[Management View]
Huron Consulting Group reported record Revenue Before Reimbursable Expenses (RBR) of $402.5 million in Q2 2025, an 8.3% YoY increase. Organic RBR grew 4.2%, driven by strong performance across Healthcare, Education, and Commercial segments. Strategic acquisitions, including Eclipse Insights and Treliant, are expected to enhance capabilities in revenue cycle optimization and compliance. Management emphasized their commitment to delivering measurable financial benefits to clients amid industry disruptions.

[Outlook]
The company raised its full-year RBR guidance to $1.64 billion-$1.68 billion, reflecting a 12% midpoint increase. Adjusted EBITDA margin guidance remains at 14%-14.5%, while adjusted non-GAAP EPS guidance was increased to $7.30-$7.70, representing 16% midpoint growth. Segment-level expectations include upper single-digit growth for Healthcare, mid-to-upper single-digit growth for Education, and mid-twenty percent growth for Commercial. Management reiterated their medium-term M&A target of 2%-4% annual inorganic growth.

[Financial Performance]
- Healthcare RBR: $197.8 million (+4.1% YoY; +6% excluding divestitures), operating margin 30.2% (+110 bps YoY).
- Education RBR: $129.3 million (+5.3% YoY), operating margin 25% (flat YoY).
- Commercial RBR: $75.4 million (+28.2% YoY), operating margin 16.6% (+130 bps YoY).
- Adjusted EBITDA: $60.6 million (+8.8% YoY), representing 15.1% of RBR.
- Adjusted Net Income: $33.7 million (+12.5% YoY), or $1.89 per diluted share.
- Free Cash Flow: $73.7 million after $6.3 million in capital expenditures.

[Q&A Highlights]
Question 1: How has the One Big Beautiful Bill Act impacted visibility and guidance conservatism?
Answer: Management noted the bill brought clarity to anticipated federal reimbursement pressures, aligning with expectations. Visibility has improved due to strong sales conversions and a robust pipeline, particularly in healthcare consulting services. Guidance is not contingent on digital transformation sales conversions.

Question 2: Why are healthcare digital transformation sales conversions slower, and is this temporary?
Answer: Slower conversions are attributed to client financial pressures, with a shift in focus to performance improvement projects. Management believes this pause is temporary, as digital projects will resume once financial stability is achieved. Guidance is driven by consulting-led revenue streams.

Question 3: Can you elaborate on hiring trends and utilization rates?
Answer: Headcount growth was driven by managed services demand and the Eclipse acquisition. Utilization rates of 77% (consulting) and 78% (digital) are near sustainable ceilings, prompting accelerated hiring to support growth.

Question 4: What progress has been made on M&A targets for 2025?
Answer: Management has made significant progress, with potential for one or two additional tuck-in acquisitions by year-end. Acquisitions are strategically aligned and expected to be accretive in 2026.

Question 5: What drove record sales conversions in the Education segment?
Answer: Strong demand for strategy and operations offerings, including enrollment optimization, research efficacy, and fundraising campaigns, contributed to record sales conversions.

Question 6: How is healthcare consolidation impacting Huron’s business?
Answer: Consolidation remains a contributor, with Huron supporting strategic evaluations and post-merger integrations. Financial pressures are expected to catalyze further transactions.

Question 7: How does Huron help healthcare clients adapt to Medicaid funding constraints and uninsured population growth?
Answer: Huron leverages its comprehensive performance improvement offerings, including revenue cycle optimization, supply chain management, and clinical operations, to deliver measurable financial benefits. Financial advisory services further enhance decision-making and cash management.

Question 8: What capabilities does the Treliant acquisition bring?
Answer: Treliant expands Huron’s financial services portfolio with specialized expertise in risk management, compliance, and fraud prevention. The acquisition complements existing capabilities and creates a more comprehensive solution.

[Sentiment Analysis]
Management conveyed confidence in their ability to navigate industry disruptions and deliver growth, supported by strong sales conversions and strategic acquisitions. Analysts expressed optimism about the company’s execution and pipeline visibility, while seeking clarity on temporary delays in digital sales conversions.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|---------------------------------|-----------------|-----------------|------------------|
| RBR | $402.5M | $371.7M | +8.3% |
| Adjusted EBITDA | $60.6M | $55.7M | +8.8% |
| Adjusted Net Income | $33.7M | $18.5M | +12.5% |
| Healthcare RBR | $197.8M | $190.1M | +4.1% |
| Education RBR | $129.3M | $122.8M | +5.3% |
| Commercial RBR | $75.4M | $58.8M | +28.2% |
| Free Cash Flow | $73.7M | $68.4M | +7.7% |

[Risks and Concerns]
- Net income margin declined to 4.7% from 9.8% YoY due to impairment charges and increased corporate expenses.
- Federal healthcare legislation is expected to increase uncompensated care costs and reduce Medicaid payments, pressuring hospital margins.
- Slower sales conversions in healthcare digital offerings may persist if client financial pressures intensify.

[Final Takeaway]
Huron Consulting Group delivered record revenue growth in Q2 2025, supported by strong demand across all segments and strategic acquisitions. While healthcare digital sales conversions faced temporary delays, consulting-led revenue streams remain robust. The company’s updated guidance reflects confidence in its ability to navigate industry disruptions and capitalize on emerging opportunities. Strategic M&A and disciplined capital deployment further position Huron for sustainable growth in 2025 and beyond.