Executive Summary / Key Takeaways

• Huron Consulting Group (HURN) is demonstrating robust financial performance, achieving record revenues before reimbursable expenses (RBR) and expanding adjusted EBITDA margins, driven by strong demand across its Healthcare, Education, and Commercial segments.
• The company's integrated growth strategy, underpinned by deep industry expertise and a broad portfolio of consulting and digital offerings, is proving highly effective in addressing complex client challenges amidst dynamic regulatory and macroeconomic environments.
• HURN's strategic investments in digital capabilities, including AI and automation, are enhancing service delivery efficiency and creating tangible value for clients, strengthening its competitive moat against larger, more generalized firms.
• A disciplined capital allocation strategy, balancing strategic tuck-in acquisitions with significant share repurchases, is contributing to strong adjusted diluted earnings per share growth and shareholder value creation.
• Despite ongoing market uncertainties and competitive pressures, HURN's strong pipeline, high utilization rates, and positive full-year 2025 guidance underscore confidence in its continued growth trajectory and commitment to mid-teen adjusted EBITDA margins.

Unlocking Value in a World of Disruption: Huron's Strategic Blueprint

Huron Consulting Group Inc. (NASDAQ:HURN) operates as a global professional services firm, partnering with clients across the Healthcare, Education, and Commercial sectors to craft sound strategies, optimize operations, and accelerate digital transformation. The company's overarching strategy is rooted in leveraging its deep industry expertise and comprehensive suite of offerings to become a trusted advisor, empowering businesses to thrive amidst constant change. This approach is particularly critical in an industry landscape characterized by persistent financial pressures, evolving regulatory frameworks, and rapid technological advancements, especially in artificial intelligence (AI) and automation.

Huron's foundational strength lies in its integrated go-to-market model and a collaborative culture, which management views as a significant competitive advantage. This culture fosters low attrition rates and attracts top talent, crucial for delivering high-quality, innovative solutions. The company's strategic responses to broad industry trends, such as declining provider margins in healthcare, policy uncertainty in education, and macroeconomic volatility in commercial sectors, are central to its investment thesis. These disruptions, while challenging for clients, create substantial opportunities for Huron's specialized services.

A History of Strategic Expansion and Financial Resilience

Incorporated in 2002, Huron has systematically built its capabilities and market presence. Early strategic investments, such as the convertible debt in Shorelight Holdings, LLC in 2014 and an equity stake in a hospital-at-home company in 2019, demonstrate a long-term view on emerging sectors. The period from 2020 to 2024 marked a phase of sustained financial improvement, with Huron achieving high single-digit or better revenues before reimbursable expenses (RBR) growth for four consecutive years, including a notable 20% increase in 2023 over 2022 and 9% in 2024 over 2023. This growth was coupled with adjusted EBITDA margin expansion for the fourth consecutive year, aligning with the company's mid-teen margin goal. Adjusted diluted earnings per share surged by 235% from 2020 to 2025, reflecting the compounding impact of revenue growth, margin expansion, and shareholder returns through share repurchases.

Huron's growth strategy has been significantly bolstered by a series of strategic acquisitions and divestitures. In 2024, the acquisition of Grenzebach Glier and Associates (GG+A) enhanced its global philanthropy consulting within the Education segment, while AXIA Consulting, Inc. expanded the Commercial segment's supply chain management and Microsoft capabilities. Concurrently, the divestiture of the Studer Education business allowed for a sharper focus on core market areas. The first nine months of 2025 saw further inorganic expansion with the acquisitions of Advancement Resources and Halpin Partnership Limited, strengthening Education's philanthropy consulting. Eclipse Insights LLC was acquired in June 2025 to bolster Healthcare's performance improvement and mid-revenue cycle expertise. In July 2025, TVG-Treliant Holdings, LLC (Treliant) joined the Commercial segment, adding specialized advisory and managed services in financial services, particularly in risk management and compliance. Most recently, in September 2025, Wilson Perumal and Company, Inc. (WPC) was acquired, enhancing the Commercial segment's strategy and operations consulting capabilities. These tuck-in acquisitions are highly complementary, filling gaps and expanding Huron's comprehensive solutions.

Technological Edge: Driving Efficiency and Value Creation

Huron's core technological differentiation lies in its robust digital capabilities, which span enterprise health record (EHR), enterprise resource planning (ERP), enterprise performance management (EPM), customer relationship management (CRM), data management, artificial intelligence (AI), automation, and technology managed services. The company has also developed a portfolio of proprietary software products, including the Huron Research Suite and Huron Intelligence Rounding. These technologies are not merely tools but foundational elements that accelerate client transformation, facilitate data-driven decision-making, and improve customer and employee experiences.

The tangible benefits of Huron's technology are evident across its segments. In Healthcare, its revenue cycle managed services, leveraging machine learning models, delivered a 20% RBR growth in the first three quarters of 2025. This technology helps clients lower costs and boost collections. In Education, an AI offering automates data input and processing across thousands of grants, drastically reducing setup time and freeing up research administration capacity. For Commercial clients, Huron combines manufacturing expertise with data, AI, and broader technology capabilities to deploy predictive modeling for preventive maintenance, resulting in significant savings.

Huron's R&D initiatives are focused on expanding its digital offerings organically and inorganically, growing its data, analytics, AI, and automation capabilities. The company actively collaborates with over 30 technology partners, including Oracle (ORCL), Salesforce.com (CRM), Workday (WDAY), Amazon Web Services (AMZN), and Microsoft (MSFT), to deliver a unified and actionable technology ecosystem. This strategic focus on technology contributes significantly to Huron's competitive moat, enabling higher efficiency, superior value creation for clients, and supporting its long-term growth strategy.

Segment Performance: A Deep Dive into Growth Drivers

Huron's diversified portfolio is strategically aligned with the distinct needs of its three operating segments:

Healthcare: This segment, representing 51% of total company RBR in Q3 2025, achieved record RBR of $219.5 million, marking a 19.9% increase over Q3 2024, with organic RBR growing 18.6%. The segment's operating income margin expanded to 30.9% in Q3 2025. This robust performance is driven by broad-based demand for performance improvement, financial advisory, revenue cycle managed services, strategy and innovation, and digital offerings. Management describes the current demand for performance improvement as the "strongest market we've ever seen," fueled by persistent margin pressures on healthcare providers. Engagements are increasingly comprehensive, integrating various offerings, leading to larger average engagement sizes. The outlook for full-year 2025 Healthcare operating income margin is strong, projected to be in the 29% to 31% range. Huron's proven track record of delivering demonstrable ROI and its breadth of offerings differentiate it from competitors.

Education: Contributing 30% of total company RBR, the Education segment also achieved record RBR of $129.4 million in Q3 2025, a 6.9% increase over the prior year quarter. Its operating income margin stood at 25.7%. Growth is primarily driven by strong demand for strategy and operations, research, and digital offerings, including software products. Colleges and universities are grappling with declining research funding, lower enrollment, and policy uncertainty, leading to a focus on digital transformation projects to modernize infrastructure and leverage AI. The segment's full-year 2025 operating income margin is expected to be in the 23% to 25% range. Huron's comprehensive portfolio and deep understanding of the industry provide an unmatched competitive advantage.

Commercial: This segment accounted for 19% of total company RBR in Q3 2025, achieving record RBR of $83.4 million, up 26.6% over Q3 2024. The operating income margin was 16.4%. Growth was primarily inorganic, driven by the acquisitions of AXIA and Treliant, alongside continued organic growth in the commercial digital business. While strategy and financial advisory offerings saw lower demand earlier in the quarter, an "inflection point" with improved sales conversion was observed in Q3 and into October. The full-year 2025 operating margins are projected to be in the 16% to 18% range, reflecting the mix shift towards digital and integration expenses from recent acquisitions, which are expected to be accretive in 2026. Huron's integrated strategy and operations expertise, combined with its data, AI, and automation capabilities, allows it to compete effectively against formidable incumbents in areas like cloud EPM.

Consolidated Financial Strength and Liquidity

Huron's consolidated financial performance in the third quarter of 2025 underscores its operational effectiveness. Company-wide RBR grew 16.8% year-over-year to $432.4 million, with 10% organic growth. Adjusted EBITDA as a percentage of RBR increased to 15.6% in Q3 2025 from 14.8% in Q3 2024. Diluted EPS increased 16.3% to $1.71, and adjusted diluted EPS rose 25% to $2.10 for the quarter.

Liquidity remains robust, with primary sources including cash on hand, cash flows from U.S. operations, and significant borrowing capacity under its credit facility. For the nine months ended September 30, 2025, net cash provided by operating activities increased to $67 million, up from $61.7 million in the prior year period. Net cash used in investing activities totaled $133.2 million, primarily for strategic acquisitions ($107.2 million) and internally developed software ($15.4 million). Financing activities provided $68.2 million in cash, largely from net borrowings of $253.3 million used to fund operations and acquisitions.

In July 2025, Huron amended its credit facility, establishing a $700 million revolving credit facility and a $400 million term loan, both maturing in July 2030. As of September 30, 2025, total borrowings were $611 million, with a healthy Consolidated Leverage Ratio of 2.30 to 1 and a Consolidated Interest Coverage Ratio of 8.86 to 1, well within covenant limits. The company also returned $152.5 million to shareholders through share repurchases in the first nine months of 2025, with $112.6 million remaining under the current authorization. This balanced capital deployment strategy supports both organic and inorganic growth while enhancing shareholder value.

Competitive Landscape and Strategic Positioning

Huron operates in a competitive professional services market alongside larger, more diversified firms like Accenture (ACN), Cognizant Technology Solutions (CTSH), IBM Corporation (IBM), and Wipro Limited (WIT), as well as niche players and internal client capabilities. Huron's competitive advantage is its specialized expertise in healthcare and education, where its deep sector knowledge and tailored solutions often lead to stronger client loyalty and more efficient project delivery compared to the broader, more generalized services offered by ACN or CTSH. For instance, in healthcare revenue cycle management, Huron's focused approach can yield superior results.

While larger competitors like ACN and IBM may possess greater global scale and broader technological capabilities, Huron strategically positions itself as a trusted implementation partner, working shoulder-to-shoulder with clients. This approach allows Huron to leverage its understanding of client business processes and industries, particularly in deploying AI and automation solutions. In the Commercial segment, Huron's ability to align strategy consulting, data, AI, and automation expertise with cloud EPM offerings has enabled it to win against formidable incumbents. However, Huron's smaller scale compared to these giants could lead to higher operational costs in certain areas and potentially slower innovation cycles in broad technology development. Its sector dependencies also expose it to specific industry-wide challenges more acutely than highly diversified firms. Barriers to entry, such as the need for specialized expertise and regulatory knowledge, help protect Huron's market position.

Outlook and Forward Trajectory

Huron''s updated full-year 2025 guidance reflects confidence in its strategic direction and market opportunities. The company narrowed its RBR guidance to a range of $1.65 billion to $1.67 billion, affirmed its adjusted EBITDA guidance at 14% to 14.5% of RBR, and increased its adjusted non-GAAP EPS guidance to a range of $7.50 to $7.70. Free cash flow is projected to be between $165 million and $185 million. Management anticipates a year-end leverage ratio of approximately 2.0x adjusted EBITDA.

The underlying assumption for this guidance is continued robust demand across all segments, with acquisitions like Eclipse and Treliant expected to be adjusted EPS neutral in 2025 due to integration expenses but accretive in 2026. Management's confidence is rooted in a strong pipeline, high utilization rates, and the ability to adapt to evolving client needs. The company's strategic roadmap, including its focus on digital transformation, AI integration, and programmatic M&A, is expected to drive sustained growth and margin expansion, building on the momentum from previous years.

Conclusion

Huron Consulting Group stands as a compelling investment opportunity, demonstrating consistent growth and margin expansion fueled by its specialized expertise and strategic digital transformation initiatives. The company's ability to deliver tangible, measurable results for clients in the complex Healthcare, Education, and Commercial sectors, often leveraging advanced AI and automation, underpins its strong competitive position. While facing inherent risks from dynamic regulatory environments and macroeconomic uncertainties, Huron's disciplined capital allocation, robust liquidity, and clear strategic vision position it for continued value creation. The ongoing demand for its integrated consulting and digital solutions, coupled with a proven track record of execution, suggests a bright outlook for Huron as it empowers its clients and shareholders to own their future.