Huron Consulting(HURN) - 2024 Q4 - Annual Report

Growth and Workforce - The company has increased its full-time professionals from 249 in 2002 to approximately 7,230 as of December 31, 2024, indicating significant growth[62] - The company relies heavily on its senior management team and other managing directors for revenue generation and client relationships, making retention critical for future success[57] - The company faces significant competition for talent, which may increase labor costs and negatively affect margins and results of operations[60] - The company must effectively manage organizational challenges associated with growth to achieve its business objectives[61] Business Model and Strategy - The company has modified its operating model effective January 1, 2022, to report under three industries, aimed at strengthening its go-to-market strategy and supporting growth[76] - The company intends to continue expanding internationally, which may introduce additional regulatory compliance risks[64] - The company’s growth strategy emphasizes innovation and investment in new technology to remain competitive in a rapidly changing market[84] - Digital offerings are a key focus, with the company needing to adapt to rapid technological changes to meet evolving client needs[83] Revenue and Financial Performance - A significant portion of the company's revenue is derived from clients in the healthcare and education industries, which are highly regulated and subject to changing influences[77] - A large portion of client contracts are short-term, leading to unpredictable operating results and potential revenue declines if new engagements are not secured[85] - The consulting services industry is highly competitive, with many competitors having greater resources and market presence, which could adversely affect the company's financial results[90] - The company’s financial results could suffer if it fails to achieve adequate utilization and suitable billing rates for its consultants[109] Risks and Challenges - The company faces significant uncertainty regarding future government spending, which could adversely affect funding for individual programs and delay purchasing decisions by customers[81] - The tax-exempt status of healthcare clients may be challenged, potentially impacting their financial health and demand for the company's services[82] - The company faces risks related to cybersecurity, including potential breaches that could disrupt operations and harm financial results[95] - Legal and regulatory complexities surrounding data protection laws may increase operational costs and impact the company's results[102] - The company faces increased litigation risk due to an expanded workforce, which may lead to significant legal liabilities[105] Financial Position and Debt - As of December 31, 2024, the company's outstanding indebtedness totaled $357.7 million, with$93.0 million under the Revolver and $264.7 million under the Term Loan[124] - The company has a senior secured revolving credit facility of$600 million and a senior secured term loan facility of $275 million, both maturing on November 15, 2027[124] - Borrowings under the senior secured credit facility totaled$357.7 million as of December 31, 2024, with a weighted average interest rate of 4.7%[291] - A hypothetical 100 basis point change in interest rates would have a $1.1 million effect on pretax income on an annualized basis as of December 31, 2024[291] Investments and Assets - Goodwill and other intangible assets amounted to$704.8 million, representing 52% of the company's total assets as of December 31, 2024[126] - The fair value of the investment in Shorelight Holdings, LLC is $62.3 million as of December 31, 2024, with a total cost basis of$40.9 million, indicating unrealized gains[128] - The investment in a hospital-at-home company has a carrying value of $7.4 million as of December 31, 2024, with a total cost basis of$5.0 million, reflecting cumulative unrealized gains of $28.6 million and losses of$26.3 million since the initial investment[130] - The fair value of the investment in Shorelight decreased from $68.0 million as of December 31, 2023, to$62.3 million as of December 31, 2024[295] - The company has not recognized any credit allowance on its investment in Shorelight as of December 31, 2024[128] - The company has established allowances for losses of receivables and unbilled services, which may need adjustment based on actual losses[133] Tax and Regulatory Environment - The overall tax environment remains uncertain, with potential changes in tax laws that could materially affect the company's profitability[138] - Unfavorable fluctuations in currency exchange rates, particularly between the U.S. dollar and Indian rupee, could materially affect the company's results of operations[71] - The company has exposure to foreign currency risk with INR-denominated intercompany expenses totaling INR 1.40 billion, or $16.3 million, as of December 31, 2024[293] - The company does not use derivative instruments for trading or speculative purposes, focusing instead on short-term marketable securities[297]