Huron announces third quarter 2020 financial results and updates 2020 guidance
Chicago--(business wire)--global professional services firm huron (nasdaq: hurn) today announced financial results from continuing operations for the third quarter ended september 30, 2020. “our third-quarter performance was in line with our expectations. growth in the business advisory segment reflected solid demand for our restructuring services and the acceleration of clients’ investments in technology to improve their operations, while the ongoing pandemic has continued to create disruption for our clients in the healthcare and education industries,” said james h. roth, chief executive officer of huron. “the current crisis presents a classic set of challenges for our clients, including how to balance addressing immediate operational issues with strategically managing for the long-term. huron is well positioned to help our clients in this environment as we work with them to solve an increasingly complex array of issues and position their organizations for a successful future.” covid-19 impact the worldwide spread of the coronavirus (covid-19) has created significant volatility, uncertainty and disruption to the global economy. the company continues to closely monitor the impact of the pandemic on all aspects of its business, including how it will impact its clients, employees and business partners. in the first nine months of 2020, some clients reprioritized and delayed projects as a result of the pandemic. this negatively impacted demand for certain services, primarily in the company's healthcare and education segments. conversely, the pandemic strengthened demand for cloud-based technology and analytics solutions and certain services provided to organizations in transition within the company's business advisory segment. during the third quarter of 2020, the pandemic continued to negatively impact sales and elongate the sales cycle for new opportunities for certain services, particularly within the company's healthcare and education segments. therefore, the company expects the covid-19 pandemic to continue to have an unfavorable impact on its financial results in the fourth quarter of 2020 compared to the same prior year period, which is contemplated in the updated full year 2020 guidance provided. fourth quarter 2020 restructuring plan on october 29, 2020, the company announced a restructuring plan to reduce operating costs to address the impact of the covid-19 pandemic on its business. the restructuring plan provides for a reduction in workforce and leased office space that is expected to result in annualized savings of approximately $23.0 million to $27.0 million. the company does not anticipate a material revenue impact related to the restructuring actions. the reduction in workforce impacts approximately 145 employees across all segments and corporate operations. the company expects the reduction in workforce to be substantially complete by the end of the fourth quarter of 2020 and expects to incur an estimated restructuring charge in a range of approximately $3.5 million to $4.5 million related to cash payments for employee severance and benefits. the reduction in leased office space is expected to result in estimated non-cash restructuring charges in a range of approximately $12.0 million to $15.0 million. the non-cash restructuring charges related to the reduction in leased office space are expected to be recorded primarily in the fourth quarter of 2020. future cash expenditures related to the leased office space are expected to continue through 2029. the exact amount and timing of the office space reductions, and the associated payments and expenses, depend on a number of factors, including the company’s ability to terminate or modify existing lease contracts and/or enter into sublease agreements for the exited spaces to lower future cash expenditures. additional cost avoidance measures, including limiting annual salary increases, are expected to result in additional annualized savings. in addition, the company announced its intent to divest its life sciences drug safety practice, a uk-based business that is part of the life sciences reporting unit within the business advisory segment. for the nine months ended september 30, 2020, this practice generated $1.9 million of revenue and is not significant to the company's consolidated financial statements. the company expects the divestiture to be completed in the fourth quarter of 2020. the company believes these measures will better align delivery capacity with anticipated demand and strengthen the company’s financial position amidst the ongoing disruption, creating a foundation from which it can grow. third quarter 2020 results from continuing operations revenues were $205.3 million for the third quarter of 2020, compared to $219.3 million for the third quarter of 2019. net income from continuing operations was $11.1 million for the third quarter of 2020 compared to $13.7 million for the same quarter last year. diluted earnings per share from continuing operations was $0.50 for the third quarter of 2020 compared to $0.61 for the third quarter of 2019. third quarter 2020 earnings before interest, taxes, depreciation and amortization ("ebitda")(7) was $23.3 million compared to $28.6 million in the same prior year period. in addition to using ebitda to evaluate the company’s financial performance, management uses other non-gaap financial measures, which exclude the effect of the following items (in thousands): three months ended september 30, 2020 2019 amortization of intangible assets $ 3,155 $ 4,205 restructuring and other charges $ 59 $ 127 litigation and other gains $ — $ (630 ) non-cash interest on convertible notes $ — $ 2,171 transaction-related expenses $ 437 $ 563 tax effect of adjustments $ (1,692 ) $ (1,673 ) tax benefit related to "check-the-box" election $ — $ (736 ) foreign currency transaction losses (gains), net $ (194 ) $ 114 adjusted ebitda(7) was $23.6 million, or 11.5% of revenues, in the third quarter of 2020, compared to $28.8 million, or 13.1% of revenues, in the same prior year period. adjusted net income from continuing operations(7) was $13.0 million, or $0.59 per diluted share, for the third quarter of 2020, compared to $17.7 million, or $0.79 per diluted share, for the same prior year period. the average number of full-time billable consultants(1) increased 4.7% to 2,592 in the third quarter of 2020 from 2,476 in the same quarter last year, primarily related to hiring that occurred prior to the covid-19 pandemic. full-time billable consultant utilization rate(2) was 70.4% during the third quarter of 2020, compared to 76.3% during the same period last year. average billing rate per hour for full-time billable consultants(3) was $206 for both the third quarter of 2020 and 2019. the average number of full-time equivalent professionals(5) was 360 in the third quarter of 2020, compared to 288 for the same period in 2019. year-to-date 2020 results from continuing operations revenues slightly increased $1.3 million, or 0.2%, to $645.8 million for the first nine months of 2020, compared to $644.5 million for the same prior year period. net loss from continuing operations was $17.6 million for the first nine months of 2020, compared to net income from continuing operations of $27.6 million for the same prior year period. diluted loss per share from continuing operations was $0.81 for the first nine months of 2020, compared to diluted earnings per share from continuing operations of $1.23 for the first nine months of 2019. results for the first nine months of 2020 reflect non-cash pretax charges totaling $59.8 million to reduce the carrying value of goodwill in the company's strategy and innovation and life sciences reporting units within the business advisory segment. the impairment charges are non-cash in nature and do not affect the company's liquidity or debt covenants. ebitda(7) was $7.0 million for the first nine months of 2020, compared to ebitda of $72.8 million for the first nine months of 2019. in addition to using ebitda to evaluate the company’s financial performance, management uses other non-gaap financial measures, which exclude the effect of the following items (in thousands): nine months ended september 30, 2020 2019 amortization of intangible assets $ 9,558 $ 13,036 restructuring and other charges $ 2,626 $ 2,156 litigation and other gains $ (150 ) $ (1,571 ) goodwill impairment charges $ 59,816 $ — non-cash interest on convertible notes $ — $ 6,436 loss on sale of business $ 102 $ — transaction-related expenses $ 437 $ 2,613 tax effect of adjustments $ (17,041 ) $ (5,909 ) tax benefit related to "check-the-box" election $ — $ (736 ) foreign currency transaction losses, net $ 245 $ 36 adjusted ebitda(7) was $70.1 million, or 10.8% of revenues, for the first nine months of 2020, compared to $76.0 million, or 11.8% of revenues, for the first nine months of 2019. adjusted net income from continuing operations(7) was $37.7 million, or $1.70 per diluted share, for the first nine months of 2020, compared to $43.7 million, or $1.95 per diluted share, for the same prior year period. the average number of full-time billable consultants(1) increased 9.1% to 2,592 in the first nine months of 2020 from 2,376 in the first nine months of 2019, primarily related to hiring that occurred prior to the covid-19 pandemic. full-time billable consultant utilization rate(2) was 71.5% during the first nine months of 2020, compared to 76.5% during the same prior year period. average billing rate per hour for full-time billable consultants(3) was $206 for the first nine months of 2020, compared to $207 for the first nine months of 2019. the average number of full-time equivalent professionals(5) was 362 in the first nine months of 2020, compared to 295 in the same prior year period. operating segments huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges. the company’s year-to-date 2020 revenues by operating segment as a percentage of total company revenues are as follows: healthcare (42%); business advisory (31%); and education (27%). financial results by segment are included in the attached schedules and in huron's quarterly report on form 10-q filing for the quarter ended september 30, 2020. outlook for 2020 based on currently available information, the company is updating guidance for full year 2020 revenues before reimbursable expenses in a range of $835 million to $855 million. the company anticipates adjusted ebitda as a percentage of revenues in a range of 10.0% to 10.5% and non-gaap adjusted diluted earnings per share in a range of $1.95 to $2.15. management will provide a more detailed discussion of its outlook during the company's earnings conference call webcast. third quarter 2020 webcast the company will host a webcast to discuss its financial results today, november 2, 2020, at 5:00 p.m. eastern time (4:00 p.m. central time). the conference call is being webcast by nasdaq and can be accessed from huron's website at http://ir.huronconsultinggroup.com. a replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter. use of non-gaap financial measures(7) in evaluating the company’s financial performance and outlook, management uses ebitda, adjusted ebitda, adjusted ebitda as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-gaap measures. management uses these non-gaap financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). these non-gaap financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. management also uses these non-gaap financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. management believes that these non-gaap financial measures provide useful information to investors and others in understanding and evaluating huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner huron’s current financial results with huron’s past financial results. investors should recognize that these non-gaap measures might not be comparable to similarly titled measures of other companies. these measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the united states. management has provided its outlook regarding adjusted ebitda and non-gaap adjusted diluted earnings per share, both of which are non-gaap financial measures and exclude certain charges. management has not reconciled these non-gaap financial measures to the corresponding gaap financial measures because guidance for the various reconciling items are not provided. management is unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. accordingly, reconciliations to the corresponding gaap financial measures are not available without unreasonable effort. about huron huron is a global consultancy that collaborates with clients to drive strategic growth, ignite innovation and navigate constant change. through a combination of strategy, expertise and creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need to own their future. by embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. learn more at www.huronconsultinggroup.com. statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in section 21e of the securities exchange act of 1934, as amended, and the private securities litigation reform act of 1995. forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “guidance,” or “outlook” or similar expressions. these forward-looking statements reflect the company's current expectations about future requirements and needs, results, levels of activity, performance, or achievements. some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: the impact of the covid-19 pandemic on the economy, our clients and client demand for our services, and our ability to sell and provide services, including the measures taken by governmental authorities and businesses in response to the pandemic, which may cause or contribute to other risks and uncertainties that we face; failure to achieve expected utilization rates, billing rates and the number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. these forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under “item 1a. risk factors” in huron's annual report on form 10-k for the year ended december 31, 2019, and under "item 1a. risk factors" in huron's quarterly report on form 10-q for the quarter ended september 30, 2020, that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. the company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason. huron consulting group inc. consolidated statements of operations and other comprehensive income (loss) (in thousands, except per share amounts) (unaudited) three months ended september 30, nine months ended september 30, 2020 2019 2020 2019 revenues and reimbursable expenses: revenues $ 205,304 $ 219,289 $ 645,780 $ 644,488 reimbursable expenses 2,860 23,636 25,133 65,787 total revenues and reimbursable expenses 208,164 242,925 670,913 710,275 direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses): direct costs 145,459 143,034 451,221 422,442 amortization of intangible assets and software development costs 1,370 1,162 4,005 3,450 reimbursable expenses 2,840 23,571 25,095 65,897 total direct costs and reimbursable expenses 149,669 167,767 480,321 491,789 operating expenses and other losses (gains), net: selling, general and administrative expenses 38,561 48,123 126,864 151,409 restructuring charges 59 127 1,777 2,156 litigation and other gains — (630 ) (150 ) (1,571 ) depreciation and amortization 6,176 6,962 18,483 21,285 goodwill impairment charges — — 59,816 — total operating expenses and other losses (gains), net 44,796 54,582 206,790 173,279 operating income (loss) 13,699 20,576 (16,198 ) 45,207 other income (expense), net: interest expense, net of interest income (2,259 ) (4,374 ) (7,516 ) (13,156 ) other income (expense), net 2,035 (82 ) 687 2,830 total other income (expense), net (224 ) (4,456 ) (6,829 ) (10,326 ) income (loss) from continuing operations before taxes 13,475 16,120 (23,027 ) 34,881 income tax expense (benefit) 2,388 2,414 (5,413 ) 7,256 net income (loss) from continuing operations 11,087 13,706 (17,614 ) 27,625 loss from discontinued operations, net of tax (29 ) (52 ) (89 ) (195 ) net income (loss) $ 11,058 $ 13,654 $ (17,703 ) $ 27,430 net earnings (loss) per basic share: net income (loss) from continuing operations $ 0.50 $ 0.62 $ (0.81 ) $ 1.26 loss from discontinued operations, net of tax — — — (0.01 ) net income (loss) $ 0.50 $ 0.62 $ (0.81 ) $ 1.25 net earnings (loss) per diluted share: net income (loss) from continuing operations $ 0.50 $ 0.61 $ (0.81 ) $ 1.23 loss from discontinued operations, net of tax — — — (0.01 ) net income (loss) $ 0.50 $ 0.61 $ (0.81 ) $ 1.22 weighted average shares used in calculating earnings (loss) per share: basic 21,905 22,052 21,868 21,973 diluted 22,175 22,561 21,868 22,425 comprehensive income: net income (loss) $ 11,058 $ 13,654 $ (17,703 ) $ 27,430 foreign currency translation adjustments, net of tax 381 (630 ) (294 ) (673 ) unrealized gain (loss) on investment, net of tax 4,885 1,168 (1,051 ) 7,740 unrealized loss on cash flow hedging instruments, net of tax (243 ) (149 ) (3,633 ) (998 ) other comprehensive income (loss) 5,023 389 (4,978 ) 6,069 comprehensive income (loss) $ 16,081 $ 14,043 $ (22,681 ) $ 33,499 huron consulting group inc. consolidated balance sheets (in thousands, except share and per share amounts) (unaudited) september 30, 2020 december 31, 2019 assets current assets: cash and cash equivalents $ 74,745 $ 11,604 receivables from clients, net 94,644 116,571 unbilled services, net 78,346 79,937 income tax receivable 244 2,376 prepaid expenses and other current assets 11,853 14,248 total current assets 259,832 224,736 property and equipment, net 34,879 38,413 deferred income taxes, net 11,425 1,145 long-term investments 66,122 54,541 operating lease right-of-use assets 50,499 54,954 other non-current assets 58,944 52,177 intangible assets, net 22,250 31,625 goodwill 586,730 646,680 total assets $ 1,090,681 $ 1,104,271 liabilities and stockholders’ equity current liabilities: accounts payable $ 4,838 $ 7,944 accrued expenses and other current liabilities 23,646 18,554 accrued payroll and related benefits 105,276 141,605 current maturities of long-term debt 540 529 current maturities of operating lease liabilities 9,058 7,469 deferred revenues 31,768 28,443 total current liabilities 175,126 204,544 non-current liabilities: deferred compensation and other liabilities 44,699 28,635 long-term debt, net of current portion 250,917 208,324 operating lease liabilities, net of current portion 64,318 69,233 deferred income taxes, net 555 8,070 total non-current liabilities 360,489 314,262 commitments and contingencies stockholders’ equity common stock; $0.01 par value; 500,000,000 shares authorized; 25,444,128 and 25,144,764 shares issued at september 30, 2020 and december 31, 2019, respectively 247 247 treasury stock, at cost, 2,571,266 and 2,425,430 shares at september 30, 2020 and december 31, 2019, respectively (129,438 ) (128,348 ) additional paid-in capital 454,153 460,781 retained earnings 220,146 237,849 accumulated other comprehensive income 9,958 14,936 total stockholders’ equity 555,066 585,465 total liabilities and stockholders’ equity $ 1,090,681 $ 1,104,271 huron consulting group inc. consolidated statements of cash flows (in thousands) (unaudited) nine months ended september 30, 2020 2019 cash flows from operating activities: net income (loss) $ (17,703 ) $ 27,430 adjustments to reconcile net income (loss) to cash flows from operating activities: depreciation and amortization 22,511 25,410 non-cash lease expense 5,844 6,413 lease impairment charge — 805 share-based compensation 18,559 18,094 amortization of debt discount and issuance costs 595 8,066 goodwill impairment charges 59,816 — allowances for doubtful accounts 539 191 deferred income taxes (16,125 ) (262 ) loss on sale of business 102 — change in fair value of contingent consideration liabilities — (1,506 ) changes in operating assets and liabilities, net of divestiture: (increase) decrease in receivables from clients, net 23,493 (6,817 ) (increase) decrease in unbilled services, net 1,597 (30,163 ) (increase) decrease in current income tax receivable / payable, net 9,455 10,561 (increase) decrease in other assets (3,426 ) (4,160 ) increase (decrease) in accounts payable and other liabilities (5,272 ) (3,565 ) increase (decrease) in accrued payroll and related benefits (25,290 ) (1,850 ) increase (decrease) in deferred revenues 3,290 3,098 net cash provided by operating activities 77,985 51,745 cash flows from investing activities: purchases of property and equipment, net (5,731 ) (10,024 ) purchases of investment securities (13,000 ) — investment in life insurance policies (2,026 ) (4,434 ) purchases of businesses (801 ) (2,500 ) capitalization of internally developed software costs (6,830 ) (7,462 ) net cash used in investing activities (28,388 ) (24,420 ) cash flows from financing activities: proceeds from exercise of stock options 825 703 shares redeemed for employee tax withholdings (7,797 ) (5,206 ) share repurchases (22,115 ) — proceeds from bank borrowings 283,000 105,500 repayments of bank borrowings (240,396 ) (105,885 ) payment of debt issuance costs — (1,498 ) payments for contingent consideration liabilities — (4,674 ) net cash provided by (used in) financing activities 13,517 (11,060 ) effect of exchange rate changes on cash 27 38 net increase in cash and cash equivalents 63,141 16,303 cash and cash equivalents at beginning of the period 11,604 33,107 cash and cash equivalents at end of the period $ 74,745 $ 49,410 huron consulting group inc. segment operating results and other operating data (unaudited) three months ended september 30, percent increase (decrease) segment and consolidated operating results (in thousands): 2020 2019 healthcare: revenues $ 87,406 $ 100,000 (12.6 )% operating income $ 25,610 $ 32,863 (22.1 )% segment operating income as a percentage of segment revenues 29.3 % 32.9 % business advisory: revenues $ 66,048 $ 62,519 5.6 % operating income $ 10,780 $ 11,942 (9.7 )% segment operating income as a percentage of segment revenues 16.3 % 19.1 % education: revenues $ 51,850 $ 56,770 (8.7 )% operating income $ 12,548 $ 14,413 (12.9 )% segment operating income as a percentage of segment revenues 24.2 % 25.4 % total company: revenues $ 205,304 $ 219,289 (6.4 )% reimbursable expenses 2,860 23,636 (87.9 )% total revenues and reimbursable expenses $ 208,164 $ 242,925 (14.3 )% statements of operations reconciliation: segment operating income $ 48,938 $ 59,218 (17.4 )% items not allocated at the segment level: other operating expenses 29,042 32,310 (10.1 )% litigation and other gains — (630 ) n/m depreciation and amortization 6,197 6,962 (11.0 )% total operating income (loss) 13,699 20,576 (33.4 )% other expense, net (224 ) (4,456 ) (95.0 )% income from continuing operations before taxes $ 13,475 $ 16,120 (16.4 )% other operating data: number of full-time billable consultants (at period end) (1): healthcare 838 886 (5.4 )% business advisory 1,001 954 4.9 % education 790 727 8.7 % total 2,629 2,567 2.4 % average number of full-time billable consultants (for the period) (1): healthcare 844 858 business advisory 976 920 education 772 698 total 2,592 2,476 huron consulting group inc. segment operating results and other operating data (continued) (unaudited) three months ended september 30, other operating data (continued): 2020 2019 full-time billable consultant utilization rate (2): healthcare 71.4 % 81.8 % business advisory 72.6 % 72.0 % education 66.5 % 75.5 % total 70.4 % 76.3 % full-time billable consultant average billing rate per hour (3): healthcare $ 252 $ 226 business advisory (4) $ 186 $ 193 education $ 184 $ 197 total (4) $ 206 $ 206 revenue per full-time billable consultant (in thousands): healthcare $ 77 $ 84 business advisory $ 64 $ 65 education $ 57 $ 70 total $ 66 $ 73 average number of full-time equivalents (for the period) (5): healthcare 279 217 business advisory 35 19 education 46 52 total 360 288 revenue per full-time equivalent (in thousands): healthcare $ 80 $ 128 business advisory $ 106 $ 126 education $ 165 $ 151 total $ 93 $ 132 huron consulting group inc. segment operating results and other operating data (continued) (unaudited) nine months ended september 30, percent increase (decrease) segment and consolidated operating results (in thousands): 2020 2019 healthcare: revenues $ 268,340 $ 295,621 (9.2 )% operating income $ 70,831 $ 94,058 (24.7 )% segment operating income as a percentage of segment revenues 26.4 % 31.8 % business advisory: revenues $ 201,423 $ 183,602 9.7 % operating income $ 37,306 $ 32,997 13.1 % segment operating income as a percentage of segment revenues 18.5 % 18.0 % education: revenues $ 176,017 $ 165,265 6.5 % operating income $ 41,792 $ 43,235 (3.3 )% segment operating income as a percentage of segment revenues 23.7 % 26.2 % total company: revenues $ 645,780 $ 644,488 0.2 % reimbursable expenses 25,133 65,787 (61.8 )% total revenues and reimbursable expenses $ 670,913 $ 710,275 (5.5 )% statements of operations reconciliation: segment operating income $ 149,929 $ 170,290 (12.0 )% items not allocated at the segment level: other operating expenses 87,826 105,369 (16.6 )% litigation and other gains (150 ) (1,571 ) (90.5 )% depreciation and amortization 18,635 21,285 (12.5 )% goodwill impairment charges (6) 59,816 — n/m total operating income (loss) (16,198 ) 45,207 n/m other expense, net (6,829 ) (10,326 ) (33.9 )% income (loss) from continuing operations before taxes $ (23,027 ) $ 34,881 n/m other operating data: number of full-time billable consultants (at period end) (1): healthcare 838 886 (5.4 )% business advisory 1,001 954 4.9 % education 790 727 8.7 % total 2,629 2,567 2.4 % average number of full-time billable consultants (for the period) (1): healthcare 873 835 business advisory 940 876 education 779 665 total 2,592 2,376 huron consulting group inc. segment operating results and other operating data (continued) (unaudited) nine months ended september 30, other operating data (continued): 2020 2019 full-time billable consultant utilization rate (2): healthcare 70.2 % 80.4 % business advisory 72.6 % 72.7 % education 71.7 % 76.7 % total 71.5 % 76.5 % full-time billable consultant average billing rate per hour (3): healthcare $ 233 $ 225 business advisory (4) $ 197 $ 195 education $ 189 $ 200 total (4) $ 206 $ 207 revenue per full-time billable consultant (in thousands): healthcare $ 216 $ 247 business advisory $ 204 $ 202 education $ 194 $ 217 total $ 205 $ 222 average number of full-time equivalents (for the period) (5): healthcare 279 237 business advisory 27 14 education 56 44 total 362 295 revenue per full-time equivalent (in thousands): healthcare $ 285 $ 375 business advisory $ 370 $ 465 education $ 453 $ 480 total $ 317 $ 395 (1) consists of full-time professionals who provide consulting services and generate revenues based on the number of hours worked. (2) utilization rate for full-time billable consultants is calculated by dividing the number of hours full-time billable consultants worked on client assignments during a period by the total available working hours for these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days. (3) average billing rate per hour for full-time billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period. (4) the business advisory segment includes operations of huron eurasia india. absent the impact of huron eurasia india, the average billing rate per hour for the business advisory segment would have been $201 and $221 for the three months ended september 30, 2020 and 2019, respectively; and $217 and $220 for the nine months ended september 30, 2020 and 2019, respectively. absent the impact of huron eurasia india, huron's consolidated average billing rate per hour would have been $212 and $216 for the three months ended september 30, 2020 and 2019, respectively; and $213 and $216 for the nine months ended september 30, 2020 and 2019, respectively. (5) consists of coaches and their support staff within the culture and organizational excellence solution, consultants who work variable schedules as needed by clients, employees who provide managed services in our healthcare segment, and full-time employees who provide software support and maintenance services to clients. (6) the non-cash goodwill impairment charges are not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segments. we do not include the impact of goodwill impairment charges in our evaluation of segment performance. huron consulting group inc. reconciliation of net income (loss) from continuing operations to adjusted earnings before interest, taxes, depreciation and amortization (7) (in thousands) (unaudited) three months ended september 30, nine months ended september 30, 2020 2019 2020 2019 revenues $ 205,304 $ 219,289 $ 645,780 $ 644,488 net income (loss) from continuing operations $ 11,087 $ 13,706 $ (17,614 ) $ 27,625 add back: income tax expense (benefit) 2,388 2,414 (5,413 ) 7,256 interest expense, net of interest income 2,259 4,374 7,516 13,156 depreciation and amortization 7,546 8,124 22,488 24,735 earnings before interest, taxes, depreciation and amortization (ebitda) (7) 23,280 28,618 6,977 72,772 add back: restructuring and other charges 59 127 2,626 2,156 litigation and other gains — (630 ) (150 ) (1,571 ) goodwill impairment charges — — 59,816 — loss on sale of business — — 102 — transaction-related expenses 437 563 437 2,613 foreign currency transaction losses (gains), net (194 ) 114 245 36 adjusted ebitda (7) $ 23,582 $ 28,792 $ 70,053 $ 76,006 adjusted ebitda as a percentage of revenues (7) 11.5 % 13.1 % 10.8 % 11.8 % huron consulting group inc. reconciliation of net income (loss) from continuing operations to adjusted net income from continuing operations (7) (in thousands, except per share amounts) (unaudited) three months ended september 30, nine months ended september 30, 2020 2019 2020 2019 net income (loss) from continuing operations $ 11,087 $ 13,706 $ (17,614 ) $ 27,625 weighted average shares - diluted 22,175 22,561 21,868 22,425 diluted earnings (loss) per share from continuing operations $ 0.50 $ 0.61 $ (0.81 ) $ 1.23 add back: amortization of intangible assets 3,155 4,205 9,558 13,036 restructuring and other charges 59 127 2,626 2,156 litigation and other gains — (630 ) (150 ) (1,571 ) goodwill impairment charges — — 59,816 — non-cash interest on convertible notes — 2,171 — 6,436 loss on sale of business — — 102 — transaction-related expenses 437 563 437 2,613 tax effect of adjustments (1,692 ) (1,673 ) (17,041 ) (5,909 ) tax benefit related to "check-the-box" election — (736 ) — (736 ) total adjustments, net of tax 1,959 4,027 55,348 16,025 adjusted net income from continuing operations (7) $ 13,046 $ 17,733 $ 37,734 $ 43,650 adjusted weighted average shares - diluted (8) 22,175 22,561 22,207 22,425 adjusted diluted earnings per share from continuing operations (7) $ 0.59 $ 0.79 $ 1.70 $ 1.95 in evaluating the company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“ebitda”), adjusted ebitda, adjusted ebitda as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-gaap measures. management uses these non-gaap financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). these non-gaap financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. management also uses these non-gaap financial measures when publicly providing the company's business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. management believes that these non-gaap financial measures provide useful information to investors and others in understanding and evaluating huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner huron’s current financial results with huron’s past financial results. investors should recognize that these non-gaap measures might not be comparable to similarly titled measures of other companies. these measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the united states. as the company reported a net loss for the nine months ended september 30, 2020, gaap diluted weighted average shares outstanding equals the basic weighted average shares outstanding for that period. the non-gaap adjustments described above resulted in adjusted net income from continuing operations for the first nine months of 2020. therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding.
