Huron Announces Fourth Quarter and Full Year 2021 Financial Results, and Provides 2022 Guidance

FOURTH QUARTER 2021 HIGHLIGHTS

  • Revenues increased $49.9 million, or 25.2%, to $248.3 million in Q4 2021 from $198.3 million in Q4 2020.
  • Net income from continuing operations increased to $31.1 million in Q4 2021 compared to a net loss from continuing operations of $6.1 million in Q4 2020. Results for Q4 2021 include a $23.7 million gain, net of tax from the sale of the company's Life Sciences business in the fourth quarter of 2021. Results for Q4 2020 include $13.9 million of restructuring charges, net of tax related to the fourth quarter 2020 restructuring plan.
  • Adjusted EBITDA(8), a non-GAAP measure, increased $12.2 million, or 71.7%, to $29.3 million in Q4 2021 from $17.1 million in Q4 2020.
  • Diluted earnings per share from continuing operations was $1.45 in Q4 2021 compared to diluted loss per share from continuing operations of $0.28 in Q4 2020.
  • Adjusted diluted earnings per share from continuing operations(8), a non-GAAP measure, excludes the gain on sale of the company's Life Sciences business and increased $0.35, or 77.8%, to $0.80 in Q4 2021 from $0.45 in Q4 2020.

FULL YEAR 2021 HIGHLIGHTS AND 2022 GUIDANCE

  • Revenues increased $61.5 million, or 7.3%, to $905.6 million for full year 2021 compared to $844.1 million for full year 2020.
  • Net income from continuing operations was $63.0 million for full year 2021 compared to a net loss from continuing operations of $23.7 million for full year 2020. Results for full year 2021 include a $23.7 million gain, net of tax from the sale of the company's Life Sciences business in the fourth quarter of 2021. Results for full year 2020 include non-cash goodwill impairment charges, net of tax of $45.3 million incurred in Q1 2020 related to the company's Strategy and Innovation and Life Sciences reporting units within the Business Advisory segment and $13.9 million of restructuring charges, net of tax related to the fourth quarter 2020 restructuring plan.
  • Adjusted EBITDA(8), a non-GAAP measure, increased $10.7 million, or 12.3%, to $97.8 million for full year 2021 compared to $87.1 million for full year 2020.
  • Diluted earnings per share from continuing operations was $2.89 for full year 2021 compared to diluted loss per share from continuing operations of $1.08 for full year 2020.
  • Adjusted diluted earnings per share from continuing operations(8), a non-GAAP measure, excludes the gain on sale of the company's Life Sciences business and increased $0.46, or 21.4%, to $2.61 for full year 2021 from $2.15 for full year 2020.
  • Huron provides full year 2022 guidance, including revenue expectations in a range of $970.0 million to $1.03 billion.
  • Effective January 1, 2022, Huron has modified its operating model to expand and more deeply integrate the company’s industry expertise with its digital, strategic and financial advisory capabilities to accelerate growth and margin expansion.

CHICAGO--()--Global professional services firm Huron (NASDAQ: HURN) today announced financial results from continuing operations for the fourth quarter ended December 31, 2021.

We continued to deliver on our commitment to sustainable revenue growth and improved profitability, demonstrated by our Q4 2021 and full year results,” said James H. Roth, chief executive officer, Huron. “Led by organic growth across all three operating segments, annual revenues grew 7% and full year adjusted EBITDA margin improved 50 basis points over the prior year. We believe favorable market conditions across our core industries will provide a solid foundation for continued growth and profitability into 2022 as our clients address strategic and operational uncertainties.”

We recently established a new operating model to strengthen our go-to-market strategy and better position Huron to integrate our deep industry expertise with our strong digital, strategy and financial advisory capabilities. Our business alignment builds upon the historical collaboration across our teams while creating a platform to drive greater efficiencies companywide, which we believe will provide improved growth and profitability for our shareholders,” added Roth.

COVID-19 IMPACT

The worldwide spread of the coronavirus (COVID-19) has created significant volatility, uncertainty and disruption to the global economy. The company continues to closely monitor the impact of the pandemic on all aspects of its business, including how it will impact its clients, employees and business partners. In most of 2020 and the first quarter of 2021, the COVID-19 pandemic negatively impacted sales and elongated the sales cycle for new opportunities for certain services, particularly within the company's Healthcare and Education segments as some clients reprioritized or delayed certain projects. Conversely, the pandemic strengthened demand for the company's cloud-based technology and analytics solutions and certain services provided to organizations in transition within the company's Business Advisory segment.

Beginning in the second quarter of 2021 and continuing through the end of 2021, the company saw an increase in its sales pipeline and the pace of signings, particularly within its Healthcare and Education businesses, as well as strengthened demand across all segments. As a result, fourth quarter and full year 2021 revenues increased compared to the same prior year periods. The company expects continued revenue growth in 2022 compared to 2021.

FOURTH QUARTER 2021 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $49.9 million, or 25.2%, to $248.3 million for the fourth quarter of 2021 compared to $198.3 million for the fourth quarter of 2020.

Net income from continuing operations increased to $31.1 million for the fourth quarter of 2021, compared to a net loss from continuing operations of $6.1 million for the same quarter last year. Diluted earnings per share from continuing operations was $1.45 for the fourth quarter of 2021, compared to diluted loss per share from continuing operations of $0.28 for the fourth quarter of 2020. Results for the fourth quarter of 2021 include a $23.7 million gain, net of tax from the sale of the company's Life Sciences business in the fourth quarter of 2021. Results for the fourth quarter of 2020 reflect $13.9 million of restructuring charges, net of tax related to the fourth quarter 2020 restructuring plan.

Fourth quarter 2021 earnings before interest, taxes, depreciation and amortization ("EBITDA")(8) was $50.0 million compared to loss before interest, taxes, depreciation and amortization of $1.9 million in the same prior year period.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Three Months Ended
December 31,

 

2021

 

2020

Amortization of intangible assets

$

2,328

 

 

$

3,138

 

Restructuring and other charges

$

9,235

 

 

$

18,748

 

Litigation and other losses

$

100

 

 

$

 

(Gain) loss on sale of businesses(1)

$

(31,510

)

 

$

1,501

 

Transaction-related expenses

$

1,447

 

 

$

695

 

Unrealized gain on preferred stock investment

$

 

 

$

(1,667

)

Tax effect of adjustments

$

4,530

 

 

$

(6,158

)

Foreign currency transaction losses (gains), net

$

21

 

 

$

(276

)

______________________
(1) On November 1, 2021, the company completed the divestiture of its Life Sciences commercial and R&D strategy, pricing and market access strategy business (the "Life Sciences business"), and recognized a $31.5 million pre-tax gain related to the sale. The Life Sciences business generated revenues of $1.9 million in October 2021.

Adjusted EBITDA(8) increased $12.2 million, or 71.7%, to $29.3 million, or 11.8% of revenues, in the fourth quarter of 2021, compared to $17.1 million, or 8.6% of revenues, in the same quarter last year. Adjusted net income from continuing operations(8) increased $7.0 million to $17.2 million, or $0.80 per diluted share, for the fourth quarter of 2021, compared to $10.2 million, or $0.45 per diluted share, for the quarter in 2020.

The average number of billable consultants(2) increased 9.7% to 2,880 in the fourth quarter of 2021 from 2,626 in the same quarter last year. Billable consultant utilization rate(3) was 70.0% during the fourth quarter of 2021 compared to 68.0% during the same period last year. Average billing rate per hour for our billable consultants(4) was $231 for the fourth quarter of 2021 compared to $206 for the same prior year period. The average number of full-time equivalent professionals(6) was 301 in the fourth quarter of 2021 compared to 263 for the same period in 2020. The average number of Healthcare Managed Services employees(7) was 513 in the fourth quarter of 2021 compared to 92 for the same period in 2020. This operating data has been revised from previously reported amounts as the company began assessing its operating performance by the following three employee types in the second quarter of 2021: billable consultants, full-time equivalents, and Healthcare Managed Services employees.

FULL YEAR 2021 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $61.5 million, or 7.3%, to $905.6 million for full year 2021, compared to $844.1 million for full year 2020.

Net income from continuing operations was $63.0 million for full year 2021, compared to a net loss from continuing operations of $23.7 million for full year 2020. Diluted earnings per share from continuing operations was $2.89 for full year 2021, compared to diluted loss per share from continuing operations of $1.08 for full year 2020. Results for full year 2021 include a $23.7 million gain, net of tax from the sale of the company's Life Sciences business in the fourth quarter of 2021. Results for full year 2020 reflect non-cash goodwill impairment charges, net of tax totaling $45.3 million to reduce the carrying value of goodwill in the company's Strategy and Innovation and Life Sciences reporting units within the Business Advisory segment and $13.9 million of restructuring charges, net of tax related to the fourth quarter 2020 restructuring plan.

EBITDA(8) was $114.5 million for the full year 2021, compared to $5.1 million for full year 2020.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Twelve Months Ended
December 31,

 

2021

 

2020

Amortization of intangible assets

$

9,251

 

 

$

12,696

 

Restructuring and other charges

$

12,401

 

 

$

21,374

 

Litigation and other losses (gains), net

$

198

 

 

$

(150

)

Goodwill impairment charges

$

 

 

$

59,816

 

Unrealized gain on preferred stock investment

$

 

 

$

(1,667

)

(Gain) loss on sale of businesses(1)

$

(31,510

)

 

$

1,603

 

Transaction-related expenses

$

1,782

 

 

$

1,132

 

Tax effect of adjustments

$

1,742

 

 

$

(23,199

)

Foreign currency transaction losses, net

$

419

 

 

$

(31

)

_____________________
(1) On November 1, 2021, the company completed the divestiture of its Life Sciences business, and recognized a $31.5 million pre-tax gain related to the sale. The Life Sciences business generated revenues of $16.7 million during the ten months ended October 31, 2021.

Adjusted EBITDA(8) increased $10.7 million, or 12.3%, to $97.8 million, or 10.8% of revenues, for full year 2021 compared to $87.1 million, or 10.3% of revenues, for full year 2020. Adjusted net income from continuing operations(8) increased $9.0 million to $56.9 million, or $2.61 per diluted share, for full year 2021 compared to $47.9 million, or $2.15 per diluted share, for full year 2020.

The average number of billable consultants(2) increased 4.5% to 2,716 for full year 2021 from 2,600 for the same prior year period. Billable consultant utilization rate(3) was 71.1% for full year 2021, compared to 70.7% in the same period last year. Average billing rate per hour for billable consultants(4) was $209 for full year 2021, compared to $202 in the same period last year. The average number of full-time equivalent professionals(6) was 258 for full year 2021 compared to 269 for the same prior year period. The average number of Healthcare Managed Services employees(7) was 382 for full year 2021 compared to 91 for the same period in 2020. This operating data has been revised from previously reported amounts as the company began assessing its operating performance by the following three employee types in the second quarter of 2021: billable consultants, full-time equivalents, and Healthcare Managed Services employees.

OPERATING SEGMENTS

Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.

The company’s full year 2021 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (42%); Business Advisory (32%); and Education (26%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Annual Report on Form 10-K filing for the year ended December 31, 2021.

OUTLOOK FOR 2022

Based on currently available information, the company provided guidance for full year 2022 revenues before reimbursable expenses in a range of $970.0 million to $1.03 billion. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 11.3% to 12.3% and non-GAAP adjusted diluted earnings per share in a range of $2.85 to $3.35.

Management will provide a more detailed discussion of its outlook during the company's earnings conference call webcast.

FOURTH QUARTER 2021 WEBCAST

The company will host a webcast to discuss its financial results today, February 24, 2022, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by NASDAQ and can be accessed from Huron's website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

2022 BUSINESS REALIGNMENT AND CHANGES TO SEGMENT REPORTING

Effective January 1, 2022, Huron has modified its operating model to expand and more deeply integrate the company’s industry expertise with its digital, strategic and financial advisory capabilities. The new operating model will strengthen Huron’s go-to-market strategy, drive efficiencies that support margin expansion, and position the company to accelerate growth.

To align with the new operating model, effective with reporting for periods beginning January 1, 2022, the company will begin reporting under the following three industries, which will be the company's reportable segments: Healthcare, Education and Commercial. The Commercial segment will include all industries outside of healthcare and education, including, but not limited to, financial services and energy and utilities. In the new reporting structure, each segment will include all revenues and costs associated with engagements delivered in the respective industry segment. The new Healthcare and Education segments will include some revenues and costs historically reported in the Business Advisory segment and the Healthcare segment will include certain revenues and costs historically reported in the Education segment. The company will also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital. These changes will provide greater transparency for investors by improving visibility into the core drivers of the business.

Supplemental materials that include unaudited recast summary financial information and other operating data according to the new reporting segments can be found on the investor relations section of Huron's website at http://ir.huronconsultinggroup.com.

VIRTUAL INVESTOR DAY

Huron will host an Investor Day on Tuesday, March 29, 2022. The Investor Day will be held virtually and begin at 9:00 a.m. Eastern Time (8:00 a.m. Central Time). Interested parties are encouraged to pre-register for the event here and log in to the webcast approximately 10 minutes prior to the start of the event.

Chief executive officer James H. Roth, chief financial officer John D. Kelly, president and chief operating officer C. Mark Hussey and other members of Huron’s leadership team will provide an update on the company’s strategy and segment reporting changes. In addition to management’s prepared remarks, there will be a question-and-answer session.

After the conclusion of the event, a transcript and a replay of the video webcast, including the Q&A session, will be available on the investor relations section of Huron’s website at http://ir.huronconsultinggroup.com and will be available for one year.

USE OF NON-GAAP FINANCIAL MEASURES(8)

In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These 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 accounting principles generally accepted in the United States.

Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

ABOUT HURON

Huron is a global consultancy that collaborates with clients to drive strategic growth, ignite innovation and navigate constant change. Through a combination of strategy, expertise and creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need 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. Learn more at www.huronconsultinggroup.com.

Statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “guidance,” or “outlook” or similar expressions. These forward-looking statements reflect the company's current expectations about future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: the impact of the COVID-19 pandemic on the economy, our clients and client demand for our services, and our ability to sell and provide services, including the measures taken by governmental authorities and businesses in response to the pandemic, which may cause or contribute to other risks and uncertainties that we face; failure to achieve expected utilization rates, billing rates and the number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under “Item 1A. Risk Factors” in Huron's Annual Report on Form 10-K for the year ended December 31, 2021 that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

248,294

 

 

$

198,347

 

 

$

905,640

 

 

$

844,127

 

Reimbursable expenses

 

12,442

 

 

 

1,754

 

 

 

21,318

 

 

 

26,887

 

Total revenues and reimbursable expenses

 

260,736

 

 

 

200,101

 

 

 

926,958

 

 

 

871,014

 

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

 

 

 

 

 

 

 

Direct costs

 

173,233

 

 

 

141,207

 

 

 

636,776

 

 

 

592,428

 

Amortization of intangible assets and software development costs

 

1,058

 

 

 

1,361

 

 

 

3,803

 

 

 

5,366

 

Reimbursable expenses

 

12,136

 

 

 

1,823

 

 

 

21,369

 

 

 

26,918

 

Total direct costs and reimbursable expenses

 

186,427

 

 

 

144,391

 

 

 

661,948

 

 

 

624,712

 

Operating expenses and other losses (gains), net:

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

49,410

 

 

 

43,822

 

 

 

177,886

 

 

 

170,686

 

Restructuring charges

 

9,235

 

 

 

18,748

 

 

 

12,401

 

 

 

20,525

 

Litigation and other losses (gains)

 

100

 

 

 

 

 

 

198

 

 

 

(150

)

Depreciation and amortization

 

5,400

 

 

 

5,794

 

 

 

21,686

 

 

 

24,277

 

Goodwill impairment charges

 

 

 

 

 

 

 

 

 

 

59,816

 

Total operating expenses and other losses (gains), net

 

64,145

 

 

 

68,364

 

 

 

212,171

 

 

 

275,154

 

Operating income (loss)

 

10,164

 

 

 

(12,654

)

 

 

52,839

 

 

 

(28,852

)

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(2,185

)

 

 

(1,776

)

 

 

(8,150

)

 

 

(9,292

)

Other income, net

 

33,170

 

 

 

3,584

 

 

 

35,347

 

 

 

4,271

 

Total other income (expense), net

 

30,985

 

 

 

1,808

 

 

 

27,197

 

 

 

(5,021

)

Income (loss) from continuing operations before taxes

 

41,149

 

 

 

(10,846

)

 

 

80,036

 

 

 

(33,873

)

Income tax expense (benefit)

 

10,091

 

 

 

(4,742

)

 

 

17,049

 

 

 

(10,155

)

Net income (loss) from continuing operations

 

31,058

 

 

 

(6,104

)

 

 

62,987

 

 

 

(23,718

)

Loss from discontinued operations, net of tax

 

 

 

 

(33

)

 

 

 

 

 

(122

)

Net income (loss)

$

31,058

 

 

$

(6,137

)

 

$

62,987

 

 

$

(23,840

)

Net earnings (loss) per basic share:

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

1.48

 

 

$

(0.28

)

 

$

2.94

 

 

$

(1.08

)

Loss from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

(0.01

)

Net income (loss)

$

1.48

 

 

$

(0.28

)

 

$

2.94

 

 

$

(1.09

)

Net earnings (loss) per diluted share:

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

1.45

 

 

$

(0.28

)

 

$

2.89

 

 

$

(1.08

)

Loss from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

(0.01

)

Net income (loss)

$

1.45

 

 

$

(0.28

)

 

$

2.89

 

 

$

(1.09

)

Weighted average shares used in calculating earnings (loss) per share:

 

 

 

 

 

 

 

Basic

 

21,039

 

 

 

21,903

 

 

 

21,439

 

 

 

21,882

 

Diluted

 

21,466

 

 

 

21,903

 

 

 

21,809

 

 

 

21,882

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income (loss)

$

31,058

 

 

$

(6,137

)

 

$

62,987

 

 

$

(23,840

)

Foreign currency translation adjustments, net of tax

 

(1,161

)

 

 

642

 

 

 

(925

)

 

 

348

 

Unrealized gain on investment, net of tax

 

3,237

 

 

 

2,374

 

 

 

1,169

 

 

 

1,323

 

Unrealized gain (loss) on cash flow hedging instruments, net of tax

 

1,579

 

 

 

87

 

 

 

3,535

 

 

 

(3,546

)

Other comprehensive income (loss)

 

3,655

 

 

 

3,103

 

 

 

3,779

 

 

 

(1,875

)

Comprehensive income (loss)

$

34,713

 

 

$

(3,034

)

 

$

66,766

 

 

$

(25,715

)

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

December 31,
2021

 

December 31,
2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

20,781

 

 

$

67,177

 

Receivables from clients, net

 

122,316

 

 

 

87,687

 

Unbilled services, net

 

91,285

 

 

 

53,959

 

Income tax receivable

 

8,071

 

 

 

5,121

 

Prepaid expenses and other current assets

 

15,229

 

 

 

16,569

 

Total current assets

 

257,682

 

 

 

230,513

 

Property and equipment, net

 

31,004

 

 

 

29,093

 

Deferred income taxes, net

 

1,804

 

 

 

4,191

 

Long-term investments

 

72,584

 

 

 

71,030

 

Operating lease right-of-use assets

 

35,311

 

 

 

39,360

 

Other non-current assets

 

68,191

 

 

 

62,068

 

Intangible assets, net

 

31,894

 

 

 

20,483

 

Goodwill

 

620,879

 

 

 

594,237

 

Total assets

$

1,119,349

 

 

$

1,050,975

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

13,621

 

 

$

648

 

Accrued expenses and other current liabilities

 

22,519

 

 

 

14,874

 

Accrued payroll and related benefits

 

139,131

 

 

 

133,830

 

Current maturities of long-term debt

 

559

 

 

 

499

 

Current maturities of operating lease liabilities

 

10,142

 

 

 

8,771

 

Deferred revenues

 

19,212

 

 

 

28,247

 

Total current liabilities

 

205,184

 

 

 

186,869

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

 

43,458

 

 

 

47,131

 

Long-term debt, net of current portion

 

232,221

 

 

 

202,780

 

Operating lease liabilities, net of current portion

 

54,313

 

 

 

61,825

 

Deferred income taxes, net

 

12,273

 

 

 

428

 

Total non-current liabilities

 

342,265

 

 

 

312,164

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 24,364,814 and 25,346,916 shares issued, respectively

 

239

 

 

 

246

 

Treasury stock, at cost, 2,495,172 and 2,584,119 shares, respectively

 

(135,969

)

 

 

(129,886

)

Additional paid-in capital

 

413,794

 

 

 

454,512

 

Retained earnings

 

276,996

 

 

 

214,009

 

Accumulated other comprehensive income

 

16,840

 

 

 

13,061

 

Total stockholders’ equity

 

571,900

 

 

 

551,942

 

Total liabilities and stockholders’ equity

$

1,119,349

 

 

$

1,050,975

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Twelve Months Ended
December 31,

 

 

2021

 

 

 

2020

 

Cash flows from operating activities:

 

 

 

Net income (loss)

$

62,987

 

 

$

(23,840

)

Adjustments to reconcile net income (loss) to cash flows from operating activities:

 

 

 

Depreciation and amortization

 

25,978

 

 

 

30,222

 

Non-cash lease expense

 

6,967

 

 

 

7,763

 

Lease impairment charges

 

 

 

 

13,217

 

Share-based compensation

 

25,857

 

 

 

24,081

 

Amortization of debt discount and issuance costs

 

794

 

 

 

793

 

Goodwill impairment charges

 

 

 

 

59,816

 

Allowances for doubtful accounts

 

13

 

 

 

1,050

 

Deferred income taxes

 

12,480

 

 

 

(9,859

)

(Gain) loss on sales of businesses, excluding transaction costs

 

(32,824

)

 

 

1,603

 

Change in fair value of contingent consideration liabilities

 

173

 

 

 

 

Change in fair value of preferred stock investment

 

 

 

 

(1,667

)

Other, net

 

(421

)

 

 

(25

)

Changes in operating assets and liabilities, net of acquisition and divestiture:

 

 

 

(Increase) decrease in receivables from clients, net

 

(39,845

)

 

 

33,051

 

(Increase) decrease in unbilled services, net

 

(38,820

)

 

 

18,876

 

(Increase) decrease in current income tax receivable / payable, net

 

(2,723

)

 

 

(3,662

)

(Increase) decrease in other assets

 

(2,670

)

 

 

(11,972

)

Increase (decrease) in accounts payable and other liabilities

 

10,394

 

 

 

(7,786

)

Increase (decrease) in accrued payroll and related benefits

 

(2,636

)

 

 

(1,169

)

Increase (decrease) in deferred revenues

 

(7,717

)

 

 

6,246

 

Net cash provided by operating activities

 

17,987

 

 

 

136,738

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(10,871

)

 

 

(8,125

)

Investment in life insurance policies

 

(1,245

)

 

 

(2,462

)

Purchases of businesses, net of cash acquired

 

(44,819

)

 

 

(8,701

)

Purchase of investment securities

 

 

 

 

(13,000

)

Capitalization of internally developed software costs

 

(4,889

)

 

 

(8,272

)

Proceeds from sale of property and equipment

 

408

 

 

 

25

 

Divestiture of businesses, net of cash sold

 

41,273

 

 

 

(1,499

)

Net cash used in investing activities

 

(20,143

)

 

 

(42,034

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

 

804

 

 

 

1,003

 

Shares redeemed for employee tax withholdings

 

(10,103

)

 

 

(7,903

)

Share repurchases

 

(64,612

)

 

 

(27,141

)

Proceeds from bank borrowings

 

235,000

 

 

 

283,000

 

Repayments of bank borrowings

 

(205,499

)

 

 

(288,574

)

Net cash used in financing activities

 

(44,410

)

 

 

(39,615

)

Effect of exchange rate changes on cash

 

170

 

 

 

484

 

Net increase (decrease) in cash and cash equivalents

 

(46,396

)

 

 

55,573

 

Cash and cash equivalents at beginning of the period

 

67,177

 

 

 

11,604

 

Cash and cash equivalents at end of the period

$

20,781

 

 

$

67,177

HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)

 

In conjunction with the company's continuous evaluation of the appropriate level of disaggregation of revenues as the company's business evolves and in consideration of a group hire of approximately 300 employees in the company's Healthcare Managed Services solution within its Healthcare segment in the second quarter of 2021, the company began assessing its operating performance by the following three employee types: billable consultants, full-time equivalents, and Healthcare Managed Services employees. The other operating data previously reported for the three and twelve months ended December 31, 2020 was revised below to reflect this change. This change has no impact on the company's consolidated total revenues or total revenues by segment.

 

 

 

Three Months Ended
December 31,

 

Percent
Increase
(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

 

2021

 

 

 

2020

 

 

Healthcare:

 

 

 

 

 

 

Revenues

 

$

103,653

 

 

$

85,097

 

 

21.8

%

Operating income

 

$

25,647

 

 

$

24,094

 

 

6.4

%

Segment operating income as a percentage of segment revenues

 

 

24.7

%

 

 

28.3

%

 

 

Business Advisory:

 

 

 

 

 

 

Revenues

 

$

77,922

 

 

$

65,938

 

 

18.2

%

Operating income

 

$

10,952

 

 

$

10,740

 

 

2.0

%

Segment operating income as a percentage of segment revenues

 

 

14.1

%

 

 

16.3

%

 

 

Education:

 

 

 

 

 

 

Revenues

 

$

66,719

 

 

$

47,312

 

 

41.0

%

Operating income

 

$

15,561

 

 

$

5,711

 

 

172.5

%

Segment operating income as a percentage of segment revenues

 

 

23.3

%

 

 

12.1

%

 

 

Total Company:

 

 

 

 

 

 

Revenues

 

$

248,294

 

 

$

198,347

 

 

25.2

%

Reimbursable expenses

 

 

12,442

 

 

 

1,754

 

 

N/M

 

Total revenues and reimbursable expenses

 

$

260,736

 

 

$

200,101

 

 

30.3

%

Statements of Operations reconciliation:

 

 

 

 

 

 

Segment operating income

 

$

52,160

 

 

$

40,545

 

 

28.6

%

Items not allocated at the segment level:

 

 

 

 

 

 

Other operating expenses

 

 

36,836

 

 

 

47,429

 

 

(22.3

) %

Litigation and other losses

 

 

75

 

 

 

 

 

N/M

 

Depreciation and amortization

 

 

5,085

 

 

 

5,770

 

 

(11.9

) %

Total operating income (loss)

 

 

10,164

 

 

 

(12,654

)

 

N/M

 

Other income

 

 

30,985

 

 

 

1,808

 

 

N/M

 

Income (loss) from continuing operations before taxes

 

$

41,149

 

 

$

(10,846

)

 

N/M

 

Other Operating Data:

 

 

 

 

 

 

Number of billable consultants (at period end) (2):

 

 

 

 

 

 

Healthcare

 

 

869

 

 

 

820

 

 

6.0

%

Business Advisory

 

 

1,116

 

 

 

1,051

 

 

6.2

%

Education

 

 

901

 

 

 

737

 

 

22.3

%

Total

 

 

2,886

 

 

 

2,608

 

 

10.7

%

Average number of billable consultants (for the period) (2):

 

 

 

 

 

 

Healthcare

 

 

866

 

 

 

834

 

 

 

Business Advisory

 

 

1,148

 

 

 

1,028

 

 

 

Education

 

 

866

 

 

 

764

 

 

 

Total

 

 

2,880

 

 

 

2,626

 

 

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

 

 

Three Months Ended
December 31,

Other Operating Data (continued):

 

 

2021

 

 

 

2020

 

Billable consultant utilization rate (3):

 

 

 

 

Healthcare

 

 

70.1

%

 

 

65.1

%

Business Advisory

 

 

68.3

%

 

 

71.6

%

Education

 

 

72.1

%

 

 

66.1

%

Total

 

 

70.0

%

 

 

68.0

%

Billable consultant average billing rate per hour (4):

 

 

 

 

Healthcare

 

$

276

 

 

$

261

 

Business Advisory (5)

 

$

219

 

 

$

189

 

Education

 

$

201

 

 

$

179

 

Total (5)

 

$

231

 

 

$

206

 

Revenue per billable consultant (in thousands):

 

 

 

 

Healthcare

 

$

84

 

 

$

69

 

Business Advisory

 

$

64

 

 

$

60

 

Education

 

$

63

 

 

$

53

 

Total

 

$

69

 

 

$

61

 

Average number of full-time equivalents (for the period) (6):

 

 

 

 

Healthcare

 

 

153

 

 

 

183

 

Business Advisory

 

 

61

 

 

 

40

 

Education

 

 

87

 

 

 

40

 

Total

 

 

301

 

 

 

263

 

Revenue per full-time equivalent (in thousands):

 

 

 

 

Healthcare

 

$

124

 

 

$

110

 

Business Advisory

 

$

75

 

 

$

94

 

Education

 

$

144

 

 

$

170

 

Total

 

$

120

 

 

$

117

 

Healthcare Managed Services(7):

 

 

 

 

Total revenues (in thousands)

 

$

12,309

 

 

$

7,171

 

Average number of Healthcare Managed Services employees (for the period)

 

 

513

 

 

 

92

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

 

 

Twelve Months Ended
December 31,

 

Percent
Increase
(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

 

2021

 

 

 

2020

 

 

Healthcare:

 

 

 

 

 

 

Revenues

 

$

377,577

 

 

$

353,437

 

 

6.8

%

Operating income

 

$

104,010

 

 

$

94,925

 

 

9.6

%

Segment operating income as a percentage of segment revenues

 

 

27.5

%

 

 

26.9

%

 

 

Business Advisory:

 

 

 

 

 

 

Revenues

 

$

291,663

 

 

$

267,361

 

 

9.1

%

Operating income

 

$

48,236

 

 

$

48,046

 

 

0.4

%

Segment operating income as a percentage of segment revenues

 

 

16.5

%

 

 

18.0

%

 

 

Education:

 

 

 

 

 

 

Revenues

 

$

236,400

 

 

$

223,329

 

 

5.9

%

Operating income

 

$

52,772

 

 

$

47,503

 

 

11.1

%

Segment operating income as a percentage of segment revenues

 

 

22.3

%

 

 

21.3

%

 

 

Total Company:

 

 

 

 

 

 

Revenues

 

$

905,640

 

 

$

844,127

 

 

7.3

%

Reimbursable expenses

 

 

21,318

 

 

 

26,887

 

 

(20.7

) %

Total revenues and reimbursable expenses

 

$

926,958

 

 

$

871,014

 

 

6.4

%

Statements of Operations reconciliation:

 

 

 

 

 

 

Segment operating income

 

$

205,018

 

 

$

190,474

 

 

7.6

%

Items not allocated at the segment level:

 

 

 

 

 

 

Other operating expenses

 

 

131,372

 

 

 

135,255

 

 

(2.9

) %

Litigation and other losses (gains)

 

 

173

 

 

 

(150

)

 

N/M

 

Depreciation and amortization

 

 

20,634

 

 

 

24,405

 

 

(15.5

) %

Goodwill impairment charges (1)

 

 

 

 

 

59,816

 

 

N/M

 

Total operating income (loss)

 

 

52,839

 

 

 

(28,852

)

 

N/M

 

Other income (expense), net

 

 

27,197

 

 

 

(5,021

)

 

N/M

 

Income (loss) from continuing operations before taxes

 

$

80,036

 

 

$

(33,873

)

 

N/M

 

Other Operating Data:

 

 

 

 

 

 

Number of billable consultants (at period end) (2):

 

 

 

 

 

 

Healthcare

 

 

869

 

 

 

820

 

 

6.0

%

Business Advisory

 

 

1,116

 

 

 

1,051

 

 

6.2

%

Education

 

 

901

 

 

 

737

 

 

22.3

%

Total

 

 

2,886

 

 

 

2,608

 

 

10.7

%

Average number of billable consultants (for the period) (2):

 

 

 

 

 

 

Healthcare

 

 

822

 

 

 

863

 

 

 

Business Advisory

 

 

1,115

 

 

 

962

 

 

 

Education

 

 

779

 

 

 

775

 

 

 

Total

 

 

2,716

 

 

 

2,600

 

 

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

 

 

Twelve Months Ended
December 31,

Other Operating Data (continued):

 

 

2021

 

 

 

2020

 

Billable consultant utilization rate (3):

 

 

 

 

Healthcare

 

 

72.0

%

 

 

69.0

%

Business Advisory

 

 

69.1

%

 

 

72.4

%

Education

 

 

73.0

%

 

 

70.3

%

Total

 

 

71.1

%

 

 

70.7

%

Billable consultant average billing rate per hour (4):

 

 

 

 

Healthcare

 

$

243

 

 

$

227

 

Business Advisory (5)

 

$

198

 

 

$

195

 

Education

 

$

190

 

 

$

187

 

Total (5)

 

$

209

 

 

$

202

 

Revenue per billable consultant (in thousands):

 

 

 

 

Healthcare

 

$

305

 

 

$

272

 

Business Advisory

 

$

246

 

 

$

264

 

Education

 

$

253

 

 

$

247

 

Total

 

$

266

 

 

$

262

 

Average number of full-time equivalents (for the period) (6):

 

 

 

 

Healthcare

 

 

153

 

 

 

187

 

Business Advisory

 

 

52

 

 

 

30

 

Education

 

 

53

 

 

 

52

 

Total

 

 

258

 

 

 

269

 

Revenue per full-time equivalent (in thousands):

 

 

 

 

Healthcare

 

$

518

 

 

$

481

 

Business Advisory

 

$

343

 

 

$

455

 

Education

 

$

743

 

 

$

618

 

Total

 

$

528

 

 

$

504

 

Healthcare Managed Services(7):

 

 

 

 

Total revenues (in thousands)

 

$

47,718

 

 

$

28,663

 

Average number of Healthcare Managed Services employees (for the period)

 

 

382

 

 

 

91

 

______________________

(1)

The non-cash goodwill impairment charges are not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segments. We do not include the impact of goodwill impairment charges in our evaluation of segment performance.

(2)

Consists of our consulting professionals who provide consulting services and generate revenues based on the number of hours worked.

(3)

Utilization rate for billable consultants is calculated by dividing the number of hours billable consultants worked on client assignments during a period by the total available working hours for these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days.

(4)

Average billing rate per hour for our billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period.

(5)

The Business Advisory segment includes operations of Huron Eurasia India. Absent the impact of Huron Eurasia India, the average billing rate per hour for the Business Advisory segment would have been $243 and $203 for the three months ended December 31, 2021 and 2020, respectively; and $216 and $213 for the twelve months ended December 31, 2021 and 2020, respectively.

 

Absent the impact of Huron Eurasia India, Huron's consolidated average billing rate per hour would have been $240 and $213 for the three months ended December 31, 2021 and 2020, respectively; and $216 and 209 for the twelve months ended December 31, 2021 and 2020.

(6)

Consists of coaches and their support staff within the Culture and Organizational Excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients.

(7)

Consists of employees who manage and provide revenue cycle billing, collections, insurance verification and change integrity services to our healthcare clients.

N/M - Not Meaningful

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS

TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (8)

(In thousands)

(Unaudited)

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenues

$

248,294

 

 

$

198,347

 

 

$

905,640

 

 

$

844,127

 

Net income (loss) from continuing operations

$

31,058

 

 

$

(6,104

)

 

$

62,987

 

 

$

(23,718

)

Add back:

 

 

 

 

 

 

 

Income tax expense (benefit)

 

10,091

 

 

 

(4,742

)

 

 

17,049

 

 

 

(10,155

)

Interest expense, net of interest income

 

2,185

 

 

 

1,776

 

 

 

8,150

 

 

 

9,292

 

Depreciation and amortization

 

6,707

 

 

 

7,156

 

 

 

26,347

 

 

 

29,644

 

Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) (8)

 

50,041

 

 

 

(1,914

)

 

 

114,533

 

 

 

5,063

 

Add back:

 

 

 

 

 

 

 

Restructuring and other charges

 

9,235

 

 

 

18,748

 

 

 

12,401

 

 

 

21,374

 

Litigation and other losses (gains)

 

100

 

 

 

 

 

 

198

 

 

 

(150

)

Unrealized gain on preferred stock investment

 

 

 

 

(1,667

)

 

 

 

 

 

(1,667

)

Goodwill impairment charges

 

 

 

 

 

 

 

 

 

 

59,816

 

(Gain) loss on sale of businesses

 

(31,510

)

 

 

1,501

 

 

 

(31,510

)

 

 

1,603

 

Transaction-related expenses

 

1,447

 

 

 

695

 

 

 

1,782

 

 

 

1,132

 

Foreign currency transaction losses (gains), net

 

21

 

 

 

(276

)

 

 

419

 

 

 

(31

)

Adjusted EBITDA (8)

$

29,334

 

 

$

17,087

 

 

$

97,823

 

 

$

87,140

 

Adjusted EBITDA as a percentage of revenues (8)

 

11.8

%

 

 

8.6

%

 

 

10.8

%

 

 

10.3

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (8)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Net income (loss) from continuing operations

$

31,058

 

 

$

(6,104

)

 

$

62,987

 

 

$

(23,718

)

Weighted average shares - diluted

 

21,466

 

 

 

21,903

 

 

 

21,809

 

 

 

21,882

 

Diluted earnings (loss) per share from continuing operations

$

1.45

 

 

$

(0.28

)

 

$

2.89

 

 

$

(1.08

)

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

 

2,328

 

 

 

3,138

 

 

 

9,251

 

 

 

12,696

 

Restructuring and other charges

 

9,235

 

 

 

18,748

 

 

 

12,401

 

 

 

21,374

 

Litigation and other losses (gains)

 

100

 

 

 

 

 

 

198

 

 

 

(150

)

Goodwill impairment charges

 

 

 

 

 

 

 

 

 

 

59,816

 

Unrealized gain on preferred stock investment

 

 

 

 

(1,667

)

 

 

 

 

 

(1,667

)

(Gain) loss on sale of businesses

 

(31,510

)

 

 

1,501

 

 

 

(31,510

)

 

 

1,603

 

Transaction-related expenses

 

1,447

 

 

 

695

 

 

 

1,782

 

 

 

1,132

 

Tax effect of adjustments

 

4,530

 

 

 

(6,158

)

 

 

1,742

 

 

 

(23,199

)

Total adjustments, net of tax

 

(13,870

)

 

 

16,257

 

 

 

(6,136

)

 

 

71,605

 

Adjusted net income from continuing operations (8)

$

17,188

 

 

$

10,153

 

 

$

56,851

 

 

$

47,887

 

Adjusted weighted average shares - diluted (9)

 

21,466

 

 

 

22,323

 

 

 

21,809

 

 

 

22,299

 

Adjusted diluted earnings per share from continuing operations (8)

$

0.80

 

 

$

0.45

 

 

$

2.61

 

 

$

2.15

 

(8)

In evaluating the company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing the company's business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These 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 accounting principles generally accepted in the United States.

(9)

As the company reported a net loss for the three and twelve months ended December 31, 2020, GAAP diluted weighted average shares outstanding equals the basic weighted average shares outstanding for that period. The non-GAAP adjustments resulted in adjusted net income from continuing operations for the three and twelve months ended December 31, 2020. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding.

 

Contacts

MEDIA CONTACT
Allie Bovis
abovis@hcg.com

INVESTOR CONTACT
John D. Kelly
investor@hcg.com

Contacts

MEDIA CONTACT
Allie Bovis
abovis@hcg.com

INVESTOR CONTACT
John D. Kelly
investor@hcg.com