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HC

Huron Consulting Group Inc. (HURN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue before reimbursable expenses reached a record $402.5M (+8.3% YoY), with adjusted diluted EPS of $1.89 (+12.5% YoY) and adjusted EBITDA of $60.6M (+8.8% YoY); GAAP EPS was $1.09 due to an $8.2M net non-cash impairment on a convertible debt investment .
  • Versus S&P Global consensus, Huron delivered a clear beat on adjusted EPS (+$0.10) and essentially in-line revenue; adjusted EBITDA was modestly below consensus (see table) . Values retrieved from S&P Global*.
  • Management raised full-year 2025 guidance: RBR to $1.64–$1.68B (from $1.58–$1.66B) and adjusted EPS to $7.30–$7.70 (from $6.80–$7.60); adjusted EBITDA margin was maintained at 14.0–14.5% .
  • Catalysts: upgraded guidance, amended senior secured credit facility to $1.1B with maturity extended to 2030, and expansion via acquisitions (Eclipse Insights; Treliant) that strengthen healthcare revenue cycle and financial services regulatory capabilities .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly RBR ($402.5M), with organic growth across all three segments; adjusted EPS rose 12.5% and adjusted EBITDA rose 8.8% YoY .
  • Segment momentum: Healthcare margin expanded to 30.2% (+110 bps YoY) and Commercial RBR grew 28.2% YoY with margin up to 16.6% .
  • Management confidence and guidance raise: “We remain confident in our prospects… as reflected in our updated annual guidance” . Credit facility amended to extend maturity to 2030 and increase capacity to $1.1B, supporting balanced capital deployment .

What Went Wrong

  • GAAP earnings were pressured by a non-cash impairment ($11.1M pre-tax; $8.2M net-of-tax) on a convertible debt investment and an equity impairment, reducing GAAP EPS to $1.09; prior-year Q2 benefited from an $11.1M net litigation settlement gain .
  • Healthcare digital sales conversion slowed in certain areas as clients prioritized performance improvement amid financial pressure; management characterizes this as a temporary pause .
  • Unallocated corporate expenses rose (+$8.7M YoY) driven by deferred compensation liability changes, support personnel costs, and M&A-related fees; leverage ticked up to 2.5x adjusted EBITDA at 6/30/25 (from 2.2x at 3/31/25) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenues before reimbursable expenses ($USD Millions)$388.4 $395.7 $402.5
Net Income ($USD Millions)$34.0 $24.5 $19.4
Diluted EPS - GAAP ($USD)$1.84 $1.33 $1.09
Adjusted diluted EPS ($USD)$1.90 $1.68 $1.89
Adjusted EBITDA ($USD Millions)$56.8 $41.5 $60.6
Adjusted EBITDA Margin (%)14.6% 10.5% 15.1%

Consensus vs. Actual – Q2 2025

MetricConsensusActual
Revenues before reimbursable expenses ($USD Millions)402.68*402.51
Adjusted diluted EPS ($USD)1.794*1.89
Adjusted EBITDA ($USD Millions)61.53*60.58
  • Beat/Miss: Adjusted EPS beat (+$0.10); revenue in-line; adjusted EBITDA slight miss. Values retrieved from S&P Global*.

Segment breakdown (Q2 YoY)

SegmentRBR ($USD Millions) Q2 2024RBR ($USD Millions) Q2 2025Operating Income ($USD Millions) Q2 2024Operating Income ($USD Millions) Q2 2025Operating Margin Q2 2024Operating Margin Q2 2025
Healthcare$190.10 $197.82 $55.25 $59.65 29.1% 30.2%
Education$122.75 $129.30 $30.79 $32.33 25.1% 25.0%
Commercial$58.80 $75.38 $9.02 $12.51 15.3% 16.6%
Total Huron$371.65 $402.51 $59.40 $45.65 ——

KPIs and operating metrics

KPIQ4 2024Q1 2025Q2 2025
Consulting Utilization (%)77.2% —77.0%
Digital Utilization (%)77.7% —77.8%
Rev-Generating Professionals (excl. Managed Services)4,694 —4,963
Managed Services Professionals1,530 —1,918
DSO (days)—79 78
Net Debt ($USD Millions)—$552.9 $596.8
Leverage Ratio (Bank definition)—2.2x 2.5x
Share Repurchases (quarter/YTD)—$72.9M; ~509K shares $133.9M YTD; 938,280 shares

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenues before reimbursable expenses (RBR)FY 2025$1.58–$1.66B $1.64–$1.68B Raised
Adjusted EBITDA Margin (% of RBR)FY 202514.0–14.5% 14.0–14.5% Maintained
Adjusted diluted EPSFY 2025$6.80–$7.60 $7.30–$7.70 Raised
Healthcare revenue growthFY 2025Mid-single-digit (initial outlook) Upper single-digit Raised
Healthcare operating marginFY 2025—~28–30% New detail
Education revenue growthFY 2025—Mid to upper single-digit New detail
Education operating marginFY 2025—~23–25% New detail
Commercial revenue growthFY 2025—Mid-20% range (incl. Treliant) New detail
Commercial operating marginFY 202521–23% (Q1 view) ~18–20% (mix shift, integration costs) Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Healthcare regulatory/funding pressures (Medicaid, reimbursement)Providers facing operating expenses outpacing reimbursements; regulatory changes flagged “One Big Beautiful Bill Act” brought clarity; hospitals preparing for margin declines; strong demand for performance improvement, financial advisory Intensifying urgency, driving consulting demand
Healthcare digital transformation paceBalanced demand; digital capability strong in prior periods Slower sales conversion for standalone healthcare digital as clients prioritize stability; expected to be temporary Near-term pause, expected rebound post-stabilization
Education regulatory uncertaintyVariable impacts; clients assessing scenarios; strategy and operations in demand Record sales conversion; strong strategy/ops and research software demand Robust demand despite uncertainty
Commercial digital and M&AAXIA boosted digital; caution in strategy; strong pipeline Record RBR; Treliant acquisition expanding FS risk/compliance; margins rising Expansion via programmatic M&A and digital
Tariffs/macroClients modeling tariff impacts; volatility noted Macro volatility persists; focus on planning, scenario modeling Ongoing headwind, consulting tailwind

Management Commentary

  • “Revenues before reimbursable expenses (RBR) in the quarter grew 8%… including organic RBR growth across all three operating segments.” — CEO Mark Hussey .
  • “We remain confident in our prospects for continued growth in 2025 as reflected in our updated annual guidance.” — CEO Mark Hussey .
  • “We… amended and restated our credit facility… increased our borrowing capacity to $1,100,000,000 on favorable pricing terms… to support the anticipated growth in our business, as well as our capital allocation strategy.” — CFO John D. Kelly .
  • “We expect Eclipse and Treliant to be adjusted EPS accretive… in 2026.” — CFO John D. Kelly .

Q&A Highlights

  • Visibility: Management sees stronger visibility than three months ago due to regulatory clarity and record sales conversions/pipeline, particularly in healthcare performance improvement and managed services .
  • Healthcare digital conversion: Slower standalone digital conversion deemed temporary; 2025 guidance is not contingent on a rebound in digital conversion; consulting strength drives confidence .
  • Utilization: Current consulting and digital utilization levels are near the upper end of sustainable ranges; aggressive hiring underway in high-demand teams to ease pressure .
  • M&A pace: Programmatic tuck-ins advancing well (Eclipse, Treliant); possibly “one or two” more transactions by year-end depending on timing .
  • Balance sheet: Leverage 2.5x adj. EBITDA at 6/30/25; net debt $596.8M; ample authorization for buybacks; facility amended to extend maturity to 2030 and $1.1B capacity .

Estimates Context

  • S&P Global consensus for Q2 2025: adjusted EPS 1.794*, revenue $402.68M*, adjusted EBITDA $61.53M*; actual adjusted EPS $1.89, revenue $402.51M, adjusted EBITDA $60.58M. Result: EPS beat (+5.6%), revenue in-line (-0.04%), adjusted EBITDA slight miss (~-1.5%). Values retrieved from S&P Global* .
  • Forward estimates (selected): Q3/Q4 2025 consensus points suggest continued growth cadence into 2H; management raised FY guide and maintained margin targets (see Guidance) . Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Quality beat on adjusted EPS with revenue in-line; GAAP EPS depressed by non-cash investment impairment—focus on adjusted metrics for underlying performance .
  • Guidance raise on both RBR and adjusted EPS supports a stronger 2H setup; margin framework unchanged at 14–14.5% of RBR .
  • Mix shift toward higher-margin consulting in healthcare as clients address immediate financial pressures—near-term digital pause likely transitory .
  • Strengthened balance sheet and $1.1B credit facility enhance flexibility for buybacks and tuck-in M&A; recent acquisitions (Eclipse, Treliant) expand capabilities in revenue cycle and financial services risk/compliance .
  • Segment drivers: Healthcare upper single-digit growth and 28–30% margins; Education mid-to-upper single-digit growth; Commercial mid-20% growth albeit with lower margin (18–20%) in 2025 due to integration costs .
  • Near-term trading: Guidance upgrade and resilient demand in healthcare/education are positives; watch healthcare digital conversion, corporate expense run-rate, and integration costs for EPS cadence .
  • Medium-term thesis: Continued programmatic M&A, expanding digital + managed services footprint, and secular tailwinds from industry disruption position Huron for sustained RBR and margin growth .

Footnote: Values retrieved from S&P Global*