Earnings call transcript: Huron Consulting Group Q2 2025 sees revenue boost

Huron Consulting Group reported a strong performance for Q2 2025, with revenues reaching $402.5 million, marking an 8.3% increase year-over-year. The company also recorded a net income of $19.4 million, or $1.09 per diluted share. This performance aligns with the company’s robust financial health, earning a "GREAT" rating according to InvestingPro metrics. Despite these positive results, Huron’s stock price saw a modest increase of 0.68% in aftermarket trading, closing at $147.73, though the stock has delivered an impressive 19.66% return year-to-date.

Key Takeaways

• Huron’s revenue increased by 8.3% year-over-year, driven by all three business segments.
• The company’s net income for the quarter was $19.4 million, translating to $1.09 per share.
• Huron’s stock price increased by 0.68% in aftermarket trading.
• The company acquired Eclipse Insights and Traliant, enhancing its healthcare and commercial segments.
• Full-year revenue guidance was increased to $1.64-$1.68 billion.

Company Performance

Huron Consulting Group demonstrated robust performance in Q2 2025, with all three segments—Healthcare, Education, and Commercial—reporting record revenues. The company’s organic revenue growth was 4.2%, contributing to an impressive 9.24% revenue growth over the last twelve months. With a healthy PEG ratio of 0.59 and strong return on equity of 22%, Huron continues to expand its market presence despite challenging regulatory environments. Huron’s strategic acquisitions, including Eclipse Insights and Traliant, have bolstered its offerings in key sectors. InvestingPro analysis reveals 8 additional key insights about Huron’s growth strategy and market position, available to subscribers.

Financial Highlights

• Revenue: $402.5 million, up 8.3% year-over-year
• Net income: $19.4 million, or $1.09 per diluted share
• Adjusted EBITDA: $60.6 million, representing 15.1% of revenue
• Utilization rates: 77% for consulting and 78% for digital services

Outlook & Guidance

Huron has revised its full-year revenue guidance upward to a range of $1.64-$1.68 billion, reflecting confidence in sustained growth across its segments. The company maintains its adjusted EBITDA margin guidance at 14-14.5%. With a solid current ratio of 1.99 and strong cash flow generation, Huron demonstrates financial stability that supports its growth initiatives. Additionally, the healthcare segment is expected to grow in the upper single digits, while the commercial segment anticipates growth in the mid-20% range. For detailed analysis of Huron’s growth potential and comprehensive valuation metrics, access the full Pro Research Report available on InvestingPro.

Executive Commentary

Mark Hussey, CEO, noted, "Disruption facing our clients in primary end markets is substantial," highlighting the challenges in the healthcare sector due to upcoming regulatory changes. CFO John Kelly added, "Our visibility is stronger at this point than it was earlier in the year," indicating optimism about future performance and market conditions.

Risks and Challenges

• Regulatory changes in the healthcare sector could impact client operations and demand for Huron’s services.
• Potential Medicaid funding cuts and an increase in uninsured individuals may affect the healthcare market.
• The education sector faces regulatory uncertainty, which could influence Huron’s growth in this area.
• Market volatility and economic pressures could pose risks to Huron’s financial performance.
• The company’s aggressive M&A strategy requires careful integration to realize expected synergies.

Huron’s Q2 2025 earnings call highlighted a strong performance with strategic initiatives aimed at future growth. While the company faces regulatory and market challenges, its diversified portfolio, strategic acquisitions, and strong Altman Z-Score of 6.1 position it well for continued success. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels, though the company maintains strong fundamentals and growth prospects.

Full transcript - Huron Consulting Group Inc (HURN) Q2 2025:

Conference Call Operator: Good afternoon and welcome to Huron Consulting Group’s webcast to discuss the financial results for the second quarter 2025. At this time, all conference call lines are on a listen-only mode. Later we will conduct a question and answer session for conference call participants and instructions will follow at that time. As a reminder, this conference call is being recorded. Before we begin, I would like to point all of you to the disclosure at the end of the Company’s news release for information about forward-looking statements that may be made or discussed on this call. The news release is posted on Huron’s website. Please review that information along with the filings with the SEC for a disclosure of factors that may impact subjects discussed in this afternoon’s webcast. The Company will be discussing one or more non-GAAP financial measures.

Please look at the earnings release on Huron’s website for all of the disclosures required by the SEC, including reconciliation to the most comparable GAAP numbers. Now I’d like to turn the call over to Mark Hussey, Chief Executive Officer and President of Huron Consulting Group. Mr. Hussey, please proceed.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Good afternoon and welcome to Huron Consulting Group second quarter 2025 earnings call. With me today are John Kelly, our Chief Financial Officer, and Ronnie Dale, our Chief Operating Officer. Revenues before reimbursable expenses, or RBR, in the quarter grew 8% over the second quarter of 2024, including organic RBR growth across all three operating segments. RBR in the second quarter of 2025 was a record high for our business. Growth in our core markets continues to reflect strong demand for our services as health systems, universities, and commercial businesses adapt to regulatory and macroeconomic pressures while evolving their business models for success in the future. Clients continue to seek our deep industry expertise, breathtaking capabilities, and proven track record of delivering results to help them achieve a more sustainable path forward in the face of significant market disruption.

The current demand environment, coupled with our strong client relationships, provides us confidence in our outlook for continued growth in 2025 as reflected in our updated annual guidance. I’ll now share some additional insights into our second quarter performance in the Healthcare segment. Second quarter RBR grew 4% over the prior year quarter, excluding the results for Studer Education, which we divested at the end of 2024. Healthcare segment RBR grew 6% over the second quarter of 2024. The increase in RBR in the quarter was driven by continued strong demand for our performance improvement, managed services, financial advisory, and strategy and innovation offerings, partially offset by a decrease in our digital offerings within healthcare. The passage of the One Big Beautiful Bill Act earlier this month brought some clarity to the anticipated reductions in federal spending on health care.

The cuts in Medicaid funding are projected to reduce federal spending on health care by over a trillion dollars over the next decade and are expected to result in a significant increase in patients without health insurance coverage. In response, hospitals and health systems are acting with urgency to prepare for margin declines anticipated in the coming years while addressing current financial pressures driven primarily by costs that continue to increase at a faster rate than reimbursements. Within the current legislation, many hospitals and health systems will face reductions in the supplemental payments that states have made to healthcare providers to augment low Medicaid reimbursement rates. The expected increase in the uninsured population has been estimated to be up to 10 million people, which will increase the cost of uncompensated care for most hospitals.

As hospitals and health systems address their budget gaps and position their business for a more sustainable future, they are returning to Huron because of our decades-long track record of delivering significant, measurable, and sustainable financial benefits. In this environment, demand remains strong for our performance improvement, financial advisory, and strategy and innovation offerings as reflected in our RBR growth and our solid pipeline. While demand for our digital offerings within healthcare remains solid, we have seen slower sales conversions in certain areas within our pipeline for larger digital transformation engagements. We believe this to be a temporary pause as our clients focus on their immediate priorities to address their financial situations.

As we’ve mentioned on prior earnings calls, the breadth of our capabilities, we believe we are well positioned across a full range of market conditions to address the wide array of opportunities and challenges facing our hospital, physician group, and health system clients both now and in the future, which we believe will drive continued growth for our healthcare segment. Let me also add some perspective to the recent acquisition we announced in the healthcare segment. At the end of the second quarter, we acquired Eclipse Insights to strengthen our performance improvement offerings. We partnered with Eclipse Insights in the market for several years. This acquisition strengthens Huron’s mid revenue cycle expertise, enhancing our ability to support providers across the full revenue cycle continuum.

From patient intake and care delivery through documentation, billing, and reimbursements, CPS Insights brings deep experience in charge capture optimization, clinical documentation, coding, denials management, and revenue strategy, key areas that have direct impact on hospital financial performance. Turning to the Education segment, RBR grew 5% in the second quarter of 2025 over the prior year quarter, driven by strong demand for our strategy and operations offerings and increased demand for our research software product offerings. We achieved record education segment RBR in the quarter. Their team continues to execute exceptionally well given the ongoing dynamic regulatory landscape. The recent legislation brought some clarity for taxation of endowment earnings. However, in most other areas, universities and research institutes remain in a period of heightened uncertainty.

The impact to our broad client base is highly variable, and institutions are closely monitoring the evolving regulatory environment and assessing the magnitude, timing, and strategic implications of potential scenarios that will affect them. The industry continues to face the prospect of lower indirect reimbursement rates for research grants, reduced federal support for research grants and contracts, anticipated declines in enrollment numbers from international and domestic students, and potential reductions in federal financial aid. As such, our clients continue to strategically prepare for a variety of future scenarios while preemptively taking action to position their organizations for the best possible outcome and a sustainable future. This environment led to a record level of sales conversion for our education segment during the quarter. Performance improvement offerings in education remain in high demand as clients seek opportunities to reduce cost, optimize their operations, and strengthen their financial positions.

Demand for our digital offerings continues to be robust as clients view investments in their technology infrastructures to be foundational to driving enterprise-wide operating efficiencies in research. Many clients are focused on optimizing their research strategies to align with their mission and to retain their research faculty. In addition, they’re increasingly turning to our software products and managed services offerings to optimize their research administration operations. As tuition and government revenue sources are pressured, institutions are increasingly focused on optimizing fundraising strategies to grow philanthropic support. Our advancement fundraising offerings are well positioned to address these evolving needs. A comprehensive and balanced portfolio allows us to serve our clients across the full spectrum of challenges and opportunities that they are facing in the current landscape.

The needs of our clients are wide ranging and we believe we remain best positioned to serve them in this uncertain environment given the breadth of our diverse offerings and our deep understanding of the industry and our clients’ institutions. Now let me turn to the commercial segment. In the second quarter 2025, we also achieved record RBR in the commercial segment. Commercial segment RBR grew 28% over the prior year quarter. The increase was driven by the incremental RBR from our acquisition of Axia and strong demand for our digital offerings. Excluding the acquisition of Axia, our commercial digital capability RBR grew 23% over the prior year quarter.

Building upon the strengths of our digital, financial advisory, and strategy capabilities, our growth strategy in the commercial segment is focused on increasing the depth of our industry expertise while broadening our offerings and market reach, primarily seeking opportunities that are highly complementary to our current portfolio. The strategy has led to continued growth in the commercial segment during a challenging market environment as our global clients navigate through the broader macroeconomic environment, they’re turning to Huron to advance their competitive positions, drive operational efficiency, and leverage data to make better, faster decisions. For example, we’re working closely with one of our vendor partners in Europe to bring our deep enterprise performance management experience to serve large multinational clients.

Many of these large, complex companies are upgrading their technologies to improve the quality and speed of planning, scenario modeling, and the data integration needed to make faster decisions and operate more effectively in today’s volatile and dynamic environment. As part of our programmatic M&A strategy, we’re also investing inorganically to execute our commercial industry strategy. Earlier this month, we acquired Traliant, a leading advisory partner to the financial services industry with relationships with some of the top financial organizations in the world. Traliant brings decades of specialized expertise in areas such as risk management, compliance operations, financial crimes, and fraud. Combining Traliant’s offerings with Huron’s existing industry-specific digital capabilities creates a more comprehensive portfolio to help our clients address the complex challenges of balancing growth, operational efficiency, and automation with robust risk management that complies with the most stringent regulations.

We have a solid track record of expanding our commercial portfolio to include accretive offerings and capabilities, building upon our core commercial industries of focus in financial services, industrials and manufacturing, energy and utilities, and the public sector. We believe that our focused strategy and disciplined investments will continue to foster our competitive advantage and support the achievement of our medium-term financial targets in this segment. Let me turn to our outlook for the year inclusive of our recent acquisitions. Today, we’re increasing our RBR guidance to a range of $1.64 billion to $1.68 billion, which represents an increase of 12% at the midpoint of our guidance when compared to our full year 2024 results.

We are maintaining our adjusted EBITDA margin guidance range of 14.0% to 14.5% of RBR and increasing our adjusted non-GAAP EPS guidance to a range of $7.30 to $7.70, which represents an increase of 16% at the midpoint as compared to full year 2024. We’re pleased with the progress we’ve made in executing our organic growth strategy in the first half of 2025, especially given the challenges posed by the current macroeconomic environment. In parallel, we continue to advance our programmatic M&A strategy, maintaining a disciplined focus on delivering upon our stated goal of adding 2% to 4% inorganic growth annually. We are committed to driving continued sustainable margin expansion fueled by our ongoing pricing and efficiency initiatives.

We believe our outlook for 2025 reflects the strong foundation we’ve built, the ongoing market tailwinds for our business, and continued solid execution of our growth strategy consistent with medium-term financial goals we established at our Investor Day in March. Our strong first half of 2025 performance, our pipeline of emerging opportunities, and the strengthened outlook are only possible because of our deep industry expertise, broad portfolio of offerings, and our highly talented and collaborative team. Disruption facing our clients in primary end markets is substantial, stemming from the ongoing market uncertainty and regulatory environment, as well as the rapidly evolving competitive landscape. We continue to believe this disruption creates significant opportunities for long term growth for Huron, and now let me turn it over to John for a more detailed discussion of our financial results.

John Kelly, Chief Financial Officer, Huron Consulting Group: John, thank you Mark, and good afternoon everyone. Before I begin, please note that I will be discussing non-GAAP financial measures such as adjusted EBITDA, adjusted net income, adjusted EPS, and free cash flow. Our press release, 10-Q, and investor relations page on the Huron website include reconciliations of these non-GAAP measures to the most comparable GAAP measures, along with the discussion of why management uses these non-GAAP measures and why management believes they provide useful information to investors regarding our financial condition and operating results. Before discussing our financial results for the quarter, I’d like to discuss several housekeeping items. First, our second quarter 2025 results in the Healthcare segment exclude the operating results from the Studer Education business, which was divested on December 31, 2024.

Second, our second quarter results in the Education segment do reflect a full quarter of operating results from the acquisitions of Advancement Resources and Halpin, both of which closed in March 2025. Third, our acquisition of Eclipse Insights closed on June 24, and as such, a partial period of their operating results are included within the Healthcare segment. Operating results of Eclipse Insights were not material to our second quarter results. Finally, our acquisition of Traliant, which closed in July, is not included in our second quarter results. The results of Traliant will begin to be included in the third quarter within the Commercial segment. Now I’ll share some of the key financial results for the second quarter. RBR for the second quarter of 2025 was $402.5 million, up 8.3% from $371.7 million in the same quarter of 2024.

Organic RBR, which excludes the RBR generated by all acquisitions completed subsequent to the second quarter of 2024, grew 4.2% over the prior year quarter, driven by growth across all three operating segments. As Mark mentioned, we achieved record RBR in the quarter, crossing the $400 million mark for the first time. None of this would be possible without our incredible team and their dedication to our clients, our business, and each other. Net income for the second quarter 2025 was $19.4 million, $1.09 per diluted share, compared to net income of $37.5 million, $2.03 per diluted share, in the second quarter of 2024. As a percentage of total revenues, net income decreased to 4.7% in the second quarter of 2025 compared to 9.8% in the second quarter of 2024.

Net income for the second quarter of 2025 includes an $8.2 million non-cash impairment charge, net of tax, related to our convertible debt investment in a third party. 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 in which Huron was the plaintiff. Our effective income tax rate in the second quarter of 2025 was 29.9%, which was higher than the statutory rate, primarily due to the establishment of a valuation allowance for a deferred tax asset recorded as the result of the capital loss on our investment in a hospital-at-home company as well as certain non-deductible 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.

We now expect an effective tax rate in the range of 25% to 27% for the full year. Adjusted EBITDA was $60.6 million in Q2 2025, or 15.1% of RBR, compared to $55.7 million, or 15% of RBR, in Q2 2024. The increase in adjusted EBITDA for the quarter was primarily due to increases in segment operating income for all three operating segments, excluding the impact of segment depreciation and amortization and segment restructuring charges, partially offset by the increase in unallocated corporate expenses, excluding the impact of the change in the market value of our deferred compensation liabilities and transaction-related expenses. Adjusted net income was $33.7 million, or $1.89 per diluted share, in Q2 2025 compared to $18.5 million, or $1.68 per diluted share, in the second quarter of 2024, resulting in a 12.5% increase in adjusted diluted earnings per share over Q2.

Now I’ll discuss the performance of each of our operating segments. The healthcare segment generated 49% of total company RBR during the second quarter of 2025. The segment posted RBR of $197.8 million, up $7.7 million, or 4.1%, from the second quarter of 2024. The second quarter of 2024 included $3.5 million of RBR from the Studer Education business, which was divested in 2024. Excluding the results for Studer Education, healthcare segment Q2 RBR grew 6% over the second quarter of 2024. The increase in RBR in the quarter was driven by continued strong demand for our performance improvement, managed services, financial advisory, and strategy and innovation offerings, partially offset by a decrease in our digital offerings within healthcare and a decrease in RBR due to the divestiture of our Studer Education practice. The inorganic RBR contribution from our acquisitions was immaterial in the second quarter of 2025.

Operating income margin for healthcare was 3.2% in Q2 2025 compared to 29.1% in Q2 2024. The increase in margin was primarily due to decreases in bad debt expenses, salaries, and related expenses for our support personnel, partially offset by an increase in contractor expenses as a percentage of RBR. The education segment generated 32% of total company RBR during the second quarter of 2025. The education segment posted record RBR of $129.3 million, up $6.5 million or 5.3% from the second quarter of 2024. The increase in RBR in the quarter was driven by strong demand for our strategy and innovation offerings and increased demand for our research software products within our digital capability. The inorganic RBR contribution from our acquisitions was $2.2 million in the second quarter of 2025.

The operating income margin for education was 25% in Q2 2025 compared to 25.1% in the same quarter in 2024. The commercial segment generated 19% of total company RBR during the second quarter of 2025 and posted record RBR of $75.4 million, up $16.6 million or 28.2% from the second quarter of 2024. The increase in RBR was driven by $12.3 million of incremental RBR from our acquisition of Axia and strong demand for our digital offerings. Operating income margin for the commercial segment was 16.6% for Q2 2025 compared to 15.3% for the same quarter in 2024. The increase in operating income margin is primarily attributable to revenue growth that outpaced the increases in compensation costs for our revenue-generating professionals, partially offset by an increase in contractor expenses as a percentage of RBR.

Corporate expenses not allocated at the segment level and excluding corporate restructuring charges were $54.3 million in Q2 2025 compared to $45.6 million in Q2 2024. Unallocated corporate expenses in the second quarter of 2025 included $3.7 million of expense related to the increase in the liability of our deferred compensation plan compared to $0.7 million of expense in the second quarter of 2024. These amounts are offset by the change in market value of the investment assets used to fund that plan, which is reflected in other income expense excluding the impact of our deferred compensation plan and restructuring expense in both periods. Unallocated Corporate expenses increased $5.8 million in the second quarter of 2025, primarily driven by increases in salaries and related expenses for our support personnel, legal expenses, and third party professional fees related to M&A activity during the quarter.

Now turning to the balance sheet and cash flows, cash flow from operations in the second quarter of 2025 was $80 million. During the quarter, we used $6.3 million to invest in capital expenditures inclusive of internally developed software costs, resulting in free cash flow of $73.7 million. We continue to expect full year free cash flow to be in a range of positive $160 million to $190 million, net of cash taxes and interest and excluding non-cash stock compensation. DSO came in at 78 days for the second quarter of 2025 compared to 81 days for the second quarter of 2024. The decrease in DSO reflects the impact of collections on certain larger healthcare and education projects in alignment with their contractual payment schedules. Total debt as of June 30, 2025 was $657.8 million, consisting entirely of our senior bank debt.

We finished the quarter with cash of $61 million for net debt of $596.8 million. This was a $43.9 million increase in net debt compared to Q1 2025, primarily due to the share repurchases and acquisition payments during the quarter. Our leverage ratio, as defined in our senior bank agreement, was 2.5 times adjusted EBITDA as of June 30, 2025, compared to 2.2 times adjusted EBITDA as of June 30, 2024. We continue to expect our year end leverage ratio to be approximately 2 times full year adjusted EBITDA. In the second quarter, we used $61 million to repurchase approximately 430,000 shares, bringing our total year to date share repurchases to $133.9 million and approximately 938,000 shares, representing 5.3% of our common stock outstanding as of December 31, 2024.

As of June 30, 2025, $131.3 million was made available for share repurchases under the current share repurchase authorization from our Board of Directors. Since December 31, 2021, we have repurchased approximately 5.7 million shares under our share repurchase program, returning over $500 million of capital to our shareholders. Today we announced that effective with the closing on July 30, we have amended and restated our credit facility. We extended the maturity date on the facility to 2030 and increased our borrowing capacity to $1.1 billion with favorable pricing terms to provide additional flexibility to support the anticipated growth in our business as well as our capital allocation strategy. We remain committed to deploying capital in a balanced way, including returning capital to shareholders and executing strategic tuck-in acquisitions while maintaining our debt levels within our target leverage ratio.

Finally, let me turn to our guidance for the full year 2025. As Mark Hussey mentioned, inclusive of our recent acquisitions, today we are increasing our RBR guidance to a range of $1.64 billion to $1.68 billion, maintaining our adjusted EBITDA guidance range of 14% to 14.5% of RBR, and increasing our adjusted non-GAAP EPS to a range of $7.30 to $7.70. Now let me provide some additional color into these numbers before consideration of our recent acquisitions of Eclipse Insights and Traliant. We are narrowing and increasing the midpoint of our previous RBR guidance to a range of $1.62 billion to $1.66 billion, effectively narrowing to the upper half of our original guidance range. We’re pleased with our first half performance year to date, sales, conversions, and pipeline of emerging opportunities.

We believe we will continue to be well positioned to help our clients address the increased strategic, financial, and operational pressures facing our businesses. This pressure is particularly acute for our healthcare provider clients and is driving increased demand for our performance improvement, managed services, financial advisory, and strategy and innovation offerings in the healthcare segment. We expect our recent acquisitions of Eclipse Insights and Traliant to collectively add approximately $20 million of RBR in the second half of 2025. As such, inclusive of these acquisitions, we now expect full year consolidated RBR to be in the range of $1.64 billion to $1.68 billion. We expect approximately half of this acquisition RBR to be in our healthcare segment and about half in our commercial segment.

We expect net adjusted EBITDA from these acquisitions as a percentage of RBR to be in a range consistent with our overall consolidated margin guidance, inclusive of certain expenses to integrate the businesses that we do not expect to repeat in 2026. With regard to adjusted EPS, we expect the net impact of Eclipse Insights and Traliant to be neutral for the remainder of 2025, reflecting those incremental integration expenses. Over the next two quarters, we expect Eclipse Insights and Traliant to be adjusted EPS accretive individually and in the aggregate in 2026. Finally, let me provide updated segment level guidance inclusive of the Eclipse Insights and Traliant acquisitions. With regard to our healthcare segment, we now expect upper single digit % revenue growth for full year 2025.

We now expect operating margins will be in a range of approximately 28% to 30%. In the education segment, we continue to expect mid to upper single digit % revenue growth for the full year 2025 and operating margins to be in a range of approximately 23% to 25%. In the commercial segment, we now expect to see growth in the mid 20% range for 2025, which includes a full year of Axia and our recent acquisition of Traliant. We expect our operating margin in this segment will be in a range of approximately 18% to 20%, reflecting the full year revenue mix shift towards our digital offerings and Traliant integration expenses. As discussed earlier, we expect the mix shift to be more balanced between consulting and digital in the commercial segment starting in the second half of 2025.

Do not expect the incremental Traliant integration expenses to extend beyond 2025. Thanks everyone. I would now like to open the call to questions. Operator, thank you.

Conference Call Operator: Ladies and gentlemen, if you have a question at this time, please press star 11 on your Touchstone telephone. If your question has been answered and you wish to remove yourself from the queue, you may do so by pressing star 11 again. One moment for our first question. Our first question comes from Andrew Nicholas with William Blair. Please proceed.

John Kelly, Chief Financial Officer, Huron Consulting Group: Hi, good afternoon. Thanks for taking my questions. You mentioned on a few different occasions that the One Big Beautiful Bill Act brought some clarity. It sounds like maybe a little bit more in healthcare than in education, but I just wanted to ask broadly on visibility, is it better or worse than three months ago? Six months ago? How should we think about visibility in how it relates to maybe the conservatism of government guidance from here.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Yeah, Andrew. The way I would characterize it, it’s like there was no shock, I think, in what came in the One Big Beautiful Bill Act. I think there was, you know, for the most part, I think there was a broad anticipation that there was going to be pressure on federal reimbursements. When I say it brings clarity, it’s like, okay, we’re no longer waiting to see what happens. We now know what’s going to happen, and now we’re in a position to start to make some firmer decisions about that uncertainty. I think it was more about coming in line with what people generally expect. There were some nuances in every part of the bill when it got passed. I’d say generally speaking, it’s consistent with our outlook for the full year in terms of the guidance that we provided.

I would say it’s not necessarily propelling it more. It’s consistent, and we just continue to see ongoing financial pressures, even besides these, because for a long time we’ve seen cost trends ahead of reimbursements and probably maybe even incremental a little bit more pressure in this past year.

John Kelly, Chief Financial Officer, Huron Consulting Group: I’ll just add, Mark, I think from a visibility perspective, I think that our visibility is stronger at this point than it was earlier in the year, three months ago. Some of that has to do with some of the increased clarity around some of the regulatory environment.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Some of it has to do.

John Kelly, Chief Financial Officer, Huron Consulting Group: With just our sales conversion over the first half of the year, the pipeline at this point, even some of the activity we see heading into the third quarter, what is clear is that within the healthcare segment, for our healthcare provider clients, there are many clients who are going through either current financial strain or, for a variety of factors, concerned about financial constraint in the near term. I think that is a strong driver for the consulting parts of our business, in particular within healthcare performance improvement, our strategy offerings, our financial advisory offerings, our managed services offerings. As we’ve had those sales conversions and as the pipeline has strengthened to record highs, that does provide additional visibility for us within the education segment. Obviously, there’s been a lot of news.

During the first half of the year, we continue to see both strong revenue execution and strong sales conversion. Mark noted in his comments, we had record sales conversion for that team in the second quarter. That’s another thing that strengthens our visibility at this point. We feel good about that. Thank you. Maybe just on healthcare, you talked about a little bit slower sales conversions there as it relates to digital transformation work. I think you also said that you believe it’s a temporary pause. Can you flesh that out a little bit more? What makes you confident that’s temporary and to what extent do you need it to be temporary to hit your targets for this year? Andrew, to answer that last part first, it isn’t.

Our guidance for the year is not contingent on any assumptions related to the pace of conversion on the digital side of the business. From a healthcare segment perspective, the strength we’re seeing on the consulting side is definitely driving our confidence in the guidance moving forward as it relates to digital. Just to provide a little clarity there, we actually do see demand.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: For certain.

John Kelly, Chief Financial Officer, Huron Consulting Group: Digital offering areas and really across the board as towards some of our performance improvement projects, we continue to see good strength there. I think what we have seen is a little bit of a slower sales conversion cycle for some of the standalone digital sales in that segment. I think that’s somewhat intuitive given some of the financial pressures that our clients are going through right now. I think we do see a shift in focus to some of the performance improvement projects support clients that are going through financial strain. The reality is those underlying projects, eventually they need to get done. We know that once our clients kind of reach that point of financial stability, they’re likely to have to circle back and take on some of those digital projects. That’s what gives us confidence that it’s a temporary pause.

In the meantime, we feel very well positioned to help them on the performance improvement side. Great, thank you.

Conference Call Operator: One moment for our next question. Our next question comes from Tobey Sommer with Truist Securities. Please proceed.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Thanks. I kind of wanted to dig in a little bit more, if we could, on the delays in the pipeline conversion. You’ve given some explanation, but what is the.

John Kelly, Chief Financial Officer, Huron Consulting Group: What are the elements that give you confidence?

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Confidence that the delays are temporary?

John Kelly, Chief Financial Officer, Huron Consulting Group: Yeah.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Again, Toby, I would say just back to the context of what’s happening in the market. This is not by anywhere near the headline story of what is happening within the healthcare business. It’s an element of one component of probably five or six other major areas. I would just say we’ve seen just the increase of our clients whose C suites are focused on driving financial stability to their business, have prioritized that ahead of some of the other conversations. I think it’s really not that they’ve gone away, it’s just they have more pressing needs in the context of where we are. I do think that, you know, back to, you know, the outlook for the year, I would say this is, this is an area that we expect to have more than. This is not just related to the approval of the legislation.

These were long term trends coming into this legislation. Visa now just dialed it even more pressure beyond even 2025. This is back to the comment we have about the longer term secular tailwinds for our business. Feeling very good about it.

John Kelly, Chief Financial Officer, Huron Consulting Group: Right. If you think about the healthcare business from where we started the year and we increased our guidance today from the initial outlook at the beginning, there was mid single digit growth from an overall healthcare segment perspective to now upper single digit revenue growth. If you go back to the original assumptions in the year for that mix between consulting and digital, I think the net effect of this is more of a shift towards our higher margin consulting part of the business during the year. We have just noted that some clients, as we’ve engaged with them and they’re looking at their strategic agenda for the year, we’re seeing more demand on the performance improvement side and some clients that are shifting some dollars that maybe previously would have been allocated to digital to focusing on aspects of performance improvement.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Okay, I appreciate that. In terms of hiring, the headcount growth was quite high. Maybe could you disaggregate the impact of acquisitions from that and maybe speak.

Conference Call Operator: To.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: What your view is on utilization.

John Kelly, Chief Financial Officer, Huron Consulting Group: And.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Organic headcount growth going forward through the balance of the year?

John Kelly, Chief Financial Officer, Huron Consulting Group: Yeah. In terms of our headcount growth, I think a lot of the increase in headcount growth came from our managed services business within the healthcare segment. In terms of excluding the managed services headcount, I think there it’s really two primary factors. You did have some increase in headcount from the Eclipse Insights acquisition. That was in the neighborhood of 40 new team members joining as a result of that acquisition. Beyond that, it’s really just the strength in demand that we see right now on the consulting side within healthcare. Based on the sales conversions and pipeline activity that we see, we’ve been aggressive in the market adding talent in that area to support the growth that we’re expecting for the back half of the year. Those would be the primary areas where we’ve seen headcount growth.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: I appreciate that. Where are you sort of year to date with the acquisitions that you’ve consummated? How do they sum up to your longer term sort of annual goals?

John Kelly, Chief Financial Officer, Huron Consulting Group: Are you already at target for this?

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Year or do you think there’s more to go before we flip the calendar to 2026? You know, Tobey, I think we’ve actually done a good job of kind of building that. I think we have. I would expect there might be maybe one or two. Some of the timing of these deals, as you know, you don’t get to decide exactly when they fall. I would say they’re all within the tuck-in type categories that we had. Certainly our expectation is to try to stay in that balanced capital deployment strategy. I would say we’ve made a lot of progress. You saw that with some of the transaction costs within the quarter. We’ve been very, very busy in the marketplace. The good news is we’re finding areas that fill in our gaps very nicely.

We’re finding the right partners that are not necessarily for sale when we get working together. It’s leading to the kinds of conversations that we want to over time that will give us the long-term confidence that it’s going to be a successful deal. I’d say it’s actually powering very well. Maybe there might be another transaction or two by the end of the year.

John Kelly, Chief Financial Officer, Huron Consulting Group: Thank you very much.

Conference Call Operator: Again, ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. Our next question comes from Bill Sutherland with The Benchmark Company. Please proceed.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Thank you and good evening, guys.

John Kelly, Chief Financial Officer, Huron Consulting Group: The utilization rates were impressive in the quarter. 77% consulting and 78% in digital.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Should we think of that as kind of the upper end?

John Kelly, Chief Financial Officer, Huron Consulting Group: Of a range that you’re likely to have in any given quarter?

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Is there a possibility that this is a level that maybe isn’t the top of a range? It could be like midpoint.

John Kelly, Chief Financial Officer, Huron Consulting Group: Now, I would say, Bill, it’s closer to the top of the range in terms of utilization, which doesn’t mean there couldn’t be individual quarters where it could flex a little bit higher. In terms of a sustainable rate of utilization, I think that this is towards the top or top end of where we want to be. The thing to keep in mind, when you see those utilization metrics that you mentioned for consulting and digital, of course it’s not spread even across all teams. Within there you have certain teams that have even higher utilization that blend into that up into the 80% range. Those are some of the areas where we’re more aggressively hiring right now to continue to build out the team and to give us capacity as we continue to grow.

I think in those areas that are driving that average up even a little bit, our hope is that that will actually cool off and come down a little bit as the year goes on. We’re adding new team members to continue to support the longer term growth of the business.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Okay.

John Kelly, Chief Financial Officer, Huron Consulting Group: In the education segment, with the.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Record sales conversion in the quarter.

John Kelly, Chief Financial Officer, Huron Consulting Group: You kind of rank order 1, 2, 3 of what was getting the most momentum? I would say within our strategy and operations team build, that’s where we saw a lot of strength. I really characterize where we have seen strength, particularly in education, as offerings that really drive higher benefits, either on investments in technology or helping our clients right now work through their strategy through what’s a fairly disruptive environment. Improving student enrollment yields, reducing risk, and improving the efficacy of research and driving more effective fundraising campaigns. I think those are the things right now that our clients are coming to in what’s been a fairly disruptive macro environment to start the year where they’re seeking our help to really navigate whether it’s financial strain or operational disruption. Lastly, the backdrop in the healthcare side where there’s a fair amount of consolidation.

I’m not sure if it’s accelerated year to date. Sometimes it feels like it from the headlines, but what are you guys seeing there and how’s it impacting your book on that side?

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: You’re talking back on healthcare bill with respect to consolidation. We certainly see systems continuing to want to acquire hospitals that are going to help them achieve their growth objectives. I would say for us, it’s not the headline, but it’s certainly an element of what we’re doing and helping them not only with the strategic evaluation of which targets, but then helping them on the post-merger integration work as well. It’s certainly a contributor to what’s happening in the marketplace. I would expect that as you see continued pressures, sometimes those are the catalysts that relate to transactions ultimately. It’s going to continue to be an element of what we see in.

John Kelly, Chief Financial Officer, Huron Consulting Group: The market for sure.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Okay. Thanks, guys.

John Kelly, Chief Financial Officer, Huron Consulting Group: One moment for our next question.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Thanks, Phil.

Conference Call Operator: Our next question comes from Kevin Steinke with Barrington Research Associates. Please proceed.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Thank you. Good afternoon. Just wondering if you could give investors some tangible examples of how you can help healthcare clients adapt to this more constrained Medicaid funding environment. Expected surge in uninsured population. I know it’s the same playbook you’ve been following for many years, but perhaps it’d be helpful if you can just kind of point to some of the things you can do on the performance improvement side, revenue cycle side, and how you help the client base work through this pretty substantial change. If you go back to the core of this business, back even 16, 17 years ago when we acquired Stockamp and Wellspring, over the years we’ve built out a pretty comprehensive set of performance improvement offerings from revenue cycle to supply chain work to workforce set up to the clinical operations.

Pretty much if there’s any operation within the four walls of a hospital system, not only including the main hospitals, but really the overall system, we’re doing an assessment. Not only are there operations from where the cost savings opportunities, but more importantly the balanced approach to find the growth opportunities for them to continue to improve their business. I think depth and breadth of what we have together and just the methodology, the track record of real savings and results and impact that we’ve made, those are the things that we’re bringing to every client based on their own unique setting and their situation. Sometimes they know in advance where they want us to focus because they have certainly hit some insights there, but it’s pretty much not limited then that goes even beyond just the, we call it performance improvement.

The financial advisory areas, whether it’s how you work with the office of the CFO and get better insights in terms of the decision making, the speed management of cash, there’s really, I would say we’re not aware of anyone else who’s got the breadth of what we do and we bring it together as a unified team. Going to market in that way, I think really gives us a great speed to value and impact for our clients. Great, thank you, that’s helpful. I wanted to ask about the Traliant acquisition. I’m trying to recall how much of this is an expansion of maybe an adjacent services that you currently aren’t providing. I can’t recall how much you’re into the risk management compliance side, but maybe just a little more color on what that particular transaction brings to you in terms of added capabilities.

What we have among our commercial portfolio, financial services has been the number one or number two industry segment that we’ve had for a long time. A lot of those have been built in areas that are already doing risk management compliance reporting. Things that as we look at Traliant are highly complementary to what they do. This gets back to even how we came together, which has been an outreach to recognize where we have opportunities to take their capabilities, our capabilities, and really create a more comprehensive solution. There’s a lot of joint excitement for that, and they are very much aligned, but not overlapping. Okay. Yeah. Appreciate the color. I’ll turn it back over.

John Kelly, Chief Financial Officer, Huron Consulting Group: Thank you.

Conference Call Operator: Seeing there are no further questions in the queue, I’d like to turn the call back to Mr. Hussey.

Mark Hussey, Chief Executive Officer and President, Huron Consulting Group: Thank you very much for joining us this afternoon. We look forward to speaking with you again in October when we announce our third quarter results. Have a good evening.

Conference Call Operator: This concludes today’s conference call. Thank you, everyone, for your participation. You may now disconnect.

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