Huron Consulting Group Inc
For the period ended Sep 30, 2024. Filed Oct 29, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 29, 2024
HURN$166.82-5.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0001289848-24-000172
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-29.
0001289848-24-000209
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 210 previous paragraphs and 215 current paragraphs.
107 unchanged; 77 reworded; 29 added; 24 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
Total Revenues
Current report
•Revenues before reimbursable expenses increased 3.3% to $370.0 million for the third quarter of 2024 from $358.2 million for the third quarter of 2023.
Current report
•Net income as a percentage of total revenues increased to 7.2% for the third quarter of 2024, compared to 5.9% for the third quarter of 2023.
Current report
•Adjusted EBITDA as a percentage of revenues before reimbursable expenses increased to 14.8% for the third quarter of 2024, compared to 13.4% for the third quarter of 2023.
Current report
•Diluted EPS increased 33.6% to $1.47 for the third quarter of 2024, compared to $1.10 for the third quarter of 2023.
Current report
•Net cash provided by operating activities increased 23.9% to $85.2 million for the third quarter of 2024, compared to $68.8 million for the third quarter of 2023.
Current report
Net income increased $5.6 million, or 26.2%, to $27.1 million, or 7.2% of total revenues, for the three months ended September 30, 2024 from $21.5 million, or 5.9% of total revenues, for the same period last year. As a result of the increase in net income and a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan, diluted earnings per share for the third quarter of 2024 increased 33.6% to $1.47, compared to $1.10 for the third quarter of 2023. Adjusted diluted earnings per share increased 20.9% to $1.68 for the third quarter of 2024, compared to $1.39 for the third quarter of 2023.
Current report
Adjusted EBITDA increased $6.9 million, or 14.3%, to $54.9 million, or 14.8% of revenues before reimbursable expenses, for the three months ended September 30, 2024, compared to $48.0 million, or 13.4% of revenues before reimbursable expenses, for the same period last year.
Current report
The number of revenue-generating professionals within our Healthcare segment grew 30.0% to 2,442 as of September 30, 2024, compared to 1,878 as of September 30, 2023.
Current report
•Commercial revenues before reimbursable expenses decreased $2.1 million, or 3.1%, primarily due to decreases in demand for our financial advisory and strategy and innovation solutions within our Consulting and Managed Services capability, partially offset by an increase in demand for our technology and analytics services within our Digital capability. Revenues before reimbursable expenses in the third quarter of 2024 included $0.3 million of incremental revenues before reimbursable expenses from our acquisition of Vlamis completed in January 2024.
Current report
The number of revenue-generating professionals within our Commercial segment, the majority of which provide services across all of our industries, was 2,204 as of September 30, 2024 compared to 2,260 as of September 30, 2023.
Current report
Operating expenses for the third quarter of 2024 increased $5.5 million, or 1.7%, over the third quarter of 2023.
Current report
Other gains, net totaled $0.2 million in the third quarter of 2024 compared to less than $0.1 million in the third quarter of 2023. The other gains, net in both the third quarter of 2024 and the third quarter of 2023 primarily related to remeasurement gains to decrease the fair value of our contingent consideration liabilities related to business combinations.
Current report
Restructuring charges for the third quarter of 2024 were $3.1 million, compared to $5.4 million for the third quarter of 2023. The $3.1 million restructuring charge recognized in the third quarter of 2024 included $1.3 million of severance-related expenses; a $1.2 million non-cash impairment charge on the right-of-use operating lease asset and fixed assets for a portion of our New York, New York office space that we exited during the third quarter of 2024; and $0.6 million of rent and related expenses, net of sublease income, for previously vacated office spaces.
Current report
The $5.4 million of restructuring charges recognized in the third quarter of 2023 included a $3.5 million non-cash impairment charge on the right-of-use operating lease asset and fixed assets for our office space in Lexington, Massachusetts that we exited during the third quarter of 2023; $1.2 million of severance-related expenses; and $0.7 million of rent and related expenses, net of sublease income, for previously vacated office spaces.
Current report
Operating Income
Current report
Operating income and operating margin for each of our segments as well as unallocated corporate expenses were as follows:
Current report
•Commercial operating income increased $0.7 million, or 4.6%, primarily due to decreases in compensation costs for our revenue-generating professionals and contractor expenses; partially offset by the decrease in revenues before reimbursable expenses. The decrease in compensation costs for our revenue-generating professionals was primarily driven by a decrease in performance bonus expense, partially offset by an increase in headcount and annual salary increases that went into effect in the first quarter of 2024. Commercial operating margin increased to 24.5% from 22.7% primarily due to decreases in performance bonus expenses for our revenue-generating professionals, contractor expenses and signing, retention and other bonus expense for our revenue-generating professionals, as percentages of revenues before reimbursable expenses; partially offset by the increases in salaries and related expenses for our revenue-generating professionals.
Current report
•Unallocated corporate expenses increased $3.7 million, or 8.6%, primarily due to increases in compensation costs for our support personnel and software and data hosting expenses; partially offset by a decrease in legal expenses. The increase in compensation costs for our support personnel was primarily driven by an increase in deferred compensation expense attributable to the change in market value of our deferred compensation liability and an increase in headcount and annual salary increases that went into effect in the first quarter of 2024; partially offset by a decrease in share-based compensation expense.
Current report
For the three months ended September 30, 2023, our effective tax rate was 31.2% as we recognized income tax expense of $9.8 million on income of $31.3 million. The effective tax rate of 31.2% was less favorable than the statutory rate, inclusive of state income taxes, of 26.6%, primarily due to tax expense related to nondeductible losses on our investments used to fund our deferred compensation liability and certain nondeductible expense items.
Current report
Net income increased $5.6 million, or 26.2%, to $27.1 million for the three months ended September 30, 2024 from $21.5 million for the same period last year. Diluted earnings per share for the third quarter of 2024 increased to $1.47 from $1.10 for the third quarter of 2023, driven by the increase in net income and a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan.
Current report
EBITDA increased $8.3 million to $50.9 million for the third quarter of 2024 from $42.6 million for the third quarter of 2023. The increase in EBITDA was primarily attributable to the increases in Healthcare and Education segment operating income, excluding segment depreciation and amortization; a decrease in corporate restructuring charges; and a decrease in unallocated corporate expenses, excluding the impact of the change in the market value of our deferred compensation liability.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
The number of revenue-generating professionals within our Healthcare segment grew 30.0% to 2,442 as of September 30, 2024, compared to 1,878 as of September 30, 2023.
Current report
The number of revenue-generating professionals within our Commercial segment, the majority of which provide services across all of our industries, was 2,204 as of September 30, 2024, compared to 2,260 as of September 30, 2023.
Current report
Operating Income
Current report
Operating income and operating margin for each of our segments as well as unallocated corporate expenses were as follows:
Current report
•Commercial operating income decreased $0.8 million, or 1.9%, primarily due to the decrease in revenues before reimbursable expenses; partially offset by decreases in compensation costs for our revenue-generating professionals, contractor expenses, and promotion and marketing expenses. The decrease in compensation costs for our revenue-generating professionals was primarily driven by a decrease in performance bonus expense; partially offset by an increase in headcount and annual salary increases that went into effect in the first quarter of 2024. Commercial operating margin increased to 20.8% from 20.5% primarily driven by decreases in performance bonus expense for our revenue-generating professionals, contractor expenses and promotion and marketing expenses, as percentages of revenues before reimbursable expenses; partially offset by an increase in salaries and related expenses for our revenue-generating professionals.
Current report
•Unallocated corporate expenses increased $13.6 million, or 10.5%, primarily due to increases in compensation costs for our support personnel, software and data hosting expenses, and legal expenses. The increase in compensation costs for our support personnel was primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of 2024 and an increase in deferred compensation expense attributable to the change in market value of our deferred compensation liability; partially offset by a decrease in performance bonus expense for our support personnel.
Removed paragraphs (24)
Previous report
•Total revenues increased 7.2% to $371.7 million for the second quarter of 2024 from $346.8 million for the second quarter of 2023.
Previous report
•Diluted EPS increased 59.8% to $2.03 for the second quarter of 2024, compared to $1.27 for the second quarter of 2023. Diluted EPS for the second quarter of 2024 includes a litigation settlement gain related to a completed legal matter for which Huron was the plaintiff, which had a favorable $0.60 impact on diluted EPS.
Previous report
•Net cash provided by operating activities was $107.2 million for the second quarter of 2024, compared to $78.2 million for the second quarter of 2023.
Previous report
•Returned $96.7 million to shareholders in the first six months of 2024 by repurchasing 1,001,191 shares of our common stock.
Previous report
Net income increased $12.8 million, or 51.7%, to $37.5 million for the three months ended June 30, 2024 from $24.7 million for the same period last year. Net income for the second quarter of 2024 includes an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter for which Huron was the plaintiff. As a result of the increase in net income and a reduction in diluted shares outstanding resulting from share repurchases, diluted earnings per share for the second quarter of 2024 increased 59.8% to $2.03, compared to $1.27 for the second quarter of 2023. The litigation settlement gain recognized in the second quarter of 2024 had a favorable $0.60 impact on diluted earnings per share. Adjusted diluted earnings per share increased 21.7% to $1.68 for the second quarter of 2024, compared to $1.38 for the second quarter of 2023.
Previous report
In the first six months of 2024, we deployed $96.7 million of capital to repurchase 1,001,191 shares of our common stock, representing 5.4% of our common stock outstanding as of December 31, 2023.
Previous report
The number of revenue-generating professionals within our Healthcare segment grew 26.3% to 2,339 as of June 30, 2024, compared to 1,852 as of June 30, 2023.
Previous report
•Commercial revenues decreased $3.5 million, or 5.6%, primarily due to a decrease in demand for our technology and analytics services within our Digital capability, partially offset by an increase in demand for our financial advisory solutions within our Consulting and Managed Services capability.
Previous report
The number of revenue-generating professionals within our Commercial segment grew 3.1% to 2,266 as of June 30, 2024, compared to 2,198 as of June 30, 2023.
Previous report
Operating expenses for the second quarter of 2024 increased $6.4 million, or 2.0%, over the second quarter of 2023.
Previous report
Restructuring charges for the second quarter of 2024 were $2.1 million, compared to $1.7 million for the second quarter of 2023. In the second quarter of 2024, we exited the office space previously occupied by GG+A, which resulted in a $1.4 million non-cash impairment charge on the related right-of-use operating lease asset and fixed assets of that office space. Additionally, in the second quarter of 2024, we recognized $0.6 million of restructuring expense for rent and related expenses, net of sublease income, for previously vacated office spaces.
Previous report
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.
Previous report
Operating Income and Operating Margin
Previous report
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.
Previous report
•Commercial operating income decreased $1.5 million, or 14%, primarily due to the decrease in revenues, partially offset by decreases in restructuring charges and contractor expenses. Commercial operating margin decreased to 15.3% from 16.8% primarily due to an increase in compensation costs for our revenue-generating professionals, as a percentage of revenues; partially offset by decreases in restructuring charges and contractor expenses, as percentages of revenues.
Previous report
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, partially offset by a tax benefit related to non-taxable gains on our investments used to fund our deferred compensation liability.
Previous report
Net income increased $12.8 million, or 51.7%, to $37.5 million for the three months ended June 30, 2024 from $24.7 million for the same period last year, driven by the $11.1 million litigation settlement gain, net of tax, recognized in the second quarter of 2024 related to a completed legal matter for which Huron was the plaintiff. Diluted earnings per share for the second quarter of 2024 increased to $2.03 from $1.27 for the second quarter of 2023, driven by the increase in net income and a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan.
Previous report
EBITDA increased $19.2 million to $66.3 million for the second quarter of 2024 from $47.1 million for the second quarter of 2023. The increase in EBITDA was primarily attributable to the pre-tax $15.0 million litigation settlement gain recognized for a completed legal matter for which Huron was the plaintiff, as well as the increase in segment operating income.
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
The number of revenue-generating professionals within our Healthcare segment grew 26.3% to 2,339 as of June 30, 2024, compared to 1,852 as of June 30, 2023.
Previous report
The number of revenue-generating professionals within our Commercial segment grew 3.1% to 2,266 as of June 30, 2024, compared to 2,198 as of June 30, 2023.
Previous report
Operating Income and Operating Margin
Previous report
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.
Previous report
•Commercial operating income decreased $1.5 million, or 6.1%, primarily due to the decrease in revenues, partially offset by decreases in restructuring charges and compensation costs for our revenue-generating professionals. The decrease in compensation costs for our revenue-generating professionals was primarily driven by a decrease in performance bonus expense. Commercial operating margin decreased to 18.8% from 19.3% primarily driven by an increase in compensation costs for our revenue-generating professionals, as a percentage of revenues; partially offset by a decrease in restructuring charges, as a percentage of revenues.
Reworded paragraphs (77)
Previous wording
Huron is a global professional services firm that partners with clients to develop growth strategies, optimize operations and accelerate digital transformation, including using an enterprise portfolio of technology, data and analytics solutions, to empower clients to own their future. By collaborating with clients, embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve.
Current wording
Huron is a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve.
Previous wording
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.
Current wording
Revenues before reimbursable expenses are primarily generated by our employees who provide consulting and other professional services to our clients and are billable to our clients based on the number of hours worked, services provided, or achieved outcomes. We refer to these employees as our revenue-generating professionals. Revenues before reimbursable expenses are primarily driven by the number of revenue-generating professionals we employ as well as the total value, scope, and terms of the consulting contracts under which they provide services. We also engage independent contractors to supplement our revenue-generating professionals on client engagements as needed.
Previous wording
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.
Current wording
We generate our revenues before reimbursable expenses from providing professional services and software products under the following four types of billing arrangements: fixed-fee (including software license revenue); time-and-expense; performance-based; and software support, maintenance and subscriptions.
Previous wording
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.
Current wording
Reimbursable expenses that are billed to clients, primarily relating to travel and out-of-pocket expenses incurred in connection with client engagements, are included in total revenues. We manage our business on the basis of revenues before reimbursable expenses, which we believe is the most accurate reflection of our services because it eliminates the effect of reimbursable expenses that we bill to our clients at cost.
Previous wording
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.
Current wording
Segment operating income consists of the revenues generated by a segment, less operating expenses that are incurred directly by the segment. Unallocated corporate expenses not allocated at the segment level include costs related to administrative functions that are performed in a centralized manner and 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.
Previous wording
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. 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.
Current wording
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 before reimbursable expenses, adjusted net income, and adjusted diluted earnings per share. These non-GAAP financial measures differ from GAAP because they exclude a number of items required by GAAP, each discussed below. 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.
Previous wording
2024 litigation settlement gain: In the second quarter of 2024, we settled a litigation matter for which Huron was the plaintiff for $15.0 million, on a pre-tax basis. This $15.0 million settlement gain was recorded as a component of other gains, net on our consolidated statement of operations. We have excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal costs incurred during 2024 specific to this litigation matter, as this net gain is not indicative of the ongoing performance of our business. Of the $3.3 million third-party legal costs incurred for this matter in the first half of 2024, $2.7 million was incurred in the first quarter and $0.6 million was incurred in the second quarter. Our third-party legal expenses are recorded as a component of selling, general and administrative expenses on our statement of operations. Third-party legal costs incurred for this litigation matter during the three and six months ended June 30, 2023 were $0.4 million and $1.0 million, respectively.
Current wording
2024 litigation settlement gain: In the second quarter of 2024, we settled a litigation matter in which Huron was the plaintiff for $15.0 million, on a pre-tax basis. This $15.0 million settlement gain was recorded as a component of other gains, net on our consolidated statement of operations. We have excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal costs incurred during 2024 specific to this litigation matter, as this net gain is not indicative of the ongoing performance of our business. Of the $3.3 million third-party legal costs incurred for this matter in 2024, $2.7 million was incurred in the first quarter and $0.6 million was incurred in the second quarter. Our third-party legal expenses are recorded as a component of selling, general and administrative expenses on our statement of operations. Third-party legal costs incurred for this litigation matter during the three and nine months ended September 30, 2023 were $1.2 million and $2.2 million, respectively.
Previous wording
Highlights from the second quarter of 2024 include:
Current wording
Highlights from the third quarter of 2024 include:
Previous wording
•Adjusted diluted EPS increased 21.7% to $1.68 for the second quarter of 2024, compared to $1.38 for the second quarter of 2023.
Current wording
•Adjusted diluted EPS increased 20.9% to $1.68 for the third quarter of 2024, compared to $1.39 for the third quarter of 2023.
Previous wording
Total revenues increased $24.9 million, or 7.2%, to $371.7 million for the second quarter of 2024 from $346.8 million for the second quarter of 2023. The increase in revenues was driven by continued strength in demand for Healthcare's Consulting and Managed Services and Digital capabilities, as well as an increase in demand for Education's Consulting and Managed Services capability, reflecting our focus on accelerating growth in our healthcare and education industries. These increases were partially offset by a decrease in demand for Commercial's Digital capability.
Current wording
Revenues before reimbursable expenses increased $11.9 million, or 3.3%, to $370.0 million for the third quarter of 2024 from $358.2 million for the third quarter of 2023. The increase in revenues before reimbursable expenses was driven by an increase in demand for Education's Consulting and Managed Services and Digital capabilities, as well as continued strength in demand for Healthcare's Digital capability, reflecting our focus on accelerating growth in our healthcare and education industries. These increases in demand were partially offset by a decrease in demand for Commercial's Consulting and Managed Services capability.
Previous wording
In our Consulting and Managed Services capability, revenues for the second quarter of 2024 increased 10.7%, compared to the second quarter of 2023, and reflected strengthened demand in our Education and Healthcare segments. The utilization rate within our Consulting capability decreased to 73.7% in the second quarter of 2024, compared to 76.0% in the second quarter of 2023.
Current wording
Revenues before reimbursable expenses within our Consulting and Managed Services capability were $214.5 million in the third quarter of 2024, compared to $214.7 million in the third quarter of 2023; and reflected strengthened demand in the Education segment, offset by a decrease in demand in our Commercial and Healthcare segments. The utilization rate within our Consulting capability decreased to 73.6% in the third quarter of 2024, compared to 77.3% in the third quarter of 2023.
Previous wording
Revenues within our Digital capability increased 2.5% in the second quarter of 2024, compared to the second quarter of 2023, and reflected strengthened demand in our Healthcare segment, partially offset by a decrease in demand in our Commercial segment. The utilization rate within our Digital capability increased to 75.0% in the second quarter of 2024, compared to 74.7% in the second quarter of 2023.
Current wording
Revenues before reimbursable expenses within our Digital capability increased 8.4% in the third quarter of 2024 to $155.5 million, compared to $143.5 million in the third quarter of 2023, and reflected strengthened demand in all of our segments. The utilization rate within our Digital capability increased to 77.2% in the third quarter of 2024, compared to 75.4% in the third quarter of 2023.
Previous wording
The total number of revenue-generating professionals increased 13.0% to 5,848 as of June 30, 2024, compared to 5,174 as of June 30, 2023, as a result of hiring to support the overall increase in demand for our services, and includes approximately 70 hires as a result of our acquisition of GG+A in the first quarter of 2024. 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.
Current wording
Our total number of revenue-generating professionals increased 10.4% to 5,896 as of September 30, 2024, compared to 5,341 as of September 30, 2023, as a result of hiring to support the overall increase in demand for our services. 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.
Previous wording
Net cash provided by operating activities for the second quarter of 2024 was $107.2 million, compared to $78.2 million for the second quarter of 2023. The increase in net cash provided by operating activities was primarily related to an increase in cash collections during the second quarter of 2024 compared to the second quarter of 2023; partially offset by increases in payments for salaries and related expenses for our revenue-generating professionals and selling, general and administrative expenses during the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Net cash provided by operating activities for the third quarter of 2024 was $85.2 million, compared to $68.8 million for the third quarter of 2023. The increase in net cash provided by operating activities was primarily related to an increase in cash collections during the third quarter of 2024 compared to the third quarter of 2023, as well as the cash received for the settlement of a legal matter in which Huron was the plaintiff; partially offset by an increase in payments for salaries and related expenses for our revenue-generating professionals during the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
(3)During the first quarter of 2024, we reclassified one of the offerings within Education's Consulting capability to Education's Managed Services capability. Revenues generated by this offering during the quarters ended March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023 were $2.8 million, $2.2 million, $2.4 million, and $2.7 million, respectively, and during the years ended December 31, 2022 and 2023 were $15.0 million and $10.1 million, respectively. The number of revenue-generating professionals within this offering as of December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023 were 54, 24, 24, 24 and 23, respectively.
Current wording
(3)During the first quarter of 2024, we reclassified one of the offerings within Education's Consulting capability to Education's Managed Services capability. Revenues before reimbursable expenses generated by this offering during the quarters ended March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023 were $2.8 million, $2.2 million, $2.4 million, and $2.7 million, respectively, and during the years ended December 31, 2022 and 2023 were $15.0 million and $10.1 million, respectively. The number of revenue-generating professionals within this offering as of December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023 were 54, 24, 24, 24 and 23, respectively.
Previous wording
This reclassification did not impact the aggregate revenues or headcount reported for the Education Consulting and Managed Services capability for any period, and the prior period Education Managed Services capability revenues and headcount in the following footnotes have been revised for consistent presentation.
Current wording
This reclassification did not impact the aggregate revenues before reimbursable expenses or headcount reported for the Education Consulting and Managed Services capability for any period, and the prior period Education Managed Services capability revenues before reimbursable expenses and headcount in the following footnotes have been revised for consistent presentation.
Previous wording
(4)Managed Services capability revenues within our Healthcare segment was $16.7 million and $17.3 million for the three months ended June 30, 2024 and 2023, respectively; and $34.2 million and $37.1 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
(4)Managed Services capability revenues before reimbursable expenses within our Healthcare segment was $19.3 million and $16.7 million for the three months ended September 30, 2024 and 2023, respectively; and $53.5 million and $53.8 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Managed Services capability revenues within our Education segment was $6.8 million and $7.1 million for the three months ended June 30, 2024 and 2023, respectively; and $14.2 million and $14.5 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
Managed Services capability revenues before reimbursable expenses within our Education segment was $6.6 million and $7.4 million for the three months ended September 30, 2024 and 2023, respectively; and $20.8 million and $22.0 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
(5)The number of Managed Services revenue-generating professionals within our Healthcare segment was 1,116 and 772 as of June 30, 2024 and 2023, respectively.
Current wording
(5)The number of Managed Services revenue-generating professionals within our Healthcare segment was 1,223 and 757 as of September 30, 2024 and 2023, respectively.
Previous wording
The number of Managed Services revenue-generating professionals within our Education segment was 128 and 130 as of June 30, 2024 and 2023, respectively.
Current wording
The number of Managed Services revenue-generating professionals within our Education segment was 122 and 129 as of September 30, 2024 and 2023, respectively.
Previous wording
Revenues by segment and capability for the three months ended June 30, 2024 and 2023 were as follows:
Current wording
Revenues before reimbursable expenses by segment and capability for the three months ended September 30, 2024 and 2023 were as follows:
Previous wording
Revenues increased $24.9 million, or 7.2%, to $371.7 million for the second quarter of 2024 from $346.8 million for the second quarter of 2023. The overall increase in revenues was driven by continued strength in demand for Healthcare's Consulting and Managed Services and Digital capabilities, as well as an increase in demand for Education's Consulting and Managed Services capability, reflecting our focus on accelerating growth in our healthcare and education industries. These increases in demand were partially offset by a decrease in demand for Commercial's Digital capability. Additional information on our revenues by segment follows.
Current wording
Revenues before reimbursable expenses increased $11.9 million, or 3.3%, to $370.0 million for the third quarter of 2024 from $358.2 million for the third quarter of 2023. The overall increase in revenues before reimbursable expenses was driven by an increase in demand for Education's Consulting and Managed Services and Digital capabilities, as well as continued strength in demand for Healthcare's Digital capability, reflecting our focus on accelerating growth in our healthcare and education industries. These increases in demand were partially offset by a decrease in demand for Commercial's Consulting and Managed Services capability. Additional information on our revenues before reimbursable expenses by segment follows.
Previous wording
•Healthcare revenues increased $16.3 million, or 9.4%, driven by continued strength in demand for our performance improvement, culture and organizational excellence, and strategy and innovation solutions within our Consulting and Managed Services capability, as well as an increase in demand for our technology and analytics services within our Digital capability. These increases in demand were partially offset by a decrease in demand for our financial advisory solutions within our Consulting and Managed Services capability. Revenues in the second quarter of 2024 included $0.3 million of incremental revenues from our acquisition of Roundtable Analytics completed in September 2023.
Current wording
•Healthcare revenues before reimbursable expenses increased $4.0 million, or 2.2%, driven by continued strength in demand for our technology and analytics services within our Digital capability, as well as an increase in demand for our revenue cycle managed services solution within our Consulting and Managed services capability. These increases in demand were partially offset by decreases in demand for our financial advisory and strategy and innovation solutions within our Consulting and Managed Services capability. Revenues before reimbursable expenses in the third quarter of 2024 included $0.1 million of incremental revenues before reimbursable expenses from our acquisition of Roundtable Analytics completed in September 2023.
Previous wording
•Education revenues increased $12.1 million, or 10.9%, and includes $6.8 million of incremental revenues from our acquisition of GG+A completed in March 2024. The increase in Education revenues was also driven by increases in demand for our strategy and operations solution within our Consulting and Managed Services capability and our software products within our Digital capability.
Current wording
•Education revenues before reimbursable expenses increased $10.0 million, or 9.0%, and includes $5.7 million of incremental revenues before reimbursable expenses from our acquisition of GG+A completed in March 2024. The increase in Education revenues before reimbursable expenses was also driven by strengthened demand for our technology and analytics services and software products within our Digital capability.
Previous wording
The number of revenue-generating professionals within our Education segment grew 10.6% to 1,243 as of June 30, 2024, compared to 1,124 as of June 30, 2023. Our acquisition of GG+A in March 2024 added approximately 70 revenue-generating professionals.
Current wording
The number of revenue-generating professionals within our Education segment grew 3.9% to 1,250 as of September 30, 2024, compared to 1,203 as of September 30, 2023. Our acquisition of GG+A in March 2024 added approximately 70 revenue-generating professionals.
Previous wording
Operating expenses and operating expenses as a percentage of revenues were as follows:
Current wording
Operating expenses and operating expenses as a percentage of revenues before reimbursable expenses were as follows:
Previous wording
Direct costs increased $13.4 million, or 5.7%, to $248.6 million for the second quarter of 2024 from $235.2 million for the second quarter of 2023. The $13.4 million increase primarily related to a $20.0 million increase in compensation costs for our revenue-generating professionals and a $1.1 million increase in technology costs, partially offset by a $6.5 million decrease in contractor expenses. The increase in compensation costs reflects our investment to grow our talented team to meet increased market demand and is primarily attributable to a $20.7 million increase in salaries and related expenses driven by increased headcount and annual salary increases that went into effect in the first quarter of 2024. As a percentage of revenues, direct costs decreased to 66.9% during the second quarter of 2024, compared to 67.8% during the second quarter of 2023. This decrease was primarily due to the decrease in contractor expenses; partially offset by an increase in compensation costs for our revenue-generating professionals, as a percentage of revenues.
Current wording
Direct costs increased $3.1 million, or 1.3%, to $247.8 million for the third quarter of 2024 from $244.8 million for the third quarter of 2023. The $3.1 million increase primarily related to an $8.9 million increase in compensation costs for our revenue-generating professionals and a $1.0 million increase in technology costs, partially offset by a $7.0 million decrease in contractor expenses. The increase in compensation costs reflects our investment to grow our talented team to meet increased market demand and is primarily attributable to a $16.9 million increase in salaries and related expenses driven by increased headcount and annual salary increases that went into effect in the first quarter of 2024; partially offset by a $4.5 million decrease in performance bonus expense, a $2.2 million decrease in share-based compensation expense, and a $1.3 million decrease in signing, retention and other bonus expense. As a percentage of revenues before reimbursable expenses, direct costs decreased to 67.0% during the third quarter of 2024, compared to 68.3% during the third quarter of 2023. This decrease was primarily due to the decreases in contractor expenses, performance bonus expense and share-based compensation expense for our revenue-generating professionals; partially offset by the increase in salaries and related expenses for our revenue-generating professionals, as a percentage of revenues before reimbursable expenses.
Previous wording
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.
Current wording
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. 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.
Previous wording
Selling, general and administrative expenses increased by $6.8 million, or 10.5%, to $71.4 million in the second quarter of 2024 from $64.6 million in the second quarter of 2023. The $6.8 million increase primarily related to a $5.1 million increase in non-payroll costs, driven by a $2.3 million increase in bad debt expense, a $1.5 million increase in software and data hosting expense, and a $1.7 million increase in compensation costs for our support personnel. The increase in compensation costs for our support personnel was primarily driven by a $3.1 million increase in salaries and related expenses driven by increased headcount and annual salary increases that went into effect in the first quarter of 2024, partially offset by a $0.8 million decrease in performance bonus expense. As a percentage of revenues, selling, general and administrative expenses increased to 19.2% during the second quarter of 2024, compared to 18.6% during the second quarter of 2023, primarily attributable to an increase in bad debt expense, as a percentage of revenues.
Current wording
Selling, general and administrative expenses increased by $6.0 million, or 9.3%, to $70.4 million in the third quarter of 2024 from $64.4 million in the third quarter of 2023. The $6.0 million increase primarily related to a $3.8 million increase in compensation costs for our support personnel driven by a $3.3 million increase in deferred compensation expense attributable to the change in market value of our deferred compensation liability and a $3.1 million increase in salaries and related expenses; partially offset by a $1.3 million decrease in share-based compensation expense and a $1.2 million decrease in performance bonus expense. The increase in deferred compensation expense is offset by an increase in the gain recognized for the change in the market value of investments that are used to fund our deferred compensation liability and recognized in other income (expense), net. Additionally, selling, general and administrative expenses increased $2.3 million for non-payroll costs driven by a $1.3 million increase in software and data hosting expense, a $0.7 million increase in bad debt expense, and a $0.6 million increase in research expense; partially offset by a $1.3 million decrease in legal expenses. As a percentage of revenues before reimbursable expenses, selling, general and administrative expenses increased to 19.0% during the third quarter of 2024, compared to 18.0% during the third quarter of 2023, which was primarily driven by the increase in deferred compensation expense attributable to the change in market value of our deferred compensation liability, as a percentage of revenues before reimbursable expenses.
Previous wording
Depreciation and amortization expense decreased $0.1 million, or 1.8%, to $6.0 million in the second quarter of 2024, compared to $6.1 million in the second quarter of 2023. The $0.1 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, partially offset by an an increase in amortization of intangible assets acquired in business acquisitions completed subsequent to the second quarter of 2023.
Current wording
Depreciation and amortization expense increased $0.2 million, or 3.6%, to $6.3 million in the third quarter of 2024, compared to $6.1 million in the third quarter of 2023. The $0.2 million increase in depreciation and amortization expense was primarily attributable to an increase in amortization of internally developed software, partially offset by a decrease in amortization of intangible assets.
Previous wording
Operating income increased $19.7 million, or 49.6%, to $59.4 million in the second quarter of 2024 from $39.7 million in the second quarter of 2023. Operating margin, which is defined as operating income expressed as a percentage of revenues was 16.0% for the three months ended June 30, 2024, compared to 11.5% for the three months ended June 30, 2023.
Current wording
Operating income increased $5.1 million, or 13.7%, to $42.4 million in the third quarter of 2024 from $37.3 million in the third quarter of 2023. Operating margin, which is defined as operating income expressed as a percentage of revenues before reimbursable expenses was 11.5% for the three months ended September 30, 2024, compared to 10.4% for the three months ended September 30, 2023.
Previous wording
•Healthcare operating income increased $6.1 million, or 12.4%, primarily due to the increase in revenues and a decrease in contractor expenses; partially offset by increases in compensation costs for our revenue-generating professionals and bad debt expense. The increase in compensation costs for our revenue-generating professionals was primarily driven by an increase in headcount, annual salary increases that went into effect in the first quarter of 2024, and an increase in performance bonus expense. Healthcare operating margin increased to 29.1% from 28.3% primarily due to the decrease in contractor expenses; partially offset by increases in compensation costs for our revenue-generating professionals and bad debt expense, as percentages of revenues.
Current wording
•Healthcare operating income increased $2.8 million, or 5.9%, primarily due to a decrease in contractor expenses and the increase in revenues before reimbursable expenses; partially offset by an increase in compensation costs for our revenue-generating professionals. The increase in compensation costs for our revenue-generating professionals was primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of 2024; partially offset by decreases in share-based compensation expense and performance bonus expense. Healthcare operating margin increased to 27.1% from 26.2% primarily due to the decrease in contractor expenses; partially offset by an increase in compensation costs for our revenue-generating professionals, as a percentage of revenues before reimbursable expenses.
Previous wording
•Education operating income increased $3.4 million, or 12.4%, primarily due to the increase in revenues; partially offset by increases in compensation costs for our revenue-generating professionals and support personnel. The increases in compensation costs for our revenue-generating professionals and support personnel were primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of 2024, partially offset by a decrease in performance bonus expenses for our revenue-generating professionals. Education operating margin increased to 25.1% from 24.8% primarily driven by revenue growth that outpaced the increase in compensation costs for our revenue-generating professionals and a decrease in contractor expenses; partially offset by an increase in compensation costs for our support personnel, as a percentage of revenue.
Current wording
•Education operating income increased $2.6 million, or 9.8%, primarily due to the increase in revenues before reimbursable expenses; partially offset by increases in compensation costs for our revenue-generating professionals and support personnel. The increases in compensation costs for our revenue-generating professionals and support personnel were primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of 2024, partially offset by decreases in share-based compensation expense and performance bonus expense for our revenue-generating professionals. Education operating margin increased to 24.1% from 23.9% primarily driven by the decreases in performance bonus expense and share-based compensation expense for our revenue-generating professionals and contractor expenses; partially offset by an increase in salaries and related expenses for our revenue-generating professionals and support personnel, as percentages of revenues before reimbursable expenses.
Previous wording
Interest expense, net of interest income increased $2.2 million to $8.0 million in the second quarter of 2024 from $5.8 million in the second quarter of 2023, which was primarily attributable to higher interest rates and higher levels of borrowing under our Amended Credit Facility during the second quarter of 2024 compared to the second quarter of 2023. See “Liquidity and Capital Resources” below and Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for additional information about our Amended Credit Facility.
Current wording
Interest expense, net of interest income increased $1.8 million to $6.8 million in the third quarter of 2024 from $5.0 million in the third quarter of 2023, which was primarily attributable to higher levels of borrowing and higher interest rates under our Amended Credit Facility during the third quarter of 2024 compared to the third quarter of 2023. See “Liquidity and Capital Resources” below and Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for additional information about our Amended Credit Facility.
Previous wording
Other income, net decreased $0.4 million to $0.6 million in the second quarter of 2024 from $1.1 million in the second quarter of 2023. The decrease in other income, net includes a $0.9 million decrease in the gain recognized for the market value of our investments that are used to fund our deferred compensation liability, partially offset by a $0.5 million increase in foreign currency transaction gains. During the second quarter of 2024 we recognized a $0.5 million gain for the market value of our deferred compensation investments compared to a $1.3 million gain recognized in the second quarter of 2023.
Current wording
Other income (expense), net increased $2.9 million to income of $1.9 million in the third quarter of 2024 from expense of $1.0 million in the third quarter of 2023. The increase in other income, net includes a $3.5 million increase in the gain recognized for the market value of our investments that are used to fund our deferred compensation liability. During the third quarter of 2024 we recognized a $2.2 million gain for the market value of our deferred compensation investments compared to a $1.3 million loss recognized in the third quarter of 2023. Additionally, other income (expense), net includes a $0.3 million foreign currency loss during the third quarter of 2024 compared to a $0.3 million foreign currency gain during the third quarter of 2023.
Previous wording
For the three months ended June 30, 2024, our effective tax rate was 28.1% as we recognized income tax expense of $14.6 million on income of $52.1 million. The effective tax rate of 28.1% was less favorable than the statutory rate, inclusive of state income taxes, of 26.1%, primarily due to certain nondeductible expense items.
Current wording
For the three months ended September 30, 2024, our effective tax rate was 27.8% as we recognized income tax expense of $10.4 million on income of $37.6 million. The effective tax rate of 27.8% was less favorable than the statutory rate, inclusive of state income taxes, of 26.1%, 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.
Previous wording
Adjusted EBITDA increased $7.2 million to $55.7 million in the second quarter of 2024 from $48.5 million in the second quarter of 2023. The increase in adjusted EBITDA was primarily attributable to the increase in segment operating income, excluding the impact of segment restructuring charges.
Current wording
Adjusted EBITDA increased $6.9 million to $54.9 million in the third quarter of 2024 from $48.0 million in the third quarter of 2023. The increase in adjusted EBITDA was primarily attributable to the increases in Education, Healthcare and Commercial operating income, excluding the impact of segment depreciation and amortization and segment restructuring charges.
Previous wording
Adjusted net income increased $4.0 million, or 14.8%, to $30.9 million in the second quarter of 2024, compared to $27.0 million in the second quarter of 2023. As a result of the increase in adjusted net income as well as a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan, adjusted diluted earnings per share increased to $1.68 for the second quarter of 2024 compared to $1.38 for the second quarter of 2023.
Current wording
Adjusted net income increased $3.9 million, or 14.3%, to $31.1 million in the third quarter of 2024, compared to $27.2 million in the third quarter of 2023. As a result of the increase in adjusted net income as well as a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan, adjusted diluted earnings per share increased to $1.68 for the third quarter of 2024 compared to $1.39 for the third quarter of 2023.
Previous wording
Revenues by segment and capability for the six months ended June 30, 2024 and 2023 were as follows:
Current wording
Revenues before reimbursable expenses by segment and capability for the nine months ended September 30, 2024 and 2023 were as follows:
Previous wording
Revenues increased $63.0 million, or 9.5%, to $727.6 million for the first six months of 2024 from $664.7 million for the first six months of 2023. The overall increase in revenues reflects continued strength in demand for both our Consulting and Managed Services capability and Digital capability within Healthcare and Education, and reflects our focus on accelerating growth in our healthcare and education industries. These increases in demand were partially offset by a decrease in demand for Commercial's Digital capability. Additional information on our revenues by segment follows.
Current wording
Revenues before reimbursable expenses increased $74.8 million, or 7.3%, to $1.10 billion for the first nine months of 2024 from $1.02 billion for the first nine months of 2023. The overall increase in revenues before reimbursable expenses reflects continued strength in demand for both our Consulting and Managed Services capability and Digital capability within Healthcare and Education, and reflects our focus on accelerating growth in our healthcare and education industries. These increases in demand were partially offset by a decrease in demand for Commercial's Digital and Consulting and Managed Services capabilities. Additional information on our revenues before reimbursable expense by segment follows.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Net Income and Earnings per Share
Current report — wording carried from elsewhere
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
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Other gains, net totaled $15.9 million in the second quarter of 2024 compared to $0.6 million in the second quarter of 2023. The $15.9 million of other gains, net in the second quarter of 2024 consisted of a pre-tax $15.0 million litigation settlement gain for a completed legal matter for which Huron was the plaintiff, as well as $0.9 million of remeasurement gains to decrease the fair value of our contingent consideration liabilities related to business combinations. The $0.6 million of other gains, net in the second quarter of 2023 primarily consisted of remeasurement gains to decrease the fair value of our contingent consideration liabilities related to business combinations.
Previous report — wording carried elsewhere
Net Income from Continuing Operations and Earnings per Share