On Tuesday, Huron Consulting Gr (NASDAQ:HURN) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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The full earnings call is available at https://edge.media-server.com/mmc/p/tpofwybx/
Summary
Huron Consulting Group Inc reported a 12% increase in revenues before reimbursable expenses (RVR) for Q1 2026, driven by growth across healthcare, education, and commercial segments.
Healthcare segment RVR grew 14%, with a 10% organic growth rate, attributed to strong demand for performance improvement, revenue cycle management services, and strategy offerings.
Education segment RVR increased by 4%, driven by digital offerings, despite challenges like declining international student enrollment and rising costs.
Commercial segment saw a 22% RVR increase, with significant growth in financial advisory and strategy offerings.
The company affirmed its 2026 guidance, maintaining expectations for RVR, adjusted EBITDA margin, and adjusted diluted EPS.
The management remains optimistic about the benefits and opportunities provided by AI, which is expected to significantly contribute to future growth and margin expansion.
Huron Consulting Group Inc highlighted strong pipeline and backlog, with bookings up by over 20% across segments.
The company executed significant share repurchases, reducing outstanding shares by 6.5% in Q1 2026.
Management emphasized continued investment in AI capabilities and maintaining a disciplined capital allocation strategy.
Full Transcript
OPERATOR
good afternoon and welcome to Huron Consulting Group Inc’s webcast to discuss financial results for the first quarter of twenty twenty six at this time all conference call lines are in a listen only mode later we will conduct our question and answer session for conference call participants and instructions will follow at that time as a reminder this conference call is being recorded before we begin i would like to point all of you to the disclosure at the end of the company’s news release for information about any forward looking statements that may be made or discussed on this call the news release is posted on Huron Consulting Group Inc’s website please review that information along with the filings with the SEC for a disclosure of factors that may impact subjects discussed in this afternoon’s webcast the company will be discussing one or more non gaap financial measures please look at the earnings release and on Huron Consulting Group Inc’s website for all of the disclosures required by the SEC including reconciliation to the most comparable GAAP numbers and now i would like to turn the call over to mark hussey chief executive officer and president of huron consulting group mister hussey please go ahead
mark hussey
good afternoon and welcome to Huron Consulting Group Inc’s first quarter twenty twenty six earnings call with me today are john kelly our chief financial officer and ronnie dale our chief operating officer i’ll begin by noting that the execution of our growth strategy continues to deliver performance consistent with the financial goals outlined for twenty twenty five investor day revenues before reimbursable expenses or revenue before reimbursable expenses (RVR) increased twelve percent in the first quarter of twenty twenty six compared to the first quarter of twenty twenty five driven by growth across the healthcare education and commercial segments including record revenue before reimbursable expenses (RVR) performance in healthcare during the quarter we also continued our trajectory of margin expansion reflecting disciplined execution by our highly talented team encouraged by the strong start to the year and strength of our pipeline and backlog we’re affirming our annual revenue before reimbursable expenses (RVR) and margin guidance we continue to believe we are well positioned to serve as our client’s trusted advisor as they evolve their business models and organizations to succeed in challenging markets in an increasingly complex ai enabled world we remain focused on executing against the market tailwinds driving demand for our business and further strengthening our competitive position to enhance our ability to best serve our clients and achieve our financial goals i’ll now share some additional insight into our first quarter performance in the healthcare segment first quarter revenue before reimbursable expenses (RVR) grew fourteen percent over the prior year quarter reflecting strong demand for our performance improvement revenue cycle managed services financial advisory and strategy offerings as well as incremental revenue before reimbursable expenses (RVR) growth in the integration of our acquisitions excluding the impact of the acquisitions organic growth for the healthcare segment was ten percent in q one twenty twenty six as compared to q one twenty twenty five as we’ve discussed in prior earnings calls healthcare providers are operating amidst the convergence of competitive and regulatory pressures that continue to impact financial performance and drive the need to redesign care delivery models finding reimbursements rising operational costs and labor shortages are intensifying the need for stronger cash flow cost optimization and greater operational flexibility health systems are facing a period of rapid transformation driven by advancements in technologies developing and executing an ai strategy amidst the rapid pace of change has become an increasingly important issue for the growing number of our clients providers are increasingly seeking trusted partners with the industry expertise that can help them integrate technology workforce and operating model changes into cohesive executable strategies that deliver near term financial benefit while positioning their organizations for sustainable growth improved margins and long term competitive advantage we see significant opportunities for evaluating and integrating a broad and growing number of applications and use cases for ai and digital tools cross clinical administrative and financial workflows in our clients complex operating environments our ability to help clients address enduring and new challenges and opportunities is at the heart of the growth strategy for our healthcare business as we rapidly expand and integrate our ai capabilities across our healthcare offerings we believe our distinctive operational and technology expertise along with innovative new solutions and partnerships position us well to continue our growth trajectory turning next to the education segment in the first quarter of twenty twenty six education segment revenue before reimbursable expenses (RVR) grew four percent compared to the first quarter of twenty twenty five driven by strong demand for our digital offerings higher education institutions are experiencing uneven demand among domestic students and a significant decline in international students amidst that backdrop institutions are contending with rising operating costs funding declines heightened regulatory scrutiny and further erosion of public confidence in the value of a traditional four year degree these dynamics are forcing higher education leaders to confront fundamental questions about scale economic portfolio mix cost structure and long term financial sustainability we believe our strong market position in higher education provides the opportunity to serve as an experienced partner that can help our clients move beyond incremental actions for more integrated strategic transformation universities are prioritizing solutions that deliver near term financial improvement while modernizing operating models for administrative workflows and academic offerings to accomplish this our clients are building the enabling infrastructure to improve efficiency decision making and the student experience while increasingly leveraging ai we believe our strong client relationships industry expertise ai capabilities and comprehensive portfolio of offerings have positioned us to continue to serve as a partner of choice for our clients as they address these ongoing challenges in the commercial segment first quarter rbr grew twenty two percent over the prior year quarter reflecting strong demand for our financial advisory and strategy offerings the increase in rbr in the quarter also included incremental rbr from our acquisitions of tr alliance and wilson parable excluding the impact of acquisitions rbr in q one twenty twenty six grew eight percent organically for the first quarter of twenty twenty five commercial industries are navigating heightened complexity driven by persistent cost inflation global supply chain realignment geopolitical and regulatory uncertainty and continuously evolving customer and employee expectations at the same time companies are accelerating the adoption of ai enabled data driven operating models to improve agility productivity and decision making these forces are driving demand for comprehensive solutions that integrate strategy and operations financial advisory and digital and ai transformation we continue to invest in expanding our offerings to address the rapidly changing needs of our global client base and those investments have delivered more durable growth in the commercial business in recent quarters we’ll continue to deepen our industry expertise and expand our ability to deliver differentiated end to end solutions to enhance our competitive advantage and best address the growing needs of our clients through the first quarter our views on ai and its potential impact on huron remain bullish as we believe it will be a significant contributor to future growth margin expansion and shareholder value multiple third party research providers forecast that the ai services market will grow into double digits over the next several years and we believe we’re well positioned to help our clients plan and execute their ai strategies and take advantage of this rapidly growing market opportunity we have substantially increased our investment in ai capabilities and we’ll continue to deploy them throughout our offerings operations building upon our deep industry and functional knowledge beyond ai the fundamental market tailwinds propelling growth in our business remain to create opportunities across all three operating segments we believe our ability to bring together our strategy operations technology and people related offerings redesign core business functions and processes while integrating advanced technologies will continue to position us for long term growth now let me turn to our outlook for the year today we are affirming our twenty twenty six guidance for rbr adjusted ebitda margin and adjusted diluted earnings per share their strong first quarter results i am increasingly encouraged about our prospects for the year we remain committed to driving long term shareholder value through continued execution of our growth strategy which has delivered consistent rvr growth and margin expansion since twenty twenty two our disciplined capital allocation strategy is funded both programmatic m and a and since december thirty first twenty twenty two repurchase of five million shares or twenty five percent of our common stock outstanding we believe there is significantly more value to be unlocked by our strategy particularly as we leverage our collaborative entrepreneurial culture to compete and win in today’s rapidly evolving technological and competitive landscape in summary we believe our strong competitive positions in healthcare and education enable us to leverage our expertise a powerful portfolio of consulting managed services and digital capabilities also believe our size and scale in commercial markets enables us to be nimble and aggressive integrated operating model that amplifies our impact across our consulting digital and managed services capabilities driven by the velocity of change and complexity facing our clients we were well positioned to continue to execute upon our growth strategy and achieve our stated financial goals for low double digit revenue growth margin expansion and disciplined deployment of our strong free cash flow none of this would be possible without our strong collaborative culture innovative and dedicated team continue to be the heart and soul of our company with that let me now turn it over to john for a more detailed discussion of our financial
john kelly
results john thank you mark and good afternoon everyone before i begin please note that i will be discussing non GAAP financial measures such as ebitda adjusted ebitda adjusted net income adjusted eps and free cash flow our press release 10-Q and investor relations page on the huron website have reconciliations of these non GAAP measures to the most comparable GAAP measures along with the discussion of why management uses these non GAAP measures why management believes they provide useful information to investors regarding our financial condition and operating results now we’ll share some of the key financial results for the first quarter of twenty twenty six first quarter of twenty twenty six produced rbr of four hundred and forty three point seven million dollars up twelve point one percent from three hundred and ninety five point seven million dollars in the same quarter of twenty twenty five driven by growth across all three operating segments net income for the first quarter of twenty twenty six was twenty three point two million dollars or one dollar thirty four cents per diluted share compared to net income of twenty four point five million dollars for one dollar thirty three cents per diluted share in the first quarter of twenty twenty five as a percentage of total revenues net income declined to five point one percent in the first quarter of twenty twenty six compared to six point one percent in the first quarter of twenty twenty five reflecting a higher effective tax rate during the first quarter of twenty twenty six our effective income tax rate in the first quarter of twenty twenty six was fourteen point one percent which is more favorable than the statutory rate inclusive of state income taxes primarily due to a discrete tax benefit for share based compensation awards that vested during the quarter partially offset by certain non deductible expense items our effective income tax rate in the first quarter of twenty twenty five was negative fourteen point four percent as we recognize the income tax benefit on our pre tax income driven by the discrete tax benefit for share based compensation awards that vested during the quarter …
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