Huron Consulting Group Inc.

Good afternoon, and welcome to Huron Consulting Group's webcast to discuss financial results for the third quarter 2022. At this time, all conference call lines are on a listen-only mode. Later, we will conduct a 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's website. Please review that information along with the filings with the SEC for a disclosure of factors that may impact subject discussed in this afternoon's webcast. The company will be Discussing one or more non-GAAP financial measures. Please look at the earnings release on Huron's website for all of the disclosures required by the SEC, including reconciliation to the most comparable GAAP numbers. And now I'd like to turn the call over to Jim Roth, Chief Executive Officer of Huron Consulting Group.

Mr. Roth, please go ahead. Good afternoon and welcome to Huron Consulting Group's third quarter 2022 earnings call.

With me today are John Kelly, our Chief Financial Officer, Mark Hussey, our President, and Ronnie Dale, our Chief Operating Officer. Our third quarter performance continued to reflect strong growth across all three operating segments. We achieved 27% revenue growth over the third quarter of 2021, primarily reflecting ongoing momentum in our education and healthcare industries and continued growth in our digital capability. Despite increased uncertainty in the broader economic environment, we continue to anticipate strong demand for our offerings, leading us to increase our full year revenue guidance while narrowing the range of our adjusted earnings per share guidance to the midpoint of the range. I will now share some additional insight into our third quarter performance. During the third quarter, healthcare segment revenues grew nearly 26% over the prior year quarter. The increase in revenues was driven by strong demand for our digital financial advisory, revenue cycle managed services, and performance improvement offerings. The macro trends within hospitals and health systems have continued to be challenging for most of our client base. During the past several months, many health systems have reported their largest financial losses in a decade. The reasons for those losses are familiar. Inpatient volumes that are still lower than pre-COVID levels, volume shifts to outpatient and virtual, increased costs for labor equipment and supplies, labor shortages, and reimbursement rates that generally have not kept up with the increased cost structure. Prior to the pandemic, many health systems had declining margins, but those declines came from reasonably healthy levels. It is likely that operating margins will remain depressed, and in some cases severely depressed, for the next one to two years and possibly longer. This collective set of challenges for hospitals and health systems has led to strong demand for our healthcare offerings, most notably in performance improvement, digital, and revenue cycle managed services. We expect the strong demand to continue as our clients look to our industry expertise and digital capabilities to improve their operational efficiencies and patient-centric interactions. Ongoing financial pressures across the industry will also likely continue to create solid demand for our performance improvement and strategy capabilities as health systems seek to broaden their revenue base and use technology and analytics to deliver care in increasingly diverse settings. Turning now to the education segment, in the third quarter of 2022, the education segment achieved record quarterly revenues, growing 49% over the prior year quarter, and 7% sequentially. The increase in revenues over the third quarter of 2021 was driven by strong, broad-based demand across all of our offerings, highlighted by 53% growth in our digital capability in education. Similar to the healthcare segment, colleges and universities are facing myriad challenges to their historical business model. Research institutions continue to grow their research portfolios, but the cost of that growth is much greater than the related reimbursement from federal or commercial funding sources, generating continued strong growth for our research services. Our strategy and operations team has been helping institutions improve the sustainability of their business models, while some of our clients evaluate opportunities to expand beyond their traditional offerings in search of new revenue sources. Our collective set of digital offerings, particularly in our cloud ERP implementations, remains strong, and we expect the list of institutions seeking to deploy cloud-based systems will grow in the coming years. And finally, our student business, including our cloud-based student solution, is demonstrating early success in what we believe will be a high-demand business over the coming decade. Collectively, we believe that the education segment will continue to have solid growth as the entire industry plays catch-up and digital capabilities as it attempts to create more sustainable growth models. Turning to the commercial segment, in the third quarter of 2022, commercial segment revenues grew 6% over the prior year quarter, driven by strong demand for our digital offerings, primarily across the financial services and energy and oil and gas industries. The increase in third quarter revenues from our digital offerings in the commercial segment were partially offset by the divestiture of our life sciences business, which we sold in the fourth quarter of 2021, and a decrease in demand for our financial advisory and strategy offerings. Excluding the life sciences business, the commercial segment grew 17% in Q3 2022 over the prior year quarter. Our digital offerings within the commercial industries continue their solid growth trajectory in the third quarter. We continue to expand our offerings beyond our traditional core back office applications into CRM, data management and analytics, and emerging technologies such as intelligent automation as our commercial clients advance their digital transformations. When we held our investor day earlier this year, we highlighted the extent to which our digital capability continues to play a critical role in the growth of our company. Through the third quarter of this year, Our digital revenues comprise 45% of total company revenues, spread relatively evenly across all three of our industry reporting segments. We anticipate continued strong growth in our digital capability, and I want to provide some added context as to what is fueling our growth in this area. The pandemic highlighted the need for all organizations to have greater digital interaction with their employees, customers, patients, students, and suppliers. A significant number of our clients look to cloud technology solutions to enhance revenue opportunities and gain operational efficiencies through automation. In our core industries of healthcare and education, our clients are also looking to personalize their interaction with their patients or students through multiple digital channels and to get a consistent and informed view of their customers' needs. We believe this trend is going to lead to continued strong growth for our digital capability in the commercial, healthcare, and education markets. We are succeeding in the market due to our combined industry expertise and digital capabilities and we believe these strengths will lead to profitable growth across all of our industry verticals. The transition to our new operating model at the beginning of this year was also highly instrumental in creating an organizational structure that was more conducive to achieving the internal and market-facing efficiencies that we believe will continue to enable us to achieve strong industry and digital revenue growth, even on certain economic conditions. Finally, let me turn to our outlook for the year. As our press release indicates, we are increasing and narrowing our annual revenue guidance to $1.09 billion to $1.11 billion, and we are maintaining our adjusted EBITDA guidance in a range of 11.5% to 12% of revenues, narrowing our adjusted diluted earnings per share guidance to a range of $3.25 to $3.35. Our third quarter results and updated outlook further demonstrate the vibrancy of our end markets and the strong demand for our offerings. We continue to believe that the underlying demand for our offerings will be solid throughout the remainder of the year, and we are encouraged by our growing pipeline and backlog for 2023. To position ourselves for continued strong growth, we are investing in our business primarily by growing our team to develop on current and anticipated demand across all of our capabilities and industry verticals. Now let me turn it over to John for a more detailed discussion of the financials.