Huron Consulting Group (NasdaqGS:HURN) Q4 2025 Earnings call February 24, 2026 05:00 PM ET Company ParticipantsJohn Kelly - CFOMark Hussey - CEO and PresidentConference Call ParticipantsAndrew Nicholas - AnalystKevin Steinke - VP and Senior Research AnalystTobey Sommer - AnalystOperatorGood afternoon, welcome to Huron Consulting Group's webcast to discuss the financial results for the fourth quarter and full year of 2025. At this time, all conference call lines are on listen-only mode. Later, we will conduc ...

Financial Data and Key Metrics Changes - Revenues before reimbursable expenses (RBR) grew 8% year-over-year, reaching a record high for the business [4][21] - Net income for Q2 2025 was $19.4 million, or $1.09 per diluted share, down from $37.5 million, or $2.23 per diluted share in Q2 2024 [23] - Adjusted EBITDA was $60.6 million, or 15.1% of RBR, compared to $55.7 million, or 15% of RBR in Q2 2024 [24] - Adjusted net income increased to $33.7 million, or $1.89 per diluted share, a 12.5% increase from Q2 2024 [25] Business Line Data and Key Metrics Changes - **Healthcare Segment**: RBR grew 4.1% to $197.8 million; excluding divested student education results, growth was 6% [25][26] - **Education Segment**: RBR reached a record $129.3 million, up 5.3% driven by strong demand for strategy and operations offerings [27][10] - **Commercial Segment**: RBR grew 28.2% to $75.4 million, driven by the acquisition of Akcea and strong demand for digital offerings [13][28] Market Data and Key Metrics Changes - The healthcare segment faces significant federal spending cuts projected to reduce Medicaid funding by over $1 trillion over the next decade, increasing the uninsured population by up to 10 million [6][7] - The education segment is experiencing heightened uncertainty due to potential declines in federal support for research grants and anticipated enrollment declines [10][11] Company Strategy and Development Direction - The company is focused on organic growth and strategic acquisitions to enhance its service offerings, particularly in healthcare and commercial segments [18][16] - Recent acquisitions, including Eclipse Insights and Trelliant, are aimed at strengthening performance improvement capabilities and expanding into risk management and compliance [9][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth due to strong client relationships and demand for consulting services, particularly in healthcare [5][18] - The company anticipates ongoing financial pressures for clients, which will drive demand for performance improvement and financial advisory services [42][43] Other Important Information - The company has increased its RBR guidance for 2025 to a range of $1.64 billion to $1.68 billion, reflecting a 12% increase at the midpoint compared to 2024 [17][33] - The effective tax rate for 2025 is expected to be in the range of 25% to 27% [24] Q&A Session Summary Question: Visibility in the current environment - Management noted that visibility has improved compared to earlier in the year, driven by stronger sales conversions and a clearer regulatory environment [40][42] Question: Temporary pause in digital transformation sales - Management believes the slower sales conversions in digital offerings are temporary, as clients focus on immediate financial stability [46][47] Question: Headcount growth and utilization rates - Headcount growth was primarily driven by managed services and recent acquisitions, with utilization rates at the top end of the expected range [55][62] Question: Impact of Medicaid funding cuts - Management highlighted their comprehensive performance improvement offerings that can help healthcare clients navigate the challenges posed by reduced Medicaid funding [72][74] Question: Details on the Trelliant acquisition - The acquisition is expected to enhance the company's capabilities in risk management and compliance, complementing existing services in financial services [75][76]