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01/10 16:12
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call revealed strong financial performance with record revenue growth and improved margins. Despite some concerns in the Q&A about strategy consulting and macroeconomic impacts, the overall sentiment remains positive due to strong guidance, a decrease in leverage ratio, and increased demand across segments. The market cap suggests a moderate reaction, leading to a prediction of a 2% to 8% stock price increase.
Revenue Before Reimbursable Expenses (RBR) $395.7 million, up 11.2% from $356 million in Q1 2024. The increase was driven by strong growth across all three operating segments.
Net Income $24.5 million, up 36.3% from $18 million in Q1 2024, resulting in $1.33 per diluted share compared to $0.95 per diluted share in Q1 2024. The increase was driven by revenues outpacing expenses and a discrete tax benefit for share-based compensation.
Adjusted EBITDA $41.5 million, or 10.5% of RBR, compared to $33.8 million or 9.5% of RBR in Q1 2024. The increase was primarily due to increases in segment operating income in Healthcare and Education segments.
Adjusted Net Income $31.1 million, or $1.68 per diluted share, compared to $23.3 million, or $1.23 per diluted share in Q1 2024, resulting in a 36.6% increase in adjusted diluted earnings per share.
Healthcare Segment RBR $198.5 million, up 9.8% from Q1 2024. Excluding the divested Studer Education business, revenues grew 12% due to strong demand for performance improvement and financial advisory offerings.
Healthcare Operating Income Margin 28.4% in Q1 2025 compared to 23.6% in Q1 2024. The increase was due to revenue growth outpacing salary increases and decreases in contractor and administrative expenses.
Education Segment RBR $122.7 million, up 10% from Q1 2024. The increase was driven by strong demand for strategy and operations advancement offerings and software product offerings.
Education Operating Income Margin 18.8% in Q1 2025 compared to 19.7% in Q1 2024. The decrease was primarily due to expenses related to leadership meetings and performance bonuses.
Commercial Segment RBR $74.5 million, up 17% from Q1 2024, driven by $11.2 million from the acquisition of AXIA and strong demand for digital offerings.
Commercial Operating Income Margin 15.2% in Q1 2025 compared to 22.1% in Q1 2024. The decrease reflects increased compensation costs and contractor expenses.
Cash Flow Used in Operations $106.8 million in Q1 2025 compared to $130.7 million in Q1 2024, reflecting annual incentive payments.
Free Cash Flow Negative $115.4 million in Q1 2025 due to capital expenditures, compared to previous year.
Days Sales Outstanding (DSO) 79 days in Q1 2025 compared to 91 days in Q1 2024. The decrease reflects improved collections on larger projects.
Total Debt $576.3 million as of March 31, 2025, with net debt of $552.9 million, a $217.1 million increase from Q4 2024 due to annual cash bonuses and share repurchases.
Leverage Ratio 2.2 times adjusted EBITDA as of March 31, 2025, compared to 2.7 times in Q1 2024, reflecting seasonal high leverage due to bonus payouts.
Software Product Offerings: Increased demand for software product offerings within the Education segment.
Healthcare Segment Growth: Healthcare segment RBR grew 10% driven by strong demand for performance improvement and financial advisory offerings.
Education Segment Growth: Education segment RBR grew 10% driven by strong demand for strategy and operations advancement offerings.
Commercial Segment Growth: Commercial segment RBR grew 17% driven by incremental RBR from AXIA acquisition and strong demand for digital offerings.
Operational Efficiency: Decrease in DSO from 91 days to 79 days, reflecting improved collection on larger projects.
Margin Improvement: Healthcare operating income margin increased to 28.4% from 23.6% due to revenue growth outpacing expenses.
Acquisitions: Acquisition of AXIA Consulting contributed to Commercial segment growth; additional acquisitions of Advancement Resources and Halpin closed in March 2025.
Growth Strategy: Refreshed growth strategy shared at Investor Day in March 2025, focusing on expanding capabilities and market positioning.
Healthcare Segment Risks: Increased financial pressures and potential regulatory changes affecting health systems, including changes to Medicaid funding, reductions in research funding, and increases in costs of imported drugs and medical devices.
Education Segment Risks: Evolving regulatory impacts on higher education institutions, with varying effects based on institutional attributes, leading to uncertainty and potential financial implications.
Commercial Segment Risks: Increased pressure from a volatile macroeconomic environment and uncertainty related to tariffs, impacting clients' financial positions and operational strategies.
General Economic Risks: Dynamic external environment affecting all segments, leading to increased competition and the need for clients to adapt to market disruptions.
Growth Strategy Execution: Huron Consulting Group is executing a refreshed growth strategy shared at the Investor Day in March, which has driven strong growth across all three operating segments.
Healthcare Segment Performance: The Healthcare segment's RBR grew 10% year-over-year, driven by strong demand for performance improvement and financial advisory offerings.
Education Segment Performance: The Education segment's RBR also grew 10% year-over-year, supported by strong demand for strategy and operations advancement offerings.
Commercial Segment Performance: The Commercial segment's RBR grew 17% year-over-year, driven by the acquisition of AXIA and strong demand for digital offerings.
Digital Transformation Initiatives: Clients are advancing their digital transformation imperatives to enhance competitive positions and operational efficiency.
Acquisitions: Huron continues to selectively add advisory capabilities both organically and through programmatic M&A.
2025 Revenue Guidance: Huron reaffirms its annual RBR guidance in a range of $1.58 billion to $1.66 billion.
Adjusted EBITDA Margin Guidance: Adjusted EBITDA is expected to be in the range of 14% to 14.5% of RBR.
Adjusted EPS Guidance: Adjusted non-GAAP EPS is projected to be in the range of $6.80 to $7.50.
Free Cash Flow Guidance: Full-year free cash flow is expected to be in a range of positive $160 million to $190 million.
Share Repurchase: In the quarter, we used $72.9 million to repurchase approximately 509,000 shares representing 2.9% of our common stock outstanding as of December 31, 2024. As of March 31, 2025, $191.7 million remained available for share repurchases under the current share repurchase authorization from our Board of Directors.
The earnings call presents strong financial performance with increased revenue, net income, and adjusted EBITDA. The guidance is optimistic, with anticipated growth across segments and strategic acquisitions. The Q&A section reveals positive sentiment from analysts, highlighting strong demand and effective management strategies. Although management avoided specific guidance for 2026, the overall outlook remains positive. Given the company's market cap, a positive stock price movement of 2% to 8% is likely over the next two weeks.
The earnings call highlights strong financial performance across segments, reaffirmed guidance, and record sales conversions, which are positive indicators. The Q&A session reveals improved visibility and confidence in overcoming temporary delays, though some responses lacked specific data. The market cap suggests moderate sensitivity to news. Overall, the combination of strong results, strategic acquisitions, and positive guidance adjustments suggests a positive stock price movement, likely in the range of 2% to 8% over the next two weeks.
The earnings call revealed strong financial performance with record revenue growth and improved margins. Despite some concerns in the Q&A about strategy consulting and macroeconomic impacts, the overall sentiment remains positive due to strong guidance, a decrease in leverage ratio, and increased demand across segments. The market cap suggests a moderate reaction, leading to a prediction of a 2% to 8% stock price increase.
The earnings report shows strong financial performance with record revenue and net income growth, improved margins, and significant share repurchases. The Q&A session addresses potential risks like regulatory impacts and higher medical costs, but management remains optimistic about growth, particularly in digital and healthcare sectors. Despite some uncertainties, the positive guidance and strategic focus on expansion suggest a positive outlook. Given the company's small market cap, the stock is likely to react positively, with a potential increase of 2% to 8% over the next two weeks.
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