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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.03pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.00pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.06pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
impairment+6
unable+1
difficult+1
loss+1
unanticipated+1
Positive rising
effective+1
positive+1
despite+1
advancements+1
Risk Factors (Item 1A)
10,608 words
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.”
Risks Related to Human Capital Resources
An inability to retain our senior management team and managing directors and principals would be detrimental to the success of our business.
We rely heavily on our senior management team, our industry and capability leaders, and managing directors and principals, and 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 managing directors and principals to generate revenues and market our business. Further, our senior management’s and managing directors’ and principals' personal reputations and relationships with our clients are a element in obtaining and maintaining client engagements. Members of our senior management team and our managing directors and principals 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 managing directors or principals leave and we cannot replace them with a suitable candidate quickly, or if legal restrictions on non-competition agreements are put into place, we could experience in securing and completing engagements, managing our business properly and executing on our growth strategy, which could our business prospects and results of operations.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
losses+7
divested+2
impairment+1
plaintiff+1
bad+1
Positive rising
strength+2
advancement+2
strengthened+1
MD&A (Item 7)
12,769 words
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Management's Discussion and Analysis of Financial Condition and Results of Operations ( “ MD&A ” ) should be read in conjunction with 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 2025, 2024 and 2023; and discusses those results of operations for 2025 compared to 2024. For a discussion of our results of operations for 2024 compared to 2023 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, 2024, which was filed with the United States Securities and Exchange Commission on February 25, 2025.
OVERVIEW
Huron is a global professional services firm that partners with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses to own their future. By embracing diverse perspectives, new ideas and the status quo, we create sustainable results for the organizations we serve.
If we are unable to hire and retain talented people in an industry where there is great competition for talent, it could have a seriousnegative 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 seriousnegative effect on us, including our ability to manage, staff, and successfully complete our existing engagements and obtain new engagements. Further, if we cannot develop, train, and retain highly skilled professionals, it may impact our ability to keep pace with rapid and continuing changes in technology and respond to changes in client demand in a rapidly evolving market for professional services. 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 can offer. Additionally, we may find it difficult to hire, develop and retain qualified professionals in certain geographic regions where historically our operations have been limited. 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.
If we are unable to manage the organizational challenges associated with our continued growth, we might be unable to achieve our business objectives.
As we continue to grow and evolve, it might become increasingly difficult to maintain effective standards across a large, global enterprise and effectively institutionalize our knowledge or to effectively change the strategy, operations or culture of our Company in a timely manner. It might also become more difficult to maintain our culture; effectively manage and monitor our people and operations; effectively communicate our core values, policies and procedures, strategies and goals; and motivate, engage and retain our people, particularly given the distribution of our employees across the U.S. and internationally, the rate of new hires, the breadth of skills and expertise across all of our solutions, and the fact that essentially all of our employees have the option to work remotely. The size and scope of our operations increase the possibility that we will have employees who expose us to unacceptable business risks, despite our efforts to train them and maintain internal controls to prevent such instances. For example, employee misconduct could involve the improper use of sensitive or confidential information entrusted to us, or obtained inappropriately, or the failure to comply with legislation or regulations regarding the protection of sensitive or confidential information, including personal data and proprietary information. Furthermore, the inappropriate use of social networking sites or AI by our employees could result in breaches of confidentiality, unauthorized disclosure of nonpublic company information or damage to our reputation. If we do not continue to develop and implement the right processes and tools to manage our enterprise and instill our culture and core values into all of our employees, our ability to compete successfully and achieve our business objectives could be impaired. In addition, effective
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January 1, 2022, we made, and continue to make, changes to our operating model, including how we are organized as the needs and size of our business change, and despite the operating model yielding positive synergies and impacts to date, if we do not continue to successfully refine the changes, our business and results of operations may be negatively impacted.
Risks Related to Business Operations, Growth and Development
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 approximately 8,610 as of December 31, 2025. 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 future. To successfully manage growth, we must periodically adjust and strengthen our operating, financial, accounting, and other systems, procedures, compliance practices and controls, which may increase our total costs and may adversely affect our operating income 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.
Our international operations could result in additional risks.
We operate both domestically and internationally, including in Canada, Europe, Asia, Australia 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 or increase the acuity of 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 related social and cultural factors, including geopolitical factors affecting labor mobility;
• 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;
• potentially adverse tax consequences and limitations on our ability to utilize losses generated in our foreign operations;
• different or more stringent regulatory requirements and other barriers to conducting business;
• our ability to develop effective partnerships in foreign geographic areas;
• different or less stable political and economic environments;
• greater personal security risks for employees traveling to or located in unstable locations;
• health emergencies or pandemics; and
• civil disturbances or other catastrophic events.
Further, conducting business abroad subjects us to increased regulatory compliance and oversight. A failure to comply with applicable regulations could result in regulatory enforcement actions as well as substantial civil and criminalpenalties assessed against us and our employees.
In addition, expanding into new geographic areas and expanding current service offerings is challenging and may require integrating new employees into our company culture as well as assessing the demand in the applicable market. If we cannot manage the risks associated with new employees, 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.
The Company has significant operations in India, which presents additional risks.
We have significant operations in India, including approximately 3,500 employees, which could subject the Company to country-specific risks or exacerbate certain other risks. For example, from time to time, India has experienced instances of civil unrest, terrorism and hostilities among neighboring countries. Terrorist attacks, military activity, rioting, or civil or political unrest in the future could influence the Indian economy and our operations by disrupting operations and communications and making travel within India more difficult and less desirable.
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Further, India has experienced natural disasters such as earthquakes, tsunamis, floods, landslides and drought in the past few years. The extent and severity of these natural disasters determines their impact on the Indian economy. Our operations and employees in India may be adversely affected by these or other social and political uncertainties or change, military activity, health-related risks, acts of terrorism or natural disasters. Additionally, as the overall population of India is large, and the cities in which we operate are dense, the impact of any such occurrences could have a disproportionateadverse effect on our operations.
Additionally, the challenges presented by India’s complex business environment and heightened risk for potential corruption may increase our risk of violating applicable anti-corruption and anti-bribery laws. We face the risk that our employees or any third parties we engage to do work on our behalf may take action determined to be in violation of anti-corruption laws in any jurisdiction in which we conduct business, including the Foreign Corrupt Practices Act, India’s Prevention of Money Laundering Act, 2002 and Indian Penal Code. If we violate applicable anti-corruption laws or our internal policies designed to ensure ethical business practices, we could face financial penalties and/or reputational harm that would negatively impact our financial condition and results of operations.
Additionally, since 1991, successive Indian governments have generally pursued policies of economic liberalization and financial sector reforms, including by significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant and there is no assurance that such liberalization policies will continue. A significant change in India’s policy of economic liberalization and deregulation or any social or political uncertainties could adversely affect business and economic conditions in India generally and our business and employees in particular.
Lastly, unfavorable fluctuations in the currency exchange rate between the U.S. dollar and Indian rupee could have a material adverse effect on our results of operations. As we continue to grow our operations in India, more of our expenses will be incurred in the Indian rupee. An increase in the value of the Indian rupee against the U.S. dollar, in which our revenue is primarily recorded, could increase costs for delivery of services and decrease the profitability of our engagements that utilize our employees in India.
Additional hiring, departures, and business acquisitions and dispositions, as well as other organizational changes, 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 and shutting down certain 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.
Additionally, effective January 1, 2022, we modified our operating model to report under three industries, which are our reportable segments. The operating model was designed to strengthen Huron's go-to-market strategy and support our growth. The full implementation across all areas of our business to effect this change has taken place over several years. Despite the operating model yielding positive synergies and impacts to date, if we do not continue to successfully refine this change to our operating model, our business and results of operations may be negatively impacted.
The healthcare and education industries are areas of significant focus for our business, and factors that affect the financial condition of these industries could consequently affect our business.
We derive a significant portion of our revenue from clients in the healthcare and education industries. As a result, our financial condition and results of operations could be adversely affected by conditions affecting these industries, both generally and those specific to the types of clients we serve in these industries, including hospitals and health systems, academic medical centers, and higher education institutions. The healthcare and education industries are highly regulated and are 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 and education industries could create unexpected liabilities for us, could cause us or our clients to incur additional costs, and could restrict our or our clients’ operations.
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Additionally, regulatory and legislative changes in these industries, or executive actions impacting these industries, could reduce the demand for our services, decrease our competitive position or potentially render certain of our service offerings obsolete, change client buying patterns or decision making or require us to make unplanned modifications to our service offerings, which could require additional time and investment. If we fail to accurately anticipate the application of the laws and regulations affecting our clients and the industries they serve, if anticipated changes in regulation or regulatory uncertainty impact client buying patterns, or if such laws, regulations, and executive actions decrease our competitive position or limit the applicability of our service offerings, our results of operations and financial condition could be adversely impacted.
In addition, 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. Specifically with respect to healthcare, 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 and in turn, it is unclear what long-term effect they will have on the healthcare industry and consequently on our business, financial condition and results of operations.
There are many factors that could affect the purchasing practices, operations, and, ultimately, the operating funds of healthcare and education organizations, such as reimbursement policies for healthcare and research-related expenses, student loan policies or regulations, federal and state budgetary considerations, increased taxes, changes in the tax exempt status of healthcare and education organizations, internal stakeholders’ views of engaging third-party consultants, consolidation in either 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 proposed or enacted changes in regulations affecting either 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), changes to Medicare or Medicaid reimbursements, changes to cost rates or reimbursement rates applicable to research grants, or a decline in the level of federal or state grant spending in general. Considerable uncertainty exists regarding how future budget and program decisions will unfold, including the spending priorities of the U.S. presidential administration and Congress. Pressures on and uncertainty surrounding the U.S. federal and state governments' budgets, and potential changes in budgetary priorities and spending levels, could adversely affect the funding for individual programs and delay purchasing or payment decisions by our customers.
Some of the uncertainty and pressures described above may increase demand for certain of our service offerings. To the extent there is more certainty or a reduction in these pressures, it may adversely affect our clients’ demand for certain of our service offerings.
Our digital offerings are a significant focal point for our business, including a focus on the adaptation and expansion of our services and products in response to ongoing changes in customer demand, and a significant reduction in such demand or an inability to respond to the evolving technological environment could materially affect our results of operations.
Our financial results depend, in part, on our ability to continue to develop and implement services and solutions that anticipate and respond to rapid and continuing changes in technology to serve the evolving needs of our clients. Examples of areas of significant change include digital and analytic services and products and AI-based solutions, which are continually evolving. Technological developments may materially affect the cost and use of current technology by our clients and some of these technological developments may reduce and replace some of our historical services and products. This changing technological landscape may cause clients to delay spending under existing contracts and engagements and delay entering into new contracts while they evaluate new technologies. Such spending delays can negatively impact our results of operations.
Technological developments and advancements in AI, which may be rapid, also could shift demand to new services and products. If, as a result of new technologies or AI functionality, our clients demand new services and products, we may be less competitive in these new areas or we may need to make significant investment in our portfolio of software products to meet that demand. Our growth strategy focuses on responding to these types of developments by driving innovation that will enable us to expand our business into new growth areas and enhance our current portfolio of software products. If we do not sufficiently invest in new technology and AI, adapt to industry developments, evolve and expand our business at sufficient speed and scale, make the right strategic investments, or fail to timely deliver on our product roadmap for our portfolio of software products to respond to these developments and successfully drive innovation, our services and products, our results of operations, and our ability to develop and maintain a competitive advantage and execute on our growth strategy could be adversely affected. Additionally, as we expand our services and products into these new areas, we may be exposed to operational, legal, regulatory, ethical, technological and other risks specific to such new areas, which may negatively affect our reputation and demand for our services and products.
Many of our client contracts are short-term in duration and may 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 unexpecteddeclines in our utilization and revenues.
Our clients typically retain us on an engagement-by-engagement basis, rather than under long-term recurring contracts, and many of our client contracts are 12 months or less in duration. The volume of work performed for any particular client is likely to vary from year to year,
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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 come 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, a large portion 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 claimsagainst 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 and investments 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.
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 or must withdraw from an existing engagement as a result of an emerging or undetectedconflict of interest, our consultants may become underutilized, which would adversely affect our revenues and results of operations in future periods.
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 association with certain clients or industries, 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, 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.
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, technical and economic advisory firms, regional and specialty consulting firms, consulting divisions of our technology partners, and the internal professional resources of organizations. In addition, because there are relatively low barriers to entry, we expect to continue to face 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, and 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 priced 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.
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Risks Related to Information Technology
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. Many of our practices provide services that are increasingly dependent on the use of software applications and systems that we do not own and which could become unavailable. Moreover, our technology platforms will require continuing investments by us in order to expand existing service offerings and develop complementary services, including AI functionality. 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, security, 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 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-parties 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. 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 are no longer relevant in the marketplace, our business may be unfavorably impacted. In addition, if a third-party vendor's business changes, is reduced, fails to adapt to changing market demands, or if a third-party vendor's business or third-party technology or software that is important to our business experiences system failures, service interruptions, or security breaches or is no longer supported, it could adversely affect our business. Additionally, our third parties may depend on their own third-party vendors, which would be fourth parties to Huron. We generally do not have direct oversight or knowledge of these fourth parties. If a fourth party were to be breached, we would be reliant upon our third party to provide information and manage the incident.
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 around the world. 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, phishing, impersonation (including through AI deepfakes), hackers, improper employee or contractor access, computer viruses or malware, programming errors, denial-of-service attacks, cyberattacks, 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, disaster recovery processes, and crisis response plans, and where possible, obtaining insurance against such events, those steps may not be effective and there can be no assurance that any such steps can be effectiveagainst all possible risks. We will need to continue to invest in technology in order to achieve redundancies necessary to prevent service interruptions. Unauthorized 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. In addition, our clients and their third-party service providers are subject to technology failures, disruptions, malicious activity and cyberattacks, the result of which could cause a disruption in our ability to deliver services or to yield positive outcomes for our clients as well as potentially impact our network and systems. If such circumstances were to occur, our consultants may become underutilized, which could adversely affect our revenues and results of operations in future periods. Furthermore, these events could impact the confidentiality, integrity, or availability of our systems.
There can be no guarantee that our preventative and remediation efforts will be sufficient to protect the Company's information systems, information, and other assets from significant harm and that potential future cybersecurity incidents will not have a material adverse effect on the Company or our results of operations or financial condition or cause reputational or other harm to the Company. For more information regarding the Company's cybersecurity risk management, see Item 1C of this Annual Report on Form 10-K.
Issues related to the use of AI may result in reputational harm or liability that could adversely impact our business.
As with many innovations, AI presents risks, challenges, and unintended consequences that could affect its adoption, and therefore our business. We incorporate AI solutions into some of our information platforms, products and services, and these technologies may become increasingly important to our operations over time. AI technologies are complex and rapidly evolving and the technologies that we use or develop may ultimately be flawed or we may be unable to leverage AI capabilities as quickly as the market and our clients demand. Additionally, leveraging AI capabilities to potentially improve our information platforms, products and services presents further risks and
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challenges. If we experience an actual or perceived breach of privacy or security incident because of the use of AI, we may losevaluable sensitive or confidential client or employee data which could damage our reputation. Further, dependence on AI without adequate safeguards to make certain business decisions may introduce additional operational vulnerabilities by impacting our relationships with customers, partners, and third-parties, by producing inaccurate outcomes based on flaws in the underlying data, or other unintended results.
While we have taken and are taking reasonable steps to prevent and mitigate risks, further incorporating AI gives rise to litigation risk and risk of non-compliance and unknown cost of compliance, as AI is an emerging technology for which the legal and regulatory landscape is not fully developed (including potential liability for breaching intellectual property or privacy rights or laws). While new AI initiatives, laws, and regulations are emerging and evolving, what they ultimately will look like remains uncertain, and our obligation to comply with proposed or enacted AI initiatives, laws, and policies regulating AI, such as the European Union's AI Act, could entail significant costs, negatively affect our business, or entirely limit our ability to incorporate certain AI capabilities into our offerings.
While we aim to use and develop AI responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise.
Risks Related to Legal Matters
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 India, Canada, Switzerland, France, Singapore, and the United Kingdom, 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). 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. Our ongoing expansion into international jurisdictions may also result in additional risks or increase the acuity of risks that are not present domestically with respect to privacy laws and regulations.
These laws and regulations are increasing in complexity and number. If any person, including any of our employees or third-party vendors, negligentlydisregards 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 criminalprosecution. We maintain certain insurance coverages for cybersecurity incidents through our professional liability insurance policy, in amounts we believe to be reasonable and at a cost that is included in our general insurance premiums, 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.
In addition, unauthorized disclosure of sensitive or confidential client or employee data, whether through systems failure, employee negligence, including the misuse of AI, fraud, or misappropriation, could damage our reputation and cause us to lose clients and their related revenue in the future.
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. Litigationalleging that we performed negligently or breached any other obligations could expose us to significant legal liabilities and, regardless of the 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 and should litigation arise, our potential liability may increase as our projects expand in size, breadth, and complexity. 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 allegederror 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
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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 professional liability insurance policy. 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.
Our business could be materially adversely affected if we incur liability in connection with service offering innovation, including new or expanded service offerings.
We may grow our business through service offering innovation, including by entering into new or expanded lines of business beyond our core services. To the extent we enter into new or expanded lines of business, we may face new risks and uncertainties, including the possibility these new or expanded lines of business involve greater risks than our core services, that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk, that the required investment of capital and other resources is greater than anticipated, and that we lose existing clients due to the perception that we are no longer focusing on our core business. Entry into new or expanded lines of business may also subject us to new laws and regulations with which we are not familiar and may lead to increased litigation and regulatory risk. Any investigation or proceeding related to these laws, even if unwarranted or without merit, may have a material adverse effect on our reputation, business, results of operations and financial condition.
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 infringementclaims 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 successfullychallenge 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.
Risks Related to Financial Management and Performance
Our financial results could suffer if we are unable to achieve or maintain adequate utilization and suitable billing rates for our consultants.
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;
• the use of independent contractors as a substitute for hiring additional consultants;
• 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;
• pricing pressure resulting from the introduction of new technologies, including advanced AI;
• an increase in the number of engagements in the government sector, which are subject to federal contracting regulations;
• the introduction of new services by us or our competitors;
• our competition and the pricing policies of our competitors; and
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• 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.
Our quarterly and annual 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 public universities, 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 may not be 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 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.
Furthermore, we base our annual employee bonus expense, in part, 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 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 or annual results of operations fall below the expectations of our annual and long-term forecasts, and therefore 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 certain 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. 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, expansion in scope of work without a commensurate increase in fees, or unanticipateddelays 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.
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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 or suspend such guidance during the year, the market value of our common stock could be adversely affected.
Risks Related to Capital Resources
Our obligations under our senior secured credit facility 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 have a Fourth Amended and Restated Security Agreement (the “Security Agreement”) and a Fourth Amended and Restated Pledge Agreement (the “Pledge Agreement”) associated with our Fourth Amended and Restated Credit Agreement, dated as of July 30, 2025 (the “Amended Credit Agreement”) with Bank of America, N.A. 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 stock or other equity interests in all domestic subsidiaries and 65% of the stock or other equity interests in each “material first-tier foreign subsidiaries” (as defined in the Pledge Agreement) entitled to vote and 100% of the stock or other equity interests in each material first-tier foreign subsidiary not entitled to vote. 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.
The Amended Credit Agreement established a $700 million senior secured revolving credit facility (the “Revolver”) and a $400 million senior secured term loan facility (the “Term Loan”), both of which fully mature on July 30, 2030. As of December 31, 2025, we had outstanding indebtedness of $511.0 million, of which $121.0 million was outstanding under the Revolver and $390.0 million was outstanding under the Term Loan. 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.
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 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. Under the Amended Credit Agreement, we are obligated to pay interest, at our option, at either one, three or six month Term SOFR or at an alternate base rate, in each case plus an applicable margin. SOFR is a relatively new reference rate, has a very limited history and is based on short-term repurchase agreements backed by Treasury securities. Changes in SOFR can be volatile and difficult to predict, and there is no assurance that SOFR will perform similarly to the way LIBOR, our previous benchmark rate, would have performed at any time. Any of these factors could materially and adversely affect our business, financial condition, and results of operations.
Risks Related to Asset Impairment
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 goodwill and other intangible assets. At December 31, 2025, goodwill and other intangible assets totaled $859.8 million, or 56%, of our total assets. Goodwill results from our business 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
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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, technology and software and non-competition agreements, all of which were acquired through business acquisitions. 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. During 2025, 2024 and 2023, we did not record any impairment charges on our goodwill or other intangible assets.
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 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 goodwill impairment charges.
We have incurred impairment charges with respect to our convertible debt investment in Shorelight and our preferred stock investment in a hospital-at-home company, and we may incur additional impairment charges that could materially impact our results of operations.
Since 2014, we have invested $40.9 million, in the form of 1.69% convertible debt, in Shorelight Holdings, LLC (“Shorelight”), the parent company of Shorelight Education. Our investment is carried at its fair value with unrealized holding gains and losses reported in other comprehensive income and credit-related impairment charges reported in our results of operations. As of December 31, 2025, our investment in Shorelight is in an unrealized loss position with a fair value of $34.1 million, which includes the recognition of a $10.4 million credit-related impairment charge in 2025. This credit-related impairment charge was driven by the decrease in projected cash flows of Shorelight, which reflects the current federal regulatory environment in which Shorelight operates. We did not record any impairment charges on our convertible debt investment in 2024 and 2023. In the future, if there are additional adverse developments in Shorelight's business or the federal regulatory environment in which it operates that may be the result of events within or outside of Shorelight's control, we may incur additional impairment charges with respect to our convertible debt investment, which could materially impact our results of operations.
In 2019, we invested $5.0 million, in the form of preferred stock, in a hospital-at-home company. Our investment is carried at its fair value with unrealized holding gains and losses reported in our results of operations when an observable price change for preferred stock issued by the company with similar rights and preferences to our preferred stock investment occurs. As of December 31, 2025, our preferred stock investment is in a net unrealized loss position with a fair value of $2.4 million, which includes $5.0 million of impairment charges recognized in 2025 due to observable price changes as a result of the hospital-at-home company's merger with a third party. If there is significant deterioration in the earnings performance, credit rating, or business prospects of the consolidated company, or a significant adverse change in the regulatory, economic, or technological environment of the consolidated company, we would evaluate our investment for further impairment. If during such evaluation it was determined that the fair value of our investment was below its carrying value, we would recognize an additional unrealized loss for such difference, which could materially impact our results of operations.
General Risk Factors
Expanding our service offerings may involve additional risks and may not be profitable.
We may choose to develop new service offerings, including managed services offerings, 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 professionals and to market our new service offerings; and
• unanticipatedchallenges with service delivery.
In addition, changes to our service offerings or expanding current service offerings may impact our financial condition in ways that are difficult for us to predict. If we are unable to manage the risks associated with such new or expanded services offerings, or if the demand for those services declines in ways that are unanticipated our cash flows and results of operations could be adversely affected.
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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 or uncertainty in regulatory schemes;
• political unrest, war, terrorism, geopolitical uncertainties, trade policies and sanctions, including the ongoing repercussions of the conflicts between Russia and Ukraine and increased tensions in the Middle East; and
• other economic factors and general business conditions, including inflation and rising interest rates.
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.
If we are unable to collect our receivables or unbilled services, our results of operations, financial condition, and cash flows could be adversely affected.
Our business depends on our ability to successfully obtain payment from our clients for the amounts owed to us for work performed. We evaluate the financial condition of our clients and usually bill and collect on relatively short cycles. We have established allowances for losses of receivables and unbilled services. We may not accurately assess the credit worthiness of our clients or macroeconomic conditions could result in financial difficulties for our clients, including bankruptcy and insolvency, such that clients may delay payments to us, request modifications to their payment arrangements that could increase our receivables balance, or default on their payment obligations to us. Actual losses on client balances could differ from those that we currently anticipate and as a result we might need to adjust our allowances. Timely collection of clients' contractual payments also depends upon our ability to complete our contractual commitments and bill and collect our contracted revenues. If we are unable to meet our contractual requirements, we might experience delays in collection of and/or be unable to collect our client balances, and if this occurs, our results of operations and cash flows could be adversely affected. In addition, if we experience an increase in the time to bill and collect for our services, our cash flows could be adversely affected.
Changes in U.S. and foreign 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.
The overall tax environment remains uncertain and increasingly complex. 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. In the U.S., various proposals to change corporate income taxes are periodically considered. 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. Additionally such political, budgetary or fiscal challenges may prompt governments to implement new taxes, tariffs or regulations, which could extend to services. 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.
The Organization for Economic Co-operation and Development has released guidance establishing a global minimum tax of 15% of reported profits applied on a country-by-country basis for multinational entities (“Pillar Two”). As of December 31, 2025, multiple countries in which we operate have enacted legislation to adopt Pillar Two model rule concepts into their domestic laws. The adoption and effective dates of these changes vary by country and increase tax complexity and uncertainty and may adversely affect our provision for income taxes. We currently do not expect a material impact to our tax expense and profitability. We will continue to monitor regulatory developments with respect to this initiative for potential impacts.
encouraging
challenging
We provide our services and products and manage our business under three operating segments: Healthcare, Education and Commercial. We also provide revenue reporting across two principal capabilities: i) Consulting and Managed Services and ii) Digital. 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 segments and capabilities.
COMPONENTS OF OPERATING RESULTS
Total Revenues
Revenues before Reimbursable Expenses
Revenues before reimbursable expenses are primarily generated by our employees who provide consulting and other professional services to our clients and are billable to our clients based on the number of hours worked, services provided, or achieved outcomes. We refer to these employees as our revenue-generating professionals. Revenues before reimbursable expenses are primarily driven by the number of revenue-generating professionals we employ as well as the total value, scope, and terms of the consulting contracts under which they provide services. We also engage independent contractors to supplement our revenue-generating professionals on client engagements as needed.
We generate our revenues before reimbursable expenses from providing professional services and software products under the following four types of billing arrangements: fixed-fee; time-and-expense; performance-based; and software support, maintenance and subscriptions.
• Fixed-fee: 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.
• Time-and-expense: Under time-and-expense billing arrangements, we invoice our clients based on the number of hours worked by our revenue-generating professionals at agreed upon rates. Time-and-expense arrangements also include speaking engagements, conferences and publications purchased by our clients.
• Performance-based: In performance-based billing arrangements, fees are tied to the attainment of contractually defined objectives. We enter into performance-based engagements in essentially two forms. First, we generally earn fees that are directly related to the savings formally acknowledged by the client as a result of adopting our recommendations for improving operational and cost effectiveness in the areas we review. Second, we earn a success fee when and if certain predefined outcomes occur. Often, performance-based fees supplement our fixed-fee or time-and-expense engagements. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide.
• Software support, maintenance and subscriptions: We generate subscription revenue from our cloud-based analytic tools and solutions including our cloud-based revenue cycle management software and research administration and compliance software. Additionally, clients that have purchased one of our software licenses can pay an annual fee for software support and maintenance. 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 as revenue.
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
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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.
Our quarterly results are impacted principally by the total value, scope, and terms of our client contracts, the number of our revenue-generating professionals who are available to work, our revenue-generating professionals' utilization rate, and the bill rates we charge our clients. Our utilization rate can be negatively affected by increased hiring because there is generally a transition period for new professionals that results in a temporary drop in our utilization rate. Our utilization rate can also be affected by seasonal variations in the demand for our services from our clients. For example, during the third and fourth quarters of the year, vacations taken by our clients can result in the deferral of activity on existing and new engagements, which would negatively affect our utilization rate. The number of business work days is also affected by the number of vacation days taken by our consultants and holidays in each quarter. We typically have fewer business work days available in the fourth quarter of the year, which can impact revenues during that period.
Reimbursable Expenses
Reimbursable expenses that are billed to clients, primarily relating to travel and out-of-pocket expenses incurred in connection with client engagements, are included in total revenues. We manage our business on the basis of revenues before reimbursable expenses, which we believe is the most accurate reflection of our services because it eliminates the effect of reimbursable expenses that we bill to our clients at cost.
Operating Expenses
Our most significant expenses are costs classified as direct costs. Direct costs primarily consist of compensation costs for our revenue-generating professionals, which includes salaries, performance bonuses, share-based compensation, signing and retention bonuses, payroll taxes and benefits. Direct costs also include fees paid to independent contractors that we retain to supplement our revenue-generating professionals, typically on an as-needed basis for specific client engagements, and technology costs, product and event costs, and commissions. Direct costs exclude amortization of intangible assets and software development costs and reimbursable expenses, both of which are separately presented in our consolidated statements of operations.
Selling, general and administrative expenses primarily consists of compensation costs for our support personnel, which includes salaries, performance bonuses, share-based compensation, signing and retention bonuses, payroll taxes, benefits and deferred compensation expense attributable to the change in market value of our deferred compensation liability. Changes in the market value of our deferred compensation liability are offset with the changes in market value of the investments that are used to fund our deferred compensation liability, which are recorded within other income (expense), net. Also included in selling, general and administrative expenses are third-party professional fees, software licenses and data hosting expenses, rent and other office-related expenses, sales and marketing-related expenses, recruiting and training expenses, and practice administration and meeting expenses.
Other operating expenses include restructuring charges, other gains and losses, depreciation expense, and amortization expense related to internally developed software costs and intangible assets acquired in business combinations.
Segment Results
Segment operating income consists of the revenues generated by a segment, less operating expenses that are incurred directly by the segment. Unallocated corporate expenses not allocated at the segment level include costs related to administrative functions that are performed in a centralized manner, as well as restructuring charges, depreciation and amortization, and interest expense that are not attributable to a particular segment. The administrative function costs include corporate office support costs, office facility costs, costs related to accounting and finance, human resources, legal, marketing, information technology, and company-wide business development functions, and costs related to overall corporate management.
Non-GAAP Measures
We also assess our results of operations using the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues before reimbursable expenses, adjusted net income, and adjusted diluted earnings per share. These non-GAAP financial measures differ from GAAP because they exclude a number of items required by GAAP, each discussed below. These non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows, or liquidity prepared in accordance with GAAP. Our non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how we define our non-GAAP financial measures.
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
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outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results.
These non-GAAP financial measures include adjustments for the following items:
Amortization of intangible assets: We exclude the effect of amortization of intangible assets from the calculation of adjusted net income, as it is inconsistent in its amount and frequency and is significantly affected by the timing and size of our acquisitions.
Restructuring charges: We have incurred charges due to restructuring various parts of our business. These restructuring charges have primarily consisted of costs associated with office space consolidations, including lease impairment charges and accelerated depreciation on lease-related property and equipment, and employee severance charges. We exclude the effect of the restructuring charges from our non-GAAP measures to permit comparability with periods that were not impacted by these items. We do not include normal, recurring, cash operating expenses in our restructuring charges.
2024 litigation settlement gain: In the second quarter of 2024, we settled a litigation matter in which Huron was the plaintiff for $15.0 million, on a pre-tax basis. This $15.0 million settlement gain was recorded as a component of other gains, net on our consolidated statement of operations. We have excluded from our non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal costs of $3.3 million incurred during 2024 specific to this litigation matter, as this net gain is not indicative of the ongoing performance of our business. Third-party legal costs incurred for this litigation matter in 2023 were $4.0 million. Our third-party legal expenses are recorded as a component of selling, general and administrative expenses on our statement of operations.
Other losses (gains), net: We exclude the effects of other losses and gains, which primarily relate to changes in the estimated fair value of our liabilities for contingent consideration related to business acquisitions and litigation settlement losses and gains, excluding the 2024 litigation settlement gain presented separately, to permit comparability with periods that are not impacted by these items. These items are recorded as a component of other losses (gains), net on our consolidated statement of operations.
Transaction-related expenses : We exclude the impact of third-party advisory, legal, and accounting fees and other corporate costs incurred directly related to the evaluation and/or consummation of business acquisitions to permit comparability with prior periods as these costs are inconsistent in their amount and frequency and are significantly affected by the timing and size of our acquisitions.
Unrealized losses (gains) on long-term investments, net: We exclude the effect of unrealized losses and gains related to our long-term investments, which include non-cash credit related impairment charges on our convertible debt investment in Shorelight Holdings, LLC and changes in the fair value of our equity investment in a hospital-at-home company arising from observable price changes or impairment charges. These unrealized losses and gains are included as a component of other income (expense), net on our consolidated statement of operations. We believe these unrealized losses and gains are not indicative of the ongoing performance of our business and their exclusion permits comparability with prior periods.
Losses (gains) on sales of businesses: We exclude the effect of non-operating losses and gains recognized as a result of sales of businesses 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 2024 gain relates to the divestiture of our Studer Education practice in the fourth quarter of 2024.
Foreign currency transaction losses (gains), net: We exclude the effect of foreign currency transaction losses and gains from the calculation of adjusted EBITDA because the amount of each loss or gain is significantly affected by changes in foreign exchange rates.
Tax effect of adjustments: The non-GAAP income tax adjustment reflects the incremental tax impact applicable to the non-GAAP adjustments.
Income tax expense, interest expense, net of interest income, depreciation and amortization: We exclude the effects of income tax expense, interest expense, net of interest income, and depreciation and amortization in the calculation of EBITDA, as these are customary exclusions as defined by the calculation of EBITDA to arrive at meaningful earnings from core operations excluding the effect of such items. We include, within the depreciation and amortization adjustment, the amortization of capitalized implementation costs of our enterprise resource planning (ERP) system and other related software, which is included within selling, general and administrative expenses in our consolidated statements of operations.
Revenue-Generating Professionals
Our revenue-generating professionals consist of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the culture and organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients;
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and our Managed Services professionals who provide revenue cycle management and research administration managed services and outsourcing at our healthcare, education and research-focused clients.
Utilization Rate
The utilization rate of our revenue-generating professionals is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these billable consultants during the same period. Available working hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We do not present utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.
RESULTS OF OPERATIONS
Executive Highlights
Highlights from the year ended December 31, 2025 include the following:
• Revenues before reimbursable expenses increased 11.9% to $1.66 billion in 2025 from $1.49 billion in 2024.
• Net income as a percentage of total revenues was 6.2% in 2025, compared to 7.7% in 2024. Results for 2025 include $7.7 million of non-cash impairment charges, net of tax, related to our convertible debt investment in a third-party. Results for 2024 include an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter in which Huron was the plaintiff.
• Adjusted EBITDA as a percentage of revenues before reimbursable expenses increased to 14.3% in 2025 from 13.5% in 2024.
• Diluted EPS was $5.84 for 2025, compared to $6.27 for 2024. Results for 2025 include the non-cash impairment charge related to our convertible debt investment in a third-party, which had an unfavorable $0.43 impact on diluted earnings per share for the year. Results for 2024 include the litigation settlement gain related to a completed legal matter in which Huron was the plaintiff, which had a favorable impact of $0.60 on diluted earnings per share in 2024.
• Adjusted diluted EPS increased 21.0% to $7.83 for 2025, compared to $6.47 for 2024.
• Returned $166.2 million to shareholders by repurchasing 1,166,077 shares of our common stock in 2025.
Revenues before reimbursable expenses increased $176.8 million, or 11.9%, to $1.66 billion for the year ended December 31, 2025 from $1.49 billion for the year ended December 31, 2024. The overall increase in revenues before reimbursable expenses reflects strength in demand for our Consulting and Managed Services capabilities within all three of our segments, as well as continued strength in demand for our Digital capabilities within our Commercial and Education segments. The increase includes $86.0 million of incremental revenues before reimbursable expenses from our acquisitions completed since December 31, 2023. These increases were partially offset by a decrease in demand for our Digital capability within our Healthcare segment. Excluding the $86.0 million of incremental revenues before reimbursable expenses from our acquisitions and $13.7 million of revenues before reimbursable expenses in 2024 generated by the Studer Education business, which we divested at the end of 2024, revenues before reimbursable expenses grew 7.1% organically.
Revenues before reimbursable expenses within our Consulting and Managed Services capability increased 13.1% to $976.9 million in 2025, compared to $863.9 million in 2024; and reflected strengthened demand in all three of our segments. The increase includes $38.2 million of incremental revenues before reimbursable expenses from our acquisitions of Eclipse Insights, Treliant, Advancement Resources, WP&C, GG+A and Halpin. The utilization rate within our Consulting capability increased to 75.7% in 2025, compared to 73.6% in 2024.
Revenues before reimbursable expenses within our Digital capability increased 10.2% to $686.0 million in 2025, compared to $622.2 million in 2024; and reflected strengthened demand in our Commercial and Education segments, partially offset by a decrease in demand in our Healthcare segment. The increase includes $47.8 million of incremental revenues before reimbursable expenses from our acquisitions of AXIA Consulting, Inc (“AXIA Consulting”) and AXIOM. The utilization rate within our Digital capability increased to 78.2% in 2025, compared to 76.0% in 2024.
Our total number of revenue-generating professionals, excluding Managed Services professionals, increased 13.1% to 5,307 as of December 31, 2025, compared to 4,694 as of December 31, 2024, as a result of the acquisitions completed since December 31, 2024 and hiring to support the overall increase in demand for our services. The number of Managed Services professionals increased 46.3% to 2,239 as of December 31, 2025 from 1,530 as of December 31, 2024. We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services as employee compensation costs are the most significant portion of our operating expenses.
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Net income decreased $11.6 million, or 9.9%, to $105.0 million, or 6.2% of total revenues, for the year ended December 31, 2025 from $116.6 million, or 7.7% of total revenues, for the same period last year. Results for 2025 include $7.7 million of non-cash impairment charges, net of tax, related to our convertible debt investment in a third-party. Results for 2024 include an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter in which Huron was the plaintiff. As a result of the decrease in net income, and partially offset by a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan, diluted earnings per share decreased 6.9% to $5.84 for 2025, compared to $6.27 for 2024. Adjusted diluted earnings per share, which excludes the impact of the non-cash impairment charges in 2025 and the litigation settlement gain in 2024, increased 21.0% to $7.83 for 2025 from $6.47 for 2024.
Adjusted EBITDA increased $36.3 million, or 18.1%, to $237.5 million, or 14.3% of revenues before reimbursable expenses, in 2025, compared to $201.2 million, or 13.5% of revenues before reimbursable expenses, in 2024.
During 2025, we deployed $166.2 million of capital to repurchase 1,166,077 shares of our common stock, representing 6.6% of our common stock outstanding as of December 31, 2024.
Summary of Results
The following tables set forth, for the periods indicated, selected segment and consolidated operating results and other operating data, including non-GAAP measures.
Segment and Consolidated Operating Results
(in thousands, except per share amounts):
Year Ended December 31,
Healthcare:
Revenues before reimbursable expenses
Operating income
Segment operating income as a percentage of segment revenues before reimbursable expenses
Education:
Revenues before reimbursable expenses
Operating income
Segment operating income as a percentage of segment revenues before reimbursable expenses
Commercial:
Revenues before reimbursable expenses
Operating income
Segment operating income as a percentage of segment revenues before reimbursable expenses
Total Huron:
Revenues before reimbursable expenses
Reimbursable expenses
Total revenues
Items not allocated at the segment level:
Unallocated corporate expenses
Other losses (gains), net
Restructuring charges
Depreciation and amortization
Operating income
Other income (expense), net
Income before taxes
Income tax expense
Net income
Earnings per share
Basic
Diluted
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Segment and Consolidated Operating Results
(in thousands, except per share amounts):
Year Ended December 31,
Other Operating Data:
Number of revenue-generating professionals by segment (at period end):
Healthcare
Education
Commercial (1)(2)
Total (excluding Managed Services)
Managed Services (3)
Total
Revenues before reimbursable expenses by capability:
Consulting and Managed Services (4)
Digital
Total
Number of revenue-generating professionals by capability (at period end):
Consulting
Managed Services (3)
Digital
Total
Utilization rate by capability (5) :
Consulting
Digital
(1) The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education.
(2) The increase in the number of revenue-generating professionals within our Commercial segment includes our acquisition of Treliant in 2025. This acquisition added approximately 180 revenue-generating professionals, of which approximately 65 are consultants who work variable schedules as needed by clients.
(3) We have separately presented the total number of revenue-generating professionals within our Managed Services capabilities of our Healthcare and Education segments. Our Healthcare Managed Services professionals provide revenue cycle billing, collections, insurance verification and change integrity services to clients. Our Education Managed Services professionals provide research administration managed services and outsourcing at our education and research-focused clients.
The number of Managed Services professionals within our Healthcare segment was 2,117, 1,420 and 924 as of December 31, 2025, 2024 and 2023, respectively.
The number of Managed Services professionals within our Education segment was 122, 110 and 126 as of December 31, 2025, 2024 and 2023, respectively.
(4) Managed Services capability revenues before reimbursable expenses within our Healthcare segment was $90.1 million, $77.5 million and $70.1 million for the years ended 2025, 2024 and 2023, respectively.
Managed Services capability revenues before reimbursable expenses within our Education segment was $29.3 million, $28.2 million and $29.6 million for the years ended 2025, 2024 and 2023, respectively.
(5) Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We do not present utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.
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Non-GAAP Measures
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Year Ended December 31,
Revenues before reimbursable expenses
Reimbursable expenses
Total revenues
Net income
Net income as a percentage of total revenues
Add back:
Income tax expense
Interest expense, net of interest income
Depreciation and amortization
EBITDA
Add back:
Restructuring charges
2024 litigation settlement gain
Other losses (gains), net
Transaction-related expenses
Unrealized losses on long-term investments, net
Gain on sale of business
Foreign currency transaction losses (gains), net
Adjusted EBITDA
Adjusted EBITDA as a percentage of revenues before reimbursable expenses
Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted Earnings per Share
Year Ended December 31,
Net income
Weighted average shares - diluted
Diluted earnings per share
Add back:
Amortization of intangible assets
Restructuring charges
2024 litigation settlement gain
Other losses (gains), net
Transaction-related expenses
Unrealized losses on long-term investments, net
Gain on sale of business
Tax effect of adjustments
Total adjustments, net of tax
Adjusted net income
Adjusted weighted average shares - diluted
Adjusted diluted earnings per share
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Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Revenues before Reimbursable Expenses
Revenues before reimbursable expenses by segment and capability for the years ended December 31, 2025 and 2024 were as follows:
Revenues before Reimbursable Expenses (in thousands)
Year Ended
December 31,
Increase / (Decrease)
Segment:
Healthcare
Education
Commercial
Total revenues before reimbursable expenses
Capability:
Consulting and Managed Services
Digital
Total revenues before reimbursable expenses
Revenues before reimbursable expenses increased $176.8 million, or 11.9%, to $1.66 billion for the year ended December 31, 2025 from $1.49 billion for the year ended December 31, 2024. The overall increase in revenues before reimbursable expenses reflects strength in demand for our Consulting and Managed Services capabilities within all three of our segments, as well as continued strength in demand for our Digital capabilities within our Commercial and Education segments. The increase includes $86.0 million of incremental revenues before reimbursable expenses from our acquisitions completed since December 31, 2023. These increases were partially offset by a decrease in demand for our Digital capability within our Healthcare segment. Excluding the $86.0 million of incremental revenues before reimbursable expenses from our acquisitions and $13.7 million of revenues before reimbursable expenses in 2024 generated by the Studer Education business, which we divested at the end of 2024, revenues before reimbursable expenses grew 7.1% organically. Additional information on our revenues before reimbursable expense by segment follows.
• Healthcare revenues before reimbursable expenses increased $81.3 million, or 10.7%, driven by continued strength in demand for our performance improvement, financial advisory, revenue cycle managed services and strategy and innovation solutions within our Consulting and Managed Services capability. These increases were partially offset by a decrease in revenues before reimbursable expenses due to the divestiture of our Studer Education practice in the fourth quarter of 2024 and a decrease in revenues before reimbursable expenses for our technology and analytics services within our Digital capability. The Studer Education business generated $13.7 million of revenues before reimbursable expenses in 2024. Revenues before reimbursable expenses for the year ended December 31, 2025 included $14.5 million of incremental revenues before reimbursable expenses from our recent acquisitions of Eclipse Insights, AXIA Consulting and AXIOM.
The number of revenue-generating professionals, excluding Managed Services professionals, within our Healthcare segment grew 22.6% to 1,493 as of December 31, 2025, compared to 1,218 as of December 31, 2024. Our acquisitions of Eclipse Insights and AXIOM in 2025 added approximately 75 revenue-generating professionals.
• Education revenues before reimbursable expenses increased $26.0 million, or 5.5%, driven by strengthened demand for our strategy and operations and research solutions within our Consulting and Managed Services capability and software products within our Digital capability, as well as $9.9 million of incremental revenues from our recent acquisitions of Advancement Resources, GG+A, AXIA Consulting and Halpin.
The number of revenue-generating professionals, excluding Managed Services professionals, within our Education segment grew 0.4% to 1,145 as of December 31, 2025, compared to 1,141 as of December 31, 2024.
• Commercial revenues before reimbursable expenses increased $69.5 million, or 27.2%, which reflects $61.6 million of incremental revenues before reimbursable expenses from our recent acquisitions of AXIA Consulting, Treliant and WP&C and continued strength in demand for our technology and analytics services within our Digital capability. These increases were partially offset by decreases in demand for our strategy and innovation and financial advisory solutions within our Consulting and Managed Services capability.
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The number of revenue-generating professionals within our Commercial segment, the majority of which provide services across all of our industries, grew 14.3% to 2,669 as of December 31, 2025, compared to 2,335 as of December 31, 2024. Our acquisitions of Treliant and WP&C in 2025 added approximately 210 revenue-generating professionals.
Operating Expenses
Operating expenses for the year ended December 31, 2025 increased $167.6 million, or 12.4%, over the year ended December 31, 2024.
Operating expenses and operating expenses as a percentage of revenues before reimbursable expenses were as follows:
Operating Expenses (in thousands, except amounts as a percentage of revenues before reimbursable expenses)
Year Ended December 31,
Increase / (Decrease)
Direct costs
Reimbursable expenses
Selling, general and administrative expenses
Other losses (gains), net
Restructuring charges
Depreciation and amortization
Total operating expenses
Direct Costs
Direct costs increased $112.4 million, or 11.1%, to $1.12 billion for the year ended December 31, 2025 from $1.01 billion for the year ended December 31, 2024. The $112.4 million increase primarily related to a $99.0 million increase in compensation costs for our revenue-generating professionals, an $8.7 million increase in contractor expenses, and a $3.0 million increase in technology costs. The $99.0 million increase in compensation costs reflects our investment to grow our talented team to meet increased market demand and is primarily attributable to an $87.2 million increase in salaries and related expenses driven by the recent acquisitions, hiring to support the overall increase in demand for our services, and annual salary increases that went into effect in the first quarter of 2025, as well as a $6.3 million increase in performance bonus expense, a $4.4 million increase in signing, retention and other bonus expense, and a $1.0 million increase in share-based compensation expense. As a percentage of revenues before reimbursable expenses, direct costs decreased to 67.5% during 2025, compared to 68.0% during 2024, primarily attributable to revenue growth that outpaced the increase in performance bonus expense for our revenue-generating professionals.
Reimbursable Expenses
Reimbursable expenses are billed to clients at cost and primarily relate to travel and out-of-pocket expenses incurred in connection with client engagements. These expenses are also included in total revenues. We manage our business on the basis of revenues before reimbursable expenses, which we believe is the most accurate reflection of our services because it eliminates the effect of reimbursable expenses that are also included as a component of operating expenses.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $31.4 million, or 10.9%, to $318.0 million for the year ended December 31, 2025 from $286.7 million for the year ended December 31, 2024. The $31.4 million increase primarily related to an $18.5 million increase in non-payroll costs and a $12.5 million increase in salaries and related expenses for our support personnel. The $18.5 million increase in non-payroll costs was primarily driven by a $7.3 million increase in software and data hosting expenses, a $4.3 million increase in third-party professional fees, a $2.6 million increase in promotion and marketing expenses, a $1.5 million increase in recruiting costs, a $1.4 million increase in business insurance costs, and a $1.2 million increase in severance expenses. These increases to non-payroll costs were partially offset by a $2.1 million decrease in bad debt expense and a $1.5 million decrease in legal expenses. The increase in third-party professional fees and business insurance costs were primarily driven by our programmatic acquisition activity. As a percentage of revenues before reimbursable expenses, selling, general and administrative expenses decreased to 19.1% during 2025, compared to 19.3% during 2024. This decrease was primarily attributable to revenue growth that outpaced the increase in compensation costs for our support personnel.
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Other Losses (Gains), Net
Other losses (gains), net totaled a net loss of $3.1 million for the year ended December 31, 2025 and a net gain of $14.2 million for the year ended December 31, 2024. The $3.1 million of other losses, net for the year ended December 31, 2025 primarily consisted of net remeasurement charges to increase the fair value of our contingent consideration liabilities related to business combinations. The $14.2 million of other gains, net for the year ended December 31, 2024 primarily consisted of a pre-tax $15.0 million litigation settlement gain for a completed legal matter in which Huron was the plaintiff and $0.5 million of net remeasurement gains to decrease the fair value of our contingent consideration liabilities related to business combinations.
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.
Restructuring Charges
Restructuring charges for the year ended December 31, 2025 were $9.1 million, compared to $9.9 million for the year ended December 31, 2024. The $9.1 million of restructuring charges recognized in 2025 primarily consisted of $3.8 million of severance-related expenses; $3.1 million of rent and related expenses, net of sublease income, for our previously vacated office spaces; $1.4 million of accelerated depreciation and amortization on the related fixed assets and right-of-use operating lease assets recognized when we abandoned our office spaces in Pensacola, Florida and Boston, Massachusetts; and a $0.7 million non-cash lease impairment charge driven by updated sublease assumptions for a previously vacated office space.
During 2024, we exited our office space previously occupied by GG+A and a portion of our office space in New York, New York resulting in non-cash impairment charges of $1.4 million and $1.2 million, respectively, on the related right-of-use operating lease assets and fixed assets. Additionally, we exited the remaining portion of our office space in Denver, Colorado resulting in $0.5 million of accelerated depreciation and amortization on the related fixed assets and right-of-use operating lease assets we abandoned. Furthermore, in the fourth quarter of 2024, we completed the divestiture of our Studer Education practice and incurred $1.3 million of restructuring charges, consisting of $1.0 million of transaction-related employee payments and $0.3 million of third-party legal and professional advisory fees. Restructuring charges incurred in 2024 also included $2.3 million of severance-related expenses unrelated to the divestiture; $2.3 million of rent and related expenses, net of sublease income, for previously vacated office spaces; and $0.8 million related to non-cash lease impairment charges driven by updated sublease assumptions for our previously vacated office spaces.
Depreciation and Amortization
Depreciation and amortization expense increased $6.8 million, or 27.4%, to $31.6 million for the year ended December 31, 2025, compared to $24.8 million for the year ended December 31, 2024. The $6.8 million increase in depreciation and amortization expense was primarily attributable to increases in amortization of intangible assets acquired in business acquisitions and internally developed software.
Operating Income
Operating income increased $9.8 million, or 5.8% , to $178.6 million for the year ended December 31, 2025 from $168.8 million for the year ended December 31, 2024. Operating margin, which is defined as operating income expressed as a percentage of revenues before reimbursable expenses, decreased to 10.7% for 2025, compared to 11.4% for 2024.
Operating income and operating margin for each of our segments as well as unallocated corporate expenses were as follows:
Segment Operating Income (in thousands, except operating margin percentages)
Year Ended December 31,
Increase / (Decrease)
Healthcare
Education
Commercial
Unallocated Corporate Expenses (in thousands)
Unallocated corporate expenses
• Healthcare operating income increased $46.7 million, or 22.3%, primarily due to the increase in revenues before reimbursable expenses, as well as decreases in salaries and related expenses for our support personnel, bad debt expense, and practice administration and meetings expenses; partially offset by increases in compensation costs for our revenue-generating professionals and technology expenses. The increases in compensation costs for our revenue-generating professionals were primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of 2025, as well as increases in
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performance bonus expense, signing, retention and other bonus expense, and share-based compensation expense. Healthcare operating margin increased to 30.5% from 27.6% primarily due to the decreases in salaries and related expenses for our support personnel, bad debt expense, and practice administration and meetings expenses, and revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals.
• Education operating income increased $4.7 million, or 4.3%, primarily due to the increase in revenues before reimbursable expenses; partially offset by increases in compensation costs for our revenue-generating professionals and support personnel, amortization of internally developed software, contractor expenses, practice administration and meeting expenses, promotion and marketing expenses, and project costs. The increases in compensation costs for our revenue-generating professionals and support personnel were primarily driven by an increase in headcount and annual salary increases that went into effect in the first quarter of 2025, partially offset by a decrease in performance bonus expense for our revenue-generating professionals. Education operating margin decreased to 22.6% from 22.9% primarily driven by the increases in amortization of internally developed software, salaries and related expenses for our support personnel, contractor expenses, practice administration and meetings expenses, projects costs and promotion and marketing expenses, all as percentages of revenues before reimbursable expenses; partially offset by revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals and the decrease in performance bonus expense for our revenue-generating professionals.
• Commercial operating income increased $4.7 million, or 9.1%, primarily due to the increase in revenues before reimbursable expenses, partially offset by increases in compensation costs for our revenue-generating professionals, contractor expenses, salaries and related expenses for our support personnel and restructuring charges. The increase in compensation costs for our revenue-generating professionals was primarily due to the increased headcount, driven by our acquisitions of AXIA Consulting and Treliant, annual salary increases that went into effect in the first quarter of 2025, and increases in performance bonus expense and signing, retention and other bonus expense. Commercial operating margin decreased to 17.2% from 20.0% primarily driven by the increases in salaries and related expenses for our revenue-generating professionals and contractor expenses, as percentages of revenues before reimbursable expenses; partially offset by revenue growth that outpaced the increase in performance bonus expense for our revenue-generating professionals.
• Unallocated corporate expenses increased $26.4 million, or 13.8%, primarily due to increases in compensation costs for our support personnel, software and data hosting expenses, third-party professional fees, business insurance costs, promotion and marketing expenses, and practice administration and meeting expenses. The increase in compensation costs for our support personnel was primarily driven by an increase in headcount, annual salary increases that went into effect in the first quarter of 2025 and an increase in deferred compensation expense attributable to the change in the market value of our deferred compensation liability. The increases in third-party professional fees and business insurance costs were primarily driven by our programmatic acquisition activity.
Other Income (Expense), Net
Interest expense, net of interest income increased $8.9 million to $34.2 million for the year ended December 31, 2025 from $25.3 million for the year ended December 31, 2024, which was primarily attributable to higher levels of borrowing and higher interest rates under our senior secured credit facility in 2025 compared to 2024. See “Liquidity and Capital Resources” below and Note 7 “Financing Arrangements” within the notes to our consolidated financial statements for additional information about our senior secured credit facility.
Other income (expense), net totaled expense of $9.3 million for the year ended December 31, 2025, compared to income of $10.5 million for the year ended December 31, 2024. In 2025, we recognized pre-tax $10.4 million of non-cash credit-related impairment charges related to our convertible debt investment in a third-party and non-cash impairment charges of $5.0 million on our equity investment in a hospital-at-home company. These losses were partially offset by a $5.7 million gain recognized for the market value of our investments that are used to fund our deferred compensation liability and $0.4 million of foreign currency transaction gains. In 2024, we recognized a $4.6 million gain for the market value of our investments that are used to fund our deferred compensation liability, a $3.6 million gain related to the divestiture of our Studer Education practice, and $2.1 million of foreign currency transaction gains. The gains recognized in 2025 and 2024 related to the market value of our investments that are used to fund our deferred compensation liability were offset with deferred compensation expense attributable to the change in the market value of our deferred compensation liability which is recognized as a component of selling, general and administrative expenses on our consolidated statements of operations.
See Note 3 “Acquisitions and Divestitures” within the notes to our consolidated financial statements for additional information on the divestiture completed in 2024, Note 12 “Derivative Instruments and Hedging Activity” within the notes to our consolidated financial statements for additional information on our foreign exchange forward contracts, Note 13 “Fair Value of Financial Instruments” within the notes to our consolidated financial statements for additional information on our convertible debt and equity investments, and Note 15 “Employee Benefit and Deferred Compensation Plans” within the notes to our consolidated financial statements for additional information on our deferred compensation plan.
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Income Tax Expense
For the year ended December 31, 2025, our effective tax rate was 22.2% as we recognized income tax expense of $30.0 million on income of $135.1 million. The effective tax rate of 22.2% was more favorable than the statutory rate, inclusive of state income taxes, of 26.0%, primarily due to a discrete tax benefit for share-based compensation awards that vested during the year. This favorable item was partially offset by certain nondeductible expense items.
For the year ended December 31, 2024, our effective tax rate was 24.3% as we recognized income tax expense of $37.4 million on income of $154.0 million. The effective tax rate of 24.3% was more favorable than the statutory rate, inclusive of state income taxes, of 26.0%, primarily due to a discrete tax benefit for share-based compensation awards that vested during the year. This favorable item was partially offset by certain nondeductible expense items.
See Note 17 “Income Taxes” within the notes to our consolidated financial statements for additional information on our income tax expense.
Net Income and Earnings per Share
Net income decreased $11.6 million, or 9.9%, to $105.0 million for the year ended December 31, 2025 from $116.6 million for the year ended December 31, 2024. Net income for 2025 includes $7.7 million of non-cash impairment charges, net of tax, related to our convertible debt investment in a third-party. Net income for 2024 includes an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter in which Huron was the plaintiff. Diluted earnings per share for the year ended December 31, 2025 decreased to $5.84, compared to $6.27 for the year ended December 31, 2024, driven by the decrease in net income, partially offset by a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan. The non-cash credit-related impairment charges on our convertible debt investment had an unfavorable $0.43 impact on diluted EPS for the year ended December 31, 2025, while the litigation settlement gain related to a completed legal matter in which Huron was the plaintiff had a favorable impact of $0.60 on diluted earnings per share for the prior year period.
EBITDA and Adjusted EBITDA
EBITDA decreased $3.3 million, or 1.6%, to $201.8 million for the year ended December 31, 2025 from $205.0 million for the year ended December 31, 2024. The decrease in EBITDA was primarily attributable to the increase in unallocated corporate expenses, excluding the impact of the change in the market value of our deferred compensation liability; the pre-tax $15.0 million litigation settlement gain recognized in 2024 for a completed legal matter in which Huron was the plaintiff; the pre-tax $10.4 million of non-cash credit-related impairment charges recognized in 2025 related to our convertible debt investment in a third-party; and the $5.0 million of non-cash impairment charges recognized on our equity investment in a hospital-at-home company in 2025. These decreases were partially offset by the increases in segment operating income for all three of our segments, excluding segment depreciation and amortization.
Adjusted EBITDA increased $36.3 million, or 18.1% , to $237.5 million for the year ended December 31, 2025 from $201.2 million for the year ended December 31, 2024. The increase in adjusted EBITDA was primarily attributable to the increases in segment operating income for all three of our segments, excluding the impact of segment depreciation and amortization and segment restructuring charges; partially offset by the increase in unallocated corporate expenses, excluding the impacts of the change in the market value of our deferred compensation liability and transaction-related expenses.
Adjusted Net Income and Adjusted Earnings per Share
Adjusted net income increased $20.4 million, or 16.9% , to $140.8 million for the year ended December 31, 2025, compared to $120.4 million for the year ended December 31, 2024. As a result of the increase in adjusted net income, as well as a reduction in diluted shares outstanding resulting from share repurchases made under our share repurchase plan, adjusted diluted earnings per share increased to $7.83 in 2025, compared to $6.47 in 2024.
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LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $24.5 million, $21.9 million, and $12.1 million at December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, 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,
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rate changes on cash
Net increase in cash and cash equivalents
Operating Activities
Our operating assets and liabilities consist primarily of receivables from billed and unbilled services, accounts payable and accrued expenses, accrued payroll and related benefits, operating lease obligations and deferred revenues. The volume of services rendered and the related billings and timing of collections on those billings, as well as payments of our accounts payable and salaries, bonuses, and related benefits to employees affect these account balances. Our purchase obligations primarily consist of payments for software and other information technology products to support our business and corporate infrastructure.
Net cash provided by operating activities decreased $7.9 million to $193.4 million in 2025 from $201.3 million in 2024. The decrease in net cash provided by operating activities primarily related to an increase in payments for salaries and related expenses for our revenue-generating professionals, an increase in payments for selling, general and administrative expenses, a $15 million litigation settlement received in 2024 for a completed legal matter in which Huron was the plaintiff, an increase in the amount paid for annual performance bonuses in the first quarter of 2025 compared to the first quarter of 2024, and an increase in payments for contractor expenses; largely offset by an increase in cash collections in 2025 compared to the prior year.
Investing Activities
Our investing activities primarily consist of purchases of complementary businesses; purchases of property and equipment, primarily related to computers and related equipment for our employees and leasehold improvements and furniture and fixtures for office spaces; payments related to internally developed cloud-based software sold to our clients; and investments. Our investments include a convertible note investment in Shorelight Holdings, LLC, an equity investment in a hospital-at-home company, and investments in life insurance policies that are used to fund our deferred compensation liability.
Net cash used in investing activities was $145.8 million for 2025 which primarily consisted of $111.6 million for purchases of businesses; $20.6 million for payments related to internally developed software to advance our Education and Healthcare software products; $10.4 million for purchases of property and equipment, primarily related to purchases of computers and related equipment and leasehold improvements for certain office spaces; and $3.2 million for contributions to our life insurance policies.
Net cash used in investing activities was $79.7 million for 2024 which primarily consisted of $49.5 million for purchases of businesses; $23.9 million for payments related to internally developed software to advance our Healthcare and Education software products; $8.7 million for purchases of property and equipment, primarily related to purchases of computers and related equipment and leasehold improvements for certain office spaces; and $2.6 million for contributions to our life insurance policies. These uses of cash for investing activities were partially offset by $4.7 million of cash received related to the divestiture of our Studer Education practice in the fourth quarter of 2024.
We estimate that cash utilized for purchases of property and equipment and software development in 2026 will total approximately $30 million to $40 million; primarily consisting of leasehold improvements and furniture and fixtures for certain office locations, information technology-related equipment to support our corporate infrastructure, and software development costs.
Financing Activities
Our financing activities primarily consist of borrowings and repayments under our senior secured credit facility, share repurchases, shares redeemed for employee tax withholdings upon vesting of share-based compensation, and payments for contingent consideration liabilities related to business acquisitions. See “Financing Arrangements” below for additional information on our senior secured credit facility.
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Net cash used in financing activities was $45.0 million in 2025. The net borrowings of $153.3 million during 2025 were primarily used to fund our operations, including our annual performance bonus payments in the first quarter of 2025, and our programmatic business acquisitions. The aggregate borrowings and repayments during 2025 include the $400 million term loan proceeds received in the third quarter of 2025 under the Amended Credit Agreement, which were used to repay outstanding borrowings under the Third Amended and Restated Credit Agreement (the “Existing Credit Agreement”). In conjunction with the closing of the Amended Credit Agreement, we paid $3.1 million of debt issuance costs. See “Financing Arrangements” below for additional information on the Amended Credit Agreement. Additionally, during 2025, we paid $166.7 million for the settlement of share repurchases and we reacquired $33.6 million of common stock as a result of tax withholdings upon vesting of share-based compensation. These uses of cash for financing activities were partially offset by $5.1 million of cash received from stock option exercises in 2025.
Net cash used in financing activities was $111.6 million in 2024. During 2024, we borrowed $743.5 million and made repayments on our borrowings of $709.8 million. The borrowings and repayments during 2024 include the $275.0 million term loan proceeds received under the Existing Credit Agreement in the first quarter of 2024, which were used to repay borrowings under the revolver in the first quarter of 2024. The net borrowings of $33.7 million were primarily used to fund our operations, including our annual performance bonus payments in the first quarter of 2024. Additionally, in 2024, we paid $123.0 million for the settlement of share repurchases and we reacquired $22.1 million of common stock as a result of tax withholdings upon vesting of share-based compensation. We also made payments of $1.4 million for debt issuance costs related to the term loan established under the Existing Credit Agreement. These uses of cash for financing activities were partially offset by $1.8 million of cash received from stock option exercises in 2024.
Share Repurchase Program
In November 2020, our board of directors authorized a share repurchase program permitting us to repurchase up to $50 million of our common stock through December 31, 2021. Subsequently, our board of directors authorized extensions of the share repurchase program through December 31, 2026 and increased the authorized amount to $700 million, of which $99.0 million remained available as of December 31, 2025. In the first quarter of 2026, our board of directors authorized a further increase to the authorized amount under the share repurchase program from $700 million to $900 million. The amount and timing of repurchases under the share repurchase program were and will continue to be determined by management and depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements.
Financing Arrangements
At December 31, 2025, we had $511.0 million outstanding under our Amended Credit Agreement, as discussed below.
The company has a $700 million Revolver and a $400 million Term Loan, subject to the terms of the Amended Credit Agreement, both of which mature on July 30, 2030. The Term Loan is subject to scheduled quarterly amortization payments of $5.0 million which began September 30, 2025 and continue through the maturity date of July 30, 2030, at which time the outstanding principal balance and all accrued interest will be due. The Amended Credit Agreement amended and restated the Existing Credit Agreement in its entirety.
Fees and interest on borrowings under the Amended Credit Agreement vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). At our option, these borrowings will bear interest at one, three or six month Term SOFR or an alternate base rate, in each case plus the applicable margin. The applicable margin will fluctuate between 1.250% per annum and 1.875% per annum, in the case of Term SOFR borrowings, or between 0.250% 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, including upon an Event of Default (as defined in the Amended Credit Agreement). In addition, we have the right to permanently reduce or terminate the unused portion of the commitments provided under the Amended Credit Agreement at any time.
The Amended Credit Agreement contains usual and customary representations and warranties; affirmative and negative covenants, which include limitations on liens, investments, additional indebtedness, and restricted payments; and two quarterly financial covenants as follows: (i) a maximum Consolidated Leverage Ratio (defined as the ratio of debt to consolidated EBITDA) of 3.75 to 1.00; however the maximum permitted Consolidated Leverage Ratio will increase to 4.25 to 1.00 upon the occurrence of a Qualified Acquisition (as defined in the Amended Credit Agreement), and (ii) a minimum Consolidated Interest Coverage Ratio (defined as the ratio of consolidated EBITDA to interest) of 3.00 to 1.00. Consolidated EBITDA for purposes of the financial covenants is calculated on a continuing operations basis and includes adjustments to add back non-cash goodwill impairment charges, share-based compensation costs, certain non-cash restructuring charges, pro forma historical EBITDA for businesses acquired, and other specified items in accordance with the Amended Credit Agreement. For purposes of the Consolidated Leverage Ratio, total debt is on a gross basis and is not netted against our cash balances. At December 31, 2025 and December 31, 2024, we were in compliance with these financial covenants. Our Consolidated Leverage Ratio as of December 31, 2025 was 1.93 to 1.00, compared to 1.39 to 1.00 as of December 31, 2024. Our Consolidated Interest Coverage Ratio as of December 31, 2025 was 8.12 to 1.00, compared to 10.50 to 1.00 as of December 31, 2024.
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The Amended Credit Agreement contains restricted payment provisions, including a potential limit on the amount of dividends we may pay. Pursuant to the terms of the Amended Credit Agreement, if our Consolidated Leverage Ratio is greater than 3.50, the amount of dividends and other Restricted Payments (as defined in the Amended Credit Agreement) we may pay is limited to an amount up to $50 million.
Borrowings outstanding under the Amended Credit Agreement at December 31, 2025 totaled $511.0 million, consisting of $121.0 million outstanding under the Revolver and $390.0 million outstanding under the Term Loan.
Borrowings outstanding under the Existing Credit Agreement at December 31, 2024 totaled $357.7 million, consisting of $93.0 million outstanding under the senior secured revolving credit facility of the Existing Credit Agreement and $264.7 million outstanding under the senior secured term loan facility of the Existing Credit Agreement.
These borrowings carried a weighted average interest rate of 5.3% at December 31, 2025 and 4.7% at December 31, 2024 including the impact of the interest rate swaps described in Note 12 “Derivative Instruments and Hedging Activity" within the notes to the consolidated financial statements.
The borrowing capacity under the Revolver is reduced by any outstanding borrowings under the agreement and outstanding letters of credit. At both December 31, 2025 and 2024, we had outstanding letters of credit totaling $0.4 million, which are used as security deposits for our office facilities. As of December 31, 2025 and 2024, the unused borrowing capacity under the Revolver was $578.6 million and $506.6 million, respectively.
Refer to Note 7 “Financing Arrangements” within the notes to the consolidated financial statements for additional information on our senior secured credit facility. For a discussion of certain risks and uncertainties related to the Amended Credit Agreement, see Part I—Item 1A. “Risk Factors.”
Future Financing Needs
Our primary financing need is to fund our long-term growth. Our growth strategy is to expand our service offerings, which may require investments in new hires, acquisitions of complementary businesses, possible expansion into other geographic areas, and related capital expenditures.
We believe our internally generated liquidity, together with our available cash and the borrowing capacity available under our senior secured credit facility will be adequate to support our current financing needs and long-term growth strategy. Our ability to secure additional financing in the future, if needed, will depend on several factors, including our future profitability, the quality of our accounts receivable and unbilled services, our relative levels of debt and equity, and the overall condition of the credit markets.
OFF-BALANCE SHEET ARRANGEMENTS
We are not a party to any material off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Our significant accounting policies are discussed in Note 2 “Summary of Significant Accounting Policies” within the notes to our consolidated financial statements. We regularly review our financial reporting and disclosure practices and accounting policies to ensure that our financial reporting and disclosures provide accurate information relative to the current economic and business environment. The preparation of financial statements in conformity with GAAP requires management to make assessments, estimates, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Critical accounting policies and estimates are those policies and estimates that we believe present the most complex or subjective measurements and have the most potential to impact our financial position and operating results. While all decisions regarding accounting policies and estimates are important, we believe that there are five accounting policies and estimates that could be considered critical: revenue recognition, allowances for doubtful accounts and unbilled services, business combinations, carrying values of goodwill and other intangible assets, and accounting for income taxes.
Revenue Recognition
We generate substantially all of our revenues from providing professional services to our clients. We also generate revenues from software licenses, software support and maintenance and subscriptions to our cloud-based analytic tools and solutions, speaking engagements, conferences, and publications.
Our revenue is generated under four types of billing arrangements: fixed-fee; time-and-expense; performance-based; and software support, maintenance and subscriptions. Determining the method and amount of revenue to recognize requires us to make judgments and estimates.
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Specifically, multiple performance obligation arrangements require us to allocate the total transaction price to each performance obligation based on its relative standalone selling price, for which we rely on our overall pricing objectives, taking into consideration market conditions and other factors. Provisions are recorded for the estimated realization on all engagements, including engagements for which fees are subject to review by the bankruptcy courts. We continually evaluate our estimates of the provisions based on available information and experiences. Additionally, when accounting for fixed-fee and performance-based billing arrangements, we must make additional judgments and estimates as further described below.
In fixed-fee billing arrangements for professional services, 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. 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. Estimates of total engagement revenues and cost of services are monitored regularly during the term of the engagement. Any increased or unexpected costs or unanticipateddelays in connection with the performance of these engagements could make these contracts less profitable or unprofitable.
In performance-based billing arrangements, fees are tied to the attainment of contractually defined objectives. We enter into performance-based engagements in essentially two forms. First, we generally earn fees that are directly related to the savings formally acknowledged by the client as a result of adopting our recommendations for improving operational and cost effectiveness in the areas we review. Second, we earn a success fee when and if certain predefined outcomes occur. We recognize revenue under performance-based billing arrangements using the following steps: 1) estimate variable consideration using either the expected value method or the most likely amount method, as appropriate, 2) apply a constraint to the estimated variable consideration to limit the amount that could be reversed when the uncertainty is resolved (the “constraint”), and 3) recognize revenue of estimated variable consideration, net of the constraint, based on work completed to date versus our estimates of the total services to be provided under the engagement. Our estimates are monitored throughout the life of each contract and are based on an assessment of our anticipated performance, historical experience, and other information available at the time. While we believe that the estimates and assumptions we use for revenue recognition for performance-based billing arrangements are reasonable, subsequent changes could materially impact our results of operations.
See Note 2 “Summary of Significant Accounting Policies” within the notes to the consolidated financial statements for additional information on our revenue recognition accounting policy.
Allowances for Doubtful Accounts and Unbilled Services
We maintain allowances for doubtful accounts and for services performed but not yet billed based on several factors, including the estimated cash realization from amounts due from clients, an assessment of a client’s ability to make required payments, and the historical percentages of fee adjustments and write-offs by age of receivables and unbilled services. The allowances are assessed by management on a regular basis. These estimates may differ from actual results. If the financial condition of a client deteriorates in the future, impacting the client’s ability to make payments, an increase to our allowance might be required or our allowance may not be sufficient to cover actual write-offs.
We record the provision for doubtful accounts and unbilled services as a reduction in revenue. To the extent we write-off accounts receivable due to a client’s inability to pay, the charge is recognized as a component of selling, general and administrative expenses.
Business Combinations
We use the acquisition method of accounting for business combinations . The assets acquired and liabilities assumed in a business combination, including identifiable intangible assets, are recorded at their estimated fair values as of the acquisition date, with the exception of contract assets and liabilities which are recognized and measured in accordance with our revenue recognition accounting policy described in Note 2 “Summary of Significant Accounting Policies” within the notes to the consolidated financial statements . Goodwill is recorded as the excess of the fair value of consideration transferred, including any contingent consideration, over the net value of the assets acquired and liabilities assumed. We base the fair values of identifiable intangible assets on detailed valuations that require management to make significant judgments, estimates, and assumptions, such as the expected future cash flows to be derived from the intangible assets, discount rates that reflect the risk factors associated with future cash flows, and estimates of useful lives.
We measure and recognize contingent consideration at fair value as of the acquisition date. We estimate the fair value of contingent consideration based on either a probability-weighted assessment of the specific financial performance targets being achieved or a Monte Carlo simulation model, as appropriate. These fair value measurements require the use of significant judgments, estimates, and assumptions, including financial performance projections and discount rates. The fair value of the contingent consideration is reassessed quarterly based on assumptions used in our latest financial projections and input provided by practice leaders and management, with any change in the fair value estimate recorded in earnings in that period. Increases or decreases in the fair value of contingent consideration liabilities resulting from changes in the estimates or assumptions could materially impact the financial statements.
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See Note 3 “Acquisitions and Divestiture” within the notes to our consolidated financial statements for additional information on our acquisitions and Note 13 “Fair Value of Financial Instruments” within the notes to our consolidated financial statements for additional information on our contingent consideration liabilities.
Carrying Values of Goodwill and Other Intangible Assets
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. We perform our annual goodwill impairment test as of November 30 and monitor for interim triggering events on an ongoing basis. A reporting unit is an operating segment or one level below an operating segment (referred to as a component) to which goodwill is assigned when initially recorded. We assign goodwill to reporting units based on our integration plans and the expected synergies resulting from the acquisition. As of December 31, 2025, we have three reporting units: Healthcare, Education, and Commercial.
Under GAAP, we have the option to first assess qualitative factors to determine whether the existence of current events or circumstances would lead to a determination that it is more likely than not that the fair value of one or more of our reporting units is greater than its carrying value. If we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying value, no further testing is necessary. However, if we conclude otherwise, then we are required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying value of the reporting unit. If the fair value of the reporting unit is less than its carrying value, an impairment charge is recorded in an amount equal to that difference with the loss not to exceed the total amount of goodwill allocated to the reporting unit.
We determine the fair value of our reporting units using a combination of the income approach and the market approach. For a company such as ours, the income and market approaches will generally provide the most reliable indications of fair value because the value of such companies is dependent on their ability to generate earnings.
In the income approach, we utilize a discounted cash flow analysis, which involves estimating the expected after-tax cash flows that will be generated by each reporting unit and then discounting those cash flows to present value, reflecting the relevant risks associated with each reporting unit and the time value of money. This approach requires the use of significant estimates and assumptions, including forecasted revenue growth rates, forecasted EBITDA margins, and discount rates. Our forecasts are based on historical experience, current backlog, expected market demand, and other industry information.
In the market approach, we utilize the guideline company method, which involves calculating EBITDA multiples based on operating data from guideline publicly traded companies. Multiples derived from guideline companies provide an indication of how much a knowledgeable investor in the marketplace would be willing to pay for a company. These multiples are evaluated and adjusted based on specific characteristics of the reporting units relative to the selected guideline companies and applied to the reporting units' operating data to arrive at an indication of value.
The following is a discussion of the goodwill impairment test performed during 2025.
Pursuant to our policy, we performed our annual goodwill impairment test as of November 30, 2025 for our three reporting units: Healthcare, Education, and Commercial. We performed a qualitative assessment over all reporting units to determine if it was more likely than not the respective fair values of these reporting units were less than their carrying amounts, including goodwill.
For our qualitative assessment, we considered the most recent quantitative analysis performed for each reporting unit, which was as of November 30, 2024, including the key assumptions used within that analysis, the indicated fair values, and the amount by which those fair values exceeded their carrying amounts. One of the key assumptions used within the prior quantitative analysis was our internal financial projections; therefore, we considered the actual performance of each reporting unit during 2025 compared to the internal financial projections used, as well as specific outlooks for each reporting unit based on our most recent internal financial projections. We also reviewed the current carrying value of each reporting unit in comparison to the carrying values as of the prior quantitative analysis. In addition, we considered various factors, including macroeconomic conditions, relevant industry and market trends for each reporting unit, and other entity-specific events, that could indicate a potential change in the fair value of our reporting units or the composition of their carrying values. Based on our assessments, we determined that it was more likely than not that the fair values for each of our reporting units exceeded their respective carrying amounts. As such, the goodwill for our reporting units was not considered impaired as of November 30, 2025, and a quantitative goodwill impairment analysis was not necessary.
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 non-cash goodwill impairment charges.
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The carrying value of goodwill for each of our reporting units as of December 31, 2025 is as follows (in thousands):
Reporting Unit
Carrying Value
of Goodwill
Healthcare
Education
Commercial
Total
Intangible assets represent purchased assets that lack physical substance but can be distinguished from goodwill. Our intangible assets, net of accumulated amortization, totaled $72.9 million at December 31, 2025 and primarily consist of customer relationships, technology and software, trade names, customer contracts, 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 impairment charges for intangible assets were recorded in 2025.
Income Taxes
Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated future taxes to be paid. In determining our provision for income taxes on an interim basis, we estimate our annual effective tax rate based on information available at each interim period. Changes in applicable U.S. state, federal or foreign tax laws and regulations, or their interpretation and application, could materially affect our tax expense.
Deferred tax assets and liabilities are recorded for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in management’s opinion, it is more likely than not that some portion or the entire deferred tax asset will not be realized. Factors considered in making this determination include the period of expiration of the tax asset, planned use of the tax asset, tax planning strategies and historical and projected taxable income as well as tax liabilities for the tax jurisdiction in which the tax asset is located. Valuation allowances will be subject to change in each future reporting period as a result of changes in one or more of these factors.
Our tax positions are subject to income tax audits by federal, state, local, and foreign tax authorities. A tax benefit from an uncertain position may be recognized in the financial statements only if it is more likely than not that the position is sustainable, based on its technical merits. We measure the tax benefit recognized as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority. The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. We believe that positions taken on our tax returns are fully supported. However, final determinations of prior year tax positions upon settlement with the taxing authority could be materially different from estimates. The outcome of these final determinations could have a material impact on our provision for taxes, net income, or cash flows in the period in which that determination is made.
NEW ACCOUNTING PRONOUNCEMENTS
Refer to Note 2 “Summary of Significant Accounting Policies” within the notes to the consolidated financial statements for information on new accounting pronouncements.
