repurchase up to $50 million of our common stock through December 31, 2021.

The share repurchase program has been subsequently extended and increased, most recently in the fourth quarter of 2023.

The share repurchase program has been subsequently extended and increased, most recently in the second quarter of 2024.

The current authorization extends the share repurchase program through December 31, 2025 with a repurchase amount of $500 million, of which $64.5 million remains available as of December 31, 2024.

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Financing Arrangements

At December 31, 2023, we had $324.0 million outstanding under our senior secured credit facility, as discussed below.

The Company has a $600 million five-year senior secured revolving credit facility, subject to the terms of a Third Amended and Restated Credit Agreement dated as of November 15, 2022 and amended by Amendment No.

1 (collectively, the “Amended Credit Agreement”) that becomes due and payable in full upon maturity on November 15, 2027.

In February 2024, the Company entered into Amendment No.

2 (the “Second Amendment”) to the Amended Credit Agreement to establish a $275 million term loan as discussed below under “2024 Term Loan.” Prior to the Second Amendment, the Amended Credit Agreement provided 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 revolving credit facility were used to refinance borrowings outstanding under a prior credit agreement, and future revolving credit facility 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 under the revolving credit facility vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement).

At our option, these borrowings 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.

Fees and interest on borrowings are paid on a monthly basis.

In April 2023, the Company and PNC Capital Markets, LLC, as Sustainability Structuring Agent, with the consent of the Required Lenders (as defined in the Amended Credit Agreement), entered into Amendment No.

1 to the Amended Credit Agreement (the “First Amendment”) to incorporate specified key performance indicators with respect to certain environmental, social and governance targets of the Company.

Based upon the performance of the Company against those key performance indicators in each Reference Year (as defined in the First

Amendment), certain adjustments to the otherwise applicable rates for interest, commitment fees and letter of credit fees will be made.

At December 31, 2024, we had $357.7 million outstanding under our Amended Credit Agreement, as discussed below.

The Company has a $600 million senior secured revolving credit facility (the “Revolver”) and a $275 million senior secured term loan facility (the “Term Loan”), subject to the terms of the Third Amended and Restated Credit Agreement dated as of November 15, 2022 (as amended, the “Amended Credit Agreement”), both of which fully mature on November 15, 2027.

The Term Loan was established in February 2024 with the execution of Amendment No.

2 to the Third Amended and Restated Credit Agreement.

The Term Loan is subject to scheduled quarterly amortization payments of $3.4 million which began June 30, 2024 and continue through the maturity date of November 15, 2027, at which time the outstanding principal balance and all accrued interest will be due.

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

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

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

The applicable margin for the outstanding principal under the Term Loan will range between 1.625% per annum and 2.375% per annum based upon our Consolidated Leverage Ratio at such time.

The fees and interest are subject to further adjustment based upon the Company's performance against specified key performance indicators.

Based upon the performance of the Company against those key performance indicators in each Reference Year (as defined in the Amended Credit Agreement), certain adjustments to the otherwise applicable rates for interest,

commitment fees and letter of credit fees will be made.

These annual adjustments will not exceed an increase or decrease of 0.01% in the aggregate for all key performance indicators in the case of the commitment fee rate or an increase or decrease of 0.05% in the aggregate for all key performance indicators in the case of the Term SOFR borrowings, base rate borrowings or letter of credit fee rate.

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Pursuant to the terms of the Amended Credit Agreement, if our Consolidated Leverage Ratio is greater than 3.50, the amount of dividends and other Restricted Payments (as defined in the Amended Credit Agreement) we may pay is limited to an amount up to $50 million.

Borrowings outstanding under the revolving credit facility at December 31, 2023 and 2022 totaled $324.0 million and $290.0 million, respectively.

Borrowings outstanding under the Amended Credit Agreement at December 31, 2024 and 2023 totaled $357.7 million and $324.0 million, respectively.

Of the $357.7 million outstanding as of December 31, 2024, $93.0 million was outstanding under the Revolver and $264.7 million was outstanding under the Term Loan.

There were no borrowings outstanding under the Term Loan at December 31, 2023.

These borrowings carried a weighted average interest rate of 4.7% at December 31, 2024 and 4.2% at December 31, 2023 including the impact of the interest rate swaps described in Note 12 “Derivative Instruments and Hedging Activity" within the notes to the consolidated financial statements.

The borrowing capacity under the Amended Credit Agreement is reduced by any outstanding borrowings under the agreement and outstanding letters of credit.

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

At December 31, 2024 and 2023, we had outstanding letters of credit totaling $0.4 million and $0.5 million, respectively, which are used as security deposits for our office facilities.

As of December 31, 2023 and 2022, the unused borrowing capacity under the Amended Credit Agreement was $275.5 million and $309.3 million, respectively.

2024 Term Loan

In February 2024, the Company entered into Amendment No.2 to the Amended Credit Agreement (the “Second Amendment”), which established a $275 million term loan facility (the “Term Loan”) under the Amended Credit Agreement (as amended to date, the “Current Credit Agreement”).

The Term Loan is subject to scheduled quarterly amortization payments of $3.4 million beginning June 30, 2024 through the maturity date of November 15, 2027, at which time the outstanding principal balance and all accrued interest will be due.

Additionally, the Second Amendment provided for the option to increase the revolving credit facility or establish additional term loan facilities in an aggregate amount up to $250 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Current Credit Agreement of $1.13 billion.

The proceeds of the Term Loan will be used to reduce borrowings under the company's revolving credit facility.

Interest on the Term Loan varies based on our Consolidated Leverage Ratio (as defined in the Current Credit Agreement).

At our option, the Term Loan will bear interest at one, three or six month Term SOFR plus the applicable margin.

The applicable margin will range between 1.625% per annum and 2.375% per annum based upon our Consolidated Leverage Ratio at such time and subject to the adjustments allowed for performance against certain environmental, social and governance targets of the Company as outlined in the First Amendment.

The Current Credit Agreement maintains the same prepayment provisions, usual and customary representations and warranties, fee pricing schedule, and affirmative and negative covenants as the Amended Credit Agreement discussed above.

For further information, see Note 7 “Financing Arrangements” within the notes to the consolidated financial statements.

As of December 31, 2024 and 2023, the unused borrowing capacity under the Revolver was $506.6 million and $275.5 million, respectively.

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

For a discussion of certain risks and uncertainties related to the Current Credit Agreement, see Part I—Item 1A.

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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.

1) estimate variable consideration using either the expected value method or the most likely amount method, as appropriate, 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.

Our estimates are monitored throughout the life of each contract and are based on an assessment of our anticipated performance, historical experience, and other information available at the time.

believe that the estimates and assumptions we use for revenue recognition for performance-based billing arrangements are reasonable, subsequent changes could materially impact our results of operations.

While we believe that the estimates and assumptions we use for revenue recognition for performance-based billing arrangements are reasonable, subsequent changes could materially impact our results of operations.

See Note 2 “Summary of Significant Accounting Policies” within the notes to the consolidated financial statements for additional information on our revenue recognition accounting policy.

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

We determine the fair value of our reporting units using the income approach.

For a company such as ours, the income approach will generally provide the most reliable indication of fair value because the value of such companies is dependent on their ability to generate earnings.

We utilize a discounted cash flow analysis, which involves 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.

This approach requires the use of significant estimates and assumptions, including forecasted revenue growth

rates, forecasted EBITDA margins, and discount rates.

We determine the fair value of our reporting units using a combination of the income approach and the market approach.

For a company such as ours, the income and market approaches will generally provide the most reliable indications of fair value because the value of such companies is dependent on their ability to generate earnings.

In the income approach, we utilize a discounted cash flow analysis, which involves 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.

This approach requires the use of significant estimates and assumptions, including forecasted revenue growth rates, forecasted EBITDA margins, and discount rates.

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

In the market approach, we utilize the guideline company method, which involves calculating EBITDA multiples based on

operating data from guideline publicly traded companies.

Multiples derived from guideline companies provide an indication of how much a

knowledgeable investor in the marketplace would be willing to pay for a company.

These multiples are evaluated and adjusted based on

specific characteristics of the reporting units relative to the selected guideline companies and applied to the reporting units' operating data to

arrive at an indication of value.

The following is a discussion of the goodwill impairment test performed during 2024.

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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 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 and 2023 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 reviewed the current carrying value of each reporting unit in comparison to the carrying values as of the prior quantitative analysis.

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

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

As such, the goodwill for our reporting units was not considered impaired as of November 30, 2023, and a quantitative goodwill impairment analysis was not necessary.

We elected to bypass the qualitative assessment and utilized the quantitative goodwill impairment test to provide an updated fair value for each reporting unit as the most recent valuation quantitative analysis performed was as of January 1, 2022.

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

In estimating the fair value of the reporting units, we relied on a combination of the income approach and the market approach, as discussed above, with a fifty-fifty weighting.

Based on the results of the goodwill impairment test, we determined the fair value of the Healthcare, Education, and Commercial reporting units exceeded their carrying value by approximately 105%, 185%, and 335%, respectively.

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

Determining the fair value of a reporting unit requires us to make significant judgments, estimates, and assumptions.

While we believe that the estimates and assumptions underlying our valuation methodology are reasonable, these estimates and assumptions could have a significant impact on whether or not a non-cash goodwill impairment charge is recognized and also the magnitude of any such charge.

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

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

Our intangible assets, net of accumulated amortization, totaled $18.1 million at December 31, 2023 and primarily consist of customer relationships, technology and software, trade names, and non-competition agreements, all of which were acquired through business combinations.

Our intangible assets, net of accumulated amortization, totaled $26.1 million at December 31, 2024 and primarily consist of customer relationships, technology and software, trade names, customer contracts, and non-competition agreements, all of which were acquired through business combinations.

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

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We measure the tax benefit recognized as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority.

The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks,

facts and circumstances existing at that time.

The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time.

We believe that positions taken on our tax returns are fully supported.

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Refer to Note 2 “Summary of Significant Accounting Policies” within the notes to the consolidated financial statements for information on new accounting pronouncements.

SUBSEQUENT EVENT

On February 11, 2024, we entered into an agreement to acquire Grenzebach Glier and Associates, Inc.

(“GG+A”), a philanthropic management consulting firm that helps education institutions and healthcare, arts and other nonprofit organizations build and accelerate the philanthropic programs that support their mission.

The transaction is expected to close in March 2024, subject to customary closing conditions.

The results of operations of GG+A will be included within our consolidated financial statements and results of operations of our Education segment from the date of acquisition.

We do not expect the acquisition of GG+A to be significant to our consolidated financial statements.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis