false--12-31FY201900012898480000.01500000000251147392514476439287000P13YP5YP6YP3YP3YP5Y0P1Y99800027530001850004600010000480001060006300029500000P2YP1YP1YP5Y2020-12-3125682882425430 0001289848 2019-01-01 2019-12-31 0001289848 hurn:InnosightHoldingsLLCMember 2019-01-01 2019-12-31 0001289848 2019-06-30 0001289848 2020-02-18 0001289848 2019-12-31 0001289848 2018-12-31 0001289848 2018-01-01 2018-12-31 0001289848 2017-01-01 2017-12-31 0001289848 us-gaap:TreasuryStockMember 2018-12-31 0001289848 us-gaap:TreasuryStockMember 2017-01-01 2017-12-31 0001289848 us-gaap:CommonStockMember 2019-12-31 0001289848 us-gaap:CommonStockMember 2018-01-01 2018-12-31 0001289848 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001289848 us-gaap:RetainedEarningsMember 2018-01-01 2018-12-31 0001289848 us-gaap:RetainedEarningsMember 2019-01-01 2019-12-31 0001289848 us-gaap:TreasuryStockMember 2019-01-01 2019-12-31 0001289848 us-gaap:RetainedEarningsMember 2019-12-31 0001289848 2017-12-31 0001289848 us-gaap:TreasuryStockMember 2019-12-31 0001289848 us-gaap:CommonStockMember 2017-12-31 0001289848 2016-12-31 0001289848 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-12-31 0001289848 us-gaap:AdditionalPaidInCapitalMember 2016-12-31 0001289848 us-gaap:TreasuryStockMember 2018-01-01 2018-12-31 0001289848 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001289848 us-gaap:CommonStockMember 2019-01-01 2019-12-31 0001289848 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001289848 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-12-31 0001289848 us-gaap:CommonStockMember 2017-01-01 2017-12-31 0001289848 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001289848 us-gaap:TreasuryStockMember 2017-12-31 0001289848 us-gaap:AccountingStandardsUpdate201409Member us-gaap:RetainedEarningsMember 2018-01-01 2018-12-31 0001289848 us-gaap:AccountingStandardsUpdate201802Member 2017-01-01 2017-12-31 0001289848 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-01-01 2017-12-31 0001289848 us-gaap:RetainedEarningsMember 2016-12-31 0001289848 us-gaap:AdditionalPaidInCapitalMember 2017-01-01 2017-12-31 0001289848 us-gaap:CommonStockMember 2018-12-31 0001289848 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2016-12-31 0001289848 us-gaap:RetainedEarningsMember 2017-12-31 0001289848 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-12-31 0001289848 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001289848 us-gaap:CommonStockMember 2016-12-31 0001289848 us-gaap:TreasuryStockMember 2016-12-31 0001289848 us-gaap:RetainedEarningsMember 2017-01-01 2017-12-31 0001289848 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-12-31 0001289848 us-gaap:RetainedEarningsMember 2018-12-31 0001289848 us-gaap:AccountingStandardsUpdate201609Member us-gaap:RetainedEarningsMember 2017-01-01 2017-12-31 0001289848 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001289848 us-gaap:AccountingStandardsUpdate201609Member 2017-01-01 2017-12-31 0001289848 us-gaap:AccountingStandardsUpdate201802Member us-gaap:RetainedEarningsMember 2017-01-01 2017-12-31 0001289848 us-gaap:AccountingStandardsUpdate201609Member us-gaap:AdditionalPaidInCapitalMember 2017-01-01 2017-12-31 0001289848 us-gaap:AccountingStandardsUpdate201409Member 2018-01-01 2018-12-31 0001289848 2019-01-01 0001289848 us-gaap:AccruedLiabilitiesMember 2019-01-01 2019-01-01 0001289848 hurn:OperatingleaserightofuseassetMember 2019-01-01 2019-01-01 0001289848 hurn:DeferredrentcreditnoncurrentMember 2019-01-01 2019-01-01 0001289848 hurn:OperatingleaseliabilitycurrentMember 2019-01-01 2019-01-01 0001289848 hurn:OperatingleaseliabilitynoncurrentMember 2019-01-01 2019-01-01 0001289848 us-gaap:OtherLiabilitiesMember 2019-01-01 2019-01-01 0001289848 srt:MaximumMember hurn:ComputersRelatedEquipmentAndSoftwareMember 2019-01-01 2019-12-31 0001289848 2014-09-30 0001289848 2018-01-01 2018-03-31 0001289848 srt:MaximumMember 2019-01-01 2019-12-31 0001289848 us-gaap:FurnitureAndFixturesMember 2019-01-01 2019-12-31 0001289848 srt:AircraftTypeMember 2019-01-01 2019-12-31 0001289848 srt:MinimumMember hurn:ComputersRelatedEquipmentAndSoftwareMember 2019-01-01 2019-12-31 0001289848 hurn:InnosightHoldingsLLCMember 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember 2017-03-01 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:NoncompeteAgreementsMember 2017-03-01 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:NoncompeteAgreementsMember 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:OffMarketFavorableLeaseMember 2017-03-01 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:TradeNamesMember 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:CustomerContractsMember 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:OffMarketFavorableLeaseMember 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:CustomerRelationshipsMember 2017-03-01 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:CustomerContractsMember 2017-03-01 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:TradeNamesMember 2017-03-01 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember us-gaap:CustomerRelationshipsMember 2017-03-01 0001289848 2017-03-01 2017-03-01 0001289848 hurn:InnosightHoldingsLLCMember 2017-01-01 2017-12-31 0001289848 2017-03-01 0001289848 us-gaap:NoncompeteAgreementsMember 2018-12-31 0001289848 us-gaap:TechnologyBasedIntangibleAssetsMember 2018-12-31 0001289848 us-gaap:TradeNamesMember 2019-12-31 0001289848 us-gaap:OffMarketFavorableLeaseMember 2019-01-01 2019-12-31 0001289848 us-gaap:CustomerRelationshipsMember 2018-12-31 0001289848 us-gaap:CustomerContractsMember 2019-12-31 0001289848 us-gaap:OffMarketFavorableLeaseMember 2019-12-31 0001289848 us-gaap:OffMarketFavorableLeaseMember 2018-12-31 0001289848 us-gaap:CustomerContractsMember 2019-01-01 2019-12-31 0001289848 us-gaap:NoncompeteAgreementsMember 2019-12-31 0001289848 us-gaap:NoncompeteAgreementsMember 2019-01-01 2019-12-31 0001289848 us-gaap:CustomerRelationshipsMember 2019-12-31 0001289848 us-gaap:TradeNamesMember 2018-12-31 0001289848 us-gaap:CustomerContractsMember 2018-12-31 0001289848 us-gaap:TechnologyBasedIntangibleAssetsMember 2019-12-31 0001289848 hurn:StrategyandInnovationMember 2019-11-30 0001289848 hurn:EnterpriseSolutionsandAnalyticsMember 2017-01-01 2017-12-31 0001289848 us-gaap:HealthCareMember 2017-01-01 2017-12-31 0001289848 us-gaap:HealthCareMember 2018-01-01 2018-12-31 0001289848 us-gaap:HealthCareMember 2018-12-31 0001289848 us-gaap:HealthCareMember 2019-12-31 0001289848 hurn:EducationMember 2018-01-01 2018-12-31 0001289848 hurn:BusinessAdvisoryMember 2017-12-31 0001289848 hurn:BusinessAdvisoryMember 2019-12-31 0001289848 hurn:EducationMember 2019-01-01 2019-12-31 0001289848 hurn:BusinessAdvisoryMember 2018-12-31 0001289848 us-gaap:HealthCareMember 2017-12-31 0001289848 hurn:EducationMember 2018-12-31 0001289848 hurn:BusinessAdvisoryMember 2019-01-01 2019-12-31 0001289848 hurn:EducationMember 2017-12-31 0001289848 hurn:BusinessAdvisoryMember 2018-01-01 2018-12-31 0001289848 us-gaap:HealthCareMember 2019-01-01 2019-12-31 0001289848 hurn:EducationMember 2019-12-31 0001289848 srt:MinimumMember us-gaap:TechnologyBasedIntangibleAssetsMember 2019-01-01 2019-12-31 0001289848 srt:MaximumMember us-gaap:TechnologyBasedIntangibleAssetsMember 2019-01-01 2019-12-31 0001289848 srt:MinimumMember us-gaap:CustomerRelationshipsMember 2019-01-01 2019-12-31 0001289848 srt:MinimumMember us-gaap:TradeNamesMember 2019-01-01 2019-12-31 0001289848 srt:MaximumMember us-gaap:TradeNamesMember 2019-01-01 2019-12-31 0001289848 srt:MaximumMember us-gaap:CustomerRelationshipsMember 2019-01-01 2019-12-31 0001289848 us-gaap:SegmentDiscontinuedOperationsMember hurn:HuronLegalMember 2019-01-01 2019-12-31 0001289848 us-gaap:RestructuringChargesMember 2019-01-01 2019-12-31 0001289848 2019-10-01 2019-12-31 0001289848 hurn:OperatingleaserightofuseassetMember 2019-01-01 2019-12-31 0001289848 us-gaap:LeaseholdImprovementsMember 2019-01-01 2019-09-30 0001289848 srt:MaximumMember 2019-12-31 0001289848 srt:MinimumMember 2019-12-31 0001289848 us-gaap:FurnitureAndFixturesMember 2018-12-31 0001289848 us-gaap:AssetUnderConstructionMember 2019-12-31 0001289848 hurn:ComputersRelatedEquipmentAndSoftwareMember 2019-12-31 0001289848 us-gaap:LeaseholdImprovementsMember 2018-12-31 0001289848 us-gaap:AssetUnderConstructionMember 2018-12-31 0001289848 hurn:ComputersRelatedEquipmentAndSoftwareMember 2018-12-31 0001289848 srt:AircraftTypeMember 2018-12-31 0001289848 us-gaap:FurnitureAndFixturesMember 2019-12-31 0001289848 srt:AircraftTypeMember 2019-12-31 0001289848 us-gaap:LeaseholdImprovementsMember 2019-12-31 0001289848 us-gaap:ConvertibleDebtMember 2017-01-01 2017-12-31 0001289848 us-gaap:ConvertibleDebtMember 2018-01-01 2018-12-31 0001289848 us-gaap:ConvertibleDebtMember 2019-01-01 2019-12-31 0001289848 us-gaap:ConvertibleDebtMember 2018-12-31 0001289848 srt:MinimumMember hurn:SeniorSecuredCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2015-03-31 2015-03-31 0001289848 us-gaap:ConvertibleDebtMember 2014-09-30 0001289848 srt:MaximumMember hurn:SeniorSecuredCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2015-03-31 2015-03-31 0001289848 hurn:SeniorSecuredCreditFacilityMember 2019-12-31 0001289848 us-gaap:ConvertibleDebtMember 2014-09-30 2014-09-30 0001289848 hurn:PromissoryNotedue2024Member 2017-06-30 0001289848 us-gaap:WarrantMember 2014-09-30 0001289848 hurn:PromissoryNotedue2024Member 2017-06-30 2017-06-30 0001289848 us-gaap:ConvertibleDebtMember 2014-07-01 2014-09-30 0001289848 hurn:SeniorSecuredCreditFacilityMember 2015-01-01 2015-03-31 0001289848 hurn:NoteHedgeMember 2014-09-30 2014-09-30 0001289848 hurn:PromissoryNotedue2024Member 2017-01-01 2017-06-30 0001289848 hurn:ContingentConsiderationLiabilityMember 2019-01-01 2019-12-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember 2019-01-01 2019-12-31 0001289848 hurn:SeniorSecuredCreditFacilityMember 2018-12-31 0001289848 us-gaap:ConvertibleDebtMember 2019-10-01 2019-10-31 0001289848 srt:MinimumMember hurn:SeniorSecuredCreditFacilityMember us-gaap:BaseRateMember 2015-03-31 2015-03-31 0001289848 hurn:SeniorSecuredCreditFacilityMember 2015-03-31 0001289848 srt:MaximumMember hurn:SeniorSecuredCreditFacilityMember us-gaap:BaseRateMember 2015-03-31 2015-03-31 0001289848 us-gaap:WarrantMember 2014-09-30 2014-09-30 0001289848 hurn:NoteHedgeMember 2014-09-30 0001289848 hurn:SeniorSecuredCreditFacilityMember 2015-03-31 2015-03-31 0001289848 srt:MaximumMember us-gaap:ConvertibleDebtMember 2014-09-30 0001289848 hurn:PromissoryNotedue2024Member 2018-12-31 0001289848 hurn:PromissoryNotedue2024Member 2019-12-31 0001289848 us-gaap:ConvertibleDebtMember 2019-12-31 0001289848 2020-01-01 2019-12-31 0001289848 hurn:ReleaseofAllowanceMember 2019-01-01 2019-12-31 0001289848 hurn:ChangeinEstimatedVariableConsiderationMember 2018-01-01 2018-12-31 0001289848 hurn:ChangeinEstimatedVariableConsiderationMember 2019-01-01 2019-12-31 0001289848 hurn:ReleaseofAllowanceMember 2018-01-01 2018-12-31 0001289848 2021-01-01 2019-12-31 0001289848 2022-01-01 2019-12-31 0001289848 us-gaap:RestrictedStockMember 2019-01-01 2019-12-31 0001289848 us-gaap:RestrictedStockMember 2018-01-01 2018-12-31 0001289848 us-gaap:WarrantMember 2017-01-01 2017-12-31 0001289848 us-gaap:EmployeeStockOptionMember 2017-01-01 2017-12-31 0001289848 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-12-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember 2017-01-01 2017-12-31 0001289848 us-gaap:WarrantMember 2018-01-01 2018-12-31 0001289848 us-gaap:RestrictedStockMember 2017-01-01 2017-12-31 0001289848 us-gaap:WarrantMember 2019-01-01 2019-12-31 0001289848 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-12-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember 2018-01-01 2018-12-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember 2019-01-01 2019-12-31 0001289848 hurn:ShareRepurchaseProgramMember 2019-12-31 0001289848 hurn:ShareRepurchaseProgramMember 2019-01-01 2019-12-31 0001289848 us-gaap:CorporateNonSegmentMember 2018-01-01 2018-12-31 0001289848 us-gaap:SegmentDiscontinuedOperationsMember hurn:HuronLegalMember 2018-01-01 2018-12-31 0001289848 us-gaap:OtherRestructuringMember 2018-01-01 2018-12-31 0001289848 hurn:OfficeSpaceReductionsMember 2018-01-01 2018-12-31 0001289848 us-gaap:CorporateNonSegmentMember 2017-01-01 2017-12-31 0001289848 us-gaap:EmployeeSeveranceMember 2018-01-01 2018-12-31 0001289848 hurn:OfficeSpaceReductionsMember 2019-01-01 2019-12-31 0001289848 hurn:OfficeSpaceReductionsMember hurn:ChicagoIllinoisMember 2018-01-01 2018-12-31 0001289848 hurn:OfficeSpaceReductionsMember hurn:WisconsinOfficeMember 2018-01-01 2018-12-31 0001289848 hurn:OfficeSpaceReductionsMember hurn:LakeOswegoOregonMember 2019-01-01 2019-12-31 0001289848 us-gaap:EmployeeSeveranceMember 2019-01-01 2019-12-31 0001289848 us-gaap:RestructuringChargesMember 2019-10-01 2019-12-31 0001289848 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-12-31 0001289848 us-gaap:EmployeeSeveranceMember 2017-01-01 2017-12-31 0001289848 us-gaap:HealthCareMember 2017-01-01 2017-12-31 0001289848 us-gaap:EmployeeSeveranceMember 2019-12-31 0001289848 hurn:BusinessAdvisoryMember 2017-01-01 2017-12-31 0001289848 hurn:OfficeSpaceReductionsMember 2017-01-01 2017-12-31 0001289848 hurn:OfficeSpaceReductionsMember hurn:SanFranciscoOfficeMember 2018-01-01 2018-12-31 0001289848 hurn:OfficeSpaceReductionsMember 2019-12-31 0001289848 hurn:OfficeSpaceReductionsMember hurn:MiddletonWisconsinMember 2019-01-01 2019-12-31 0001289848 2018-04-01 2018-06-30 0001289848 hurn:OfficeSpaceReductionsMember hurn:HoustonTexasMember 2019-01-01 2019-12-31 0001289848 us-gaap:AccountingStandardsUpdate201602Member us-gaap:EmployeeSeveranceMember 2019-01-01 2019-01-01 0001289848 us-gaap:OtherRestructuringMember 2018-12-31 0001289848 hurn:OfficeSpaceReductionsMember 2019-01-01 0001289848 us-gaap:OtherRestructuringMember 2019-01-01 2019-12-31 0001289848 us-gaap:OtherRestructuringMember 2019-01-01 0001289848 us-gaap:AccountingStandardsUpdate201602Member hurn:OfficeSpaceReductionsMember 2019-01-01 2019-01-01 0001289848 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 2019-01-01 0001289848 us-gaap:EmployeeSeveranceMember 2018-12-31 0001289848 us-gaap:AccountingStandardsUpdate201602Member us-gaap:OtherRestructuringMember 2019-01-01 2019-01-01 0001289848 us-gaap:EmployeeSeveranceMember 2019-01-01 0001289848 hurn:OfficeSpaceReductionsMember 2017-12-31 0001289848 hurn:OfficeSpaceReductionsMember 2018-12-31 0001289848 us-gaap:EmployeeSeveranceMember 2017-12-31 0001289848 us-gaap:OtherRestructuringMember 2019-12-31 0001289848 us-gaap:OtherRestructuringMember 2017-12-31 0001289848 2017-06-22 0001289848 2017-06-22 2017-06-22 0001289848 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2018-12-31 0001289848 us-gaap:OtherNoncurrentLiabilitiesMember 2019-12-31 0001289848 us-gaap:OtherNoncurrentAssetsMember 2018-12-31 0001289848 us-gaap:AccruedLiabilitiesMember 2018-12-31 0001289848 us-gaap:OtherNoncurrentAssetsMember 2019-12-31 0001289848 us-gaap:OtherNoncurrentLiabilitiesMember 2018-12-31 0001289848 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2019-12-31 0001289848 us-gaap:AccruedLiabilitiesMember 2019-12-31 0001289848 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001289848 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember hurn:DeferredCompensationPlanAssetsMember 2018-12-31 0001289848 hurn:ContingentConsiderationLiabilityMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001289848 us-gaap:FairValueInputsLevel3Member hurn:ContingentConsiderationLiabilityMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001289848 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001289848 us-gaap:FairValueMeasurementsRecurringMember hurn:DeferredCompensationPlanAssetsMember 2018-12-31 0001289848 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ConvertibleDebtSecuritiesMember 2018-12-31 0001289848 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001289848 us-gaap:InterestRateSwapMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001289848 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ConvertibleDebtSecuritiesMember 2018-12-31 0001289848 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001289848 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ConvertibleDebtSecuritiesMember 2017-12-31 0001289848 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ConvertibleDebtSecuritiesMember 2019-12-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember hurn:ShorelightHoldingsLlcMember 2018-01-01 2018-12-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember hurn:ShorelightHoldingsLlcMember 2019-01-01 2019-12-31 0001289848 hurn:ContingentConsiderationLiabilityMember 2018-01-01 2018-12-31 0001289848 hurn:ContingentConsiderationLiabilityMember us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0001289848 us-gaap:ForeignCurrencyGainLossMember hurn:ContingentConsiderationLiabilityMember 2019-01-01 2019-12-31 0001289848 us-gaap:ForeignCurrencyGainLossMember hurn:ContingentConsiderationLiabilityMember 2018-01-01 2018-12-31 0001289848 hurn:ContingentConsiderationLiabilityMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001289848 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001289848 us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001289848 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember hurn:DeferredCompensationPlanAssetsMember 2019-12-31 0001289848 us-gaap:FairValueMeasurementsRecurringMember hurn:DeferredCompensationPlanAssetsMember 2019-12-31 0001289848 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001289848 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ConvertibleDebtSecuritiesMember 2019-12-31 0001289848 us-gaap:InterestRateSwapMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001289848 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember hurn:ShorelightHoldingsLlcMember 2020-03-31 0001289848 us-gaap:PreferredStockMember hurn:MedicallyHomeGroupInc.Member 2019-12-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember hurn:ShorelightHoldingsLlcMember 2014-07-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember hurn:ShorelightHoldingsLlcMember 2020-01-01 2020-03-31 0001289848 us-gaap:RetainedEarningsMember 2017-01-01 2017-12-31 0001289848 us-gaap:ConvertibleDebtSecuritiesMember us-gaap:RetainedEarningsMember 2017-01-01 2017-12-31 0001289848 us-gaap:InterestRateSwapMember us-gaap:RetainedEarningsMember 2017-01-01 2017-12-31 0001289848 us-gaap:RestrictedStockMember 2018-01-01 2018-12-31 0001289848 us-gaap:RestrictedStockMember 2019-01-01 2019-12-31 0001289848 hurn:StockOwnershipParticipationProgramMember 2015-05-01 2015-05-01 0001289848 hurn:TwoThousandAndTwelvePlanMember 2019-12-31 0001289848 us-gaap:RestrictedStockMember 2017-01-01 2017-12-31 0001289848 us-gaap:PerformanceSharesMember 2018-01-01 2018-12-31 0001289848 us-gaap:PerformanceSharesMember 2017-01-01 2017-12-31 0001289848 hurn:TwoThousandAndTwelvePlanMember 2019-01-01 2019-12-31 0001289848 hurn:TwoThousandandFourPlanMember 2019-12-31 0001289848 srt:ExecutiveOfficerMember us-gaap:EmployeeStockOptionMember 2019-01-01 2019-12-31 0001289848 hurn:StockOwnershipParticipationProgramMember 2019-12-31 0001289848 hurn:StockOwnershipParticipationProgramMember 2015-05-01 0001289848 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-12-31 0001289848 us-gaap:EmployeeStockOptionMember 2017-01-01 2017-12-31 0001289848 us-gaap:PerformanceSharesMember 2019-01-01 2019-12-31 0001289848 srt:MinimumMember us-gaap:PerformanceSharesMember 2019-01-01 2019-12-31 0001289848 us-gaap:PerformanceSharesMember 2019-12-31 0001289848 srt:ScenarioForecastMember us-gaap:PerformanceSharesMember 2020-01-01 2020-03-31 0001289848 us-gaap:RestrictedStockMember hurn:TwoThousandAndTwelvePlanMember 2018-12-31 0001289848 us-gaap:RestrictedStockMember 2019-12-31 0001289848 us-gaap:RestrictedStockMember 2018-12-31 0001289848 us-gaap:RestrictedStockMember hurn:StockOwnershipParticipationProgramMember 2019-12-31 0001289848 us-gaap:RestrictedStockMember hurn:TwoThousandAndTwelvePlanMember 2019-01-01 2019-12-31 0001289848 us-gaap:RestrictedStockMember hurn:StockOwnershipParticipationProgramMember 2019-01-01 2019-12-31 0001289848 us-gaap:RestrictedStockMember hurn:StockOwnershipParticipationProgramMember 2018-12-31 0001289848 us-gaap:RestrictedStockMember hurn:TwoThousandAndTwelvePlanMember 2019-12-31 0001289848 us-gaap:PerformanceSharesMember 2018-12-31 0001289848 us-gaap:StateAndLocalJurisdictionMember 2019-01-01 2019-12-31 0001289848 us-gaap:ForeignCountryMember 2018-01-01 2018-12-31 0001289848 us-gaap:SegmentDiscontinuedOperationsMember hurn:HuronLegalMember 2017-01-01 2017-12-31 0001289848 us-gaap:ForeignCountryMember 2019-01-01 2019-12-31 0001289848 us-gaap:DomesticCountryMember 2019-01-01 2019-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:BusinessAdvisoryMember 2017-01-01 2017-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:BusinessAdvisoryMember 2018-01-01 2018-12-31 0001289848 us-gaap:OperatingSegmentsMember us-gaap:HealthCareMember 2017-01-01 2017-12-31 0001289848 us-gaap:OperatingSegmentsMember 2018-01-01 2018-12-31 0001289848 us-gaap:MaterialReconcilingItemsMember 2019-01-01 2019-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:EducationMember 2019-01-01 2019-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:BusinessAdvisoryMember 2019-01-01 2019-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:EducationMember 2017-01-01 2017-12-31 0001289848 us-gaap:OperatingSegmentsMember 2019-01-01 2019-12-31 0001289848 us-gaap:OperatingSegmentsMember us-gaap:HealthCareMember 2018-01-01 2018-12-31 0001289848 us-gaap:MaterialReconcilingItemsMember 2017-01-01 2017-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:EducationMember 2018-01-01 2018-12-31 0001289848 us-gaap:MaterialReconcilingItemsMember 2018-01-01 2018-12-31 0001289848 us-gaap:OperatingSegmentsMember 2017-01-01 2017-12-31 0001289848 us-gaap:OperatingSegmentsMember us-gaap:HealthCareMember 2019-01-01 2019-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:BusinessAdvisoryMember 2017-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:BusinessAdvisoryMember 2019-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:EducationMember 2017-12-31 0001289848 us-gaap:MaterialReconcilingItemsMember 2018-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:EducationMember 2018-12-31 0001289848 us-gaap:MaterialReconcilingItemsMember 2019-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:BusinessAdvisoryMember 2018-12-31 0001289848 us-gaap:OperatingSegmentsMember us-gaap:HealthCareMember 2018-12-31 0001289848 us-gaap:OperatingSegmentsMember us-gaap:HealthCareMember 2017-12-31 0001289848 us-gaap:OperatingSegmentsMember hurn:EducationMember 2019-12-31 0001289848 us-gaap:MaterialReconcilingItemsMember 2017-12-31 0001289848 us-gaap:OperatingSegmentsMember us-gaap:HealthCareMember 2019-12-31 0001289848 us-gaap:SoftwareServiceSupportAndMaintenanceArrangementMember us-gaap:HealthCareMember 2019-01-01 2019-12-31 0001289848 us-gaap:TimeAndMaterialsContractMember hurn:EducationMember 2019-01-01 2019-12-31 0001289848 hurn:FulltimeBillableConsultantsMember us-gaap:HealthCareMember 2019-01-01 2019-12-31 0001289848 hurn:PerformancebasedMember 2019-01-01 2019-12-31 0001289848 us-gaap:HealthCareMember us-gaap:TransferredAtPointInTimeMember 2019-01-01 2019-12-31 0001289848 us-gaap:FixedPriceContractMember hurn:EducationMember 2019-01-01 2019-12-31 0001289848 hurn:FulltimeEquivalentsMember 2019-01-01 2019-12-31 0001289848 hurn:PerformancebasedMember us-gaap:HealthCareMember 2019-01-01 2019-12-31 0001289848 us-gaap:SoftwareServiceSupportAndMaintenanceArrangementMember 2019-01-01 2019-12-31 0001289848 us-gaap:FixedPriceContractMember us-gaap:HealthCareMember 2019-01-01 2019-12-31 0001289848 us-gaap:TransferredOverTimeMember 2019-01-01 2019-12-31 0001289848 hurn:FulltimeBillableConsultantsMember hurn:EducationMember 2019-01-01 2019-12-31 0001289848 us-gaap:FixedPriceContractMember hurn:BusinessAdvisoryMember 2019-01-01 2019-12-31 0001289848 us-gaap:TimeAndMaterialsContractMember us-gaap:HealthCareMember 2019-01-01 2019-12-31 0001289848 us-gaap:SoftwareServiceSupportAndMaintenanceArrangementMember hurn:EducationMember 2019-01-01 2019-12-31 0001289848 hurn:FulltimeEquivalentsMember hurn:EducationMember 2019-01-01 2019-12-31 0001289848 us-gaap:SoftwareServiceSupportAndMaintenanceArrangementMember hurn:BusinessAdvisoryMember 2019-01-01 2019-12-31 0001289848 hurn:BusinessAdvisoryMember us-gaap:TransferredOverTimeMember 2019-01-01 2019-12-31 0001289848 hurn:FulltimeEquivalentsMember us-gaap:HealthCareMember 2019-01-01 2019-12-31 0001289848 hurn:PerformancebasedMember hurn:EducationMember 2019-01-01 2019-12-31 0001289848 hurn:FulltimeBillableConsultantsMember 2019-01-01 2019-12-31 0001289848 us-gaap:TimeAndMaterialsContractMember 2019-01-01 2019-12-31 0001289848 hurn:PerformancebasedMember hurn:BusinessAdvisoryMember 2019-01-01 2019-12-31 0001289848 us-gaap:HealthCareMember us-gaap:TransferredOverTimeMember 2019-01-01 2019-12-31 0001289848 hurn:FulltimeBillableConsultantsMember hurn:BusinessAdvisoryMember 2019-01-01 2019-12-31 0001289848 us-gaap:TransferredAtPointInTimeMember 2019-01-01 2019-12-31 0001289848 hurn:BusinessAdvisoryMember us-gaap:TransferredAtPointInTimeMember 2019-01-01 2019-12-31 0001289848 hurn:EducationMember us-gaap:TransferredAtPointInTimeMember 2019-01-01 2019-12-31 0001289848 hurn:EducationMember us-gaap:TransferredOverTimeMember 2019-01-01 2019-12-31 0001289848 us-gaap:FixedPriceContractMember 2019-01-01 2019-12-31 0001289848 hurn:FulltimeEquivalentsMember hurn:BusinessAdvisoryMember 2019-01-01 2019-12-31 0001289848 us-gaap:TimeAndMaterialsContractMember hurn:BusinessAdvisoryMember 2019-01-01 2019-12-31 0001289848 hurn:BusinessAdvisoryMember us-gaap:TransferredOverTimeMember 2018-01-01 2018-12-31 0001289848 hurn:PerformancebasedMember hurn:EducationMember 2018-01-01 2018-12-31 0001289848 us-gaap:TimeAndMaterialsContractMember hurn:EducationMember 2018-01-01 2018-12-31 0001289848 hurn:FulltimeBillableConsultantsMember hurn:BusinessAdvisoryMember 2018-01-01 2018-12-31 0001289848 us-gaap:HealthCareMember us-gaap:TransferredAtPointInTimeMember 2018-01-01 2018-12-31 0001289848 us-gaap:SoftwareServiceSupportAndMaintenanceArrangementMember 2018-01-01 2018-12-31 0001289848 hurn:PerformancebasedMember us-gaap:HealthCareMember 2018-01-01 2018-12-31 0001289848 us-gaap:FixedPriceContractMember us-gaap:HealthCareMember 2018-01-01 2018-12-31 0001289848 hurn:FulltimeBillableConsultantsMember us-gaap:HealthCareMember 2018-01-01 2018-12-31 0001289848 hurn:EducationMember us-gaap:TransferredAtPointInTimeMember 2018-01-01 2018-12-31 0001289848 us-gaap:HealthCareMember us-gaap:TransferredOverTimeMember 2018-01-01 2018-12-31 0001289848 hurn:FulltimeEquivalentsMember hurn:EducationMember 2018-01-01 2018-12-31 0001289848 hurn:EducationMember us-gaap:TransferredOverTimeMember 2018-01-01 2018-12-31 0001289848 hurn:BusinessAdvisoryMember us-gaap:TransferredAtPointInTimeMember 2018-01-01 2018-12-31 0001289848 us-gaap:SoftwareServiceSupportAndMaintenanceArrangementMember us-gaap:HealthCareMember 2018-01-01 2018-12-31 0001289848 hurn:FulltimeBillableConsultantsMember hurn:EducationMember 2018-01-01 2018-12-31 0001289848 us-gaap:FixedPriceContractMember hurn:EducationMember 2018-01-01 2018-12-31 0001289848 us-gaap:TimeAndMaterialsContractMember us-gaap:HealthCareMember 2018-01-01 2018-12-31 0001289848 hurn:PerformancebasedMember hurn:BusinessAdvisoryMember 2018-01-01 2018-12-31 0001289848 us-gaap:TransferredAtPointInTimeMember 2018-01-01 2018-12-31 0001289848 us-gaap:FixedPriceContractMember hurn:BusinessAdvisoryMember 2018-01-01 2018-12-31 0001289848 us-gaap:TimeAndMaterialsContractMember 2018-01-01 2018-12-31 0001289848 hurn:FulltimeEquivalentsMember us-gaap:HealthCareMember 2018-01-01 2018-12-31 0001289848 us-gaap:TimeAndMaterialsContractMember hurn:BusinessAdvisoryMember 2018-01-01 2018-12-31 0001289848 us-gaap:FixedPriceContractMember 2018-01-01 2018-12-31 0001289848 us-gaap:SoftwareServiceSupportAndMaintenanceArrangementMember hurn:EducationMember 2018-01-01 2018-12-31 0001289848 hurn:PerformancebasedMember 2018-01-01 2018-12-31 0001289848 hurn:FulltimeEquivalentsMember hurn:BusinessAdvisoryMember 2018-01-01 2018-12-31 0001289848 hurn:FulltimeEquivalentsMember 2018-01-01 2018-12-31 0001289848 hurn:FulltimeBillableConsultantsMember 2018-01-01 2018-12-31 0001289848 us-gaap:SoftwareServiceSupportAndMaintenanceArrangementMember hurn:BusinessAdvisoryMember 2018-01-01 2018-12-31 0001289848 us-gaap:TransferredOverTimeMember 2018-01-01 2018-12-31 0001289848 us-gaap:AllowanceForCreditLossMember 2017-01-01 2017-12-31 0001289848 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2018-01-01 2018-12-31 0001289848 us-gaap:AllowanceForCreditLossMember 2018-01-01 2018-12-31 0001289848 us-gaap:AllowanceForCreditLossMember 2017-12-31 0001289848 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2018-12-31 0001289848 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2017-01-01 2017-12-31 0001289848 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2017-12-31 0001289848 us-gaap:AllowanceForCreditLossMember 2018-12-31 0001289848 us-gaap:AllowanceForCreditLossMember 2019-12-31 0001289848 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2019-12-31 0001289848 us-gaap:AllowanceForCreditLossMember 2019-01-01 2019-12-31 0001289848 us-gaap:AllowanceForCreditLossMember 2016-12-31 0001289848 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2016-12-31 0001289848 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2019-01-01 2019-12-31 0001289848 2018-07-01 2018-09-30 0001289848 2018-10-01 2018-12-31 0001289848 2019-01-01 2019-03-31 0001289848 2019-04-01 2019-06-30 0001289848 2019-07-01 2019-09-30 iso4217:USD xbrli:shares hurn:Reporting_Unit hurn:Segment iso4217:USD xbrli:shares xbrli:pure hurn:Billing
Table of Contents


 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K 
    (Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-50976
HURON CONSULTING GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware
 
01-0666114
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification Number)
550 West Van Buren Street
Chicago, Illinois
60607
(Address of principal executive offices and zip code)
(312) 583-8700
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common Stock, par value $0.01 per share
 
HURN
 
NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  x    No  o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o    No  x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Smaller Reporting 
Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes      No  x
The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, 2019 (the last business day of the registrant’s most recently completed second fiscal quarter) was approximately $1,128,100,000.
As of February 18, 2020, 22,509,235 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.
Documents Incorporated By Reference
Portions of the registrant’s definitive Proxy Statement to be filed with Securities and Exchange Commission within 120 days after the end of its fiscal year are incorporated by reference into Part III.
 
 


Table of Contents


HURON CONSULTING GROUP INC.
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2019
 
TABLE OF CONTENTS
 
 
 
Page
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
 
 
 
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
 
 
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
 
 
Item 15.
Item 16.


Table of Contents


FORWARD-LOOKING STATEMENTS
In this Annual Report on Form 10-K, unless the context otherwise requires, the terms “Huron,” “Company,” “we,” “us” and “our” refer to Huron Consulting Group Inc. and its subsidiaries.
Statements in this Annual Report on Form 10-K that are not historical in nature, including those concerning the Company’s current expectations about its future requirements and needs, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “guidance,” or “outlook,” or similar expressions. These forward-looking statements reflect our current expectations about our future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: failure to achieve expected utilization rates, billing rates, and the 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," that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. We disclaim any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.
PART I 
ITEM 1.
BUSINESS.
OVERVIEW
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.
We are headquartered in Chicago, Illinois, with additional locations in the United States and abroad in Canada, India, Singapore, Switzerland, and the United Kingdom.
OUR SERVICES
We provide professional services through three operating segments: Healthcare, Business Advisory, and Education. For the year ended December 31, 2019, we derived 46%, 29%, and 25% of our revenues from the Healthcare, Business Advisory, and Education operating segments, respectively.
Healthcare
Our Healthcare segment has a depth of expertise in financial and operational improvement, care transformation, culture and organizational excellence, strategy, and technology and analytics. We serve national and regional hospitals, integrated health systems, academic medical centers, community hospitals, and medical groups. Our solutions help clients evolve and adapt to the rapidly changing healthcare environment and achieve growth, optimize performance, enhance profitability, improve quality and clinical outcomes, align leaders, improve organizational culture, and drive physician, patient, and employee engagement across the enterprise to deliver better consumer outcomes.
We help organizations transform and innovate their delivery model to focus on patient wellness by improving quality outcomes, minimizing care variation and fundamentally improving patient and population health. Our consultants collaborate with clients to help build and sustain today’s business to invest in the future by reducing complexity, improving operational efficiency and growing market share. We enable the healthcare of the future by identifying, integrating and optimizing digital and technology investments to collect data that transforms care delivery and improves patient outcomes. We also develop future leaders capable of driving meaningful cultural and organizational change and who transform the consumer experience.

1

Table of Contents


Business Advisory
Our Business Advisory segment provides services to large and middle market organizations, lending institutions, law firms, investment banks, private equity firms, and not-for-profit organizations, including higher education and healthcare institutions. We assist clients in a broad range of industries and across the spectrum from healthy, well-capitalized companies to organizations in transition, as well as creditors, equity owners, and other key constituents. Our Enterprise Solutions and Analytics experts advise, deliver, and optimize technology and analytic solutions that enable organizations to manage and optimize their financial performance, operational efficiency, and client or stakeholder experience. Our Business Advisory experts resolve complex business issues and enhance client enterprise value through a suite of services including capital advisory, transaction advisory, operational improvement, restructuring and turnaround, valuation, and dispute advisory. Our Strategy and Innovation professionals collaborate with clients across a range of industries to identify new growth opportunities, build new ventures and capabilities, and accelerate organizational change. Our Life Sciences professionals provide strategic solutions to help pharmaceutical, medical device, and biotechnology companies deliver more value to patients, payers, and providers, and comply with regulations.
Education
Our Education segment provides consulting and technology solutions to higher education institutions and academic medical centers. We collaborate with clients to address challenges relating to business and technology strategy, financial and operational excellence, student success, research administration, and regulatory compliance. Our research enterprise solutions assist clients in identifying and implementing institutional research strategy, optimizing clinical research operations, improving financial management and cost reimbursement, improving service to faculty, and mitigating risk compliance. Our technology strategy, enterprise applications, and analytic solutions transform and optimize operations, deliver time and cost savings, and enhance the student experience. Our institutional strategy, budgeting and financial management, and business operations align missions with business priorities, improve quality, and reduce costs institution-wide. Our student solutions improve attraction, retention and graduation rates, increase student satisfaction and help generate quality outcomes.
Huron is a Platinum level member of the Oracle PartnerNetwork (OPN), an Oracle Cloud Premier Partner within North America, a Gold level consulting partner with Salesforce.com and a Workday Services Partner.
OUR CLIENTS AND INDUSTRIES
We provide professional services to both financially sound organizations and organizations in transition, including: national and regional hospitals, integrated health systems, higher education institutions and academic medical centers, community hospitals, medical groups, large and middle market organizations, not-for-profit organizations, lending institutions, law firms, investment banks and private equity firms. In 2019, we served over 1,800 clients.
Our clients are in a broad array of industries, including healthcare, education, financial services, life sciences, energy and utilities, manufacturing and industrials, government and other commercial industries.
EMPLOYEES
Our success depends on our ability to attract, engage, develop and retain highly talented professionals. We know that by creating a work environment where employees can shape their futures, and individuals are rewarded not only for their own contributions, but also for the success of our organization, we can accomplish these goals. We are focused on advancing every facet of the employee experience, beginning with the recruiting process through post-employment or retirement. We create a personalized experience for our people, where they are empowered to make a meaningful impact on our clients, our communities, and with one another. We have developed comprehensive programs incorporating learning opportunities, beginning with the onboarding process and continuing throughout one’s career journey. We provide a competitive total rewards package including robust benefits that are tailored to the diverse needs of our employees and are refreshed regularly to maintain competitiveness. Our commitment to corporate social responsibility is facilitated through our employee and community experience team and encompasses our Helping Hands program, diversity and inclusion efforts, and a renewed focus on sustainability.
Our employee population is divided into two groups: client-serving and support professionals. As of December 31, 2019, we had 3,750 full-time employees, including 153 client-serving managing directors. Our client-serving employees serve as critical business advisors; collaborating with clients to help solve their most complex business problems. Our managing directors are the key drivers of growth in our business, generating new revenue streams from existing and new clients. They enhance our market reputation by partnering with clients as advisors and engagement team leaders. Internally, they create our intellectual capital, develop our people, and are stewards of our culture. Our senior directors, directors, and managers manage day-to-day client relationships, develop our people, nurture our culture, and oversee the delivery and quality of our work product. Our associates and analysts gather and organize data, conduct detailed analyses, and prepare presentations that synthesize and distill information to support recommendations we deliver to clients. Our support professionals include our senior management team as well as those who provide sales support, methodology creation, software development, and corporate functions

2

Table of Contents


consisting of our facilities, finance and accounting, human resources, information technology, legal, and marketing teams. These employees provide strategic direction and support that enables the success of our client-serving employees. At December 31, 2019, our support professionals team was led by 24 managing directors, executives and corporate vice presidents.
In addition to our full-time client-serving employees, we engage temporary employees on an as-needed basis to provide unique skill sets that are not required to be staffed on a full-time basis.
The ability to advance one’s career is critical to our employee retention and engagement. As part of our onboarding process, our employee experience team facilitates a robust and structured curriculum for newly hired employees to develop and onboard into the company. We strive to develop world class leaders and are committed to providing programs and opportunities that achieve this goal by focusing on key leadership attributes at all levels. We also provide a variety of learning opportunities, through online and classroom environments, to further develop employees’ capabilities, including technical knowledge; people skills; team dynamics; and coaching and developing others. We encourage our employees to enhance their professional skills through external learning opportunities that certify their technical skills and to pursue certain advanced degrees. Employees are matched with internal performance coaches and mentors to facilitate their growth, including identifying opportunities for professional development, formal training, and technical skill certifications. All employees have a coach to support them.
Our total rewards philosophy focuses on rewarding and retaining our high performing employees. To accomplish this, we offer employees a competitive base salary; performance incentives; and robust, market-competitive benefits.
Our incentive compensation plan is designed to recognize and reward performance of both the organization and individuals and to ensure we retain our top performers. We take both practice and company financial performance into consideration in the determination of bonus pool funding. At the practice level, the annual bonus pool is funded based on achievement of its annual financial goals. Our board of directors reviews and approves the total incentive compensation pool for all practices in the context of the Company’s overall financial performance. Individual bonus awards are based on the practice’s financial performance, individual bonus targets, and the individual’s performance as evaluated through our performance management process. The intent of the incentive compensation plan is to differentiate rewards based on individual performance, ensuring that our top performers for the year receive incentives that are commensurate with their contributions, which enables Huron to retain them and continue to provide our clients with exceptional service. The incentive compensation plan for our named executive officers is funded based on a blend of achievement of financial goals and strategic initiatives.
Managing directors’ individual compensation levels, including base salary and target incentive awards, are set to align with the value of their expected contributions to the organization, including collaboration across practices. As the key drivers of the organization’s success, their compensation is designed to include equity awards as a core component. The use of equity is intended to encourage retention, align the interests of our managing directors with shareholders, and help build wealth over a managing director's career at Huron through annual grants as well as stock price appreciation.
Our benefit programs are designed to be comprehensive, competitive and personalized to the needs of our employees. Examples of these programs include flexible paid time off and a travel reward program which recognizes the significant travel commitment of our client-serving workforce. We provide opportunities that allow employees to focus and care for their personal well-being which are aimed at providing tools and resources to focus on their physical, financial, social, and emotional health given the demanding nature of their work. In addition, our health and welfare plans, retirement benefits, and stock purchase plan provide a core foundation of security to our employees and their families.
Our corporate social responsibility efforts are designed to support an individual’s charitable interests while also providing a venue for our employees to come together to make an impact in the communities in which we live and work. In addition, the diversity and inclusion efforts support the needs of our growing employee population through employee resource groups that provide corporate-wide educational opportunities, build awareness, celebrate our differences, develop mentoring relationships, and ensure we are fostering a welcoming and engaging environment for all employees.
BUSINESS DEVELOPMENT AND MARKETING
Our business development and marketing activities are aimed at cultivating relationships, generating leads, and building a strong brand reputation with health systems, hospitals, and university administrators; offices of the C-suite; and senior level influencers and decision makers of middle market and large corporate organizations. We believe excellent service delivery to clients is critical to building and maintaining relationships and our brand reputation, and we emphasize the importance of client service to all of our employees.
Currently, we generate new business opportunities through the combination of relationships our managing directors have with individuals working in healthcare organizations, academic and research institutions, and corporations, and marketing lead generation activities. We also view market-based collaboration between our managing directors as a key component in building our business. Often, the client relationship of a managing director in one area of our business leads to opportunities in another area. All of our managing directors understand their roles in ongoing relationship and business development, which is reinforced through our compensation and incentive programs. We actively seek

3

Table of Contents


to identify new business opportunities and frequently receive referrals and repeat business from past and current clients. In addition, to complement the business development efforts of our managing directors, we have dedicated business development professionals who are focused exclusively on developing client relationships and generating new business.
COMPETITION
The professional services industry is extremely competitive, highly fragmented, and constantly evolving. The industry includes a large number of participants with a variety of skills and industry expertise, including other strategy, business operations, technology, and financial consulting firms; general management consulting firms; the consulting practices of major accounting firms; technical and economic advisory firms; regional and specialty consulting firms; and the internal professional resources of organizations. We compete with a large number of service and technology providers in all of our segments. Our competitors vary, depending on the particular practice area, and we expect to continue to face competition from new market entrants.
We believe the principal competitive factors in our market include reputation, the ability to attract and retain top talent, the capacity to manage engagements effectively to drive high value to clients, and the ability to deliver measurable and sustainable results. There is also competition on price, although to a lesser extent due to the criticality of the issues that many of our services address. Some competitors have a greater geographic footprint, broader international presence, and more resources than we do, but we believe our reputation and ability to deliver high-value, quality service and measurable results to our clients across a balanced portfolio of services and attract and retain employees with broad capabilities and deep industry expertise enable us to compete favorably in the professional services marketplace.
AVAILABLE INFORMATION
We file annual, quarterly and current reports, proxy statements, and other information with the Securities and Exchange Commission (the “SEC”). These filings are available on the SEC’s website at http://www.sec.gov.
Our website is located at www.huronconsultinggroup.com, and our investor relations website is located at ir.huronconsultinggroup.com. We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 available through our website, free of charge, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We provide information about our business and financial performance, including our corporate profile, on the Investor Relations page of our website. Additionally, we webcast our earnings calls and certain events we participate in with members of the investment community on the Investor Relations page of our website. Further corporate governance information, including our code of ethics, code of business conduct, corporate governance guidelines, and board committee charters, is also available on the Investor Relations page of our website. The content of our websites is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
ITEM 1A.
RISK FACTORS.
The following discussion of risk factors may be important to understanding the statements in this Annual Report on Form 10-K or elsewhere. The following information should be read in conjunction with Part II—Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and related notes in this Annual Report on Form 10-K. Discussions about the important operational risks that our business encounters can be found in Part II—Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
An inability to retain our senior management team and other managing directors would be detrimental to the success of our business.
We rely heavily on our senior management team, our practice leaders, and other managing directors; our ability to retain them is particularly important to our future success. Given the highly specialized nature of our services, the senior management team must have a thorough understanding of our service offerings as well as the skills and experience necessary to manage an organization consisting of a diverse group of professionals. In addition, we rely on our senior management team and other managing directors to generate and market our business. Further, our senior management’s and other managing directors’ personal reputations and relationships with our clients are a critical element in obtaining and maintaining client engagements. Members of our senior management team and our other managing directors could choose to leave or join one of our competitors and some of our clients could choose to use the services of that competitor instead of our services. If one or more members of our senior management team or our other managing directors leave and we cannot replace them with a suitable candidate quickly, we could experience difficulty in securing and successfully completing engagements and managing our business properly, which could harm our business prospects and results of operations.

4

Table of Contents


Our inability to hire and retain talented people in an industry where there is great competition for talent could have a serious negative effect on our prospects and results of operations.
Our business involves the delivery of professional services and is highly labor-intensive. Our success depends largely on our general ability to attract, develop, motivate, and retain highly skilled professionals. Further, we must successfully maintain the right mix of professionals with relevant experience and skill sets as we continue to grow, as we expand into new service offerings, and as the market evolves. The loss of a significant number of our professionals, the inability to attract, hire, develop, train, and retain additional skilled personnel, or failure to maintain the right mix of professionals could have a serious negative effect on us, including our ability to manage, staff, and successfully complete our existing engagements and obtain new engagements. Qualified professionals are in great demand, and we face significant competition for both senior and junior professionals with the requisite credentials and experience. Our principal competition for talent comes from other consulting firms and accounting firms, as well as from organizations seeking to staff their internal professional positions. Many of these competitors may be able to offer greater compensation and benefits or more attractive lifestyle choices, career paths, or geographic locations than we do. Therefore, we may not be successful in attracting and retaining the skilled consultants we require to conduct and expand our operations successfully. Increasing competition for these revenue-generating professionals may also significantly increase our labor costs, which could negatively affect our margins and results of operations.
Changes in capital markets, legal or regulatory requirements, and general economic or other factors beyond our control could reduce demand for our services, in which case our revenues and profitability could decline.
A number of factors outside of our control affect demand for our services. These include:
fluctuations in U.S. and global economies;
the U.S. or global financial markets and the availability, costs, and terms of credit;
changes in laws and regulations; and
other economic factors and general business conditions.
For example, some portion of the services we provide may be considered by our clients to be more discretionary in nature, as the demand for the services may be impacted by economic slowdowns. We are not able to predict the positive or negative effects that future events or changes to the U.S. or global economy, financial markets, or regulatory and business environment could have on our operations.
Our goodwill and other intangible assets represent a substantial amount of our total assets, and we may be required to recognize a non-cash impairment charge for these assets if the performance of one or more of our reporting units falls below our expectations.
Our total assets reflect a substantial amount of intangible assets, primarily goodwill. At December 31, 2019, goodwill and other intangible assets totaled $678.3 million, or 61%, of our total assets. Goodwill results from our acquisitions, representing the excess of the fair value of consideration transferred over the fair value of the net assets acquired. We test goodwill for impairment at the reporting unit level, annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. Intangible assets other than goodwill represent purchased assets that lack physical substance but can be distinguished from goodwill. Our intangible assets primarily consist of customer relationships, trade names, customer contracts, technology and software, and non-competition agreements, all of which were acquired through business combinations. We evaluate our intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. No material impairment charges for intangible assets were recorded in 2019, 2018, and 2017. During the years ended 2019 and 2018, we did not record any non-cash goodwill impairment charges. During 2017, we recorded $253.1 million of non-cash goodwill impairment charges. Of the $253.1 million, $208.1 million related to our Healthcare reporting unit and $45.0 million related to our Enterprise Solutions and Analytics reporting unit which is included in our Business Advisory segment.
Determining the fair value of a reporting unit requires us to make significant judgments, estimates, and assumptions. While we believe that the estimates and assumptions underlying our valuation methodology are reasonable, these estimates and assumptions could have a significant impact on whether or not a non-cash goodwill impairment charge is recognized and also the magnitude of any such charge. The results of an impairment analysis are as of a point in time. There is no assurance that the actual future earnings or cash flows of our reporting units will be consistent with our projections. We will monitor any changes to our assumptions and will evaluate goodwill as deemed warranted during future periods. Any significant decline in our operations could result in additional non-cash goodwill impairment charges.
Refer to “Critical Accounting Policies” within Part I - Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 4 “Goodwill and Intangible Assets” within the notes to our consolidated financial statements for further discussion of our business combinations, goodwill, intangible assets, and impairment tests performed.

5

Table of Contents


We may incur costs to support our business and the inability to effectively build a support structure for the business could have an adverse impact on our growth and profitability.
We have grown significantly since we commenced operations and have increased the number of our full-time professionals from 249 in 2002 to 3,750 as of December 31, 2019. Additionally, our considerable growth has placed demands on our management and our internal systems, procedures, and controls and will continue to do so in the near future. To successfully manage growth, we must periodically adjust and strengthen our operating, financial, accounting, and other systems, procedures, and controls, which may increase our total costs and may adversely affect our gross profits and our ability to sustain profitability if we do not generate increased revenues to offset the costs. As a public company, our information and control systems must enable us to prepare accurate and timely financial information and other required disclosures. If we discover deficiencies in our existing information and control systems that impede our ability to satisfy our reporting requirements, we must successfully implement improvements to those systems in an efficient and timely manner.
In the fourth quarter of 2019, we committed to the implementation of a new enterprise resource planning (“ERP”) system designed to improve the efficiency of our internal operational, financial and administrative activities. The implementation of a new ERP system, which will take place over several years, subjects us to inherent costs and risks including substantial capital expenditures, additional administration and operating expenses, potential disruption of our internal control structure, retention of sufficiently skilled personnel to implement and operate the new system, demand on management time, and other risks and costs of delays or difficulties in transition. Our system implementation may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. In addition, the difficulties with implementing a new ERP system may cause disruptions or have an adverse effect on our business operations, if not anticipated and appropriately mitigated.
Our financial results could suffer if we are unable to achieve or maintain adequate utilization and suitable billing rates for our consultants, or if we are unable to deliver our services due to factors that disrupt travel to our client sites.
Our profitability depends to a large extent on the utilization and billing rates of our professionals. Utilization of our professionals is affected by a number of factors, including:
the number and size of client engagements;
the timing of the commencement, completion and termination of engagements, which in many cases is unpredictable;
our ability to transition our consultants efficiently from completed engagements to new engagements;
the hiring of additional consultants because there is generally a transition period for new consultants that results in a temporary drop in our utilization rate;
unanticipated changes in the scope of client engagements;
our ability to forecast demand for our services and thereby maintain an appropriate level of consultants; and
conditions affecting the industries in which we practice as well as general economic conditions.
The billing rates of our consultants that we are able to charge are also affected by a number of factors, including:
our clients’ perception of our ability to add value through our services;
the market demand for the services we provide;
an increase in the number of engagements in the government sector, which are subject to federal contracting regulations;
introduction of new services by us or our competitors;
our competition and the pricing policies of our competitors; and
current economic conditions.
If we are unable to achieve and maintain adequate overall utilization as well as maintain or increase the billing rates for our consultants, our financial results could materially suffer. In addition, our consultants oftentimes perform services at the physical locations of our clients. If there are natural disasters, widespread outbreak of contagious disease, disruptions to travel and transportation, or problems with communications systems, our ability to perform services for, and interact with, our clients at their physical locations may be negatively impacted which could have an adverse effect on our business and results of operations.

6

Table of Contents


Expanding our service offerings or number of offices may add additional risks and may not be profitable.
We may choose to develop new service offerings, open new offices, or eliminate service offerings because of market opportunities or client demands. Developing new service offerings involves inherent risks, including:
our inability to estimate demand for the new service offerings;
competition from more established market participants;
exposure to new legal and operational risks;
a lack of market understanding;
unanticipated expenses to recruit and hire qualified consultants and to market our new service offerings; and
unanticipated challenges with service delivery.
For example, our recently launched Huron Managed Services business provides revenue cycle management services to hospitals and health systems. These services include the coding, preparation, submission and collection of claims for medical service to payers for reimbursement. Such claims are governed by U.S. federal and state laws. U.S. federal law provides civil liability to any persons that knowingly submit, or cause to be submitted, a claim to a payer, including Medicare, Medicaid and private health plans, seeking payment for any services or items that overbills or bills for services or items that have not been provided to the patient. U.S. federal law may also impose criminal penalties for intentionally submitting such false claims. In addition, federal and state law regulates the collection of debt and may impose monetary penalties for violating those regulations. In connection with these laws, we may be subjected to U.S. federal or state government investigations and possible penalties may be imposed upon us, false claims actions may have to be defended and private payers may file claims against us. Any investigation or proceeding related to these laws, even if unwarranted or without merit, may have a material adverse effect on our business, results of operations and financial condition.
In addition, expanding into new geographic areas and expanding current service offerings is challenging and may require integrating new employees into our culture as well as assessing the demand in the applicable market. If we cannot manage the risks associated with new service offerings or new locations effectively, we are unlikely to be successful in these efforts, which could harm our ability to sustain profitability and our business prospects.
Our quarterly results of operations have fluctuated in the past and may continue to fluctuate in the future as a result of certain factors, some of which may be outside of our control.
A key element of our strategy is to market our products and services directly to certain large organizations, such as health systems and acute care hospitals, and to increase the number of our products and services utilized by existing clients. The sales cycle for some of our products and services is often lengthy and may involve significant commitment of client personnel. As a consequence, the commencement date of a client engagement often cannot be accurately forecasted. As discussed below, certain of our client contracts contain terms that result in revenue that is deferred and cannot be recognized until the occurrence of certain events. As a result, the period of time between contract signing and recognition of associated revenue may be lengthy, and we are not able to predict with certainty the period in which revenue will be recognized.
Fee discounts, pressure to not increase or even decrease our rates, and less advantageous contract terms could result in the loss of clients, lower revenues and operating income, higher costs, and less profitable engagements. More discounts or write-offs than we expect in any period would have a negative impact on our results of operations.
Other fluctuations in our quarterly results of operations may be due to a number of other factors, some of which are not within our control, including:
the timing and volume of client invoices processed and payments received, which may affect the fees payable to us under certain of our engagements;
client decisions regarding renewal or termination of their contracts;
the amount and timing of costs related to the development or acquisition of technologies or businesses; and
unforeseen legal expenses, including litigation and other settlement gains or losses.
We base our annual employee bonus expense upon our expected annual adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) for that year. If we experience lower adjusted EBITDA in a quarter without a corresponding change to our full-year adjusted EBITDA expectation, our estimated bonus expense will not be reduced, which will have a negative impact on our quarterly results of

7

Table of Contents


operations for that quarter. Our quarterly results of operations may vary significantly and period-to-period comparisons of our results of operations may not be meaningful. The results of one quarter should not be relied upon as an indication of future performance. If our quarterly results of operations fall below the expectations of securities analysts or investors, the price of our common stock could decline substantially.
Revenues from our performance-based engagements are difficult to predict, and the timing and extent of recovery of our costs is uncertain.
We have engagement agreements under which our fees include a significant performance-based component. Performance-based fees are contingent on the achievement of specific measures, such as our clients meeting cost-saving or other contractually-defined goals. The achievement of these contractually-defined goals may be subject to acknowledgment by the client and is often impacted by factors outside of our control, such as the actions of the client or other third parties. To the extent that any revenue is contingent upon the achievement of a performance target, we recognize such revenue using a process that requires us to make significant management judgments, estimates, and assumptions. While we believe that the estimates and assumptions we have used for revenue recognition are reasonable, subsequent changes could have a material impact to our future financial results. The percentage of our revenues derived from performance-based fees for the years ended December 31, 2019, 2018, and 2017, was 8.9%, 6.1%, and 4.9%, respectively. A greater number of performance-based fee arrangements may result in increased volatility in our working capital requirements and greater variations in our quarter-to-quarter results, which could affect the price of our common stock. In addition, an increase in the proportion of performance-based fee arrangements may temporarily offset the positive effect on our operating results from an increase in our utilization rate until the related revenues are recognized.
The profitability of our fixed-fee engagements with clients may not meet our expectations if we underestimate the cost of these engagements.
When making proposals for fixed-fee engagements, we estimate the costs and timing for completing the engagements. These estimates reflect our best judgment regarding the efficiencies of our methodologies and consultants as we plan to deploy them on engagements. Any increased or unexpected costs or unanticipated delays in connection with the performance of fixed-fee engagements, including delays caused by factors outside our control, could make these contracts less profitable or unprofitable, which would have an adverse effect on our profit margin. For the years ended December 31, 2019, 2018, and 2017, fixed-fee engagements represented 45.8%, 47.4%, and 46.7% of our revenues, respectively.
Our business is becoming increasingly dependent on information technology and will require additional investments in order to grow and meet the demands of our clients.
We depend on the use of sophisticated technologies and systems. Some of our practices provide services that are increasingly dependent on the use of software applications and systems that we do not own and could become unavailable. Moreover, our technology platforms will require continuing investments by us in order to expand existing service offerings and develop complementary services. For example, we have subscription-based offerings that require us to incur costs associated with upgrades and maintenance that could impact profit margins associated with those offerings and related services. Our future success depends on our ability to adapt our services and infrastructure while continuing to improve the performance, features, and reliability of our services in response to the evolving demands of the marketplace.
Adverse changes to our relationships with key third-party vendors, or in the business of our key third-party vendors, could unfavorably impact our business.
A portion of our services and solutions depend on technology or software provided by third-party vendors. Some of these third-party vendors refer potential clients to us, and others require that we obtain their permission prior to accessing their software while performing services for our clients. These third-party vendors could terminate their relationship with us without cause and with little or no notice, which could limit our service offerings and harm our financial condition and operating results. In addition, if a third-party vendor’s business changes, is reduced or fails to adapt to changing market demands, that could adversely affect our business. Moreover, if third-party technology or software that is important to our business does not continue to be available or utilized within the marketplace, or if the services that we provide to clients is no longer relevant in the marketplace, our business may be unfavorably impacted.
We could experience system failures, service interruptions, or security breaches that could negatively impact our business.
Our organization is comprised of employees who work on matters throughout the United States and overseas. Our technology platform is a “virtual office” from which we all operate. We may be subject to disruption to our operating systems from technology events that are beyond our control, including the possibility of failures at third-party data centers, disruptions to the Internet, natural disasters, power losses, and malicious attacks. In addition, despite the implementation of security measures, our infrastructure and operating systems, including the Internet and related systems, may be vulnerable to physical break-ins, hackers, improper employee or contractor access, computer viruses, programming errors, denial-of-service attacks, or other attacks by third parties seeking to disrupt operations or misappropriate information or similar physical or electronic breaches of security. While we have taken and are taking reasonable steps to prevent and mitigate the damage of such events, including implementation of system security measures, information backup, and disaster recovery processes, those steps

8

Table of Contents


may not be effective and there can be no assurance that any such steps can be effective against all possible risks. We will need to continue to invest in technology in order to achieve redundancies necessary to prevent service interruptions. Access to our systems as a result of a security breach, the failure of our systems, or the loss of data could result in legal claims or proceedings, liability, or regulatory penalties and disrupt operations, which could adversely affect our business and financial results.
Our reputation could be damaged and we could incur additional liabilities if we fail to protect client and employee data through our own accord or if our information systems are breached.
We rely on information technology systems to process, transmit, and store electronic information and to communicate among our locations around the world and with our clients, partners, and employees. These locations include Canada, the United Kingdom, Switzerland, Singapore, and India, all of which have their own either recently updated or potential new data protection laws. The breadth and complexity of this infrastructure increases the potential risk of security breaches which could lead to potential unauthorized disclosure of confidential information.
In providing services to clients, we may manage, utilize, and store sensitive or confidential client or employee data, including personal data and protected health information. As a result, we are subject to numerous laws and regulations designed to protect this information, such as the U.S. federal and state laws governing the protection of health or other personally identifiable information, including the Health Insurance Portability and Accountability Act (HIPAA), and international laws such as the European Union's General Data Protection Regulation (GDPR), which went into effect in 2018. In addition, many states, U.S. federal governmental authorities and non-U.S. jurisdictions have adopted, proposed or are considering adopting or proposing, additional data security and/or data privacy statutes or regulations. Continued governmental focus on data security and privacy may lead to additional legislative and regulatory action, which could increase the complexity of doing business. The increased emphasis on information security and the requirements to comply with applicable U.S. and foreign data security and privacy laws and regulations may increase our costs of doing business and negatively impact our results of operations.
These laws and regulations are increasing in complexity and number. If any person, including any of our employees or third-party vendors, negligently disregards or intentionally breaches our established controls or contractual obligations with respect to client or employee data, or otherwise mismanages or misappropriates that data, we could be subject to significant monetary damages, regulatory enforcement actions, fines, and/or criminal prosecution. We maintain certain insurance coverages for cybersecurity incidents through our directors and officers insurance policy, in amounts we believe to be reasonable and at a cost that is included in our general insurance premiums.
In addition, unauthorized disclosure of sensitive or confidential client or employee data, whether through systems failure, employee negligence, fraud, or misappropriation, could damage our reputation and cause us to lose clients and their related revenue in the future.
Our international expansion could result in additional risks.
We operate both domestically and internationally, including in Canada, Europe, Asia, and the Middle East. Although historically our international operations have been limited, we intend to continue to expand internationally. Such expansion may result in additional risks that are not present domestically and which could adversely affect our business or our results of operations, including:
compliance with additional U.S. regulations and those of other nations applicable to international operations;
cultural and language differences;
employment laws, including immigration laws affecting the mobility of employees, and rules and related social and cultural factors;
losses related to start-up costs, lack of revenue, higher costs due to low utilization, and delays in purchase decisions by prospective clients;
currency fluctuations between the U.S. dollar and foreign currencies;
restrictions on the repatriation of earnings;
potentially adverse tax consequences and limitations on our ability to utilize losses generated in our foreign operations;
different regulatory requirements and other barriers to conducting business;
different or less stable political and economic environments;
greater personal security risks for employees traveling to or located in unstable locations; and
civil disturbances or other catastrophic events.

9

Table of Contents


Further, conducting business abroad subjects us to increased regulatory compliance and oversight. For example, we are subject to laws prohibiting certain payments to governmental officials, such as the Foreign Corrupt Practices Act, which increases the risk from our international operations relative to our competitors who do not operate outside the United States. A failure to comply with applicable regulations could result in regulatory enforcement actions as well as substantial civil and criminal penalties assessed against us and our employees.
Our obligations under the Amended Credit Agreement are secured by a pledge of certain of the equity interests in our subsidiaries and a lien on substantially all of our assets and those of our subsidiary grantors. If we default on these obligations, our lenders may foreclose on our assets, including our pledged equity interest in our subsidiaries.
We entered into a second amended and restated security agreement with Bank of America (the “Security Agreement”) and a second amended and restated pledge agreement (the “Pledge Agreement”) in connection with our entry into the Second Amended and Restated Credit Agreement, dated as of March 31, 2015 (as amended and restated, the “Amended Credit Agreement”). Pursuant to the Security Agreement and to secure our obligations under the Amended Credit Agreement, we granted our lenders a first-priority lien, subject to permitted liens, on substantially all of the personal property assets that we and the subsidiary grantors own. Pursuant to the Pledge Agreement, we granted our lenders a security interest in 100% of the voting stock or other equity interests in our domestic subsidiaries and 65% of the voting stock or other equity interests in certain of our foreign subsidiaries. If we default on our obligations under the Amended Credit Agreement, our lenders could accelerate our indebtedness and may be able to exercise their liens on the equity interests subject to the Pledge Agreement and their liens on substantially all of our assets and the assets of our subsidiary grantors, which would have a material adverse effect on our business, operations, financial condition, and liquidity. In addition, the covenants contained in the Amended Credit Agreement impose restrictions on our ability to engage in certain activities, such as the incurrence of additional indebtedness, certain investments, certain acquisitions and dispositions, and the payment of dividends.
Our indebtedness could adversely affect our ability to raise additional capital to fund our operations and obligations, expose us to interest rate risk to the extent of our variable-rate debt, and adversely affect our financial results.
At December 31, 2019, we had outstanding indebtedness of $205.0 million on our revolving line of credit that becomes due and payable in full upon maturity on September 27, 2024, and $3.9 million principal amount of our promissory note due March 1, 2024. Our ability to make scheduled payments of the principal, to pay interest, or to refinance our indebtedness, depends on our future performance. If we are unable to generate cash flow from operations sufficient to satisfy our obligations under our current indebtedness and any future indebtedness, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing, or obtaining additional equity capital on terms that may be onerous or dilutive. Our ability to refinance our current indebtedness or future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the current indebtedness or future indebtedness.
The interest rates on our revolving line of credit and promissory note are linked to LIBOR. In 2017, the Financial Conduct Authority (FCA) in the U.K. announced that it would phase out LIBOR as a benchmark rate by the end of 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021, or whether different benchmark rates will develop. If LIBOR ceases to exist, the method and rates used to calculate our interest rates and/or payments on our debt may result in interest rates and/or payments that are higher than, or that do not otherwise correlate over time with, the interest rates and/or payments that would have been applicable to our obligations if LIBOR was available in its current form, which could have a material adverse effect on our financial condition and results of operations. While we continue to take steps to mitigate the impact of the phase-out or replacement of LIBOR, such efforts may not prove successful. Furthermore, the U.S. or global financial markets may be disrupted as a result of the phase-out or replacement of LIBOR, which could also have a material adverse effect on our business, financial condition and results of operations.
In addition, our indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences such as exposing us to the risk of increased interest rates because some of our borrowings are at variable interest rates; making us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and competitive conditions and adverse changes in government regulation; or reducing our capacity to obtain additional financing and flexibility in planning for, or reacting to, changes in our business and our industry. Any of these factors could materially and adversely affect our business, financial condition, and results of operations.
Our business performance might not be sufficient for us to meet the full-year financial guidance that we provide publicly.
We provide full-year financial guidance to the public based upon our expectations regarding our financial performance. While we believe that our annual financial guidance provides investors and analysts with insight to our view of the Company’s future performance, such financial guidance is based on assumptions that may not always prove to be accurate and may vary from actual results. If we fail to meet the full-year financial guidance that we provide, or if we find it necessary to revise such guidance during the year, the market value of our common stock could be adversely affected.

10

Table of Contents


The healthcare industry is an area of significant focus for our business, and factors that adversely affect the financial condition of the healthcare industry could consequently affect our business.
We derive a significant portion of our revenue from clients in the healthcare industry. As a result, our financial condition and results of operations could be adversely affected by conditions affecting the healthcare industry generally and hospitals and health systems particularly. The healthcare industry is highly regulated and is subject to changing political, legislative, regulatory, and other influences. Uncertainty in any of these areas could cause our clients to delay or postpone decisions to use our services. Existing and new federal and state laws and regulations affecting the healthcare industry could create unexpected liabilities for us, could cause us or our clients to incur additional costs, and could restrict our or our clients’ operations. Many healthcare laws are complex and their application to us, our clients, or the specific services and relationships we have with our clients are not always clear. In addition, federal and state legislatures have periodically introduced programs to reform or amend the U.S. healthcare system at both the federal and state level, such as the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, and continue to consider further significant reforms. Due to the significant implementation issues arising under these laws and potential new legislation, it is unclear what long-term effects they will have on the healthcare industry and in turn on our business, financial condition, and results of operations. Our failure to accurately anticipate the application of new laws and regulations, or our failure to comply with such laws and regulations, could create liability for us, result in adverse publicity and negatively affect our business.
There are many factors that could affect the purchasing practices, operations, and, ultimately, the operating funds of healthcare organizations, such as reimbursement policies for healthcare expenses, federal and state budgetary considerations, consolidation in the healthcare industry, and regulation, litigation, and general economic conditions. In particular, we could be required to make unplanned modifications of our products and services (which would require additional time and investment) or we could suffer reductions in demand for our products and services as a result of changes in regulations affecting the healthcare industry, such as changes in the way that healthcare organizations are paid for their services (e.g., based on patient outcomes instead of services provided). Furthermore, as a result of the current presidential administration and the upcoming presidential election, there is an increased uncertainty surrounding the future of the Affordable Care Act and the regulation of the healthcare industry, and therefore healthcare organizations may wait to buy services such as ours until the regulatory environment is more certain.
In addition, state tax authorities have challenged the tax-exempt status of some hospitals and other healthcare facilities claiming such status on the basis that they are operating as charitable and/or religious organizations. If the tax-exempt status of any of our clients is revoked or compromised by new legislation or interpretation of existing legislation, that client’s financial health could be adversely affected, which could adversely impact demand for our services, our sales, revenue, financial condition, and results of operations.
Additional hiring, departures, business acquisitions and dispositions could disrupt our operations, increase our costs or otherwise harm our business.
Our business strategy is dependent in part upon our ability to grow by hiring individuals or groups of individuals and by acquiring complementary businesses. However, we may be unable to identify, hire, acquire, or successfully integrate new employees and acquired businesses without substantial expense, delay, or other operational or financial obstacles. From time to time, we will evaluate the total mix of services we provide and we may conclude that businesses may not achieve the results we previously expected. Competition for future hiring and acquisition opportunities in our markets could increase the compensation we offer to potential employees or the prices we pay for businesses we wish to acquire. In addition, we may be unable to achieve the financial, operational, and other benefits we anticipate from any hiring or acquisition, as well as any disposition, including those we have completed so far. New acquisitions could also negatively impact existing practices and cause current employees to depart. Hiring additional employees or acquiring businesses could also involve a number of additional risks, including the diversion of management’s time, attention, and resources from managing and marketing our Company; the potential assumption of liabilities of an acquired business; the inability to attain the expected synergies with an acquired business; and the perception of inequalities if different groups of employees are eligible for different benefits and incentives or are subject to different policies and programs.
Selling practices and shutting down operations present similar challenges in a service business. Dispositions not only require management’s time, but they can impair existing relationships with clients or otherwise affect client satisfaction, particularly in situations where the divestiture eliminates only part of the complement of consulting services provided to a client. Dispositions may also involve continued financial involvement, as we may be required to retain responsibility for, or agree to indemnify buyers against, liabilities related to a business sold.
Our ability to maintain and attract new business depends upon our reputation, the professional reputation of our revenue-generating employees, and the quality of our services.
As a professional services firm, our ability to secure new engagements depends heavily upon our reputation and the individual reputations of our professionals. Any factor that diminishes our reputation or that of our employees, including not meeting client expectations or misconduct by our employees, could make it substantially more difficult for us to attract new engagements and clients. Similarly, because we obtain many of our new engagements from former or current clients or from referrals by those clients or by law firms that we have worked with in the past,

11

Table of Contents


any client that questions the quality of our work or that of our consultants could impair our ability to secure additional new engagements and clients.
A significant portion of our revenues is derived from a limited number of clients, and our engagement agreements, including those related to our largest clients, can be terminated by our clients with little or no notice and without penalty, which may cause our operating results to be unpredictable and may result in unexpected declines in our utilization and revenues.
As a consulting firm, we have derived, and expect to continue to derive, a significant portion of our revenues from a limited number of clients. Our clients typically retain us on an engagement-by-engagement basis, rather than under fixed-term contracts. The volume of work performed for any particular client is likely to vary from year to year, and a major client in one fiscal period may not require or may decide not to use our services in any subsequent fiscal period. Moreover, a large portion of our new engagements comes from existing clients. Accordingly, the failure to obtain new large engagements or multiple engagements from existing or new clients could have a material adverse effect on the amount of revenues we generate.
In addition, almost all of our engagement agreements can be terminated by our clients with little or no notice and without penalty. In client engagements that involve multiple engagements or stages, there is a risk that a client may choose not to retain us for additional stages of an engagement or that a client will cancel or delay additional planned engagements. For clients in bankruptcy, a bankruptcy court could elect not to retain our interim management consultants, terminate our retention, require us to reduce our fees for the duration of an engagement, elect not to approve claims against fees earned by us prior to or after the bankruptcy filing, or subject previously paid amounts to be returned to the bankruptcy estate as preferential payments under the bankruptcy code.
Terminations of engagements, cancellations of portions of the project plan, delays in the work schedule, or reductions in fees could result from factors unrelated to our services. When engagements are terminated or reduced, we lose the associated future revenues, and we may not be able to recover associated costs or redeploy the affected employees in a timely manner to minimize the negative impact. In addition, our clients’ ability to terminate engagements with little or no notice and without penalty makes it difficult to predict our operating results in any particular fiscal period.
Our engagements could result in professional liability, which could be very costly and hurt our reputation.
Our engagements typically involve complex analyses and the exercise of professional judgment. As a result, we are subject to the risk of professional liability. From time to time, lawsuits with respect to our work are pending. Litigation alleging that we performed negligently or breached any other obligations could expose us to significant legal liabilities and, regardless of outcome, is often very costly, could distract our management, could damage our reputation, and could harm our financial condition and operating results. We also face increased litigation risk as a result of an expanded workforce. In addition, certain of our engagements, including interim management engagements and corporate restructurings, involve greater risks than other consulting engagements. We are not always able to include provisions in our engagement agreements that are designed to limit our exposure to legal claims relating to our services. While we attempt to identify and mitigate our exposure with respect to liability arising out of our consulting engagements, these efforts may be ineffective and an actual or alleged error or omission on our part or the part of our client or other third parties in one or more of our engagements could have an adverse impact on our financial condition and results of operations. In addition, we carry professional liability insurance to cover many of these types of claims, but the policy limits and the breadth of coverage may be inadequate to cover any particular claim or all claims plus the cost of legal defense. For example, we provide services on engagements in which the impact on a client may substantially exceed the limits of our errors and omissions insurance coverage. If we are found to have professional liability with respect to work performed on such an engagement, we may not have sufficient insurance to cover the entire liability.
Changes in U.S. tax laws could have a material adverse effect on our business, cash flow, results of operations and financial condition.
We are subject to income and other taxes in the U.S. at the state and federal level and also in foreign jurisdictions. Changes in applicable U.S. state, federal or foreign tax laws and regulations, or their interpretation and application, could materially affect our tax expense and profitability.
Future changes in tax laws, treaties or regulations, and their interpretation or enforcement, may be unpredictable, particularly as taxing jurisdictions face an increasing number of political, budgetary and other fiscal challenges. Tax rates in the jurisdictions in which we operate may change as a result of macroeconomic and other factors outside of our control, making it increasingly difficult for multinational corporations like ourselves to operate with certainty about taxation in many jurisdictions. As a result, we could be materially adversely affected by future changes in tax law or policy (or in their interpretation or enforcement) in the jurisdictions where we operate, including the United States, which could have a material adverse effect on our business, cash flow, results of operations, financial condition, as well as our effective income tax rate.

12

Table of Contents


The consulting services industry is highly competitive and we may not be able to compete effectively.
The consulting services industry in which we operate includes a large number of participants and is intensely competitive. We face competition from other business operations and financial consulting firms, general management consulting firms, the consulting practices of major accounting firms, regional and specialty consulting firms, and the internal professional resources of organizations. In addition, because there are relatively low barriers to entry, we expect to continue to face additional competition from new entrants into the business operations and financial consulting industries. Competition in several of the sectors in which we operate is particularly intense as many of our competitors are seeking to expand their market share in these sectors. Many of our competitors have a greater national and international presence, as well as have a significantly greater number of personnel, financial, technical, and marketing resources. In addition, these competitors may generate greater revenues and have greater name recognition than we do. Some of our competitors may also have lower overhead and other costs and, therefore, may be able to more effectively compete through lower cost service offerings. Our ability to compete also depends in part on the ability of our competitors to hire, retain, and motivate skilled professionals, the price at which others offer comparable services, the ability of our competitors to offer new and valuable products and services to clients, and our competitors’ responsiveness to their clients. If we are unable to compete successfully with our existing competitors or with any new competitors, our financial results will be adversely affected.
Our intellectual property rights in our “Huron Consulting Group” name are important, and any inability to use that name could negatively impact our ability to build brand identity.
We believe that establishing, maintaining, and enhancing the “Huron Consulting Group” name and “Huron” brand is important to our business. We are, however, aware of a number of other companies that use names containing “Huron.” There could be potential trade name or service mark infringement claims brought against us by the users of these similar names and marks and those users may have trade name or service mark rights that are senior to ours. If another company were to successfully challenge our right to use our name, or if we were unable to prevent a competitor from using a name that is similar to our name, our ability to build brand identity could be negatively impacted.
We may incur impairment charges with respect to our convertible debt investment in Shorelight.
In 2014 and 2015, we invested $27.9 million, in the form of zero coupon convertible debt, in Shorelight Holdings, LLC (“Shorelight”), the parent company of Shorelight Education. The investment is carried at its fair value of $49.5 million as of December 31, 2019, with unrealized holding gains and losses reported in other comprehensive income. In the first quarter of 2020, we invested an additional $13.0 million, in the form of 1.69% convertible debt with a senior liquidation preference. As of December 31, 2019, our investment in Shorelight is in an unrealized gain position. If the investment were to be in an unrealized loss position, we would assess whether the investment is other-than-temporarily impaired. We consider impairments to be other-than-temporary if they are related to significant credit deterioration or if it is likely we will sell the security before the recovery of its cost basis. As of December 31, 2019, we have not identified any factors that indicate an other-than-temporary impairment. In the future, if there are adverse developments in Shorelight's business that may be the result of events within or outside of Shorelight's control or declines in value judged to be other-than-temporary, we may incur impairment charges with respect to our convertible debt investment, which could materially impact our results of operations.
Conflicts of interest could preclude us from accepting engagements thereby causing decreased utilization and revenues.
We provide services in connection with bankruptcy and other proceedings that usually involve sensitive client information and frequently are adversarial. In connection with bankruptcy proceedings, we are required by law to be “disinterested” and may not be able to provide multiple services to a particular client. In addition, our engagement agreement with a client or other business reasons may preclude us from accepting engagements from time to time with the client's competitors or adversaries. Moreover, in many industries in which we provide services, there has been a continuing trend toward business consolidations and strategic alliances. These consolidations and alliances reduce the number of companies that may seek our services and increase the chances that we will be unable to accept new engagements as a result of conflicts of interest. If we are unable to accept new engagements for any reason, our consultants may become underutilized, which would adversely affect our revenues and results of operations in future periods.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
PROPERTIES.
We do not own any real estate or other physical properties. Our administrative and principal executive offices are located at 550 W. Van Buren Street, Chicago, Illinois 60607. We believe that our office facilities are suitable and adequate for our business as it is presently conducted.

13

Table of Contents


ITEM 3.
LEGAL PROCEEDINGS.
From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date of this Annual Report on Form 10-K, we are not a party to any litigation or legal proceeding that, in the current opinion of management, could have a material adverse effect on our financial position or results of operations. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results.
ITEM 4.
MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock is traded on The NASDAQ Global Select Market under the symbol “HURN.” As of February 18, 2020, there were 370 registered holders of record of Huron’s common stock. A number of Huron’s stockholders hold their shares in street name; therefore, the Company believes that there are substantially more beneficial owners of its common stock.
Dividends
We have not declared or paid dividends on our common stock since we became a public company. Our board of directors re-evaluates this policy periodically. Any determination to pay cash dividends will be at the discretion of the board of directors and will be dependent upon our results of operations, financial condition, capital requirements, terms of our financing arrangements, and such other factors as the board of directors deems relevant. In addition, the amount of dividends we may pay is subject to the restricted payment provisions of our senior secured credit facility. See the Liquidity and Capital Resources section under Part II—Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further information on the restricted payment provisions of our senior secured credit facility.
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this item appears under Part III—Item 12. "Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters.”
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Our Stock Ownership Participation Program, 2012 Omnibus Incentive Plan, and 2004 Omnibus Stock Plan, which was replaced by the 2012 Omnibus Incentive Plan, permit the netting of common stock upon vesting of restricted stock awards to satisfy individual tax withholding requirements. During the quarter ended December 31, 2019, we reacquired 2,816 shares of common stock with a weighted average fair market value of $62.69 as a result of such tax withholdings.
We currently have a share repurchase program pursuant to which we may, from time to time, repurchase up to $125 million of our common stock through October 31, 2020 (the "Share Repurchase Program"). The amount and timing of the repurchases will be determined by management and will depend on a variety of factors, including the trading price of our common stock, capacity under our line of credit, general market and business conditions, and applicable legal requirements.

14

Table of Contents


The following table provides information with respect to purchases we made of our common stock during the quarter ended December 31, 2019.
Period
 
Total Number 
of Shares Purchased (1)
 
Average Price
Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (2)
October 1, 2019 – October 31, 2019
 
2,026

 
$
60.64

 

 
$
35,143,546

November 1, 2019 – November 30, 2019
 
89,263

 
$
66.63

 
89,263

 
$
29,193,168

December 1, 2019 – December 31, 2019
 
121,964

 
$
68.21

 
121,174

 
$
20,924,416

Total
 
213,253

 
$
67.48

 
210,437

 
 
 
(1)
The number of shares repurchased included 2,026 shares in October 2019 and 790 shares in December 2019 to satisfy employee tax withholding requirements. No shares were repurchased in November 2019 to satisfy employee tax withholding requirements. These shares do not reduce the repurchase authority under the Share Repurchase Program.
(2)
As of the end of the period.

15

Table of Contents


ITEM 6.
SELECTED FINANCIAL DATA.
We have derived the following selected consolidated financial data as of and for the years ended December 31, 2015 through 2019 from our consolidated financial statements. The following data reflects the business acquisitions that we have completed through December 31, 2019. The results of operations for acquired businesses have been included in our results of operations since the date of their acquisitions. See Note 3 "Acquisitions" within the notes to our consolidated financial statements for additional information regarding our acquisitions. The following data also reflects the classification of discontinued operations.
The information set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and related notes included elsewhere in this Annual Report on Form 10-K. 
Consolidated Statements of Operations
(in thousands, except per share data):
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
2016
 
2015
Revenues and reimbursable expenses:
 
 
 
 
 
 
 
 
 
 
Revenues
 
$
876,757

 
$
795,125

 
$
732,570

 
$
726,272

 
$
699,010

Reimbursable expenses
 
88,717

 
82,874

 
75,175

 
71,712

 
70,013

Total revenues and reimbursable expenses
 
965,474

 
877,999

 
807,745

 
797,984

 
769,023

Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses) (1):
 
 
 
 
 
 
 
 
 
 
Direct costs
 
575,602

 
521,537

 
454,806

 
437,556

 
401,915

Amortization of intangible assets and software development costs
 
5,375

 
4,247

 
10,932

 
15,140

 
16,788

Reimbursable expenses
 
88,696

 
82,923

 
75,436

 
71,749

 
69,932

Total direct costs and reimbursable expenses
 
669,673

 
608,707

 
541,174

 
524,445

 
488,635

Operating expenses and other losses (gains), net:
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
203,071

 
180,983

 
175,364

 
160,204

 
157,902

Restructuring charges
 
1,855

 
3,657

 
6,246

 
9,592

 
3,329

Litigation and other losses (gains), net
 
(1,196
)
 
(2,019
)
 
1,111

 
(1,990
)
 
(9,476
)
Depreciation and amortization (1)
 
28,365

 
34,575

 
38,213

 
31,499

 
25,135

Goodwill impairment charges
 

 

 
253,093

 

 

Total operating expenses and other losses (gains), net
 
232,095

 
217,196

 
474,027

 
199,305

 
176,890

Operating income (loss)
 
63,706

 
52,096

 
(207,456
)
 
74,234

 
103,498

Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
Interest expense, net of interest income
 
(15,648
)
 
(19,013
)
 
(18,613
)
 
(16,274
)
 
(18,136
)
Other income (expense), net
 
4,433

 
(7,862
)
 
3,565

 
1,197

 
(1,797
)
Total other expense, net
 
(11,215
)
 
(26,875
)
 
(15,048
)
 
(15,077
)
 
(19,933
)
Income (loss) from continuing operations before taxes
 
52,491

 
25,221

 
(222,504
)
 
59,157

 
83,565

Income tax expense (benefit)
 
10,512

 
11,277

 
(51,999
)
 
19,677

 
21,670

Net income (loss) from continuing operations
 
41,979

 
13,944

 
(170,505
)
 
39,480

 
61,895

Income (loss) from discontinued operations, net of tax
 
(236
)
 
(298
)
 
388

 
(1,863
)
 
(2,843
)
Net income (loss)
 
$
41,743

 
$
13,646

 
$
(170,117
)
 
$
37,617

 
$
59,052


16

Table of Contents


Consolidated Statements of Operations
(in thousands, except per share data):
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
2016
 
2015
Net earnings (loss) per basic share:
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
1.91

 
$
0.64

 
$
(7.95
)
 
$
1.87

 
$
2.80

Income (loss) from discontinued operations, net of tax
 
(0.01
)
 
(0.01
)
 
0.02

 
(0.09
)
 
(0.13
)
Net income (loss)
 
$
1.90

 
$
0.63

 
$
(7.93
)
 
$
1.78

 
$
2.67

Net earnings (loss) per diluted share:
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
1.87

 
$
0.63

 
$
(7.95
)
 
$
1.84

 
$
2.74

Income (loss) from discontinued operations, net of tax
 
(0.02
)
 
(0.01
)
 
0.02

 
(0.08
)
 
(0.13
)
Net income (loss)
 
$
1.85

 
$
0.62

 
$
(7.93
)
 
$
1.76

 
$
2.61

Weighted average shares used in calculating net earnings (loss) per share:
 
 
 
 
 
 
 
 
 
 
Basic
 
21,993

 
21,706

 
21,439

 
21,084

 
22,136

Diluted
 
22,507

 
22,058

 
21,439

 
21,424

 
22,600

Consolidated Balance Sheet Data
(in thousands):
 
As of December 31,
 
2019
 
2018
 
2017
 
2016
 
2015
Cash and cash equivalents
 
$
11,604

 
$
33,107

 
$
16,909

 
$
17,027

 
$
58,437

Working capital (2)
 
$
20,192

 
$
(185,374
)
 
$
51,828

 
$
44,314

 
$
96,966

Total assets
 
$
1,104,271

 
$
1,049,532

 
$
1,036,928

 
$
1,153,215

 
$
1,159,543

Long-term debt, net of current portion (2)
 
$
208,324

 
$
53,853

 
$
342,507

 
$
292,065

 
$
307,376

Total stockholders’ equity (3)
 
$
585,465

 
$
540,624

 
$
503,316

 
$
648,033

 
$
652,325

(1)
Intangible asset amortization relating to customer contracts, certain client relationships, and software and amortization of software development costs are presented as a component of total direct costs. Depreciation and intangible assets amortization not classified as direct costs are presented as a component of operating expenses.
(2)
Our Convertible Notes with a principal amount of $250.0 million were classified as short-term debt on our consolidated balance sheet at December 31, 2018 as they had a maturity date of October 1, 2019. Upon maturity, we refinanced the outstanding notes with the borrowing capacity available under our revolving credit facility, which is classified as long-term debt on our consolidated balance sheet. Refer to the "Liquidity and Capital Resources" section under Part II—Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for more information on our outstanding borrowings.
(3)
We have not declared or paid dividends on our common stock in the periods presented above. See Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividends."
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the information under Part II—Item 6. "Selected Financial Data," and our Consolidated Financial Statements and related notes appearing under Part II—Item 8. "Financial Statements and Supplementary Data." The following MD&A contains forward-looking statements and involves numerous risks and uncertainties, including, without limitation, those described under Part I—Item 1A. "Risk Factors" and "Forward-Looking Statements" of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements.
The following information summarizes our results of operations for 2019, 2018, and 2017; and discusses those results of operations for 2019 compared to 2018. For a discussion of our results of operations for 2018 compared to 2017, refer to Part II—Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of the Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the United States Securities and Exchange Commission on February 27, 2019.
OVERVIEW
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.

17

Table of Contents


We provide our services and manage our business under three operating segments: Healthcare, Business Advisory, and Education. See Part I—Item 1. "Business—Overview—Our Services” and Note 19 “Segment Information” within the notes to our consolidated financial statements for a discussion of our three segments.
How We Generate Revenues
A large portion of our revenues is generated by our full-time consultants who provide consulting services to our clients and are billable to our clients based on the number of hours worked. A smaller portion of our revenues is generated by our other professionals, also referred to as full-time equivalents, some of whom work variable schedules as needed by our clients. Full-time equivalent professionals consist of our coaches and their support staff from our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients, employees who provide managed services in our Healthcare segment, and our employees who provide software support and maintenance services to our clients. We translate the hours that these other professionals work on client engagements into a full-time equivalent measure that we use to manage our business. We refer to our full-time consultants and other professionals collectively as revenue-generating professionals.
Revenues generated by our full-time consultants are primarily driven by the number of consultants we employ and their utilization rates, as well as the billing rates we charge our clients. Revenues generated by our other professionals, or full-time equivalents, are largely dependent on the number of consultants we employ, their hours worked, and billing rates charged. Revenues generated by our coaches are largely dependent on the number of coaches we employ and the total value, scope, and terms of the consulting contracts under which they provide services, which are primarily fixed-fee contracts. Revenues generated by our Managed Services solution are dependent on the total value, scope and terms of the related contracts.
We generate our revenues from providing professional services under four types of billing arrangements: fixed-fee (including software license revenue); time-and-expense; performance-based; and software support, maintenance and subscriptions.
In fixed-fee billing arrangements, we agree to a pre-established fee in exchange for a predetermined set of professional services. We set the fees based on our estimates of the costs and timing for completing the engagements. It is the client’s expectation in these engagements that the pre-established fee will not be exceeded except in mutually agreed upon circumstances. We generally recognize revenues under fixed-fee billing arrangements using a proportionate performance approach, which is based on work completed to-date versus our estimates of the total services to be provided under the engagement. Contracts within our Culture and Organizational Excellence solution include fixed-fee partner contracts with multiple performance obligations, which primarily consist of coaching services, as well as speaking engagements, conferences, publications and software products (“Partner Contracts”). Revenues for coaching services and software products are generally recognized on a straight-line basis over the length of the contract. All other revenues under Partner Contracts, including speaking engagements, conferences and publications, are recognized at the time the goods or services are provided.
Fixed-fee arrangements also include software licenses for our revenue cycle management software and research administration and compliance software. Licenses for our revenue cycle management software are sold only as a component of our consulting projects, and the services we provide are essential to the functionality of the software. Therefore, revenues from these software licenses are recognized over the term of the related consulting services contract. License revenue from our research administration and compliance software is generally recognized in the month in which the software is delivered.
Fixed-fee engagements represented 45.8%, 47.4%, and 46.7% of our revenues for the years ended December 31, 2019, 2018, and 2017, respectively.
Time-and-expense billing arrangements require the client to pay based on the number of hours worked by our revenue-generating professionals at agreed upon rates. Time-and-expense arrangements also include certain speaking engagements, conferences and publications purchased by our clients outside of Partner Contracts within our Culture and Organizational Excellence solution. We recognize revenues under time-and-expense billing arrangements as the related services or publications are provided. Time-and-expense engagements represented 39.9%, 41.2%, and 43.0% of our revenues in 2019, 2018, and 2017, respectively.
In performance-based fee billing arrangements, fees are tied to the attainment of contractually defined objectives. We enter into performance-based engagements in essentially two forms. First, we generally earn fees that are directly related to the savings formally acknowledged by the client as a result of adopting our recommendations for improving operational and cost effectiveness in the areas we review. Second, we have performance-based engagements in which we earn a success fee when and if certain predefined outcomes occur. Often, performance-based fees supplement our time-and-expense or fixed-fee engagements. Effective January 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers, on a modified retrospective basis and began recognizing revenues under performance-based billing arrangements by estimating the amount of variable consideration that is probable of being earned and recognizing that estimate over the length of the contract using a proportionate performance approach. Prior to adopting ASC 606 in 2018, we recognized revenues under performance-based billing arrangements when all related performance criteria were met. Performance-based fee revenues represented 8.9%, 6.1%, and 4.9% of our revenues in 2019, 2018, and 2017, respectively. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide.

18

Table of Contents


Clients that have purchased one of our software licenses can pay an annual fee for software support and maintenance. We also generate subscription revenue from our cloud-based analytic tools and solutions. Software support, maintenance and subscription revenues are recognized ratably over the support or subscription period. These fees are generally billed in advance and included in deferred revenues until recognized. Software support and maintenance and subscription-based revenues represented 5.4%, 5.3%, and 5.4% of our revenues in 2019, 2018, and 2017, respectively.
Our quarterly results are impacted principally by our full-time consultants’ utilization rate, the bill rates we charge our clients, and the number of our revenue-generating professionals who are available to work. Our utilization rate can be negatively affected by increased hiring because there is generally a transition period for new professionals that results in a temporary drop in our utilization rate. Our utilization rate can also be affected by seasonal variations in the demand for our services from our clients. For example, during the third and fourth quarters of the year, vacations taken by our clients can result in the deferral of activity on existing and new engagements, which would negatively affect our utilization rate. The number of business work days is also affected by the number of vacation days taken by our consultants and holidays in each quarter. We typically have fewer business work days available in the fourth quarter of the year, which can impact revenues during that period.
Time-and-expense engagements do not provide us with a high degree of predictability as to performance in future periods. Unexpected changes in the demand for our services can result in significant variations in utilization and revenues and present a challenge to optimal hiring and staffing. Moreover, our clients typically retain us on an engagement-by-engagement basis, rather than under long-term recurring contracts. The volume of work performed for any particular client can vary widely from period to period.
Reimbursable Expenses
Reimbursable expenses that are billed to clients, primarily relating to travel and out-of-pocket expenses incurred in connection with engagements, are included in total revenues and reimbursable expenses. Under fixed-fee billing arrangements, we estimate the total amount of reimbursable expenses to be incurred over the course of the engagement and recognize the estimated amount as revenue using the proportionate performance approach, which is based on work completed to-date versus our estimates of the total services to be provided under the engagement. Under time-and-expense billing arrangements, we recognize reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred. Subcontractors that are billed to clients at cost are also included in reimbursable expenses. When billings do not specifically identify reimbursable expenses, we allocate the portion of the billings equivalent to these expenses to reimbursable expenses.
We manage our business on the basis of revenues before reimbursable expenses, which we believe is the most accurate reflection of our services because it eliminates the effect of reimbursable expenses that we bill to our clients at cost.
Total Direct Costs
Our most significant expenses are costs classified as total direct costs. These total direct costs primarily include salaries, performance bonuses, signing and retention bonuses, payroll taxes, and benefits for revenue-generating professionals, as well as commissions, technology costs, product and event costs, and fees paid to independent contractors that we retain to supplement our revenue-generating professionals, typically on an as-needed basis for specific client engagements. Direct costs also include share-based compensation, which represents the cost of restricted stock and performance-based share awards granted to our revenue-generating professionals. Compensation expense for restricted stock awards and performance-based share awards is recognized ratably using either the straight-line attribution method or the graded vesting attribution method, as appropriate, over the requisite service period, which is generally three to four years. Total direct costs also include amortization of intangible assets, primarily relating to certain customer relationships, technology and software, and customer contracts acquired in business combinations, and internally developed software costs.
Operating Expenses and Other Losses (Gains), Net
Our operating expenses include selling, general and administrative expenses, which consist primarily of salaries, performance bonuses, payroll taxes, benefits, and share-based compensation for our support personnel. Also included in selling, general and administrative expenses is rent and other office related expenses, sales and marketing related expenses, professional fees, recruiting and training expenses, and practice administration and meetings expenses. Other operating expenses include restructuring charges, other gains and losses, depreciation and certain amortization expenses not included in total direct costs.
Segment Results
Segment operating income consists of the revenues generated by a segment, less the direct costs of revenue and selling, general and administrative expenses that are incurred directly by the segment. Unallocated costs include corporate costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. These administrative function costs

19

Table of Contents


include corporate office support costs, office facility costs, costs relating to accounting and finance, human resources, legal, marketing, information technology, and company-wide business development functions, as well as costs related to overall corporate management.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected segment and consolidated operating results and other operating data. The results of operations for acquired businesses have been included in our results of operations since the date of their respective acquisition.
 
Year Ended December 31,
 
2019
 
2018
 
2017
Segment and Consolidated Operating Results (in thousands):
 
 
 
 
 
Healthcare:
 
 
 
 
 
Revenues
$
399,221

 
$
364,763

 
$
356,909

Operating income
$
125,724

 
$
108,060

 
$
118,761

Segment operating income as a percentage of segment revenues
31.5
%
 
29.6
%
 
33.3
%
Business Advisory:
 
 
 
 
 
Revenues
$
252,508

 
$
236,185

 
$
207,753

Operating income
$
49,695

 
$
50,625

 
$
46,600

Segment operating income as a percentage of segment revenues
19.7
%
 
21.4
%
 
22.4
%
Education:
 
 
 
 
 
Revenues
$
225,028

 
$
194,177

 
$
167,908

Operating income
$
55,741

 
$
48,243

 
$
40,318

Segment operating income as a percentage of segment revenues
24.8
%
 
24.8
%
 
24.0
%
Total Company:
 
 
 
 
 
Revenues
$
876,757

 
$
795,125

 
$
732,570

Reimbursable expenses
88,717

 
82,874

 
75,175

Total revenues and reimbursable expenses
$
965,474

 
$
877,999

 
$
807,745

Statements of Operations reconciliation:
 
 
 
 
 
Segment operating income
$
231,160

 
$
206,928

 
$
205,679

Items not allocated at the segment level:
 
 
 
 
 
Other operating expenses
140,285

 
122,276

 
120,718

Litigation and other losses (gains), net
(1,196
)
 
(2,019
)
 
1,111

Depreciation and amortization
28,365

 
34,575

 
38,213

Goodwill impairment charges (1)

 

 
253,093

Total operating income (loss)
63,706

 
52,096

 
(207,456
)
Other expense, net
11,215

 
26,875

 
15,048

Income (loss) from continuing operations before taxes
52,491

 
25,221

 
(222,504
)
Income tax expense (benefit)
10,512

 
11,277

 
(51,999
)
Net income (loss) from continuing operations
$
41,979

 
$
13,944

 
$
(170,505
)
Earnings (loss) per share from continuing operations
 
 
 
 
 
Basic
$
1.91

 
$
0.64

 
$
(7.95
)
Diluted
$
1.87

 
$
0.63

 
$
(7.95
)

20

Table of Contents


 
Year Ended December 31,
 
2019
 
2018
 
2017
Other Operating Data:
 
 
 
 
 
Number of full-time billable consultants (at period end) (2):
 
 
 
 
 
Healthcare
890

 
813

 
778

Business Advisory
930

 
813

 
809

Education
756

 
621

 
549

Total
2,576

 
2,247

 
2,136

Average number of full-time billable consultants (for the period) (2):
 
 
 
 
 
Healthcare
849

 
807

 
796

Business Advisory
892

 
769

 
740

Education
686

 
589

 
509

Total
2,427

 
2,165

 
2,045

Full-time billable consultant utilization rate (3):
 
 
 
 
 
Healthcare
79.4
%
 
81.7
%
 
78.4
%
Business Advisory
72.5
%
 
73.8
%
 
71.5
%
Education
76.8
%
 
76.6
%
 
72.8
%
Total
76.1
%
 
77.5
%
 
74.5
%
Full-time billable consultant average billing rate per hour (4):
 
 
 
 
 
Healthcare
$
231

 
$
209

 
$
206

Business Advisory (5)
$
201

 
$
215

 
$
205

Education
$
199

 
$
202

 
$
213

Total (5)
$
211

 
$
209

 
$
207

Revenue per full-time billable consultant (in thousands):
 
 
 
 
 
Healthcare
$
331

 
$
307

 
$
295

Business Advisory
$
273

 
$
293

 
$
268

Education
$
285

 
$
289

 
$
291

Total
$
297

 
$
297

 
$
284

Average number of full-time equivalents (for the period) (6):
 
 
 
 
 
Healthcare
244

 
219

 
213

Business Advisory
14

 
22

 
20

Education
47

 
39

 
35

Total
305

 
280

 
268

Revenue per full-time equivalent (in thousands):
 
 
 
 
 
Healthcare
$
485

 
$
536

 
$
576

Business Advisory
$
655

 
$
484

 
$
464

Education
$
617

 
$
601

 
$
564

Total
$
513

 
$
541

 
$
566

(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 full-time professionals who provide consulting services and generate revenues based on the number of hours worked.
(3)
Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all of our full-time billable consultants worked on client assignments during a period by the total available working hours for all of 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 full-time 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 $228, $246, and $233 for the years ended December 31, 2019, 2018 and 2017, respectively.
Absent the impact of Huron Eurasia India, Huron's consolidated average billing rate per hour would have been $220, $218, and $216 for the years ended December 31, 2019, 2018 and 2017, respectively.
(6)
Consists of coaches and their support staff within our Culture and Organizational Excellence solution, consultants who work variable schedules as needed by our clients, employees who provide managed services in our Healthcare segment, and full-time employees who provide software support and maintenance services to our clients.

21

Table of Contents


Non-GAAP Measures
We also assess our results of operations using certain non-GAAP financial measures. These non-GAAP financial measures differ from GAAP because the non-GAAP financial measures we calculate to measure earnings (loss) 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 exclude a number of items required by GAAP, each discussed below. These non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows, or liquidity prepared in accordance with GAAP. Our non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how we define our non-GAAP financial measures.
Our management uses the non-GAAP financial measures to gain an understanding of our comparative operating performance, for example when comparing such results with previous periods or forecasts. These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing our business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results.
The reconciliations of these financial measures from GAAP to non-GAAP are as follows (in thousands, except per share amounts): 
 
Year Ended December 31,
 
2019
 
2018
 
2017
Revenues
$
876,757

 
$
795,125

 
$
732,570

Net income (loss) from continuing operations
$
41,979

 
$
13,944

 
$
(170,505
)
Add back:
 
 
 
 
 
Income tax expense (benefit)
10,512

 
11,277

 
(51,999
)
Interest expense, net of interest income
15,648

 
19,013

 
18,613

Depreciation and amortization
33,740

 
38,822

 
49,145

Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)
101,879

 
83,056

 
(154,746
)
Add back:
 
 
 
 
 
Restructuring charges
1,855

 
3,657

 
6,246

Litigation and other losses (gains), net
(1,196
)
 
(2,019
)
 
1,111

Transaction-related expenses
2,680

 

 

Goodwill impairment charges

 

 
253,093

Other non-operating expense (income), net

 
5,807

 
(696
)
Foreign currency transaction losses (gains), net
160

 
475

 
(434
)
Adjusted EBITDA
$
105,378

 
$
90,976

 
$
104,574

Adjusted EBITDA as a percentage of revenues
12.0
%
 
11.4
%
 
14.3
%

22

Table of Contents


 
Year Ended December 31,
 
2019
 
2018
 
2017
Net income (loss) from continuing operations
$
41,979

 
$
13,944

 
$
(170,505
)
Weighted average shares - diluted
22,507

 
22,058

 
21,439

Diluted earnings (loss) per share from continuing operations
$
1.87

 
$
0.63

 
$
(7.95
)
Add back:
 
 
 
 
 
Amortization of intangible assets
17,793

 
23,955

 
35,027

Restructuring charges
1,855

 
3,657

 
6,246

Litigation and other losses (gains), net
(1,196
)
 
(2,019
)
 
1,111

Transaction-related expenses
2,680

 

 

Goodwill impairment charges

 

 
253,093

Non-cash interest on convertible notes
6,436

 
8,232

 
7,851

Other non-operating expense (income), net

 
5,807

 
(696
)
Tax effect of adjustments
(7,200
)
 
(9,487
)
 
(91,557
)
Tax expense related to the enactment of Tax Cuts and Jobs Act of 2017

 
1,749

 
8,762

Tax benefit related to "check-the-box" election
(736
)
 

 
(2,728
)
Total adjustments, net of tax
19,632

 
31,894

 
217,109

Adjusted net income from continuing operations
$
61,611

 
$
45,838

 
$
46,604

Adjusted weighted average shares - diluted
22,507

 
22,058

 
21,627

Adjusted diluted earnings per share from continuing operations
$
2.74

 
$
2.08

 
$
2.15

These non-GAAP financial measures include adjustments for the following items:
Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from the calculation of adjusted net income from continuing operations presented above. Amortization of intangibles is inconsistent in its amount and frequency and is significantly affected by the timing and size of our acquisitions.
Restructuring charges: We have incurred charges due to the restructuring of various parts of our business. These restructuring charges have primarily consisted of costs associated with office space consolidations, including lease impairment charges and accelerated depreciation on lease-related property and equipment, and severance charges. We have excluded the effect of the restructuring charges from our non-GAAP measures because the amount of each restructuring charge is significantly affected by the timing and size of the restructured business or component of a business.
Litigation and other losses (gains), net: We have excluded the effects of litigation and other losses (gains), net which primarily consist of net remeasurement losses and gains related to contingent acquisition liabilities and litigation settlement losses and gains to permit comparability with periods that were not impacted by these items.
Transaction-related expenses: To permit comparability with prior periods, we excluded the impact of transaction-related expenses for acquisitions, whether or not ultimately consummated, and which primarily relate to third-party legal and accounting fees. The transaction-related expenses incurred in 2019 primarily related to the evaluation of a potential acquisition that ultimately did not consummate.
Goodwill impairment charges: We have excluded the effect of the goodwill impairment charges that occurred in 2017 as these are infrequent events and their exclusion permits comparability with periods that were not impacted by such charges.
Non-cash interest on convertible notes: We incurred non-cash interest expense relating to the implied value of the equity conversion component of our Convertible Notes. The value of the equity conversion component was treated as a debt discount and amortized to interest expense over the life of the Convertible Notes using the effective interest rate method. We exclude this non-cash interest expense that does not represent cash interest payments from the calculation of adjusted net income from continuing operations as management believes that this non-cash expense is not indicative of the ongoing performance of our business.
Other non-operating expense (income), net: We have excluded the effects of other non-operating income and expense items as they are infrequent, management believes that these items are not indicative of the ongoing performance of our business, and their exclusion permits comparability with periods that were not impacted by such items. The other non-operating expense for 2018 consists of the loss on the sale of the Middle East practice within the Business Advisory segment in 2018. The other non-operating income for 2017 is primarily attributable to a $0.9 million gain on the sale of our Life Sciences C&O practice, partially offset by a $0.3 million remeasurement loss recorded on a promissory note that was amended in 2017.

23

Table of Contents


Foreign currency transaction losses (gains), net: We have excluded the effect of foreign currency transaction losses and gains from the calculation of adjusted EBITDA because the amount of each loss or gain is significantly affected by timing and changes in foreign exchange rates.
Tax effect of adjustments: The non-GAAP income tax adjustment reflects the incremental tax impact applicable to the non-GAAP adjustments.
Tax expense related to the enactment of Tax Cuts and Jobs Act of 2017 ("2017 Tax Reform"): We have excluded the impact of the 2017 Tax Reform, which was enacted in the fourth quarter of 2017. The net tax expense recorded in 2018 was due to a valuation allowance for foreign tax credits and an adjustment to our withholding tax on outside basis differences due to our change in assertion for permanent reinvestment, which were partially offset by U.S. federal return to provision adjustments related to 2017 Tax Reform items on our 2017 corporate tax return. The tax expense for 2017 was primarily due to the remeasurement of net deferred tax balances at the lower federal income tax rate, additional one-time income tax expense related to the transition tax on accumulated foreign earnings, and withholding tax on outside basis differences due to our change in assertion for permanent reinvestment. The exclusion of the 2017 Tax Reform permits comparability with periods that were not impacted by this item.
Tax benefit related to "check-the-box" election: We have excluded the positive impacts of tax benefits related to our "check-the-box" elections. The tax benefit recorded in 2019 was the result of recognizing a previously unrecognized tax benefit due to the expiration of statute of limitations on our "check-the-box" election made in 2015 to treat certain wholly-owned foreign subsidiaries as disregarded entities for U.S. federal income tax purposes. The tax benefit recorded in 2017 was the result of recognizing a previously unrecognized tax benefit from our "check-the-box" election made in 2014 to treat one of our wholly-owned foreign subsidiaries as a disregarded entity for U.S. federal income tax purposes. The exclusion of these discrete tax benefits permit comparability with periods that were not impacted by this item. Refer to Note 17 “Income Taxes” within the notes to the consolidated financial statements for additional information on our "check-the-box" elections.
Income tax expense, Interest expense, net of interest income, Depreciation and amortization: We have excluded the effects of income tax expense, interest expense, net of interest income, and depreciation and amortization in the calculation of EBITDA as these are customary exclusions as defined by the calculation of EBITDA to arrive at meaningful earnings from core operations excluding the effect of such items.
Adjusted weighted average shares - diluted: As we reported a net loss for the year ended December 31, 2017, GAAP diluted weighted average shares outstanding equals the basic weighted average shares outstanding for that period. For the year ended December 31, 2017, the non-GAAP adjustments described above resulted in adjusted net income from continuing operations. Therefore, we included the dilutive common stock equivalents in the calculation of adjusted diluted weighted average shares outstanding for that period.
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Revenues
Revenues increased $81.6 million, or 10.3%, to $876.8 million for the year ended December 31, 2019, from $795.1 million for the year ended December 31, 2018. Of the overall $81.6 million increase in revenues, $76.9 million was driven by our full-time billable consultants and $4.7 million was driven by our full-time equivalents.
The increase in full-time billable consultant revenues was attributable to strengthened demand for services in all of our segments, as discussed below in Segment Results, and reflected an increase in the average number of full-time billable consultants in 2019 compared to 2018.
The increase in full-time equivalent revenues was attributable to increases in full-time equivalent revenues in our Education and Healthcare segments, partially offset by a decrease in full-time equivalent revenues in our Business Advisory segment, as discussed below in Segment Results; and reflected an overall increase in the average number of full-time equivalents, partially offset by an overall decrease in revenue per full-time equivalent.
Total Direct Costs
Our total direct costs, including amortization of intangible assets and software development costs, increased $55.2 million, or 10.5%, to $581.0 million for the year ended December 31, 2019 from $525.8 million for the year ended December 31, 2018. The overall $55.2 million increase in direct costs primarily related to a $32.2 million increase in salaries and related expenses for our revenue-generating professionals, which was largely driven by increased headcount in all of our segments; a $15.7 million increase in performance bonus expense for our revenue-generating professionals; a $3.2 million increase in contractor expense; and a $2.3 million increase in share-based compensation expense for our revenue-generating professionals. As a percentage of revenues, our total direct costs increased to 66.3% during 2019 compared to 66.1% during 2018, primarily due to the increase in performance bonus expense for our revenue-generating professionals as a percentage of revenues, largely offset by revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals.

24

Table of Contents


Total direct costs for the year ended December 31, 2019 included $5.4 million of amortization expense for internal software development costs and intangible assets, compared to $4.2 million of amortization expense in 2018. The $1.1 million increase in amortization expense was primarily attributable to a $1.4 million increase in amortization of internal software development costs, partially offset by a $0.2 million decrease in intangible asset amortization attributable to certain intangible assets acquired in our Studer Group acquisition which were fully amortized in prior periods. Intangible asset amortization included within direct costs for the years ended December 31, 2019 and 2018 related to technology and software, certain customer relationships, publishing content and customer contracts acquired in connection with our business acquisitions. See Note 3 "Acquisitions" and Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information about our intangible assets.
Operating Expenses and Other Losses (Gains), Net
Selling, general and administrative expenses increased $22.1 million, or 12.2%, to $203.1 million for the year ended December 31, 2019, compared to $181.0 million for the year ended December 31, 2018. The overall increase of $22.1 million was primarily related to a $10.9 million increase in salaries and related expenses for our support personnel; a $4.5 million increase in data hosting and software related expenses; a $2.7 million increase in share-based compensation expense for our support personnel; a $2.4 million increase in legal expenses; a $1.7 million increase in performance bonus expense for our support personnel; and a $1.3 million increase in promotion and marketing expenses. These increases were partially offset by a $2.2 million decrease in facilities expense. The increases in share-based compensation expense and performance bonus expense for our support personnel were largely driven by overall improved company-wide performance. The increase in legal expenses was primarily due to third-party transaction-related expenses related to the evaluation of a potential acquisition that ultimately did not consummate. As a percentage of revenues, selling, general and administrative expenses increased to 23.2% during 2019 compared to 22.8% during 2018, primarily due to the items described above.
Restructuring charges for the year ended December 31, 2019 totaled $1.9 million, compared to $3.7 million for the year ended December 31, 2018. During 2019, we exited a portion of our Lake Oswego, Oregon office resulting in a $0.7 million lease impairment charge on the related operating lease right-of-use (“ROU”) asset and leasehold improvements and $0.2 million of accelerated depreciation on furniture and fixtures in that office. The lease impairment charge was recognized in accordance with ASC 842, Leases, which we adopted on a modified retrospective basis on January 1, 2019. See Note 2 “Summary of Significant Accounting Policies” within the notes to our consolidated financial statements for additional information on our adoption of ASC 842. See Note 5 “Leases” within the notes to our consolidated financial statements for additional information on the long-lived asset impairment test performed in 2019. Additionally, during 2019, we exited the remaining portion of our Middleton, Wisconsin office and an office space in Houston, Texas, resulting in restructuring charges of $0.4 million and $0.1 million, respectively, which primarily related to accelerated depreciation on related furniture and fixtures in those offices. During the fourth quarter of 2019, we entered into an amendment to the lease of our principal executive offices in Chicago, Illinois. Among other items, the amendment terminated the lease with respect to certain leased space which we previously vacated and currently sublease to a third-party. As a result of the amendment, we recognized a restructuring gain of $0.4 million. See Note 5 “Leases” for additional information on the amendment. Additional restructuring charges during 2019 include $0.6 million related to workforce reductions as we continue to better align resources with market demand and workforce reductions in our corporate operations.
The $3.7 million of restructuring charges in 2018 primarily consisted of $2.1 million related to workforce reductions to better align resources with market demand; $0.8 million related to the accrual of remaining lease payments, net of estimated sublease income, and accelerated depreciation on leasehold improvements due to exiting a portion of our Middleton, Wisconsin office; $0.4 million related to updated lease assumptions and commission costs for our San Francisco office vacated in 2017; and $0.3 million related to the divestiture of our Middle East practice within the Business Advisory segment. During the second quarter of 2018, we sold our Middle East business to a former employee who was the practice leader of that business at the time. The office exit costs incurred in 2018 were accounted for in accordance with ASC 840, Leases. See Note 11 “Restructuring Charges” within the notes to our consolidated financial statements for further discussion of our restructuring expenses.
Litigation and other losses (gains), net totaled to a net gain of $1.2 million for the year ended December 31, 2019, which primarily consisted of $1.5 million of remeasurement gains to decrease the estimated fair value of our liabilities for contingent consideration payments related to business acquisitions, partially offset by a $0.4 million litigation loss accrual related to a legal claim that was subsequently settled during the first quarter of 2020. Litigation and other losses (gains), net totaled a net gain of $2.0 million for the year ended December 31, 2018, which primarily consisted of a $2.5 million litigation settlement gain for the resolution of Huron's claim in a class action lawsuit, partially offset by $0.4 million of net remeasurement losses to increase the estimated fair value of our contingent consideration liabilities related to business acquisitions. In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. See Note 13 “Fair Value of Financial Instruments” within the notes to our consolidated financial statements for additional information on the fair value of contingent consideration liabilities.
Depreciation and amortization expense decreased $6.2 million, or 18.0%, to $28.4 million for the year ended December 31, 2019, from $34.6 million for the year ended December 31, 2018. The decrease was primarily attributable to decreasing amortization expense of the trade name and customer relationships acquired in our Studer Group acquisition and certain customer relationships acquired in other business

25

Table of Contents


acquisitions, due to the accelerated basis of amortization in prior periods, as well as certain other customer relationships acquired in business acquisitions that were fully amortized in prior periods. Intangible asset amortization included within operating expenses for the years ended December 31, 2019 and 2018 primarily related to certain customer relationships, trade names and non-competition agreements acquired in connection with our business acquisitions. See Note 3 “Acquisitions” and Note 4 “Goodwill and Intangible Assets” within the notes to our consolidated financial statements for additional information about our intangible assets.
Operating Income
Operating income increased $11.6 million, to $63.7 million for the year ended December 31, 2019, from $52.1 million for the year ended December 31, 2018. Operating margin, which is defined as operating income expressed as a percentage of revenues, increased to 7.3% in 2019 compared to 6.6% in 2018. The increase in operating margin was primarily attributable to the revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals and the decrease in intangible asset amortization expense; partially offset by the increase in performance bonus expense for our revenue-generating professionals, as a percentage of revenues.
Other Expense, Net
Total other expense, net decreased by $15.7 million to $11.2 million for the year ended December 31, 2019, from $26.9 million for the year ended December 31, 2018. The decrease in total other expense, net was primarily attributable to a $4.5 million net gain recognized in 2019 for the market value of our investments that are used to fund our deferred compensation liability, compared to a net loss of $1.6 million in 2018; as well as a $5.8 million loss recorded in 2018 related to the divestiture of our Middle East practice within our Business Advisory segment. During the second quarter of 2018, we sold our Middle East business to a former employee who was the practice leader of that business at the time. Interest expense, net of interest income decreased $3.4 million to $15.6 million in 2019 from $19.0 million in 2018, which was primarily attributable to the maturity of our Convertible Notes on October 1, 2019. See Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for additional information about our Convertible Notes.
Income Tax Expense
For the year ended December 31, 2019, our effective tax rate was 20.0% as we recognized income tax expense from continuing operations of $10.5 million on income from continuing operations of $52.5 million. For the year ended December 31, 2018, our effective tax rate was 44.7% as we recognized income tax expense from continuing operations of $11.3 million on income from continuing operations of $25.2 million.
The effective tax rate for 2019 was more favorable than the statutory rate, inclusive of state income taxes, of 25.9%, primarily due to a $1.6 million tax benefit related to federal and state tax credits, which had a favorable impact of 3.1% on the effective tax rate; a $1.5 million tax benefit related to the change in valuation allowance primarily due to realizing deferred tax assets recorded for foreign tax credits, which had a favorable impact of 2.9% on the effective tax rate; and a $1.0 million tax benefit related to non-taxable gains on our investments used to fund our deferred compensation liability, which had a favorable impact of 1.8% on the effective tax rate. These favorable items were partially offset by $1.0 million of additional tax expense related to disallowed executive compensation, which had an unfavorable impact of 2.0% on the effective tax rate.
The effective tax rate for 2018 was less favorable than the statutory rate, inclusive of state income taxes, of 26.2%, primarily due to $1.8 million of discrete tax expense for valuation allowances, primarily due to uncertainties relating to the ability to utilize deferred tax assets recorded for foreign tax credits, which had an unfavorable impact of 6.9% on the effective tax rate; $1.2 million of discrete tax expense for share-based compensation awards that vested during 2018, which had an unfavorable impact of 4.9% on the effective tax rate; $0.6 million of additional tax expense related to disallowed executive compensation, which had an unfavorable impact of 2.5% on the effective tax rate; and $0.6 million of additional tax expense related to the change in fair value of contingent consideration, which had an unfavorable impact of 2.4% on the effective tax rate.
Net Income from Continuing Operations
Net income from continuing operations increased by $28.0 million to $42.0 million for the year ended December 31, 2019, from $13.9 million for the year ended December 31, 2018. As a result of the increase in net income from continuing operations, diluted earnings per share from continuing operations for the year ended December 31, 2019 was $1.87 compared to $0.63 for 2018.
EBITDA and Adjusted EBITDA
EBITDA increased $18.8 million to $101.9 million for the year ended December 31, 2019, from $83.1 million for the year ended December 31, 2018. Adjusted EBITDA increased $14.4 million to $105.4 million in 2019 from $91.0 million in 2018. The increase in EBITDA was primarily attributable to the increase in revenues for the year ended December 31, 2019 compared to the same prior year period and the loss on the divestiture of our Middle East business within our Business Advisory segment recorded in 2018. These increases to EBITDA were partially offset by the increases in salaries and related expenses for our revenue-generating professionals, selling, general and administrative

26

Table of Contents


expenses, and performance bonus expense for our revenue-generating professionals recognized in 2019 compared to 2018. The increase in adjusted EBITDA was primarily attributable to the increase in revenues, partially offset by the increases in salaries and related expenses for our revenue-generating professionals, selling, general and administrative expenses, and performance bonus expense for our revenue-generating professionals in 2019 compared to 2018.
Adjusted Net Income from Continuing Operations
Adjusted net income from continuing operations increased $15.8 million to $61.6 million for the year ended December 31, 2019, compared to $45.8 million for the year ended December 31, 2018. As a result of the increase in adjusted net income from continuing operations, adjusted diluted earnings per share from continuing operations increased by $0.66 to $2.74 in 2019, compared to $2.08 in 2018.
Segment Results
Healthcare
Revenues
Healthcare segment revenues increased $34.5 million, or 9.4%, to $399.2 million for the year ended December 31, 2019, from $364.8 million for the year ended December 31, 2018.
For the year ended December 31, 2019, revenues from fixed-fee arrangements; time-and-expense arrangements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 62.5%, 13.8%, 17.8%, and 5.9% of this segment’s revenues, respectively, compared to 65.6%, 16.0%, 11.7%, and 6.7%, respectively, in 2018. Performance-based fee revenue was $71.1 million in 2019, compared to $42.7 million in 2018. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide.
Of the overall $34.5 million increase in revenues, $33.5 million was attributable to an increase in revenues from our full-time billable consultants and $1.0 million was attributable to our full-time equivalents. The increase in revenues attributable to our full-time billable consultants reflected increases in the average billing rate and the average number of full-time billable consultants, partially offset by a decrease in the consultant utilization rate in 2019 compared to 2018. The increase in revenues attributable to our full-time equivalents reflected an increase in the average number of full-time equivalents, partially offset by a decrease in the revenue per full-time equivalent in 2019 compared to 2018.
Operating Income
Healthcare segment operating income increased $17.7 million, or 16.3%, to $125.7 million for the year ended December 31, 2019, from $108.1 million for the year ended December 31, 2018. The Healthcare segment operating margin, defined as segment operating income expressed as a percentage of segment revenues, increased to 31.5% in 2019 from 29.6% in 2018. The increase in this segment’s operating margin was primarily attributable to revenue growth that outpaced an increase in salaries and related expenses for our revenue-generating professionals, partially offset by an increase in performance bonus expense for our revenue-generating professionals, as a percentage of revenues.
Business Advisory
Revenues
Business Advisory segment revenues increased $16.3 million, or 6.9%, to $252.5 million for the year ended December 31, 2019, from $236.2 million for the year ended December 31, 2018.
For the year ended December 31, 2019, revenues from fixed-fee arrangements; time-and-expense arrangements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 39.9%, 55.3%, 2.7%, and 2.1% of this segment's revenues, respectively, compared to 41.5%, 54.5%, 2.3%, and 1.7%, respectively, in 2018. Performance-based fee revenue for the year ended December 31, 2019 was $6.9 million compared to $5.4 million in 2018. The level of performance-based fees earned may vary based on our clients’ preferences and the mix of services we provide.
Of the overall $16.3 million increase in revenues, $18.0 million was attributable to an increase in revenues generated by our full-time billable consultants; partially offset by a $1.7 million decrease in revenues generated by our full-time equivalents. The increase in revenues from our full-time billable consultants reflected an increase in the average number of full-time billable consultants, partially offset by decreases in the average billing rate and the consultant utilization rate. The decrease in revenues from our full-time equivalents was driven by a decreased use of contractors and project consultants, partially offset by an increase in software support and maintenance revenues; and reflected a decrease in the average number of full-time equivalents, partially offset by an increase in revenue per full-time equivalent in 2019 compared to 2018.

27

Table of Contents


Operating Income
Business Advisory segment operating income decreased by $0.9 million, or 1.8%, to $49.7 million for the year ended December 31, 2019, compared to $50.6 million for the year ended December 31, 2018. Segment operating margin decreased to 19.7% for 2019 from 21.4% for 2018. The decrease in this segment’s operating margin was also attributable to increases in salaries and related expenses and performance bonus expense for our revenue-generating professionals, as percentages of revenues. These decreases to the operating margin, were offset by decreases in contractor expense, restructuring charges, and third-party consulting expenses. Additionally, the decrease in the operating margin reflected a higher percentage of this segment's revenues derived from our lower margin solutions in 2019 compared to 2018.
Education
Revenues
Education segment revenues increased $30.9 million, or 15.9%, to $225.0 million for the year ended December 31, 2019, from $194.2 million for the year ended December 31, 2018.
For the year ended December 31, 2019, revenues from fixed-fee arrangements; time-and-expense arrangements; and software support, maintenance and subscription arrangements represented 23.0%, 68.8%, and 8.2% of this segment’s revenues, respectively, compared to 20.4%, 72.5%, and 7.1%, respectively, in 2018.
Of the overall $30.9 million increase in revenues, $25.4 million was attributable to revenues generated by our full-time billable consultants and $5.5 million was attributable to our full-time equivalents. The increase in revenues from our full-time billable consultants reflected an increase in the average number of full-time billable consultants; partially offset by a decrease in the average billing rate in 2019 compared to 2018. The increase in revenues from our full-time equivalents was primarily driven by an increased use of contractors and an increase in software and data hosting revenues, partially offset by a decreased use of project consultants; and reflected increases in the average number of full-time equivalents and revenue per full-time equivalent in 2019 compared to 2018.
Operating Income
Education segment operating income increased $7.5 million, or 15.5%, to $55.7 million for the year ended December 31, 2019, from $48.2 million for the year ended December 31, 2018. The Education segment operating margin was 24.8% for both 2019 and 2018. The Education segment's revenue growth outpaced increases in salaries and related expenses for our revenue-generating professionals and selling, general and administrative expenses. This increase to the operating margin was offset by increases in contractor expense and performance bonus expense for our revenue-generating professionals, as percentages of revenues.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $11.6 million, $33.1 million, and $16.9 million at December 31, 2019, 2018, and 2017, respectively. As of December 31, 2019, our primary sources of liquidity are cash on hand, cash flows from our U.S. operations, and borrowing capacity available under our credit facility. 
Cash Flows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
 
2017
Net cash provided by operating activities
 
$
132,220

 
$
101,658

 
$
99,795

Net cash used in investing activities
 
(35,002
)
 
(18,562
)
 
(128,948
)
Net cash provided by (used in) financing activities
 
(118,836
)
 
(66,690
)
 
28,821

Effect of exchange rate changes on cash
 
115

 
(208
)
 
214

Net increase (decrease) in cash and cash equivalents
 
$
(21,503
)
 
$
16,198

 
$
(118
)
Operating Activities
Net cash provided by operating activities totaled $132.2 million and $101.7 million for the years ended December 31, 2019 and 2018, respectively. Our operating assets and liabilities consist primarily of receivables from billed and unbilled services, accounts payable and accrued expenses, accrued payroll and related benefits, and deferred revenues. The volume of services rendered and the related billings and timing of collections on those billings, as well as payments of our accounts payable and salaries, bonuses, and related benefits to employees affect these account balances.
The increase in cash provided by operating activities in 2019 compared to 2018 was primarily attributable to an increase in cash collections from clients, which was driven by revenue growth, partially offset by the higher amount paid for annual performance bonuses during the first quarter of 2019 compared to the first quarter of 2018.

28

Table of Contents


Investing Activities
Net cash used in investing activities was $35.0 million and $18.6 million for the years ended December 31, 2019 and 2018, respectively.
The use of cash in 2019 primarily consisted of $13.2 million for purchases of property and equipment, primarily related to purchases of computers and network equipment and leasehold improvements for new office spaces in certain locations; $10.3 million for payments related to internally developed software; $5.0 million for a purchase of investment securities in the fourth quarter of 2019; $4.7 million for contributions to our life insurance policies which fund our deferred compensation plan; and $2.5 million for the purchase of a business in the third quarter of 2019.
The use of cash in 2018 primarily consisted of $8.9 million for purchases of property and equipment, primarily related to purchases of computers and network equipment; $6.1 million for payments related to internally developed software; $2.3 million for payments related to the divestiture of our Middle East practice within the Business Advisory segment; and $2.0 million for contributions to our life insurance policies which fund our deferred compensation plan.
We estimate that cash utilized for purchases of property and equipment and software in 2020 will be approximately $25 to $30 million; primarily consisting of software development costs, information technology related equipment to support our corporate infrastructure, and leasehold improvements for certain office locations.
Financing Activities
Net cash used in financing activities was $118.8 million and $66.7 million for the years ended December 31, 2019 and 2018, respectively.
During 2019, we borrowed $347.0 million under our credit facility, of which $217.0 million was used to repay a portion of the $250.0 million outstanding principal on our Convertible Notes in the fourth quarter of 2019. The remaining $33.0 million outstanding principal on our Convertible Notes was repaid with cash on hand. During 2019, we also made repayments on our credit facility of $192.5 million. Additionally, we repurchased and retired $14.2 million of our common stock under our Share Repurchase Program, as defined below, of which $1.2 million settled in the first quarter of 2020. During 2019, we paid $10.0 million to the sellers of certain business acquisitions for achieving specified financial performance targets in accordance with the related purchase agreements. Of the total $10.0 million paid, $4.7 million is classified as a cash outflow from financing activities and represents the amount paid up to the initial fair value of contingent consideration liability recorded as of the acquisition date. The remaining $5.3 million is classified as a cash outflow from operating activities.
During 2018, we borrowed $204.3 million under our credit facility and made repayments on our credit facility of $259.8 million. We also paid $12.0 million to the sellers of certain businesses acquisitions for achieving specified financial performance targets in accordance with the related purchase agreements. Of the $12.0 million paid, $7.0 million is classified as a cash outflow from financing activities and represents the amount paid up to the initial fair value of the contingent consideration liability recorded as of the acquisition date. The remaining $5.0 million is classified as a cash outflow from operating activities.
Share Repurchase Program
We currently have a share repurchase program permitting us to repurchase up to $125 million of our common stock through October 31, 2020 (the "Share Repurchase Program"). The amount and timing of the repurchases will be determined by management and will depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements. In 2019, we repurchased and retired 210,437 shares for $14.2 million, of which $1.2 million settled in the first quarter of 2020. No shares were repurchased under this program in 2018. As of December 31, 2019, $20.9 million remains available for share repurchases.
Financing Arrangements
At December 31, 2019, we had $205.0 million outstanding under our senior secured credit facility and $3.9 million outstanding under a promissory note, as discussed below. The Convertible Notes matured on October 1, 2019.
1.25% Convertible Senior Notes
In September 2014, we issued $250 million principal amount of 1.25% convertible senior notes due 2019 in a private offering. The Convertible Notes were senior unsecured obligations of the Company and paid interest semi-annually on April 1 and October 1 of each year at an annual rate of 1.25%. The Convertible Notes matured on October 1, 2019. Upon maturity, we refinanced $217.0 million of the principal amount of the outstanding Convertible Notes with the borrowing capacity available under our revolving credit facility and funded the remaining $33.0 million principal payment with cash on hand. See Note 7 “Financing Arrangements” within the notes to the consolidated financial statements for additional information on our Convertible Notes.

29

Table of Contents


Senior Secured Credit Facility
The Company has a $600 million senior secured revolving credit facility, subject to the terms of a Second Amended and Restated Credit Agreement dated as of March 31, 2015, as amended to date (as amended and modified the "Amended Credit Agreement"), that becomes due and payable in full upon maturity on September 27, 2024. The Amended Credit Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount of up to $150 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $750 million. Borrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, acquisitions of businesses, share repurchases, and general corporate purposes.
Fees and interest on borrowings vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). At our option, borrowings under the Amended Credit Agreement will bear interest at one, two, three or six-month LIBOR or an alternate base rate, in each case plus the applicable margin. The applicable margin will fluctuate between 1.125% per annum and 1.875% per annum, in the case of LIBOR borrowings, or between 0.125% per annum and 0.875% per annum, in the case of base rate loans, based upon our Consolidated Leverage Ratio at such time.
Amounts borrowed under the Amended Credit Agreement may be prepaid at any time without premium or penalty. We are required to prepay the amounts outstanding under the Amended Credit Agreement in certain circumstances. In addition, we have the right to permanently reduce or terminate the unused portion of the commitments provided under the Amended Credit Agreement at any time.
The Amended Credit Agreement contains usual and customary representations and warranties; affirmative and negative covenants, which include limitations on liens, investments, additional indebtedness, and restricted payments; and two quarterly financial covenants as follows: (i) a maximum Consolidated Leverage Ratio (defined as the ratio of debt to consolidated EBITDA) of 3.75 to 1.00; however, the maximum permitted Consolidated Leverage Ratio will increase to 4.00 to 1.00 upon the occurrence of certain transactions, and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.50 to 1.00. Consolidated EBITDA for purposes of the financial covenants is calculated on a continuing operations basis and includes adjustments to add back non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, pro forma historical EBITDA for businesses acquired, and other specified items in accordance with the Amended Credit Agreement. At December 31, 2019 and December 31, 2018, we were in compliance with these financial covenants. Our Consolidated Leverage Ratio as of December 31, 2019 was 1.64 to 1.00, compared to 2.83 to 1.00 as of December 31, 2018. Our Consolidated Interest Coverage Ratio as of December 31, 2019 was 15.29 to 1.00, compared to 11.03 to 1.00 as of December 31, 2018. The reduction in our Consolidated Leverage Ratio as of December 31, 2019 compared to December 31, 2018 was driven by an increase in cash flows from operations, deployment of cash to reduce borrowings and improved profitability. Our maximum borrowing capacity, after consideration of our restrictive covenants and the unused borrowing capacity under the revolving credit facility, was $271.6 million at December 31, 2019 compared to $100.1 million at December 31, 2018.
Principal borrowings outstanding under the Amended Credit Agreement at December 31, 2019 and December 31, 2018 totaled $205.0 million and $50.0 million, respectively. These borrowings carried a weighted average interest rate of 3.0% at December 31, 2019 and 3.7% at December 31, 2018 including the impact of the interest rate swap described in Note 12 “Derivative Instruments and Hedging Activity" within the notes to the consolidated financial statements. The borrowing capacity under the revolving credit facility is reduced by any outstanding borrowings under the revolving credit facility and outstanding letters of credit. At December 31, 2019, we had outstanding letters of credit totaling $1.7 million, which are primarily used as security deposits for our office facilities.
The Amended Credit Agreement contains restricted payment provisions, including a potential limit on the amount of dividends we may pay. Pursuant to the terms of the Amended Credit Agreement, if our Consolidated Leverage Ratio is greater than 3.25, the amount of dividends and other Restricted Payments (as defined in the Amended Credit Agreement) we may pay is limited to an amount up to $25 million.
For further information, see Note 7 “Financing Arrangements” within the notes to the consolidated financial statements. For a discussion of certain risks and uncertainties related to the Amended Credit Agreement, see Part I—Item 1A. "Risk Factors.”
Promissory Note due 2024
On June 30, 2017, in conjunction with our purchase of an aircraft related to the acquisition of Innosight, we assumed, from the sellers of the aircraft, a promissory note with an outstanding principal balance of $5.1 million. The principal balance of the promissory note is subject to scheduled monthly principal payments until the maturity date of March 1, 2024, at which time a final payment of $1.5 million, plus any accrued and unpaid interest, will be due. Under the terms of the promissory note, we pay interest on the outstanding principal amount at a rate of one-month LIBOR plus 1.97% per annum. The obligations under the promissory note are secured pursuant to a Loan and Aircraft Security Agreement with Banc of America Leasing & Capital, LLC, which grants the lender a first priority security interest in the aircraft. At December 31, 2019, the outstanding principal amount of the promissory note was $3.9 million, and the aircraft had a carrying amount of $5.1 million. At December 31, 2018, the outstanding principal amount of the promissory note was $4.4 million, and the aircraft had a carrying amount of $5.8 million.

30

Table of Contents


For further information, see Note 7 “Financing Arrangements” within the notes to the consolidated financial statements.
Future Needs
Our primary financing need has been to fund our growth. Our growth strategy is to expand our service offerings, which may require investments in new hires, acquisitions of complementary businesses, possible expansion into other geographic areas, and related capital expenditures. We believe our internally generated liquidity, together with our available cash, the borrowing capacity available under our revolving credit facility, and access to external capital resources will be adequate to fund our long-term growth and capital needs arising from cash commitments and debt service obligations. Our ability to secure short-term and long-term financing in the future will depend on several factors, including our future profitability, the quality of our accounts receivable and unbilled services, our relative levels of debt and equity, and the overall condition of the credit markets.
CONTRACTUAL OBLIGATIONS
The following table represents our significant obligations and commitments as of December 31, 2019 and the scheduled years of payments (in thousands).
 
 
 
Payments Due by Period
 
Total
 
2020
 
2021-2022
 
2023-2024
 
Thereafter
Long-term bank borrowings—principal and interest (1)
$
234,037

 
$
6,113

 
$
12,226

 
$
215,698

 
$

Promissory note—principal and interest