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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q 
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-50976 
HURON CONSULTING GROUP INC.
(Exact name of registrant as specified in its charter)
 
Delaware 01-0666114
(State or other jurisdiction of
incorporation or organization)
 (IRS Employer
Identification Number)
550 West Van Buren Street
Chicago, Illinois
60607
(Address of principal executive offices)
(Zip Code)
(312) 583-8700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareHURNNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller Reporting 
Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of July 20, 2023, 19,024,193 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.





Huron Consulting Group Inc.
HURON CONSULTING GROUP INC.
INDEX
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.






PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited) 
June 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents$16,583 $11,834 
Receivables from clients, net of allowances of $16,808 and $10,600, respectively
152,300 147,852 
Unbilled services, net of allowances of $3,283 and $3,850, respectively
174,409 141,781 
Income tax receivable6,475 960 
Prepaid expenses and other current assets29,734 26,057 
Total current assets379,501 328,484 
Property and equipment, net23,440 26,107 
Deferred income taxes, net1,397 1,554 
Long-term investments97,227 91,194 
Operating lease right-of-use assets27,829 30,304 
Other non-current assets83,777 73,039 
Intangible assets, net19,188 23,392 
Goodwill624,966 624,966 
Total assets$1,257,325 $1,199,040 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$9,720 $14,254 
Accrued expenses and other current liabilities27,472 27,268 
Accrued payroll and related benefits126,430 171,723 
Current maturities of operating lease liabilities11,208 10,530 
Deferred revenues24,703 21,909 
Total current liabilities199,533 245,684 
Non-current liabilities:
Deferred compensation and other liabilities34,363 33,614 
Long-term debt395,000 290,000 
Operating lease liabilities, net of current portion41,407 45,556 
Deferred income taxes, net35,404 32,146 
Total non-current liabilities506,174 401,316 
Commitments and contingencies
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 21,863,932 and 22,507,159 shares issued, respectively
218 223 
Treasury stock, at cost, 2,840,319 and 2,711,712 shares, respectively
(141,407)(137,556)
Additional paid-in capital279,070 318,706 
Retained earnings390,679 352,548 
Accumulated other comprehensive income23,058 18,119 
Total stockholders’ equity551,618 552,040 
Total liabilities and stockholders’ equity$1,257,325 $1,199,040 
The accompanying notes are an integral part of the consolidated financial statements.
1




HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited) 
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Revenues and reimbursable expenses:
Revenues$346,759 $273,325 $664,654 $533,374 
Reimbursable expenses8,140 7,492 16,630 12,218 
Total revenues and reimbursable expenses354,899 280,817 681,284 545,592 
Operating expenses:
Direct costs (exclusive of depreciation and amortization included below) 235,198 189,233 463,581 376,480 
Reimbursable expenses8,121 7,576 16,745 12,332 
Selling, general and administrative expenses64,019 46,033 126,308 94,428 
Restructuring charges1,699 2,069 3,983 3,624 
Depreciation and amortization6,143 6,902 12,517 13,766 
Total operating expenses315,180 251,813 623,134 500,630 
Operating income 39,719 29,004 58,150 44,962 
Other income (expense), net:
Interest expense, net of interest income(5,796)(2,446)(10,099)(4,642)
Other income (expense), net1,062 (4,881)2,781 19,484 
Total other income (expense), net(4,734)(7,327)(7,318)14,842 
Income before taxes34,985 21,677 50,832 59,804 
Income tax expense 10,273 7,802 12,701 19,077 
Net income $24,712 $13,875 $38,131 $40,727 
Earnings per share:
Net income per basic share$1.30 $0.67 $2.00 $1.97 
Net income per diluted share$1.27 $0.66 $1.95 $1.94 
Weighted average shares used in calculating earnings per share:
Basic18,939 20,582 19,029 20,715 
Diluted19,486 20,967 19,598 21,047 
Comprehensive income (loss):
Net income $24,712 $13,875 $38,131 $40,727 
Foreign currency translation adjustments, net of tax327 (656)379 (699)
Unrealized gain (loss) on investment, net of tax553 773 4,426 (1,888)
Unrealized gain on cash flow hedging instruments, net of tax2,463 971 134 5,296 
Other comprehensive income3,343 1,088 4,939 2,709 
Comprehensive income $28,055 $14,963 $43,070 $43,436 
The accompanying notes are an integral part of the consolidated financial statements.
2




HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share amounts)
(Unaudited)
Three Months Ended June 30,
Common StockTreasury StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated Other
Comprehensive
Income
Stockholders’
Equity
SharesAmountSharesAmount
Balance at March 31, 202321,910,425 $220 (2,970,118)$(141,353)$284,420 $365,967 $19,715 $528,969 
Comprehensive income24,712 3,343 28,055 
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations8,683  3,386 145 (145) 
Exercise of stock options7,464 — 360 360 
Share-based compensation9,806 9,806 
Shares redeemed for employee tax withholdings(2,464)(199)(199)
Share repurchases(193,648)(2)(15,371)(15,373)
Balance at June 30, 202321,732,924 $218 (2,969,196)$(141,407)$279,070 $390,679 $23,058 $551,618 
Balance at March 31, 202223,639,953 $237 (2,918,100)$(135,367)$395,103 $303,848 $18,461 $582,282 
Comprehensive income13,875 1,088 14,963 
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations27,309  (15,115)(931)931  
Exercise of stock options13,731 — 538 538 
Share-based compensation6,049 6,049 
Shares redeemed for employee tax withholdings(2,584)(127)(127)
Share repurchases(497,547)(5)(28,341)(28,346)
Balance at June 30, 202223,183,446 $232 (2,935,799)$(136,425)$374,280 $317,723 $19,549 $575,359 
Six Months Ended June 30,
Common StockTreasury StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated Other
Comprehensive
Income
Stockholders’
Equity
SharesAmountSharesAmount
Balance at December 31, 202222,231,593 $223 (2,953,147)$(137,556)$318,706 $352,548 $18,119 $552,040 
Comprehensive income38,131 4,939 43,070 
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations306,264 3 121,835 5,877 (5,880) 
Exercise of stock options21,609 — 987 987 
Share-based compensation24,895 24,895 
Shares redeemed for employee tax withholdings(137,884)(9,728)(9,728)
Share repurchases(826,542)(8)(59,638)(59,646)
Balance at June 30, 202321,732,924 $218 (2,969,196)$(141,407)$279,070 $390,679 $23,058 $551,618 
Balance at December 31, 202123,868,918 $239 (2,908,849)$(135,969)$413,794 $276,996 $16,840 $571,900 
Comprehensive income40,727 2,709 43,436 
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations304,938 3 115,125 6,555 (6,558) 
Exercise of stock options30,536 — 1,185 1,185 
Share-based compensation18,100 18,100 
Shares redeemed for employee tax withholdings(142,075)(7,011)(7,011)
Share repurchases(1,020,946)(10)(52,241)(52,251)
Balance at June 30, 202223,183,446 $232 (2,935,799)$(136,425)$374,280 $317,723 $19,549 $575,359 
The accompanying notes are an integral part of the consolidated financial statements.
3




HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
20232022
Cash flows from operating activities:
Net income$38,131 $40,727 
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization12,549 13,766 
Non-cash lease expense3,340 3,174 
Lease-related impairment charge2,086  
Share-based compensation23,151 15,166 
Amortization of debt discount and issuance costs382 397 
Allowances for doubtful accounts53 47 
Deferred income taxes1,755 7,089 
(Gain) loss on sale of property and equipment, excluding transaction costs1 (1,117)
Change in fair value of contingent consideration liabilities(233)33 
Change in fair value of preferred stock investment (26,964)
Changes in operating assets and liabilities, net of acquisitions and divestiture:
(Increase) decrease in receivables from clients, net(4,440)(28,825)
(Increase) decrease in unbilled services, net(32,567)(28,329)
(Increase) decrease in current income tax receivable / payable, net(6,141)9,394 
(Increase) decrease in other assets(4,880)3,984 
Increase (decrease) in accounts payable and other liabilities(5,594)(13,524)
Increase (decrease) in accrued payroll and related benefits(44,277)(43,420)
Increase (decrease) in deferred revenues2,804 (1,834)
Net cash used in operating activities(13,880)(50,236)
Cash flows from investing activities:
Purchases of property and equipment(3,725)(6,800)
Investment in life insurance policies(2,188) 
Distributions from life insurance policies2,956  
Purchases of businesses38 (1,948)
Capitalization of internally developed software costs(12,998)(3,974)
Proceeds from note receivable154 157 
Proceeds from sale of property and equipment 4,750 
Divestiture of business 207 
Net cash used in investing activities(15,763)(7,608)
Cash flows from financing activities:
Proceeds from exercises of stock options987 1,185 
Shares redeemed for employee tax withholdings(9,728)(7,011)
Share repurchases(60,368)(52,443)
Proceeds from bank borrowings230,000 224,000 
Repayments of bank borrowings(125,000)(114,780)
Payments for debt issuance costs(58) 
Deferred payments on business acquisition(1,500)(1,875)
Net cash provided by financing activities34,333 49,076 
Effect of exchange rate changes on cash59 (55)
Net increase (decrease) in cash and cash equivalents4,749 (8,823)
Cash and cash equivalents at beginning of the period11,834 20,781 
Cash and cash equivalents at end of the period$16,583 $11,958 
Supplemental disclosure of cash flow information:
Non-cash investing and financing activities:
Property and equipment expenditures and capitalized software included in current liabilities$4,437 $3,134 
Operating lease right-of-use assets obtained in exchange for operating lease liabilities$1,839 $102 
Contingent consideration related to purchase of business$ $869 
Excise tax on net share repurchases included in current liabilities$385 $ 
    The accompanying notes are an integral part of the consolidated financial statements.
4


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)

1. Description of Business
Huron is a global professional services firm that partners with clients to develop growth strategies, optimize operations and accelerate digital transformation using an enterprise portfolio of technology, data and analytics solutions to empower clients to own their future. By collaborating with clients, embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve.
We provide our services and products and manage our business through three operating segments: Healthcare, Education and Commercial. See Note 13 “Segment Information” for more information.
2. Basis of Presentation and Significant Accounting Policies
The accompanying unaudited consolidated financial statements reflect the financial position, results of operations, and cash flows as of and for the three and six months ended June 30, 2023 and 2022. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ("GAAP") for annual financial statements. In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows for the interim periods presented in conformity with GAAP. These financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 and our Quarterly Report on Form 10-Q for the period ended March 31, 2023. Our results for any interim period are not necessarily indicative of results for a full year or any other interim period.
3. Goodwill and Intangible Assets
The table below sets forth the changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2023.

Healthcare
EducationCommercialTotal
Balance as of December 31, 2022:
Goodwill$644,238 $123,652 $312,968 $1,080,858 
Accumulated impairment losses(190,024)(1,417)(264,451)(455,892)
Goodwill, net as of December 31, 2022$454,214 $122,235 $48,517 $624,966 
Goodwill, net as of June 30, 2023$454,214 $122,235 $48,517 $624,966 
Intangible Assets
Intangible assets as of June 30, 2023 and December 31, 2022 consisted of the following:
As of June 30, 2023As of December 31, 2022
Useful Life 
(in years)
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Customer relationships
5 to 13
$65,083 $50,630 $74,583 $57,219 
Technology and software
2 to 5
13,330 9,051 13,330 7,975 
Trade names66,000 6,000 6,000 5,907 
Non-competition agreements
2 to 5
920 464 920 340 
Total$85,333 $66,145 $94,833 $71,441 
Identifiable intangible assets with finite lives are amortized over their estimated useful lives. Customer relationships as well as certain trade names and technology and software, are amortized on an accelerated basis to correspond to the cash flows expected to be derived from the assets. All other intangible assets with finite lives are amortized on a straight-line basis.
5


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
Intangible asset amortization expense was $2.0 million and $2.8 million for the three months ended June 30, 2023 and 2022, respectively; and $4.2 million and $5.7 million for the six months ended June 30, 2023 and 2022, respectively. The table below sets forth the estimated annual amortization expense for the intangible assets recorded as of June 30, 2023.
Year Ending December 31,Estimated Amortization Expense
2023$8,122 
2024$4,674 
2025$3,503 
2026$2,519 
2027$1,773 
Actual future amortization expense could differ from these estimated amounts as a result of future acquisitions, dispositions, and other factors.
4. Revenues
For the three months ended June 30, 2023 and 2022, we recognized revenues of $346.8 million and $273.3 million, respectively. Of the $346.8 million recognized in the second quarter of 2023, we recognized revenues of $14.8 million from obligations satisfied, or partially satisfied, in prior periods, of which $12.6 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements and $2.2 million was due to the release of allowances on receivables from clients and unbilled services. Of the $273.3 million recognized in the second quarter of 2022, we recognized revenues of $5.1 million from obligations satisfied, or partially satisfied, in prior periods, of which $3.7 million was primarily due to changes in the estimates of our variable consideration under performance-based billing arrangements, and $1.4 million was primarily due to the release of allowances on receivables from clients and unbilled services.
For the six months ended June 30, 2023 and 2022, we recognized revenues of $664.7 million and $533.4 million, respectively. Of the $664.7 million recognized in the first six months of 2023, we recognized revenues of $6.3 million from obligations satisfied, or partially satisfied, in prior periods, of which $5.0 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements, and $1.3 million was primarily due to the release of allowances on receivables from clients and unbilled services. Of the $533.4 million recognized in the first six months of 2022, we recognized revenues of $3.4 million from obligations satisfied, or partially satisfied, in prior periods, of which $2.1 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements, and $1.3 million was primarily due to the release of allowances on receivables from clients and unbilled services.
As of June 30, 2023, we had $240.0 million of remaining performance obligations under engagements with original expected durations greater than one year. These remaining performance obligations exclude variable consideration which has been excluded from the total transaction price due to the constraint and performance obligations under time-and-expense engagements which are recognized in the amount invoiced. Of the $240.0 million of performance obligations, we expect to recognize $54.1 million as revenue in 2023, $66.3 million in 2024, and the remaining $119.6 million thereafter. Actual revenue recognition could differ from these amounts as a result of changes in the estimated timing of work to be performed, adjustments to estimated variable consideration in performance-based arrangements, or other factors.
Contract Assets and Liabilities
The payment terms and conditions in our customer contracts vary. Differences between the timing of billings and the recognition of revenue are recognized as either unbilled services or deferred revenues in the consolidated balance sheets.
Unbilled services include revenues recognized for services performed but not yet billed to clients. Services performed that we are not yet entitled to bill because certain events, such as the completion of the measurement period or client approval in performance-based engagements, must occur are recorded as contract assets and included within unbilled services, net. The contract asset balance as of June 30, 2023 and December 31, 2022 was $43.7 million and $50.2 million, respectively. The $6.5 million decrease primarily reflects timing differences between the completion of our performance obligations and the amounts billed or billable to clients in accordance with their contractual billing terms.
Client prepayments and retainers are classified as deferred revenues and recognized over future periods in accordance with the applicable engagement agreement and our revenue recognition accounting policy. Our deferred revenues balance as of June 30, 2023 and
6


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
December 31, 2022, was $24.7 million and $21.9 million, respectively. The $2.8 million increase primarily reflects timing differences between client payments in accordance with their contract terms and the completion of our performance obligations. For the three and six months ended June 30, 2023, $3.9 million and $20.3 million of revenues recognized were included in the deferred revenue balance as of December 31, 2022, respectively.
5. Earnings Per Share
Basic earnings per share excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period, excluding unvested restricted common stock. Diluted earnings per share reflects the potential reduction in earnings per share that could occur if securities or other contracts to issue common stock were exercised or converted into common stock under the treasury stock method. Such securities or other contracts include unvested restricted stock awards, unvested restricted stock units, and outstanding common stock options, to the extent dilutive. In periods for which we report a net loss, diluted weighted average common shares outstanding excludes all potential common stock equivalents as their impact on diluted net loss per share would be anti-dilutive.
Earnings per share under the basic and diluted computations are as follows: 
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2023202220232022
Net income$24,712 $13,875 $38,131 $40,727 
Weighted average common shares outstanding – basic18,939 20,582 19,029 20,715 
Weighted average common stock equivalents547 385 569 332 
Weighted average common shares outstanding – diluted19,486 20,967 19,598 21,047 
Net income per basic share$1.30 $0.67 $2.00 $1.97 
Net income per diluted share$1.27 $0.66 $1.95 $1.94 
The number of anti-dilutive securities excluded from the computation of the weighted average common stock equivalents presented above for the three and six months ended June 30, 2023 and 2022 were both less than 0.1 million shares, and related to unvested restricted stock and outstanding common stock options.
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. Subsequent to the initial authorization, our board of directors authorized extensions of the share repurchase program through December 31, 2023 and increased the authorized amount to $300 million. The amount and timing of repurchases under the share repurchase program were and will continue to be determined by management and depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements. All shares repurchased and retired are reflected as a reduction to our basic weighted average shares outstanding based on the trade date of the share repurchase.
In the three and six months ended June 30, 2023, we repurchased and retired 193,648 and 826,542 shares for $15.4 million and $59.6 million, respectively. Additionally, in the first quarter of 2023, we settled the repurchase of 15,200 shares for $1.1 million which were accrued as of December 31, 2022. In the three and six months ended June 30, 2022, we repurchased and retired 497,547 and 1,020,946 shares for $28.3 million and $52.2 million, respectively. Additionally in the first quarter of 2022, we settled the repurchase of 3,820 shares for $0.2 million that were accrued as of December 31, 2021. As of June 30, 2023, $49.6 million remained available for share repurchases under our share repurchase program.
7


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
6. Financing Arrangements
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 (as amended, the "Amended Credit Agreement") that becomes due and payable in full upon maturity on November 15, 2027. The Amended Credit Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount up to $250 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $850 million. The initial borrowings under the Amended Credit Agreement were used to refinance borrowings outstanding under a prior credit agreement, and future borrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, share repurchases, permitted acquisitions, and other general corporate purposes.
Fees and interest on borrowings vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). At our option, borrowings under the Amended Credit Agreement will bear interest at one, 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.
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 the first amendment 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. 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.
Amounts borrowed under the Amended Credit Agreement may be prepaid at any time without premium or penalty. We are required to prepay the amounts outstanding under the Amended Credit Agreement in certain circumstances, including upon an Event of Default (as defined in the Amended Credit Agreement). In addition, we have the right to permanently reduce or terminate the unused portion of the commitments provided under the Amended Credit Agreement at any time.
The loans and obligations under the Amended Credit Agreement are secured pursuant to a Third Amended and Restated Security Agreement and a Third Amended and Restated Pledge Agreement (the “Pledge Agreement”) with Bank of America, N.A. as collateral agent, pursuant to which the Company and the subsidiary guarantors grant Bank of America, N.A., for the ratable benefit of the lenders under the Amended Credit Agreement, a first-priority lien, subject to permitted liens, on substantially all of the personal property assets of the Company and the subsidiary guarantors, and a pledge of 100% of the stock or other equity interests in all domestic subsidiaries and 65% of the stock or other equity interests in each “material first-tier foreign subsidiary” (as defined in the Pledge Agreement) entitled to vote and 100% of the stock or other equity interests in each material first-tier foreign subsidiary not entitled to vote.
The Amended Credit Agreement contains usual and customary representations and warranties; affirmative and negative covenants, which include limitations on liens, investments, additional indebtedness, and restricted payments; and two quarterly financial covenants as follows: (i) a maximum Consolidated Leverage Ratio (defined as the ratio of debt to consolidated EBITDA) of 3.75 to 1.00; however the maximum permitted Consolidated Leverage Ratio will increase to 4.25 to 1.00 upon the occurrence of a Qualified Acquisition (as defined in the Amended Credit Agreement), and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.00 to 1.00. Consolidated EBITDA for purposes of the financial covenants is calculated on a continuing operations basis and includes adjustments to add back non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, pro forma historical EBITDA for businesses acquired, and other specified items in accordance with the Amended Credit Agreement. For purposes of the Consolidated Leverage Ratio total debt is on a gross basis and is not netted against our cash balances. At June 30, 2023, we were in compliance with these financial covenants with a Consolidated Leverage Ratio of 2.17 to 1.00 and a Consolidated Interest Coverage Ratio of 11.23 to 1.00.
Borrowings outstanding under the Amended Credit Agreement at June 30, 2023 totaled $395.0 million and are classified as long-term debt in our consolidated balance sheet. These borrowings carried a weighted average interest rate of 4.6%, including the effect of the interest rate swaps described in Note 8 “Derivative Instruments and Hedging Activity.” Borrowings outstanding under the Amended Credit Agreement at December 31, 2022 were $290.0 million and carried a weighted average interest rate of 3.8%, including the effect of the interest rate swaps in effect at that time. The borrowing capacity under the revolving credit facility is reduced by any outstanding borrowings under the revolving
8


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
credit facility and outstanding letters of credit. At June 30, 2023, we had outstanding letters of credit totaling $0.7 million, which are used as security deposits for our office facilities. As of June 30, 2023, the unused borrowing capacity under the revolving credit facility was $204.3 million.
7. Restructuring Charges
Restructuring charges for the three and six months ended June 30, 2023 were $1.7 million and $4.0 million, respectively. The $1.7 million of restructuring charges recognized in the second quarter of 2023 included $0.9 million of employee-related expenses; $0.3 million related to the abandonment of a capitalized software development project; $0.2 million of rent and related expenses, net of sublease income, for previously vacated office spaces; and $0.2 million related to non-cash lease impairment charges driven by updated sublease assumptions for previously vacated office spaces. The $4.0 million of restructuring charges incurred in the first six months of 2023 included a $1.9 million non-cash impairment charge on the fixed assets and right-of-use operating lease asset related to our office space in Hillsboro, Oregon, which we exited in the first quarter of 2023; $0.9 million of employee-related expenses; $0.6 million for rent and related expenses, net of sublease income, for previously vacated office spaces; $0.3 million related to the abandonment of a capitalized software development project; and $0.2 million related to non-cash lease impairment charges driven by updated sublease assumptions for previously vacated office spaces.
Restructuring charges for the three and six months ended June 30, 2022 were $2.1 million and $3.6 million. The $2.1 million of restructuring charges recognized in the second quarter of 2022 included $1.1 million of employee-related expenses; $0.4 million of rent and related expenses, net of sublease income, for previously vacated office spaces; $0.5 million for third-party transaction expenses related to the modification of our operating model; and $0.1 million related to the divestiture of our Life Sciences business in the fourth quarter of 2021. The $3.6 million of restructuring charges incurred in the first six months of 2022 included $1.6 million of employee-related expenses; $1.0 million of rent and related expenses, net of sublease income, for previously vacated office spaces; $0.6 million for third-party transaction expenses related to the modification of our operating model; $0.3 million of accelerated amortization of capitalized software implementation costs for a cloud-computing arrangement that is no longer in use; and $0.1 million related to the divestiture of our Life Sciences business in the fourth quarter of 2021.
The table below sets forth the changes in the carrying amount of our restructuring charge liability by restructuring type for the six months ended June 30, 2023.
Employee CostsOther Total
Balance as of December 31, 2022$3,751 $568 $4,319 
Additions943  943 
Payments(3,489)(74)(3,563)
Adjustments
 41 41 
Balance as of June 30, 2023$1,205 $535 $1,740 
All of the $1.2 million restructuring charge liability related to employee costs at June 30, 2023 is expected to be paid in the next 12 months and is included as a component of accrued payroll and related benefits in our consolidated balance sheet. All of the $0.5 million other restructuring charge liability at June 30, 2023, which relates to the early termination of a contract in 2022, is expected to be paid in the next 12 months and is included as a component of accrued expenses and other current liabilities in our consolidated balance sheet.
8. Derivative Instruments and Hedging Activity
In the normal course of business, we use forward interest rate swaps to manage the interest rate risk associated with our variable-rate borrowings under our senior secured credit facility and we use non-deliverable foreign exchange forward contracts to manage the foreign currency exchange rate risk related to our Indian Rupee-denominated expenses of our operations in India. From time to time, we may enter into additional forward interest rate swaps or non-deliverable foreign exchange forward contracts to further hedge against our interest rate risk and foreign currency exchange rate risk. We do not use derivative instruments for trading or other speculative purposes.
We have designated all of our derivative instruments as cash flow hedges. Therefore, changes in the fair value of the interest rate swaps and foreign exchange forward contracts are recorded to other comprehensive income (“OCI”) to the extent effective and reclassified to earnings upon settlement.
9


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
Interest Rate Swaps
We are party to forward interest rate swap agreements with aggregate notional amounts of $250.0 million and $200.0 million as of June 30, 2023 and December 31, 2022, respectively. Under the terms of the interest rate swap agreements, we receive from the counterparty interest on the notional amount based on one month Term SOFR and we pay to the counterparty a stated, fixed rate. The forward interest rate swap agreements have staggered maturities through February 29, 2028.
As of June 30, 2023, it was anticipated that $6.2 million of the gains, net of tax, related to interest rate swaps currently recorded in accumulated other comprehensive income will be reclassified into interest expense, net of interest income in our consolidated statement of operations within the next 12 months.
Foreign Exchange Forward Contracts
We are party to non-deliverable foreign exchange forward contracts that are scheduled to mature monthly through April 30, 2024. As of June 30, 2023 and December 31, 2022, the aggregate notional amounts of these contracts were INR 625.1 million, or $7.6 million, and INR 657.9 million, or $8.0 million, respectively, based on the exchange rates in effect as of each period end.
As of June 30, 2023, it was anticipated that all of the $0.1 million of gains, net of tax, related to foreign exchange forward contracts currently recorded in accumulated other comprehensive income will be reclassified into direct costs in our consolidated statement of operations within the next 12 months.
The table below sets forth additional information relating to our derivative instruments as of June 30, 2023 and December 31, 2022.
Derivative InstrumentBalance Sheet LocationJune 30,
2023
December 31,
2022
Interest rate swapsPrepaid expenses and other current assets$8,293 $7,108 
Interest rate swapsOther non-current assets4,057 5,131 
Foreign exchange forward contractsPrepaid expenses and other current assets79  
Total Assets$12,429 $12,239 
Interest rate swapsDeferred compensation and other liabilities$126 $ 
Foreign exchange forward contractsAccrued expenses and other current liabilities1 120 
Total Liabilities$127 $120 
All of our derivative instruments are transacted under the International Swaps and Derivatives Association (ISDA) master agreements. These agreements permit the net settlement of amounts owed in the event of default and certain other termination events. Although netting is permitted, it is our policy to record all derivative assets and liabilities on a gross basis in our consolidated balance sheet. Refer to Note 10 “Other Comprehensive Income (Loss)” for additional information on our derivative instruments.
9. Fair Value of Financial Instruments
Certain of our assets and liabilities are measured at fair value. Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a fair value hierarchy for inputs used in measuring fair value and requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy consists of three levels based on the objectivity of the inputs as follows:
Level 1 Inputs
Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 InputsQuoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 InputsUnobservable inputs for the asset or liability, and include situations in which there is little, if any, market activity for the asset or liability.
10


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
The table below sets forth our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022.
Level 1Level 2Level 3Total
June 30, 2023
Assets:
Interest rate swaps$— $12,224 $— $12,224 
Convertible debt investment— — 63,596 63,596 
Foreign exchange forward contracts— 79 — 79 
Deferred compensation assets— 32,239 — 32,239 
Total assets$— $44,542 $63,596 $108,138 
Liabilities:
Foreign exchange forward contracts$— $1 $— $1 
Contingent consideration for business acquisitions— — 1,957 1,957 
Total liabilities$— $1 $1,957 $1,958 
December 31, 2022
Assets:
Interest rate swaps$— $12,239 $— $12,239 
Convertible debt investment— — 57,563 57,563 
Deferred compensation assets— 29,875 — 29,875 
Total assets$— $42,114 $57,563 $99,677 
Liabilities:
Foreign exchange forward contracts$— $120 $— $120 
Contingent consideration for business acquisitions— — 3,190 3,190 
Total liabilities$— $120 $3,190 $3,310 
Interest rate swaps: The fair values of our interest rate swaps were derived using estimates to settle the interest rate swap agreements, which are based on the net present value of expected future cash flows on each leg of the swaps utilizing market-based inputs and a discount rate reflecting the risks involved. Refer to Note 8 “Derivative Instruments and Hedging Activity” for additional information on our interest rate swaps.
Foreign exchange forward contracts: The fair values of our foreign exchange forward contracts were derived using estimates to settle the foreign exchange forward contracts agreements, which are based on the net present value of expected future cash flows on each contract utilizing market-based inputs, including both forward and spot prices, and a discount rate reflecting the risks involved. Refer to Note 8 “Derivative Instruments and Hedging Activity” for additional information on our foreign exchange forward contracts.
Deferred compensation assets: We have a non-qualified deferred compensation plan (the “Plan”) for the members of our board of directors and a select group of our employees. The deferred compensation liability is funded by the Plan assets, which consist of life insurance policies maintained within a trust. The cash surrender value of the life insurance policies approximates fair value and is based on third-party broker statements which provide the fair value of the life insurance policies' underlying investments, which are Level 2 inputs. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The Plan assets are included in other non-current assets in our consolidated balance sheets. Realized and unrealized gains (losses) from the deferred compensation assets are recorded to other income (expense), net in our consolidated statements of operations.
Convertible debt investment: Since 2014, we have invested $40.9 million in the form of 1.69% convertible debt in Shorelight Holdings, LLC (“Shorelight”), the parent company of Shorelight, a U.S.-based company that partners with leading nonprofit universities to increase access to and retention of international students, boost institutional growth, and enhance an institution’s global footprint. The convertible notes will mature on January 17, 2027, unless converted earlier.
To determine the appropriate accounting treatment for our investment, we performed a variable interest entity (“VIE”) analysis and concluded that Shorelight does not meet the definition of a VIE. We also reviewed the characteristics of our investment to confirm that the convertible notes are not in-substance common stock that would warrant equity method accounting. After we reviewed all of the terms of the investment,
11


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
we concluded the appropriate accounting treatment to be that of an available-for-sale debt security. We continue to monitor the key factors of our VIE analysis and the terms of the convertible notes to ensure our accounting treatment is appropriate. We have not identified any changes to Shorelight or our investment that would change our classification of the investment as an available-for-sale debt security.
The investment is carried at fair value with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income. We estimate the fair value of our investment using a scenario-based approach in the form of a hybrid analysis that consists of a Monte Carlo simulation model and an expected return analysis. The conclusion of value for our investment is based on the probability-weighted assessment of both scenarios. The hybrid analysis utilizes certain assumptions including the assumed holding period through the maturity date of January 17, 2027; the applicable waterfall distribution at the end of the expected holding period based on the rights and privileges of the various instruments; cash flow projections discounted at the risk-adjusted rate of 24.0% as of June 30, 2023 and December 31, 2022; and the concluded equity volatility of 40.0% as of June 30, 2023 and December 31, 2022, all of which are Level 3 inputs. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of the investment, which would result in different impacts to our consolidated balance sheet and comprehensive income. Actual results may differ from our estimates. The fair value of the convertible debt investment is recorded in long-term investments in our consolidated balance sheets.
The table below sets forth the changes in the balance of the convertible debt investment for the six months ended June 30, 2023.
Convertible Debt Investment
Balance as of December 31, 2022$57,563 
Change in fair value6,033 
Balance as of June 30, 2023$63,596 
Contingent consideration for business acquisitions: We estimate the fair value of acquisition-related contingent consideration using either a probability-weighted assessment of the specific financial performance targets being measured or a Monte Carlo simulation model, as appropriate. These fair value measurements are based on significant inputs not observable in the market and thus represent Level 3 inputs. The significant unobservable inputs used in the fair value measurements of our contingent consideration are our measures of the estimated payouts based on internally generated financial projections on a probability-weighted basis and a discount rate which was 6.1% as of June 30, 2023 and 5.5% as of December 31, 2022. The fair value of the contingent consideration is reassessed quarterly based on assumptions used in our latest projections and input provided by practice leaders and management. Any change in the fair value estimate is recorded in our consolidated statement of operations for that period. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of our contingent consideration liability, which would result in different impacts to our consolidated balance sheets and consolidated statements of operations. Actual results may differ from our estimates.
The table below sets forth the changes in the balance of the contingent consideration for business acquisitions for the six months ended June 30, 2023.
Contingent Consideration for Business Acquisitions
Balance as of December 31, 2022
$3,190 
Payment(1,000)
Change in fair value(233)
Balance as of June 30, 2023
$1,957 
Financial assets and liabilities not recorded at fair value on a recurring basis are as follows:
Medically Home Preferred Stock Investment
In the fourth quarter of 2019, we invested $5.0 million in Medically Home Group, Inc. (“Medically Home”), a hospital-at-home company. The investment was made in the form of preferred stock. To determine the appropriate accounting treatment for our preferred stock investment, we performed a VIE analysis and concluded that Medically Home does not meet the definition of a VIE. We also reviewed the characteristics of our investment to confirm that the preferred stock is not in-substance common stock that would warrant equity method accounting. After we reviewed all of the terms of the investment, we concluded the appropriate accounting treatment for our investment in Medically Home to be that of an equity security with no readily determinable fair value. We elected to apply the measurement alternative at the time of the purchase and will continue to do so until the investment does not qualify to be so measured. Under the measurement alternative, the investment is carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions
12


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
for an identical or similar investment in Medically Home. On a quarterly basis, we review the information available to determine whether an orderly and observable transaction for the same or similar equity instrument occurred, and remeasure to the fair value of the preferred stock using such identified transactions, with changes in the fair value recorded in our consolidated statement of operations.
During the first quarter of 2022, we recognized a pre-tax unrealized gain of $27.0 million based on an observable price change of preferred stock issued by Medically Home with similar rights and preferences to our preferred stock investment, a Level 2 input. There were no observable price changes for the remainder of 2022 or in the first half of 2023. Since our initial investment, we have recognized cumulative pre-tax unrealized gains of $28.6 million, which were recorded to other income (expense), net in our consolidated statement of operations, and we have not identified any impairments of our investment. As of June 30, 2023 and December 31, 2022, the carrying amount of our preferred stock investment was $33.6 million.
Senior Secured Credit Facility
The carrying value of our borrowings outstanding under our senior secured credit facility is stated at cost. Our carrying value approximates fair value, using Level 2 inputs, as the senior secured credit facility bears interest at variable rates based on current market rates as set forth in the Amended Credit Agreement. Refer to Note 6 “Financing Arrangements” for additional information on our senior secured credit facility.
Cash and Cash Equivalents and Other Financial Instruments
Cash and cash equivalents are stated at cost, which approximates fair market value. The carrying values of all other financial instruments not described above reasonably approximate fair market value due to the nature of the financial instruments and the short-term maturity of these items.
13


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
10. Other Comprehensive Income (Loss)
The table below sets forth the components of other comprehensive income (loss), net of tax, for the three and six months ended June 30, 2023 and 2022.
Three Months Ended
June 30, 2023
Three Months Ended
June 30, 2022
Before
Taxes
Tax
(Expense)
Benefit
Net of
Taxes
Before
Taxes
Tax
(Expense)
Benefit
Net of
Taxes
Foreign currency translation adjustments$327 $ $327 $(656)$ $(656)
Unrealized gain (loss) on investment$754 $(201)$553 $1,051 $(278)$773 
Interest rate swaps:
Change in fair value$5,265 $(1,400)$3,865 $1,024 $(271)$753 
Reclassification adjustments into earnings(1,941)516 (1,425)297 (79)218 
Net unrealized gain (loss) on interest rate swaps$3,324 $(884)$2,440 $1,321 $(350)$971 
Foreign exchange forward contracts:
Change in fair value$46 $(12)$34 $ $ $ 
Reclassification adjustments into earnings(14)3 (11)   
Net unrealized gain (loss) on foreign exchange forward contracts$32 $(9)$23 $ $ $ 
Other comprehensive income (loss)$4,437 $(1,094)$3,343 $1,716 $(628)$1,088 
Six Months Ended
June 30, 2023
Six Months Ended
June 30, 2022
Before
Taxes
Tax
(Expense)
Benefit
Net of
Taxes
Before
Taxes
Tax
(Expense)
Benefit
Net of
Taxes
Foreign currency translation adjustments$379 $ $379 $(699)$ $(699)
Unrealized gain (loss) on investment$6,033 $(1,607)$4,426 $(2,566)$678 $(1,888)
Interest rate swaps:
Change in fair value$3,458 $(919)$2,539 $6,692 $(1,770)$4,922 
Reclassification adjustments into earnings(3,473)923 (2,550)509 (135)374 
Net unrealized gain (loss) on interest rate swaps$(15)$4 $(11)$7,201 $(1,905)$5,296 
Foreign exchange forward contracts:
Change in fair value$200 $(53)$147 $ $ $ 
Reclassification adjustments into earnings(2) (2)   
Net unrealized gain (loss) on foreign exchange forward contracts$198 $(53)$145 $ $ $ 
Other comprehensive income (loss)$6,595 $(1,656)$4,939 $3,936 $(1,227)$2,709 
The before tax amounts reclassified from accumulated other comprehensive income related to our interest rate swaps and foreign exchange forward contracts are recorded to interest expense, net of interest income, and direct costs, respectively. Refer to Note 8 “Derivative Instruments and Hedging Activity” for additional information on our derivative instruments.

14


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
Accumulated other comprehensive income, net of tax, includes the following components: 
Cash Flow Hedges
Foreign Currency TranslationAvailable-for-Sale InvestmentInterest Rate SwapsForeign Exchange Forward ContractsTotal
Balance as of December 31, 2022$(3,033)$12,228 $9,012 $(88)$18,119 
Current period change379 4,426 (11)145 4,939 
Balance as of June 30, 2023$(2,654)$16,654 $9,001 $57 $23,058 
11. Income Taxes
For the three months ended June 30, 2023, our effective tax rate was 29.4% as we recognized income tax expense of $10.3 million on income of $35.0 million. The effective tax rate of 29.4% was less favorable than the statutory rate, inclusive of state income taxes, of 26.6% primarily due to certain nondeductible expense items. These unfavorable items were partially offset by a tax benefit related to non-taxable gains on our investments used to fund our deferred compensation liability.
For the three months ended June 30, 2022, our effective tax rate was 36.0% as we recognized income tax expense of $7.8 million on income of $21.7 million. The effective tax rate of 36.0% was less favorable than the statutory rate, inclusive of state income taxes, of 26.4% primarily due to tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items.
For the six months ended June 30, 2023, our effective tax rate was 25.0% as we recognized income tax expense of $12.7 million on income of $50.8 million. The effective tax rate of 25.0% was more favorable than the statutory rate, inclusive of state income taxes, of 26.6% primarily due to a discrete tax benefit for share-based compensation awards that vested during the first quarter of 2023 and a tax benefit related to non-taxable gains on our investments used to fund our deferred compensation liability. These favorable items were partially offset by certain nondeductible expense items.
For the six months ended June 30, 2022, our effective tax rate was 31.9% as we recognized income tax expense of $19.1 million on income of $59.8 million. The effective tax rate of 31.9% was less favorable than the statutory rate, inclusive of state income taxes, of 26.4% primarily due to tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items.
As of June 30, 2023, we had $0.6 million of unrecognized tax benefits which would affect the effective tax rate if recognized. It is reasonably possible that approximately $0.6 million of the liability for unrecognized tax benefits could decrease in the next twelve months due to the expiration of statutes of limitations.
12. Commitments, Contingencies and Guarantees
Litigation
From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date of this Quarterly Report on Form 10-Q, we are not a party to any litigation or legal proceeding or subject to any claim that, in the current opinion of management, could reasonably be expected to have a material adverse effect on our financial position or results of operations. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results.
Guarantees
Guarantees in the form of letters of credit totaling $0.7 million were outstanding at both June 30, 2023 and December 31, 2022, to support certain office lease obligations.
In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. As of June 30, 2023 and December 31, 2022, the total estimated fair value of our outstanding contingent consideration liability was $2.0 million and $3.2 million, respectively.
15


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
To the extent permitted by law, our bylaws and articles of incorporation require that we indemnify our officers and directors against judgments, fines and amounts paid in settlement, including attorneys’ fees, incurred in connection with civil or criminal action or proceedings, as it relates to their services to us if such person acted in good faith. Although there is no limit on the amount of indemnification, we may have recourse against our insurance carrier for certain payments made.
13. Segment Information
Segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker, who is our chief executive officer, manages the business under three operating segments, which are our reportable segments: Healthcare, Education and Commercial.
Healthcare
Our Healthcare segment serves acute care providers, including national and regional health systems; academic health systems; community health systems; and public, children’s and critical access hospitals, and non-acute care providers, including physician practices and medical groups; payors; and long-term care or post-acute providers. Our Healthcare professionals have a depth of expertise in business operations, including financial and operational improvement, care transformation, and revenue cycle managed services; digital solutions, spanning technology and analytic-related services and a portfolio of software products; organizational transformation; financial advisory and strategy and innovation. Healthcare organizations are focused on establishing a sustainable long-term strategy and business model centered around growth, optimal cost structures, reimbursement models, financial strategies, and consumer-focused digital transformation; changing the way care is delivered, particularly in light of personnel shortages, and improving access to care; and evolving their digital capabilities to more effectively manage their business. Our solutions help clients adapt to this rapidly changing healthcare environment to become a more agile, efficient and consumer-centric organization. We use our deep industry, functional and technical expertise to help clients solve a diverse set of business issues, including, but not limited to, identifying new opportunities for growth, optimizing financial and operational performance, improving care delivery and clinical outcomes, increasing physician, patient and employee satisfaction, and maximizing return on technology investments.
Education
Our Education segment serves public and private colleges and universities, research institutes and other education-related organizations. Our Education professionals have a depth of expertise in strategy and innovation; business operations, including the research enterprise and student and alumni lifecycle; digital solutions, spanning technology and analytic-related services and Huron Research Suite, the leading software suite designed to facilitate and improve research administration service delivery and compliance; and organizational transformation. Our Education segment clients are increasingly faced with strategic, financial and/or enrollment challenges, increased competition, and a need to modernize their businesses using technology to advance their missions. We combine our deep industry, functional and technical expertise to help clients solve their most pressing challenges, including, but not limited to, transforming business operations with technology and analytics; strengthening research strategies and support services; evolving their organizational strategy; optimizing financial and operational performance; applying innovative enrollment strategies; and enhancing the student lifecycle.
16


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
Commercial
Our Commercial segment is focused on serving industries and organizations facing significant disruption and regulatory change by helping them adapt to rapidly changing environments and accelerate business transformation. Our Commercial professionals work primarily with six primary buyers: the chief executive officer, the chief financial officer, the chief strategy officer, the chief human resources officer, the chief operating officer, and organizational advisors, including lenders and law firms. We have a deep focus on serving organizations in the financial services, energy and utilities, industrials and manufacturing industries and the public sector while opportunistically serving commercial industries more broadly, including professional and business services, life sciences, consumer products, and nonprofit. Our Commercial professionals use their deep industry, functional and technical expertise to deliver our digital services and software products, strategy and innovation, and financial advisory (special situation advisory and corporate finance advisory) services. In today’s disruptive environment, organizations must reimagine their historical strategies and financial and operating models to sustain and advance their competitive advantage. Our experts help organizations across industries with a variety of business challenges, including, but not limited to, embedding technology and analytics throughout their internal and customer-facing operations; developing analytics and insights to identify the needs of tomorrow’s customers, evolving their strategies, and bringing new products to market; managing through stressed and distressed situations to create a viable path forward for stakeholders; and providing financial, risk and regulatory advisory offerings.
Segment operating income consists of the revenues generated by a segment, less operating expenses that are incurred directly by the segment. Unallocated costs include corporate costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. These administrative function costs include corporate office support costs, office facility costs, costs related to accounting and finance, human resources, legal, marketing, information technology, and company-wide business development functions, as well as costs related to overall corporate management. Our chief operating decision maker does not evaluate segments using asset information.
17


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
The table below sets forth information about our operating segments for the three and six months ended June 30, 2023 and 2022, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements.
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Healthcare:
Revenues$173,768 $128,474 $322,817 $250,350 
Operating income$49,151 $30,364 $81,406 $58,396 
Segment operating income as a percentage of segment revenues28.3 %23.6 %25.2 %23.3 %
Education:
Revenues$110,694 $88,225 $214,841 $168,887 
Operating income$27,397 $21,691 $50,562 $35,997 
Segment operating income as a percentage of segment revenues24.8 %24.6 %23.5 %21.3 %
Commercial:
Revenues$62,297 $56,626 $126,996 $114,137 
Operating income$10,472 $11,915 $24,539 $24,129 
Segment operating income as a percentage of segment revenues16.8 %21.0 %19.3 %21.1 %
Total Huron:
Revenues$346,759 $273,325 $664,654 $533,374 
Reimbursable expenses8,140 7,492 16,630 12,218 
Total revenues and reimbursable expenses$354,899 $280,817 $681,284 $545,592 
Segment operating income$87,020 $63,970 $156,507 $118,522 
Items not allocated at the segment level:
Other operating expenses42,923 29,912 89,263 63,460 
Depreciation and amortization4,378 5,054 9,094 10,100 
Operating income39,719 29,004 58,150 44,962 
Total other income (expense), net(4,734)(7,327)(7,318)14,842 
Income before taxes$34,985 $21,677 $50,832 $59,804 
18


HURON CONSULTING GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
(Unaudited)
The following table illustrates the disaggregation of revenues by our two principal capabilities: i) Consulting and Managed Services and ii) Digital, and includes a reconciliation of the disaggregated revenues to revenues from our three operating segments for the three and six months ended June 30, 2023 and 2022.
Three Months Ended
June 30,
Six Months Ended
June 30,
Revenues by Capability2023202220232022
Healthcare:
Consulting and Managed Services$124,944 $83,955 $226,680 $167,714 
Digital48,824 44,519 96,137 82,636 
Total revenues$173,768 $128,474 $322,817 $250,350 
Education:
Consulting and Managed Services$53,426 $49,279 $106,653 $93,460 
Digital57,268 38,946 108,188 75,427 
Total revenues$110,694 $88,225 $214,841 $168,887 
Commercial:
Consulting and Managed Services$18,885 $14,637 $41,116 $37,281 
Digital43,412 41,989 85,880 76,856 
Total revenues$62,297 $56,626 $126,996 $114,137 
Total Huron:
Consulting and Managed Services$197,255 $147,871 $374,449 $298,455 
Digital149,504 125,454 290,205 234,919 
Total revenues$346,759 $273,325 $664,654 $533,374 
For the three and six months ended June 30, 2023 and 2022, substantially all of our revenues were recognized over time. At June 30, 2023 and December 31, 2022, no single client accounted for greater than 10% of our combined balance of receivables from clients, net and unbilled services, net. During the three and six months ended June 30, 2023 and 2022, no single client generated greater than 10% of our consolidated revenues.
19





ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “Huron,” “Company,” “we,” “us” and “our” refer to Huron Consulting Group Inc. and its subsidiaries.
Statements in this Quarterly Report on Form 10-Q that are not historical in nature, including those concerning the Company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “goals,” “guidance,” or “outlook,” or similar expressions. These forward-looking statements reflect our current expectations about our future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: failure to achieve expected utilization rates, billing rates, and the necessary number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under Item 1A. “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2022 that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. We disclaim any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.
OVERVIEW
Our Business    
Huron is a global professional services firm that partners with clients to develop growth strategies, optimize operations and accelerate digital transformation using an enterprise portfolio of technology, data and analytics solutions to empower clients to own their future. By collaborating with clients, embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve.
We provide our services and products and manage our business under three operating segments: Healthcare, Education and Commercial. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital.
Capabilities
Within each of our reportable segments, we provide services under two principal capabilities: i) Consulting and Managed Services and ii) Digital.
Consulting and Managed Services
Our Consulting and Managed Services capabilities represent our management consulting services, managed services (excluding technology-related managed services) and outsourcing services delivered across industries. Our Consulting and Managed Services experts help our clients address a variety of strategic, operational, financial, people and organizational-related challenges. These services are often combined with technology, analytic and data-driven solutions powered by our Digital capability to support long-term relationships with our clients and drive lasting impact. Examples include the areas of revenue cycle management and research administration at our healthcare and education clients, where our consulting and managed services projects are often coupled with our digital services and product offerings.
Digital
Our Digital capabilities represent our technology and analytics services, including technology-related managed services, and software products delivered across industries. Our Digital experts help clients address a variety of business challenges, including, but not limited to, designing and implementing technologies to accelerate transformation, facilitate data-driven decision making and improve customer and employee experiences.
We have expanded our ecosystem to work with more than 25 technology partners. We are a Leading Modern Oracle Network Partner; a Summit-level consulting partner with Salesforce.com and a Premium Partner with Salesforce.org; a Workday Services, Preferred Channel, Extend, and Application Management Services Partner; an Amazon Web Services consulting partner; an Informatica Platinum Partner; an SAP Concur implementation partner; and a Boomi Elite Partner.
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We have also grown our proprietary software product portfolio to address our clients' challenges with solutions that expand our base of recurring revenue and further differentiate our consulting, digital and managed services offerings. Our product portfolio bundles our deep industry expertise and unique intellectual property together to serve our clients outside of our traditional consulting offerings. Our product portfolio includes, among others: Huron Research Suite, the leading software suite designed to facilitate and improve research administration service delivery and compliance; Huron Intelligence™ Rounding, the #1 ranked Digital Rounding solution in the 2023 Best in KLAS® report; and Huron Intelligence™ Analytic Suite in Healthcare, a predictive analytics suite to improve care delivery while lowering costs.
Operating Industries
We provide our services and products and manage our business under three operating industries, which are our operating segments: Healthcare, Education and Commercial.
Healthcare
Our Healthcare segment serves acute care providers, including national and regional health systems; academic health systems; community health systems; and public, children’s and critical access hospitals, and non-acute care providers, including physician practices and medical groups; payors; and long-term care or post-acute providers. Our Healthcare professionals have a depth of expertise in business operations, including financial and operational improvement, care transformation, and revenue cycle managed services; digital solutions, spanning technology and analytic-related services and a portfolio of software products; organizational transformation; financial advisory and strategy and innovation. Healthcare organizations are focused on establishing a sustainable long-term strategy and business model centered around growth, optimal cost structures, reimbursement models, financial strategies, and consumer-focused digital transformation; changing the way care is delivered, particularly in light of personnel shortages, and improving access to care; and evolving their digital capabilities to more effectively manage their business. Our solutions help clients adapt to this rapidly changing healthcare environment to become a more agile, efficient and consumer-centric organization. We use our deep industry, functional and technical expertise to help clients solve a diverse set of business issues, including, but not limited to, identifying new opportunities for growth, optimizing financial and operational performance, improving care delivery and clinical outcomes, increasing physician, patient and employee satisfaction, and maximizing return on technology investments.
To best serve our clients, we continue to diversify our portfolio of offerings. For example, we have broadened our capabilities beyond our leading profit and loss-focused offerings (e.g., revenue cycle, cost transformation) into offerings dedicated to optimizing our clients' financial positions through financial advisory and transaction-related services; transforming care delivery models through virtual health, health equity and social determinants of health models; and evolving organizations by supporting change management and developing the next generation of leaders by applying our best practices (e.g., revenue cycle leadership).
Education
Our Education segment serves public and private colleges and universities, research institutes and other education-related organizations. Our Education professionals have a depth of expertise in strategy and innovation; business operations, including the research enterprise and student and alumni lifecycle; digital solutions, spanning technology and analytic-related services and Huron Research Suite, the leading software suite designed to facilitate and improve research administration service delivery and compliance; and organizational transformation. Our Education segment clients are increasingly faced with strategic, financial and/or enrollment challenges, increased competition, and a need to modernize their businesses using technology to advance their missions. We combine our deep industry, functional and technical expertise to help clients solve their most pressing challenges, including, but not limited to, transforming business operations with technology and analytics; strengthening research strategies and support services; evolving their organizational strategy; optimizing financial and operational performance; applying innovative enrollment strategies; and enhancing the student lifecycle. We continue to broaden our offerings into new areas; for example, research managed services, advancement, campus health and well-being, and athletics.
Commercial
Our Commercial segment is focused on serving industries and organizations facing significant disruption and regulatory change by helping them adapt to rapidly changing environments and accelerate business transformation. Our Commercial professionals work primarily with six primary buyers: the chief executive officer, the chief financial officer, the chief strategy officer, the chief human resources officer, the chief operating officer, and organizational advisors, including lenders and law firms. We have a deep focus on serving organizations in the financial services, energy and utilities, industrials and manufacturing industries and the public sector while opportunistically serving commercial industries more broadly, including professional and business services, life sciences, consumer products, and nonprofit. Our Commercial professionals use their deep industry, functional and technical expertise to deliver our digital services and software products, strategy and innovation, and financial advisory (special situation advisory and corporate finance advisory) services. In today’s disruptive environment, organizations must reimagine their historical strategies and financial and operating models to sustain and advance their competitive advantage. Our experts help organizations across industries with a variety of business challenges, including, but not limited to,
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embedding technology and analytics throughout their internal and customer-facing operations; developing analytics and insights to identify the needs of tomorrow’s customers, evolving their strategies, and bringing new products to market; managing through stressed and distressed situations to create a viable path forward for stakeholders; and providing financial, risk and regulatory advisory offerings.
Business Strategy, Opportunities and Challenges
Our strategy is to be the premier transformation partner to our clients by helping them address a variety of strategic, operational, financial, people, and organizational challenges through an array of industry-differentiated consulting, digital and managed services offerings that meet their unique needs. To achieve our strategic and financial objectives that will drive increased shareholder value, we remain focused on:
Extending our leading market positions and accelerating growth in healthcare and education,
Growing our presence in commercial industries,
Advancing our integrated, global digital platform,
Building a more sustainable base of revenue and executing on our margin levers to drive more consistent growth and improved profitability,
Strategically deploying capital to accelerate our strategy and return capital to shareholders, and
Investing in and growing our talented team, including attracting and retaining our managing directors - the senior most practitioners that lead our revenue generation efforts.
We regularly evaluate the performance of our businesses to ensure our investments meet these objectives.
COMPONENTS OF OPERATING RESULTS
Revenues
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. 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. 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: fixed-fee (including software license revenue); time-and-expense; performance-based; and software support, maintenance and subscriptions.
Fixed-fee (including software license revenue): In fixed-fee billing arrangements, we agree to a pre-established fee in exchange for a predetermined set of professional services. 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 certain digital products.
Time-and-expense: Under time-and-expense billing arrangements, we require the client to pay based on the number of hours worked by our revenue-generating professionals at agreed upon rates. Time-and-expense arrangements also include speaking engagements, conferences and publications purchased by our clients.
Performance-based: In performance-based fee billing arrangements, fees are tied to the attainment of contractually defined objectives. We enter into performance-based engagements in essentially two forms. First, we generally earn fees that are directly related to the savings formally acknowledged by the client as a result of adopting our recommendations for improving operational and cost effectiveness in the areas we review. Second, we earn a success fee when and if certain predefined outcomes occur. Often, performance-based fees supplement our time-and-expense or fixed-fee engagements. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide.
Software support, maintenance and subscriptions: 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 certain cloud-based digital products. Software support, maintenance and subscription revenues are recognized ratably over the support or subscription period. These fees are generally billed in advance and included in deferred revenues until recognized.
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. Moreover, our clients typically retain us on an engagement-by-engagement basis, rather than under long-term recurring contracts. The volume of work performed for any particular client can vary widely from period to period.
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Our quarterly results are impacted principally by the total value, scope, and terms of our client contracts, the number of our revenue-generating professionals who are available to work, our revenue-generating professionals' utilization rate, and the bill rates we charge our clients. Our utilization rate can be negatively affected by increased hiring because there is generally a transition period for new professionals that results in a temporary drop in our utilization rate. Our utilization rate can also be affected by seasonal variations in the demand for our services from our clients. For example, during the third and fourth quarters of the year, vacations taken by our clients can result in the deferral of activity on existing and new engagements, which would negatively affect our utilization rate. The number of business work days is also affected by the number of vacation days taken by our consultants and holidays in each quarter. We typically have fewer business work days available in the fourth quarter of the year, which can impact revenues during that period.
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. 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.
Operating Expenses
Our most significant expenses are costs classified as direct costs. Direct costs primarily consist of compensation costs for our revenue-generating professionals, which includes salaries, performance bonuses, share-based compensation, signing and retention bonuses, payroll taxes and benefits. Direct costs also include fees paid to independent contractors that we retain to supplement our revenue-generating professionals, typically on an as-needed basis for specific client engagements, and technology costs, product and event costs, and commissions. Direct costs exclude amortization of intangible assets and software development costs and reimbursable expenses, both of which are separately presented in our consolidated statements of operations.
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.
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.
Non-GAAP Measures
We also assess our results of operations using the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share (“EPS”). These non-GAAP financial measures differ from GAAP because they exclude a number of items required by GAAP, each discussed below. These non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows, or liquidity prepared in accordance with GAAP. Our non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how we define our non-GAAP financial measures.
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. 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. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results.
These non-GAAP financial measures include adjustments for the following items:
Amortization of intangible assets: We exclude the effect of amortization of intangible assets from the calculation of adjusted net income, as it is inconsistent in its amount and frequency and is significantly affected by the timing and size of our acquisitions.
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Restructuring charges: We have incurred charges due to restructuring various parts of our business. 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. We exclude the effect of the restructuring charges from our non-GAAP measures to permit comparability with periods that are not impacted by these items. We do not include normal, recurring, cash operating expenses in our restructuring charges.
Other losses (gains): We exclude the effects of other losses (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.
Transaction-related expenses: To permit comparability with prior periods, we exclude the impact of third-party legal and accounting fees incurred related to business acquisitions.
Unrealized gain on preferred stock investment: We exclude the effect of unrealized gains related to changes in the fair value of our preferred stock investment in Medically Home Group, Inc. (“Medically Home”), which are recognized when an observable price change occurs. These unrealized gains are included as a component of other income (expense), net. We believe that these unrealized gains are not indicative of the ongoing performance of our business and their exclusion permits comparability with prior periods.
Foreign currency transaction losses (gains), net: We exclude the effect of foreign currency transaction losses and gains from the calculation of adjusted EBITDA because the amount of each loss or gain is significantly affected by changes in foreign exchange rates.
Tax effect of adjustments: The non-GAAP income tax adjustment reflects the incremental tax impact applicable to the non-GAAP adjustments.
Income tax expense, Interest expense, net of interest income, Depreciation and amortization: We exclude the effects of income tax expense, interest expense, net of interest income, and depreciation and amortization in the calculation of EBITDA, as these are customary exclusions as defined by the calculation of EBITDA to arrive at meaningful earnings from core operations excluding the effect of such items. We include, within the depreciation and amortization adjustment, the amortization of capitalized implementation costs of our enterprise resource planning ("ERP") and other related software, which is included within selling, general and administrative expenses in our consolidated statements of operations.
Revenue-Generating Professionals
Our revenue-generating professionals consist of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the Culture and Organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare Managed Services employees who provide revenue cycle billing, collections insurance verification and change integrity services to clients.
Utilization Rate
The utilization rate of our revenue-generating professionals is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these billable consultants during the same period. Available hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We do not present utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.
RESULTS OF OPERATIONS
Executive Highlights
Highlights from the second quarter of 2023 include:
Total revenues increased 26.9% to $346.8 million for the second quarter of 2023 from $273.3 million for the second quarter of 2022.
Diluted EPS increased 92.4% to $1.27 for the second quarter of 2023, compared to $0.66 for the second quarter of 2022.
Adjusted diluted EPS increased 66.3% to $1.38 for the second quarter of 2023, compared to $0.83 for the second quarter of 2022.
Net cash provided by operating activities was $78.2 million in the second quarter of 2023, compared to $28.9 million for the second quarter of 2022.
Returned $59.6 million to shareholders in the first six months of 2023 by repurchasing 826,542 shares of our common stock.
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Total revenues increased $73.4 million, or 26.9%, to $346.8 million for the second quarter of 2023 from $273.3 million for the second quarter of 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 reflects 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 second quarter of 2023 increased 33.4%, compared to the second quarter of 2022, and reflected strengthened demand in all of our segments. The utilization rate within our Consulting capability increased to 76.0% in the second quarter of 2023, compared to 73.2% in the second quarter of 2022.
Revenues within our Digital capability increased 19.2% in the second quarter of 2023, compared to the second quarter of 2022, and reflected strength in demand in all of our segments. The utilization rate within our Digital capability increased to 74.7% in the second quarter of 2023, compared to 74.3% in the second quarter of 2022.
The total number of revenue-generating professionals increased to 5,174 as of June 30, 2023, compared to 4,243 as of June 30, 2022, as a result of hiring to support the overall increase in demand for our services within all of our segments. 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.
Net income increased $10.8 million to $24.7 million for the three months ended June 30, 2023 from $13.9 million for the same period last year. As a result of the increase in net income, diluted earnings per share for the second quarter of 2023 was $1.27, compared to $0.66 for the second quarter of 2022. Adjusted diluted earnings per share increased 66.3% to $1.38 for the second quarter of 2023, compared to $0.83 for the second quarter of 2022.
Net cash provided by operating activities was $78.2 million in the second quarter of 2023, compared to $28.9 million for the second quarter of 2022. The increase in net cash provided by operating activities was primarily related to an increase in cash collections in the second quarter of 2023, compared to the second quarter of 2022; partially offset by increases in salaries and related expenses for our revenue-generating professionals and payments for selling, general and administrative expenses in the second quarter of 2023, compared to the second quarter of 2022.
In the first six months of 2023, we deployed $59.6 million of capital to repurchase 826,542 shares of our common stock, representing 4.2% of our common stock outstanding as of December 31, 2022.
Summary of Results
The following table sets forth, for the periods indicated, selected segment and consolidated operating results and other operating data, including non-GAAP measures.
Segment and Consolidated Operating Results
(in thousands, except per share amounts):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Healthcare:
Revenues$173,768 $128,474 $322,817 $250,350 
Operating income$49,151 $30,364 $81,406 $58,396 
Segment operating income as a percentage of segment revenues28.3 %23.6 %25.2 %23.3 %
Education:
Revenues$110,694 $88,225 $214,841 $168,887 
Operating income$27,397 $21,691 $50,562 $35,997 
Segment operating income as a percentage of segment revenues24.8 %24.6 %23.5 %21.3 %
Commercial:
Revenues$62,297 $56,626 $126,996 $114,137 
Operating income$10,472 $11,915 $24,539 $24,129 
Segment operating income as a percentage of segment revenues16.8 %21.0 %19.3 %21.1 %
Total Huron:
Revenues$346,759 $273,325 $664,654 $533,374 
Reimbursable expenses8,140 7,492 16,630 12,218 
Total revenues and reimbursable expenses$354,899 $280,817 $681,284 $545,592 
Segment operating income$87,020 $63,970 $156,507 $118,522 
Items not allocated at the segment level:
Other operating expenses42,923 29,912 89,263 63,460 
Depreciation and amortization4,378 5,054 9,094 10,100 
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Segment and Consolidated Operating Results
(in thousands, except per share amounts):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023202220232022
Operating income39,719 29,004 58,150 44,962 
Total other income (expense), net(4,734)(7,327)(7,318)14,842 
Income before taxes34,985 21,677 50,832 59,804 
Income tax expense 10,273 7,802 12,701 19,077 
Net income$24,712 $13,875 $38,131 $40,727 
Earnings per share:
Basic$1.30 $0.67 $2.00 $1.97 
Diluted$1.27 $0.66 $1.95 $1.94 
Other Operating Data:
Number of revenue-generating professionals by segment (at period end):
Healthcare2,059 1,619 2,059 1,619 
Education1,701 1,407 1,701 1,407 
Commercial (1)
1,414 1,217 1,414 1,217 
Total5,174 4,243 5,174 4,243 
Revenue by capability:
Consulting and Managed Services (2)
$197,255 $147,871 $374,449 $298,455 
Digital149,504 125,454 290,205 234,919 
Total$346,759 $273,325 $664,654 $533,374 
Number of revenue-generating professionals by capability (at period end):
Consulting and Managed Services (3)
2,473 2,018 2,473 2,018 
Digital2,701 2,225 2,701 2,225 
Total5,174 4,243 5,174 4,243 
Utilization rate by capability (4):
Consulting76.0 %73.2 %76.1 %72.4 %
Digital74.7 %74.3 %72.8 %73.6 %
(1)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 $17.3 million and $16.1 million for the three months ended June 30, 2023 and 2022, respectively; and $37.1 million and $29.9 million for the six months ended June 30, 2023 and 2022, respectively.
Managed Services capability revenues within our Education segment was $4.9 million and $3.9 million for the three months ended June 30, 2023 and 2022, respectively; and $9.6 million and $7.3 million for the six months ended June 30, 2023 and 2022, respectively.
(3)The number of Managed Services revenue-generating professionals within our Healthcare segment as of June 30, 2023 and 2022 was 772 and 504, respectively.
The number of Managed Services revenue-generating professionals within our Education segment as of June 30, 2023 and 2022 was 106 and 96, respectively.
(4)Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We do not present utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.

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Non-GAAP Measures
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Three Months Ended
June 30,
Six Months Ended
June 30,
 2023202220232022
Revenues$346,759 $273,325 $664,654 $533,374 
Net income$24,712 $13,875 $38,131 $40,727 
Add back:
Income tax expense10,273 7,802 12,701 19,077 
Interest expense, net of interest income5,796 2,446 10,099 4,642 
Depreciation and amortization6,330 7,097 12,883 14,219 
EBITDA47,111 31,220 73,814 78,665 
Add back:
Restructuring charges1,699 2,069 3,983 3,624 
Other losses (gains)(623)21 (188)33 
Transaction-related expenses— — — 50 
Unrealized gain on preferred stock investment— — — (26,964)
Foreign currency transaction losses (gains), net288 (100)368 (81)
Adjusted EBITDA$48,475 $33,210 $77,977 $55,327 
Adjusted EBITDA as a percentage of revenues14.0 %12.2 %11.7 %10.4 %
Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted Earnings per Share
Three Months Ended
June 30,
Six Months Ended
June 30,
 2023202220232022
Net income$24,712 $13,875 $38,131 $40,727 
Weighted average shares - diluted19,486 20,967 19,598 21,047 
Diluted earnings per share$1.27 $0.66 $1.95 $1.94 
Add back:
Amortization of intangible assets1,974 2,818 4,205 5,678 
Restructuring charges1,699 2,069 3,983 3,624 
Other losses (gains)(623)21 (188)33 
Transaction-related expenses— — — 50 
Unrealized gain on preferred stock investment— — — (26,964)
Tax effect of adjustments(808)(1,301)(2,120)4,658 
Total adjustments, net of tax2,242 3,607 5,880 (12,921)
Adjusted net income$26,954 $17,482 $44,011 $27,806 
Adjusted weighted average shares - diluted19,486 20,967 19,598 21,047 
Adjusted diluted earnings per share$1.38 $0.83 $2.25 $1.32 
        
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Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022
Revenues
Revenues by segment and capability for the three months ended June 30, 2023 and 2022 were as follows:
Revenues (in thousands)Three Months Ended
June 30,
Increase / (Decrease)
20232022$%
Segment:
Healthcare$173,768 $128,474 $45,294 35.3 %
Education110,694 88,225 22,469 25.5 %
Commercial62,297 56,626 5,671 10.0 %
Total revenues$346,759 $273,325 $73,434 26.9 %
Capability:
Consulting and Managed Services$197,255 $147,871 $49,384 33.4 %
Digital149,504 125,454 24,050 19.2 %
Total revenues$346,759 $273,325 $73,434 26.9 %
Revenues increased $73.4 million, or 26.9%, to $346.8 million for the second quarter of 2023 from $273.3 million for the second quarter of 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 reflects our focus on accelerating growth in our healthcare and education industries and growing our presence in commercial industries. Additional information on our revenues by segment follows.
Healthcare revenues increased $45.3 million, or 35.3%, primarily driven by strong results in our performance improvement solution due to strengthened demand and exceeding performance expectations on certain performance-based arrangements. The increase in Healthcare revenue was also attributable to strengthened demand for our financial advisory solutions within our Consulting and Managed Services capability and our technology and analytics services within our Digital capability. Revenues in the second quarter of 2023 included $0.3 million of incremental revenues from our acquisition of Customer Evolution, LLC, which was completed in December 2022.
The number of revenue-generating professionals within our Healthcare segment grew 27.2% to 2,059 as of June 30, 2023, compared to 1,619 as of June 30, 2022.
Education revenues increased $22.5 million, or 25.5%, 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 20.9% to 1,701 as of June 30, 2023, compared to 1,407 as of June 30, 2022.
Commercial revenues increased $5.7 million, or 10.0%, 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 16.2% to 1,414 as of June 30, 2023, compared to 1,217 as of June 30, 2022.
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Operating Expenses
Operating expenses for the second quarter of 2023 increased $63.4 million, or 25.2%, over the second quarter of 2022.
Operating expenses and operating expenses as a percentage of revenues were as follows:
Operating Expenses (in thousands, except amounts as a percentage of revenues)
Three Months Ended June 30,
Increase / (Decrease)
20232022
Direct costs$235,198 67.8%$189,233 69.2%$45,965 
Reimbursable expenses8,121 2.3%7,576 2.8%545 
Selling, general and administrative expenses64,019 18.5%46,033 16.8%17,986 
Restructuring charges1,699 0.5%2,069 0.8%(370)
Depreciation and amortization6,143 1.8%6,902 2.5%(759)
Total operating expenses$315,180 90.9%$251,813 92.1%$63,367 
Direct Costs
Direct costs increased $46.0 million, or 24.3%, to $235.2 million for the second quarter of 2023 from $189.2 million for the second quarter of 2022. The $46.0 million increase primarily related to a $41.2 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 $25.2 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 $14.4 million increase in performance bonus expense, and a $2.1 million increase in share-based compensation expense. Additional increases in direct costs include a $1.7 million increase in project costs and a $1.5 million increase in technology costs. As a percentage of revenues, direct costs decreased to 67.8% during the second quarter of 2023, compared to 69.2% during the second quarter of 2022, primarily due to revenue growth that outpaced the increases in compensation costs for our revenue-generating professionals and contractor expenses; partially offset by the increase in project costs, as a percentage of revenues.
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. 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 are also included as a component of operating expenses.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $18.0 million, or 39.1%, to $64.0 million in the second quarter of 2023 from $46.0 million in the second quarter of 2022. The $18.0 million increase primarily related to a $14.7 million increase in compensation costs for our support personnel, driven by a $6.3 million increase in deferred compensation expense attributable to the change in market value of our deferred compensation liability, a $4.2 million increase in salaries and related expenses, a $2.7 million increase in performance bonus expense, and a $1.6 million increase in share-based compensation 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, net. Additionally, selling, general and administrative expenses increased by $3.2 million for non-payroll costs, which includes a $0.9 million increase in software and data hosting expenses and a $0.8 million increase in promotion and marketing expenses. As a percentage of revenues, selling, general and administrative expenses increased to 18.5% during the second quarter of 2023, compared to 16.8% during the second quarter of 2022. This increase was primarily attributable to an increase in deferred compensation expense, as a percentage of revenues; partially offset by revenue growth that outpaced the increase in salaries and related expenses for our support personnel.
Restructuring Charges
Restructuring charges for the second quarter of 2023 were $1.7 million, compared to $2.1 million for the second quarter of 2022. The $1.7 million of restructuring charges recognized in the second quarter of 2023 included $0.9 million of employee-related expenses; $0.3 million related to the abandonment of a capitalized software development project; $0.2 million of rent and related expenses, net of sublease income, for previously vacated office spaces; and $0.2 million related to non-cash lease impairment charges driven by updated sublease assumptions for previously vacated office spaces.
The $2.1 million of restructuring charges recognized in the second quarter of 2022 included $1.1 million of employee-related expenses; $0.4 million of rent and related expenses, net of sublease income, for previously vacated office spaces; $0.5 million for third-party transaction expenses related to the modification of our operating model; and $0.1 million related to the divestiture of our Life Sciences business in the fourth quarter of 2021.
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Depreciation and Amortization
Depreciation and amortization expense decreased $0.8 million, or 11.0%, to $6.1 million in the second quarter of 2023, compared to $6.9 million in the second quarter of 2022. The $0.8 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
Operating income increased $10.7 million, or 36.9%, to $39.7 million in the second quarter of 2023 from $29.0 million in the second quarter of 2022. Operating margin, which is defined as operating income expressed as a percentage of revenues, increased to 11.5% for the three months ended June 30, 2023, compared to 10.6% for the three months ended June 30, 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.
Segment Operating Income (in thousands, except operating margin percentages)
Three Months Ended June 30,
Increase / (Decrease)
20232022
Healthcare$49,151 28.3%$30,364 23.6%$18,787 
Education27,397 24.8%21,691 24.6%5,706 
Commercial10,472 16.8%11,915 21.0%(1,443)
Total segment operating income$87,020 $63,970 $23,050 
Healthcare operating income increased $18.8 million, or 61.9%, primarily due to the increase in revenues, partially offset by increases in compensation costs for our revenue-generating professionals, contractor expenses, compensation costs for our support personnel, and project costs. 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, and an increase in performance bonus expense. Healthcare operating margin increased to 28.3% from 23.6% primarily due to the revenue growth that outpaced the increase in compensation costs for our revenue-generating professionals; partially offset by increases in contractor expenses and project costs, as percentages of revenues.
Education operating income increased $5.7 million, or 26.3%, 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 and technology expenses. The increase in compensation costs was 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 24.8% from 24.6% primarily driven by the decrease in contractor expenses; largely offset by increases in compensation costs for our revenue-generating professionals and technology expenses, as percentages of revenue.
Commercial operating income decreased $1.4 million, or 12.1%, primarily due to increases in compensation costs for our revenue-generating professionals, largely offset by an increase in revenues. The increase in compensation costs for our revenue-generating professionals was primarily related to an increase in performance bonus expense, an increase in headcount, and annual salary increases that went into effect in the first quarter of 2023. The increase in performance bonus expense primarily reflects an increase in the performance bonus adjustment recorded in the second quarter of 2023 compared to the second quarter of 2022 to adjust our year-to-date performance bonus accrual to reflect the revised full-year forecasts. Commercial operating margin decreased to 16.8% from 21.0% primarily driven by the increase in compensation costs for our revenue-generating professionals, as a percentage of revenues.
Other Income (Expense), Net
Interest expense, net of interest income increased $3.4 million to $5.8 million in the second quarter of 2023 from $2.4 million in the second quarter of 2022, which was primarily attributable to higher interest rates and higher levels of borrowing under our credit facility during the second quarter of 2023 compared to the second quarter of 2022. See “Liquidity and Capital Resources” below and Note 6 “Financing Arrangements” within the notes to our consolidated financial statements for additional information about our senior secured credit facility.
Other income (expense), net increased $5.9 million to income of $1.1 million in the second quarter of 2023 from expense of $4.9 million in the second quarter of 2022. The increase in other income, net was primarily attributable to the $6.4 million increase in the gain recognized for the market value of our investments that are used to fund our deferred compensation liability, partially offset by a $0.4 million increase in foreign currency transaction losses. During the second quarter of 2023, we recognized a $1.3 million gain for the market value of our deferred compensation investments compared to a $5.0 million loss recognized in the second quarter of 2022.
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Income Tax Expense
For the three months ended June 30, 2023, our effective tax rate was 29.4% as we recognized income tax expense of $10.3 million on income of $35.0 million. The effective tax rate of 29.4% was less favorable than the statutory rate, inclusive of state income taxes, of 26.6% primarily due to certain nondeductible expense items. These unfavorable items were partially offset by a tax benefit related to non-taxable gains on our investments used to fund our deferred compensation liability.
For the three months ended June 30, 2022, our effective tax rate was 36.0% as we recognized income tax expense of $7.8 million on income of $21.7 million. The effective tax rate of 36.0% was less favorable than the statutory rate, inclusive of state income taxes, of 26.4% primarily due to tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items.
Net Income and Earnings per Share
Net income increased $10.8 million to $24.7 million for the three months ended June 30, 2023 from $13.9 million for the same period last year. As a result of the increase in net income, diluted earnings per share for the second quarter of 2023 was $1.27 compared to $0.66 for the second quarter of 2022.
EBITDA and Adjusted EBITDA
EBITDA increased $15.9 million to $47.1 million for the second quarter of 2023 from $31.2 million for the second quarter of 2022. The increase in EBITDA was primarily attributable to the increase in segment operating income, offset by the increase in corporate expenses, excluding the impact of the change in the market value of our deferred compensation liability.
Adjusted EBITDA increased $15.3 million to $48.5 million in the second quarter of 2023 from $33.2 million in the second quarter of 2022. 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.
Adjusted Net Income and Adjusted Earnings per Share
Adjusted net income increased $9.5 million to $27.0 million in the second quarter of 2023, compared to $17.5 million in the second quarter of 2022. As a result of the increase in adjusted net income, adjusted diluted earnings per share was $1.38 for the second quarter of 2023, compared to $0.83 for the second quarter of 2022.
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Revenues
Revenues by segment and capability for the six months ended June 30, 2023 and 2022 were as follows:
Revenues (in thousands)Six Months Ended
June 30,
Increase / (Decrease)
20232022$%
Segment:
Healthcare$322,817 $250,350 $72,467 28.9 %
Education214,841 168,887 45,954 27.2 %
Commercial126,996 114,137 12,859 11.3 %
Total revenues$664,654 $533,374 $131,280 24.6 %
Capability:
Consulting and Managed Services$374,449 $298,455 $75,994 25.5 %
Digital290,205 234,919 55,286 23.5 %
Total revenues$664,654 $533,374 $131,280 24.6 %
Revenues increased $131.3 million, or 24.6%, to $664.7 million for the first six months of 2023 from $533.4 million for the first six months of 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 reflects our focus on accelerating growth in our healthcare and education industries and growing our presence in commercial industries. Additional information on our revenues by segment follows.
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Healthcare revenues increased $72.5 million, or 28.9%, primarily driven by strong results in our performance improvement solution due to strengthened demand and exceeding performance expectations on certain performance-based arrangements. The increase in Healthcare revenues was also attributable to strengthened demand for our financial advisory and revenue cycle managed services solutions within our Consulting and Managed Services capability and our technology and analytics services within our Digital capability. Revenues in the first six months of 2023 included $0.6 million of incremental revenues from our acquisition of Customer Evolution, LLC, which was completed in December 2022.
The number of revenue-generating professionals within our Healthcare segment grew 27.2% to 2,059 as of June 30, 2023, compared to 1,619 as of June 30, 2022.
Education revenues increased $46.0 million, or 27.2%, 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 20.9% to 1,701 as of June 30, 2023, compared to 1,407 as of June 30, 2022.
Commercial revenues increased $12.9 million, or 11.3%, 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 16.2% to 1,414 as of June 30, 2023, compared to 1,217 as of June 30, 2022.
Operating Expenses
Operating expenses for the first six months of 2023 increased $122.5 million, or 24.5%, over the first six months of 2022.
Operating expenses and operating expenses as a percentage of revenues were as follows:
Operating Expenses (in thousands, except amounts as a percentage of revenues)
Six Months Ended June 30,
Increase / (Decrease)
20232022
Direct costs$463,581 69.7%$376,480 70.6%$87,101 
Reimbursable expenses16,745 2.5%12,332 2.3%4,413 
Selling, general and administrative expenses126,308 19.0%94,428 17.7%31,880 
Restructuring charges3,983 0.6%3,624 0.7%359 
Depreciation and amortization12,517 2.0%13,766 2.6%(1,249)
Total operating expenses$623,134 93.8%$500,630 93.9%$122,504 
Direct Costs
Direct costs increased $87.1 million, or 23.1%, to $463.6 million for the first six months of 2023 from $376.5 million for the first six months of 2022. The $87.1 million increase primarily related to a $76.5 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 $50.3 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 $23.0 million increase in performance bonus expense, and a $3.6 million increase in share-based compensation expense. Additional increases in direct costs include a $3.3 million increase in contractor expenses, a $2.7 million increase in technology costs, and a $2.4 million increase in project costs. As a percentage of revenues, direct costs decreased to 69.7% during the first six months of 2023, compared to 70.6% during the first six months of 2022, primarily due to revenue growth that outpaced the increase in compensation costs for our revenue-generating professionals; partially offset by the increase in project costs, as a percentage of revenues.
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. 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 are also included as a component of operating expenses.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $31.9 million, or 33.8%, to $126.3 million in the first six months of 2023 from $94.4 million in the first six months of 2022. The $31.9 million increase primarily related to a $23.3 million increase in compensation costs for our support personnel driven by a $10.6 million increase in deferred compensation expense attributable to the change in market value of our deferred compensation liability, a $6.0 million increase in salaries and related expenses, a $3.3 million increase in performance bonus expense, and a $3.2 million increase in share-based compensation 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, net. Additionally, selling, general and administrative expenses increased $8.5 million for non-payroll costs driven by a $2.7 million increase in promotion and marketing expenses, a $2.4 million increase in practice administration and meetings expenses, a $1.7 million increase in software and data hosting expenses, and a $1.0 million gain recognized in the first quarter of 2022 related to the sale of our aircraft. As a percentage of revenues, selling, general and administrative expenses increased to 19.0% during the first six months of 2023, compared to 17.7% during the first six months of 2022. This increase was primarily attributable to an increase in deferred compensation expense, as a percentage of revenues; partially offset by revenue growth that outpaced the increase in other compensation costs for our support personnel.
Restructuring Charges
Restructuring charges for the first six months of 2023 were $4.0 million, compared to $3.6 million for the first six months of 2022. The $4.0 million of restructuring charges incurred in the first six months of 2023 included a $1.9 million non-cash impairment charge on the fixed assets and right-of-use operating lease asset related to our office space in Hillsboro Oregon, which we exited in the first quarter of 2023; $0.9 million of employee-related expenses; $0.6 million for rent and related expenses, net of sublease income, for previously vacated office spaces; $0.3 million related to the abandonment of a capitalized software development project; and $0.2 million related to non-cash lease impairment charges driven by updated sublease assumptions for previously vacated office spaces.
The $3.6 million of restructuring charges incurred in the first six months of 2022 included $1.6 million of employee-related expenses; $1.0 million of rent and related expenses, net of sublease income, for previously vacated office spaces; $0.6 million for third-party transaction expenses related to the modification of our operating model; $0.3 million of accelerated amortization of capitalized software implementation costs for a cloud-computing arrangement that is no longer in use; and $0.1 million related to the divestiture of our Life Sciences business in the fourth quarter of 2021.
Depreciation and Amortization
Depreciation and amortization expense, which includes amortization of intangible assets and software development costs previously presented separately, decreased $1.2 million, or 9.1%, to $12.5 million for the first six months of 2023, compared to $13.8 million for first six months of 2022. The $1.2 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 the amortization of intangible assets acquired in business acquisitions due to the accelerated basis of amortization in prior periods.
Operating Income and Operating Margin
Operating income increased $13.2 million to $58.2 million in the first six months of 2023 from $45.0 million in the first six months of 2022. Operating margin, which is defined as operating income expressed as a percentage of revenues, increased to 8.7% for the first six months of 2023, compared to 8.4% for the first six months of 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.
Segment Operating Income (in thousands, except operating margin percentages)
Six Months Ended June 30,
Increase / (Decrease)
20232022
Healthcare$81,406 25.2%$58,396 23.3%$23,010 
Education50,562 23.5%35,997 21.3%14,565 
Commercial24,539 19.3%24,129 21.1%410 
Total segment operating income$156,507 $118,522 $37,985 
Healthcare operating income increased $23.0 million, or 39.4%, primarily due to the increase in revenues, partially offset by increases in compensation costs for our revenue-generating professionals, contractor expenses, compensation costs for our support personnel, and project costs. 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 25.2% from 23.3% primarily due to the revenue growth that outpaced the increase in compensation costs for our revenue-generating professionals; partially offset by increases in contractor expenses and project costs, as percentages of revenues.
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Education operating income increased $14.6 million, or 40.5%, 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, technology expenses, and promotion and marketing expenses. The increase in compensation costs was 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 23.5% from 21.3% primarily driven by the decrease in contractor expenses; partially offset by an increase in technology expenses, as a percentage of revenues.
Commercial operating income increased $0.4 million, or 1.7%, primarily due to the increase in revenues, largely offset by an increase in compensation costs for our revenue-generating professionals. The increase in compensation costs was 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. The increase in performance bonus expense primarily reflects an increase in the performance bonus adjustment recorded in the first six months of 2023 compared to the first six months of 2022 to adjust our year-to-date performance bonus accrual to reflect the revised full year forecasts. Commercial operating margin decreased to 19.3% from 21.1% primarily driven by an increase in compensation costs for our revenue-generating professionals, as a percentage of revenues; partially offset by a decrease in compensation costs for our support personnel.
Other Income (Expense), Net
Interest expense, net of interest income increased $5.5 million to $10.1 million in the first six months of 2023 from $4.6 million in the first six months of 2022, which was primarily attributable to higher interest rates and higher levels of borrowing under our credit facility during the first six months of 2023 compared to the first six months of 2022. See “Liquidity and Capital Resources” below and Note 6 “Financing Arrangements” within the notes to our consolidated financial statements for additional information about our senior secured credit facility.
Other income, net decreased $16.7 million to $2.8 million in the first six months of 2023 from $19.5 million in the first six months of 2022. The decrease in other income, net was primarily attributable to a $27.0 million unrealized gain recognized in the first quarter of 2022 related to the increase in the fair value of our preferred stock investment in Medically Home. See Note 9 “Fair Value of Financial Instruments” within the notes to our consolidated financial statements for additional information on our preferred stock investment in Medically Home. This decrease in other income, net was partially offset by a $10.7 million increase in the gain recognized for the market value of our investments that are used to fund our deferred compensation liability. During the first six months of 2023, we recognized a $3.1 million gain for the market value of our deferred compensation investments compared to a $7.6 million loss recognized in the first six months of 2022.
Income Tax Expense
For the six months ended June 30, 2023, our effective tax rate was 25.0% as we recognized income tax expense of $12.7 million on income of $50.8 million. The effective tax rate of 25.0% was more favorable than the statutory rate, inclusive of state income taxes, of 26.6% primarily due to a discrete tax benefit for share-based compensation awards that vested during the first quarter of 2023 and a tax benefit related to non-taxable gains on our investments used to fund our deferred compensation liability. These favorable items were partially offset by certain nondeductible expense items.
For the six months ended June 30, 2022, our effective tax rate was 31.9% as we recognized income tax expense of $19.1 million on income of $59.8 million. The effective tax rate of 31.9% was less favorable than the statutory rate, inclusive of state income taxes, of 26.4% primarily due to tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items.
Net Income from Continuing Operations and Earnings per Share
Net income decreased $2.6 million to $38.1 million for the six months ended June 30, 2023 from $40.7 million for the same period last year. Diluted earnings per share for the six months ended June 30, 2023 slightly increased to $1.95 compared to $1.94 for the six months ended June 30, 2022 primarily due to a reduction in diluted shares outstanding resulting from the share repurchases completed subsequent to the second quarter of 2022, partially offset by the decrease in net income.
EBITDA and Adjusted EBITDA
EBITDA decreased $4.9 million to $73.8 million for the six months ended June 30, 2023 from $78.7 million for the six months ended June 30, 2022. The decrease in EBITDA was primarily attributable to the $27.0 million unrealized gain recognized in the first quarter of 2022 related to the increase in the fair value of our preferred stock investment; as well as the increase in corporate expenses, excluding the impact of the change in the market value of our deferred compensation liability. These decreases to EBITDA were largely offset by the increase in segment operating income.
Adjusted EBITDA increased $22.7 million to $78.0 million in the first six months of 2023 from $55.3 million in the first six months of 2022. 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.
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Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share
Adjusted net income increased $16.2 million to $44.0 million in the first six months of 2023 compared to $27.8 million in the first six months of 2022. As a result of the increase in adjusted net income, adjusted diluted earnings per share was $2.25 for the six months ended June 30, 2023, compared to $1.32 for the six months ended June 30, 2022.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $16.6 million and $11.8 million at June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023, our primary sources of liquidity are cash on hand, cash flows from our U.S. operations, and borrowing capacity available under our credit facility.
 Six Months Ended
June 30,
Cash Flows (in thousands):20232022
Net cash used in operating activities$(13,880)$(50,236)
Net cash used in investing activities(15,763)(7,608)
Net cash provided by financing activities34,333 49,076 
Effect of exchange rate changes on cash59 (55)
Net increase (decrease) in cash and cash equivalents$4,749 $(8,823)
Operating Activities
Our operating assets and liabilities consist primarily of receivables from billed and unbilled services, accounts payable and accrued expenses, accrued payroll and related benefits, operating lease obligations and deferred revenues. The volume of services rendered and the related billings and timing of collections on those billings, as well as payments of our accounts payable and salaries, bonuses, and related benefits to employees affect these account balances. Our purchase obligations primarily consist of payments for software and other information technology products to support our business and corporate infrastructure.
Net cash used in operating activities decreased $36.4 million to $13.9 million for the six months ended June 30, 2023 from $50.2 million for the six months ended June 30, 2022. The decrease in net cash used in operating activities was primarily related to an increase in cash collections in the first six months of 2023 compared to the same prior year period; 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 for the first six months of 2023 compared to the same prior year period, and an increase in the amount paid for annual performance bonuses in the first quarter of 2023 compared to the first quarter of 2022.
Additionally, for the first six months of 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. We expect to bill and collect for these services in the second half of 2023. In the future, we may enter into additional client engagements with similar deferred billing terms.
Investing Activities
Our investing activities primarily consist of purchases of complementary businesses; purchases of property and equipment, primarily related to computers and related equipment for our employees and leasehold improvements and furniture and fixtures for office spaces; payments related to internally developed cloud-based software sold to our clients; and investments. Our investments include a convertible note investment in Shorelight Holdings, LLC, a preferred stock investment in Medically Home Group, Inc., and investments in life insurance policies that are used to fund our deferred compensation liability.
Net cash used by investing activities was $15.8 million for the six months ended June 30, 2023 which primarily consisted of $13.0 million for payments related to internally developed software to advance our Healthcare and Education software products; $3.7 million for purchases of property and equipment, primarily related to purchases of computers and related equipment; and $2.2 million for contributions to our life insurance policies. 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 by investing activities was $7.6 million for the six months ended June 30, 2022 which primarily consisted of $6.8 million for purchases of property and equipment, primarily related to purchases of computers and related equipment and leasehold improvements and furniture for certain office spaces; $4.0 million for payments related to internally developed software; and $1.9 million for the purchase of a business. 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.

We estimate that cash utilized for purchases of property and equipment and software development in 2023 will total approximately $35 million to $40 million; 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.
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Financing Activities
Our financing activities primarily consist of borrowings and repayments under our senior secured credit facility, share repurchases, shares redeemed for employee tax withholdings upon vesting of share-based compensation, and payments for contingent consideration liabilities related to business acquisitions. See “Financing Arrangements” below for additional information on our senior secured credit facility.
Net cash provided by financing activities was $34.3 million for the six months ended June 30, 2023. During the six months ended June 30, 2023, we borrowed $230.0 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 $125.0 million. Additionally, during the first six months of 2023, we paid $60.4 million for share repurchases, including $1.1 million related to the settlement of share repurchases that were accrued as of December 31, 2022, and reacquired $9.7 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.
Net cash provided by financing activities was $49.1 million for the six months ended June 30, 2022. During the six months ended June 30, 2022, we borrowed $224.0 million under our 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 $114.8 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, during the first six months of 2022, we repurchased and retired $52.2 million of our common stock under our share repurchase program, and settled $0.2 million of share repurchases that were accrued as of December 31, 2021. In the first half of 2022, we reacquired $7.0 million of common stock as a result of tax withholdings upon vesting of share-based compensation. We also made deferred acquisition payments of $1.9 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.
Share Repurchase Program
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. Subsequent to the initial authorization, our board of directors authorized extensions of the share repurchase program through December 31, 2023 and increased the authorized amount to $300 million. The amount and timing of repurchases under the share repurchase program were and will continue to be determined by management and depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements. As of June 30, 2023, $49.6 million remained available for share repurchases under our share repurchase program.
Financing Arrangements
At June 30, 2023, we had $395.0 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 (as amended, the "Amended Credit Agreement") that becomes due and payable in full upon maturity on November 15, 2027. The Amended Credit Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount up to $250 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $850 million. The initial borrowings under the Amended Credit Agreement were used to refinance borrowings outstanding under a prior credit agreement, and future borrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, share repurchases, permitted acquisitions, and other general corporate purposes.
Fees and interest on borrowings vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). At our option, borrowings under the Amended Credit Agreement will bear interest at one, 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 the first amendment 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. 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.
Amounts borrowed under the Amended Credit Agreement may be prepaid at any time without premium or penalty. We are required to prepay the amounts outstanding under the Amended Credit Agreement in certain circumstances, including upon an Event of Default (as defined in the Amended
36





Credit Agreement). In addition, we have the right to permanently reduce or terminate the unused portion of the commitments provided under the Amended Credit Agreement at any time.
The Amended Credit Agreement contains usual and customary representations and warranties; affirmative and negative covenants, which include limitations on liens, investments, additional indebtedness, and restricted payments; and two quarterly financial covenants as follows: (i) a maximum Consolidated Leverage Ratio (defined as the ratio of debt to consolidated EBITDA) of 3.75 to 1.00; however the maximum permitted Consolidated Leverage Ratio will increase to 4.25 to 1.00 upon the occurrence of a Qualified Acquisition (as defined in the Amended Credit Agreement), and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.00 to 1.00. Consolidated EBITDA for purposes of the financial covenants is calculated on a continuing operations basis and includes adjustments to add back non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, pro forma historical EBITDA for businesses acquired, and other specified items in accordance with the Amended Credit Agreement. For purposes of the Consolidated Leverage Ratio, total debt is on a gross basis and is not netted against our cash balances. At June 30, 2023 and December 31, 2022, we were in compliance with these financial covenants. Our Consolidated Leverage Ratio as of June 30, 2023 was 2.17 to 1.00, compared to 1.92 to 1.00 as of December 31, 2022. Our Consolidated Interest Coverage Ratio as of June 30, 2023 was 11.23 to 1.00, compared to 14.04 to 1.00 as of December 31, 2022.
The Amended Credit Agreement contains restricted payment provisions, including a potential limit on the amount of dividends we may pay. 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.
Principal borrowings outstanding under the Amended Credit Agreement at June 30, 2023 and December 31, 2022 totaled $395.0 million and $290.0 million, respectively. These borrowings carried a weighted average interest rate of 4.6% at June 30, 2023 and 3.8% at December 31, 2022, including the impact of the interest rate swaps described in Note 8 “Derivative Instruments and Hedging Activity” within the notes to the consolidated financial statements. The borrowing capacity under the revolving credit facility is reduced by any outstanding borrowings under the revolving credit facility and outstanding letters of credit. At June 30, 2023, we had outstanding letters of credit totaling $0.7 million, which are used as security deposits for our office facilities. As of June 30, 2023, the unused borrowing capacity under the revolving credit facility was $204.3 million.
Future Financing Needs
Our primary financing need is to fund our long-term growth. Our growth strategy is to expand our service offerings, which may require investments in new hires, acquisitions of complementary businesses, possible expansion into other geographic areas, and related capital expenditures.
We believe our internally generated liquidity, together with our available cash, and the borrowing capacity available under our revolving credit facility will be adequate to support our current financing needs and long-term growth strategy. Our ability to secure additional financing in the future, if needed, will depend on several factors, including our future profitability, the quality of our accounts receivable and unbilled services, our relative levels of debt and equity, and the overall condition of the credit markets.
OFF-BALANCE SHEET ARRANGEMENTS
We are not a party to any material off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES
Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We regularly review our financial reporting and disclosure practices and accounting policies to ensure that our financial reporting and disclosures provide accurate information relative to the current economic and business environment. The preparation of financial statements in conformity with GAAP requires management to make assessments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Critical accounting policies are those policies that we believe present the most complex or subjective measurements and have the most potential to impact our financial position and operating results. While all decisions regarding accounting policies are important, we believe there are five accounting policies that could be considered critical: revenue recognition, allowances for doubtful accounts and unbilled services, business combinations, carrying values of goodwill and other intangible assets, and accounting for income taxes. For a detailed discussion of these critical accounting policies, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to our critical accounting policies during the six months ended June 30, 2023.
NEW ACCOUNTING PRONOUNCEMENTS
No new accounting pronouncements or changes in accounting pronouncements have been issued or adopted that are material to our consolidated financial statements since those included in our Annual Report on Form 10-K for the year ended December 31, 2022.
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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to market risks primarily from changes in interest rates and foreign currency exchange rates and changes in the market value of our investments. We use certain derivative instruments to hedge a portion of the interest rate and foreign currency exchange rate risks.
Interest Rate Risk
We have exposure to changes in interest rates associated with borrowings under our bank credit facility, which have variable interest rates tied to Term SOFR or an alternate base rate, at our option. At June 30, 2023, we had borrowings outstanding under the credit facility totaling $395.0 million that carried a weighted average interest rate of 4.6%, including the impact of the interest rate swaps described below. A hypothetical 100 basis point change in the interest rate would have a $1.5 million effect on our pretax income on an annualized basis, including the effect of the interest rate swaps. At December 31, 2022, we had borrowings outstanding under the credit facility totaling $290.0 million that carried a weighted average interest rate of 3.8% including the impact of the interest rate swaps described below. A hypothetical 100 basis point change in the interest rate would have had a $0.9 million effect on our pretax income on an annualized basis, including the effect of the interest rate swaps.
We enter into forward interest rate swap agreements to hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one month Term SOFR and we pay to the counterparty a stated, fixed rate. As of June 30, 2023 and December 31, 2022, the aggregate notional amount of our forward interest rate swap agreements was $250.0 million and $200.0 million, respectively. The outstanding interest rate swap agreements as of June 30, 2023 are scheduled to mature on a staggered basis through February 29, 2028.
Foreign Currency Risk
We have exposure to changes in foreign currency exchange rates between the U.S. Dollar (USD) and the Indian Rupee (INR) related to our operations in India. We hedge a portion of our cash flow exposure related to our INR-denominated intercompany expenses by entering into non-deliverable foreign exchange forward contracts. As of June 30, 2023 and December 31, 2022, the aggregate notional amounts of these contracts were INR 625.1 million, or $7.6 million, and INR 657.9 million, or $8.0 million, respectively, based on the exchange rates in effect as of each period end. The outstanding foreign exchange forward contracts as of June 30, 2023 are scheduled to mature monthly through April 30, 2024.
We use a sensitivity analysis to determine the effects that market foreign currency exchange rate fluctuations may have on the fair value of our foreign currency exchange rate hedge portfolio. The sensitivity of the hedge portfolio is computed based on the market value of future cash flows as affected by changes in exchange rates. This sensitivity analysis represents the hypothetical changes in value of the hedge position and does not reflect the offsetting gain or loss on the underlying exposure. A hypothetical 100 basis point change in the foreign currency exchange rate between the USD and INR would have an immaterial impact on the fair value of our hedge instruments as of June 30, 2023 and December 31, 2022.
Market Risk
We have a 1.69% convertible debt investment in Shorelight Holdings, LLC, a privately-held company, which we account for as an available-for-sale debt security. As such, the investment is carried at fair value with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income. As of June 30, 2023, the fair value of the investment was $63.6 million, with a total cost basis of $40.9 million. At December 31, 2022, the fair value of the investment was $57.6 million, with a total cost basis of $40.9 million.
We have a preferred stock investment in Medically Home Group, Inc. ("Medically Home"), a privately-held company, which we account for as an equity security without a readily determinable fair value using the measurement alternative. As such, the investment is carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment. Any unrealized holding gains and losses resulting from observable price changes are recorded in our consolidated statement of operations. As of June 30, 2023 and December 31, 2022, the carrying value of the investment was $33.6 million with a total cost basis of $5.0 million. During the first quarter of 2022, we recognized an unrealized gain of $27.0 million on our preferred stock investment resulting from an observable price change of preferred stock with similar rights and preferences to our preferred stock investment issued by Medically Home. Following our purchase, we have not identified any impairment of our investment.
We do not use derivative instruments for trading or other speculative purposes. From time to time, we invest excess cash in short-term marketable securities. These investments principally consist of overnight sweep accounts. Due to the short maturity of these investments, we have concluded that we do not have material market risk exposure. Refer to Note 8 “Derivative Instruments and Hedging Activity” within the notes to our consolidated financial statements for additional information on our derivative instruments.
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ITEM 4.CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of June 30, 2023. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2023, our disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports we file or submit under the Exchange Act, and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION 
ITEM 1.LEGAL PROCEEDINGS.
From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date of this Quarterly Report on Form 10-Q, we are not a party to any litigation or legal proceeding or subject to any claim that, in the current opinion of management, could reasonably be expected to have a material adverse effect on our financial position or results of operations. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results.
ITEM 1A.RISK FACTORS.
See Part 1, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the Securities and Exchange Commission on February 28, 2023, for a complete description of the material risks we face.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Our Stock Ownership Participation Program and 2012 Omnibus Incentive Plan permit the netting of common stock upon vesting of restricted stock awards to satisfy individual tax withholding requirements. During the quarter ended June 30, 2023, we reacquired 2,518 shares of common stock with a weighted average fair market value of $80.24 as a result of such tax withholdings.
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. Subsequent to the initial authorization, our board of directors authorized extensions of the share repurchase program through December 31, 2023 and increased the authorized amount to $300 million. The amount and timing of repurchases under the share repurchase program were and will continue to be determined by management and depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements. As of June 30, 2023, $49.6 million remained available for share repurchases under our share repurchase program.
The following table provides information with respect to purchases we made of our common stock during the quarter ended June 30, 2023.
Period
Total Number of Shares Purchased (1)
Average Price
Paid per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Dollar Value of Shares
that may yet be
Purchased under the
Plans or Programs (2)
April 1, 2023 - April 30, 20232,518 $80.24 — $64,836,694 
May 1, 2023 - May 31, 2023193,648 $78.64 193,648 $49,602,177 
June 1, 2023 - June 30, 2023— N/A— $49,602,177 
Total196,166 $78.66 193,648 
(1)The number of shares repurchased included 2,518 shares in April 2023 to satisfy employee tax withholding requirements. These shares do not reduce the repurchase authority under the share repurchase program.
(2)As of the end of the period.
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ITEM 3.DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5.OTHER INFORMATION.
Securities Trading Plans of Directors and Executive Officers
The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted by our executive officers and/or directors during the second quarter of 2023, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as Rule 10b5-1 trading plans.
Name and TitleActionDate of Rule 10b5-1 Trading Plan ActionScheduled Expiration Date of Rule 10b5-1 Trading PlanAggregate Number of Shares to be Sold
Ekta Singh-Bushell - DirectorAdoption5/8/20234/30/20251,164
Debra L. Zumwalt - DirectorAdoption5/9/20234/30/20241,036
James H. Roth - Vice Chairman, Client RelationsAdoption5/18/20234/2/202442,548
During the second quarter of 2023, none of our executive officers or directors terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
40





ITEM 6.EXHIBITS.
(a) The following exhibits are filed as part of this Quarterly Report on Form 10-Q. 
    Incorporated by Reference
Exhibit
Number
Exhibit DescriptionFiled
herewith
Furnished
herewith
FormPeriod
Ending
ExhibitFiling
Date
3.1DEF 14AAppendix A4/5/2023
3.28-K3.25/19/2023
10.1*DEF 14AAppendix B4/5/2023
31.1X
31.2X
32.1X
32.2X
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.X
101.SCHInline XBRL Taxonomy Extension Schema DocumentX
101.CALInline XBRL Taxonomy Extension Calculation Link base DocumentX
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentX
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentX
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentX
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)X
*Indicates the exhibit is a management contract or compensatory plan or arrangement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Huron Consulting Group Inc.
(Registrant)
Date:July 27, 2023/s/    JOHN D. KELLY
John D. Kelly
Executive Vice President,
Chief Financial Officer and Treasurer

42
Document

EXHIBIT 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER,
PURSUANT TO RULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, C. Mark Hussey, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Huron Consulting Group Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:   July 27, 2023By: /s/    C. MARK HUSSEY
  C. Mark Hussey
  President and Chief Executive Officer

Document

EXHIBIT 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER,
PURSUANT TO RULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John D. Kelly, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Huron Consulting Group Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 
Date:   July 27, 2023 By: /s/    JOHN D. KELLY
   John D. Kelly
   Executive Vice President,
Chief Financial Officer and Treasurer

Document

EXHIBIT 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER,
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Huron Consulting Group Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, C. Mark Hussey, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
Date:   July 27, 2023 By: 
/S/    C. MARK HUSSEY
   C. Mark Hussey
   President and Chief Executive Officer
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-Q and shall not be considered filed as part of the Form 10-Q.

Document

EXHIBIT 32.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER,
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Huron Consulting Group Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John D. Kelly, Executive Vice President, Chief Financial Officer and Treasurer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
Date:   July 27, 2023 By: /s/    JOHN D. KELLY
   John D. Kelly
   Executive Vice President,
Chief Financial Officer and Treasurer
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-Q and shall not be considered filed as part of the Form 10-Q.