Huron Consulting Group Inc. (NASDAQ:HURN), a leading provider of
business consulting services, today announced that it has entered
into an agreement to acquire Studer Group®, a premier professional
services firm that assists healthcare providers achieve cultural
transformation to deliver and sustain exceptional improvement in
clinical outcomes and financial results.
The acquisition will combine Huron Healthcare’s performance
improvement and clinical transformation capabilities with Studer
Group’s Evidence-Based LeadershipSM framework to provide
unparalleled leadership and cultural transformation expertise for
healthcare provider clients.
"The healthcare industry is facing immense pressure to enhance
the quality of clinical outcomes and reduce the cost of providing
patient care," said James H. Roth, chief executive officer and
president, Huron Consulting Group. "Studer Group is the market
leader in driving cultural transformation to help hospitals improve
performance. The combination of Huron and Studer Group will create
the premier professional services firm focused on improving
healthcare providers’ clinical, operational, and financial
outcomes."
"Our experience working with hospitals and health systems
indicates that the key to success is combining a deep focus on
operational excellence while optimizing human potential to provide
the leadership needed for transformation," said Gordon Mountford,
executive vice president, Huron Healthcare. "Healthcare providers
have invested deeply in technology and analytics, and their
leadership teams are now focused on implementing the human side of
change. The combination of Huron Healthcare and Studer Group will
help our clients navigate all aspects of the transformation
process, resulting in improved clinical outcomes and enhanced
efficiency."
Quint Studer, founder, Studer Group, said, "Since beginning as
individuals in healthcare, then as the Studer Group, our focus has
always been to make healthcare a better place for employees to
work, physicians to practice medicine, and patients to receive
care. We create methods, tools and processes to improve
outcomes and build cultures of sustainable high
performance. Becoming part of Huron, we will strengthen our
foundation and together, Huron and Studer Group will have an even
greater impact to improve quality and access while reducing
cost."
"Huron and Studer Group share a passion to make a
difference. Our offerings are complementary in all areas of
client service to meet the needs of leadership in the emerging
healthcare environment. In combination, Huron and Studer Group
will bring to hospital and healthcare organizations the ‘best of
the best’ in performance improvement and cultural transformation to
truly hardwire excellence," said Barry Graham (B.G.) Porter, chief
executive officer and president, Studer Group.
Studer Group works with hospital executives to achieve, sustain,
and accelerate exceptional clinical, operational, and financial
results. Based in Pensacola, Florida, Studer Group was founded in
2000 and is the recognized market leader in healthcare cultural
transformation. The firm has approximately 235 full-time employees,
including more than 70 coaches, with substantial industry
experience serving more than 750 partner hospitals. Studer Group
partners with clients to establish specific clinical, operational,
and financial targets and implements its cultural transformation
methodology to help clients meet and exceed those stated targets.
To support Studer Group’s methodology and sustain results, it
packages proprietary, data-driven technology and leadership
development resources, including conferences and publications, to
deliver lasting, positive change to its partner organizations.
Together, the combined organization will have more than 1,500
dedicated healthcare professionals working to empower
transformation for healthcare providers. The acquisition will also
add proprietary, market-leading technology tools that uniquely
bolster Huron Healthcare’s core solutions.
Roth said, "Huron and Studer Group together are a great
strategic fit, and the combination will enhance Huron’s strong
reputation in the healthcare market. We expect the acquisition
to be accretive to our 2015 financial results, enhance our growth,
margins, cash flow, and non-GAAP earnings per share. The
strength of our balance sheet provides us with the flexibility to
finance the transaction, and the strength of our cash flow will
enable us to continue investing in growth opportunities across our
businesses. We are excited for the Huron Healthcare and Studer
Group teams to join forces, and we feel that we have found a
business partner that shares our commitment to improving
healthcare."
Transaction Overview
Under the terms of the acquisition agreement, Huron will
purchase Studer Group for $325 million, paid via $323 million in
cash and $2 million in Huron common stock. The cash component of
the transaction will be financed with cash on hand and borrowings
under the Company’s senior secured credit facility. For the twelve
months ended September 30, 2014, the combined companies will have
pro forma revenues of approximately $904 million and non-GAAP
adjusted earnings before interest, taxes, depreciation and
amortization ("EBITDA")(1) of approximately $190 million. As of
September 30, 2014, the Company’s pro forma leverage, as
defined in the Company’s senior secured credit facility, would have
been 2.4x net debt to last twelve months adjusted EBITDA. The
Company expects the transaction to be accretive to 2015 non-GAAP
adjusted diluted earnings per share in a range of $0.47 to $0.52.
This non-GAAP adjusted diluted earnings per share estimate cannot
be reconciled to GAAP diluted earnings per share because the impact
of acquisition related adjustments on earnings, as required by
GAAP, cannot be reasonably estimated as the information needed is
not currently available.
For reporting purposes, Studer Group will be included in the
Huron Healthcare segment, which currently accounts for more than
50% of Huron’s overall revenue. The transaction is expected to
close in February 2015, and is subject to clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other
customary closing conditions.
Further information regarding all terms and conditions contained
in the definitive acquisition agreement will be included in Huron’s
forthcoming Report on Form 8-K in connection with the
transaction.
Financial Highlights and Non-GAAP Financial Measures
A reconciliation of non-GAAP adjusted EBITDA(1) for the twelve
months ended September 30, 2014 to the most directly
comparable GAAP measure is provided below:
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION (1) (in thousands)
(Unaudited)
Twelve Months Ended September 30,
2014
Huron Consulting
Studer
Pro Forma
Group Inc.
Group
Combined (2)
Revenues
$ 829,529 $ 74,231 $ 903,760 Net income
from continuing operations 88,377 1,629 90,006 Add back: Income tax
expense 39,953 575 40,528 Interest and other expenses 5,683 12,800
18,483 Depreciation and amortization 29,226
10,648 39,874
Earnings before interest, taxes,
depreciation and amortization (EBITDA) (1)
163,239 25,652 188,891 Add back: Restructuring charges 1,561 -
1,561 Litigation and other gains (15 ) -
(15 ) Adjusted EBITDA (1) $ 164,785 $ 25,652 $
190,437 Adjusted EBITDA as a percentage of revenues (1)
19.9 % 34.6 % 21.1 %
(1) In evaluating the Company’s
financial performance, management uses earnings before interest,
taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA
and Adjusted EBITDA as a percentage of revenues, which are non-GAAP
measures. Our management uses these non-GAAP financial measures to
gain an understanding of our 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 our ongoing business in a manner that allows for
meaningful period-to-period comparisons. Management also uses these
non-GAAP financial measures when publicly providing our business
outlook, for internal management purposes, and as a basis for
evaluating potential acquisitions and dispositions. We believe 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.
(2) The pro forma combined
amounts represent the sum of Huron Consulting Group Inc. and Studer
Group results in the two preceding columns. These amounts are
presented for illustrative purposes and are not necessarily
indicative of the financial performance of the combined company had
Huron Consulting Group Inc. and Studer Group been combined during
the period presented. Additionally, the pro forma combined amounts
do not reflect the impact of purchase accounting adjustments, such
as intangible assets amortization, required to present the
acquisition as of the beginning of the period presented.
Conference Call and Webcast
The Company will host a conference call and webcast today,
January 27, 2015, at 9:00 a.m. Eastern Time (8:00 a.m. Central
Time). The conference call is being webcast by NASDAQ OMX and can
be accessed at Huron Consulting Group’s website at
http://ir.huronconsultinggroup.com/. To participate by telephone,
the dial-in number is (877) 546-5021 with passcode 87592594. A
replay of the webcast will be available approximately two hours
after the conclusion of the call and for 90 days thereafter.
A supplemental presentation that will be discussed on the
conference call and webcast will be made available in the Investor
Relations section of the Company's website at
http://ir.huronconsultinggroup.com prior to the conference call,
and will be available for 90 days thereafter.
About Huron Healthcare
Huron Healthcare is the premier provider of performance
improvement and clinical transformation solutions for hospitals and
health systems. By partnering with clients, Huron delivers
solutions that improve quality, increase revenue, reduce expenses,
and enhance physician, patient, and employee satisfaction across
the healthcare enterprise. Clients include leading national and
regional integrated healthcare systems, academic medical centers,
community hospitals, and physician practices. Modern
Healthcare ranked Huron Healthcare third on its 2014 list of
the largest healthcare management consulting firms. Learn more
at http://www.huronconsultinggroup.com/healthcare or follow us
on Twitter: @Huron.
About Huron Consulting Group
Huron Consulting Group helps clients in diverse industries
improve performance, transform the enterprise, reduce costs,
leverage technology, process and review large amounts of complex
data, address regulatory changes, recover from distress and
stimulate growth. Our professionals employ their expertise in
finance, operations, strategy and technology to provide our clients
with specialized analyses and customized advice and solutions that
are tailored to address each client's particular challenges and
opportunities to deliver sustainable and measurable results. The
Company provides consulting services to a wide variety of both
financially sound and distressed organizations, including
healthcare organizations, leading academic institutions, Fortune
500 companies, governmental entities and law firms. Huron has
worked with more than 425 health systems, hospitals, and academic
medical centers; more than 400 corporate general counsel; and more
than 350 universities and research institutions. Learn more at
http://www.huronconsultinggroup.com/.
About Studer Group
A recipient of the 2010 Malcolm Baldrige National Quality Award,
Studer Group is an outcomes-based healthcare performance
improvement firm that works with healthcare organizations in the
United States, Canada, Australia and beyond, teaching them how to
achieve, sustain, and accelerate exceptional clinical, operational,
and financial results. Working together, they help to get the
foundation right so organizations can build a sustainable culture
that promotes accountability, fosters innovation, and consistently
delivers a great patient experience and the best quality outcomes
over time. To learn more about Studer Group, visit
studergroup.com.
Statements in this presentation, including the information
incorporated by reference herein, that are not historical in
nature, including those concerning the Company’s current
expectations about its future requirements and needs, are
"forward-looking" statements as defined in Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
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" or
"continues."
These forward-looking statements reflect our current
expectations about our 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: 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 a general
downturn in market conditions. With respect to our proposed
acquisition of Studer Group, additional factors that could cause
actual results to differ materially from those indicated or implied
by the forward-looking statements include, among others: the
occurrence of any event, change or other circumstances that could
give rise to the termination of the agreement and plan of merger
entered into with Studer Group; the ability to satisfy all
conditions to completion of the acquisition of Studer Group,
including obtaining clearance under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and complete the proposed acquisition;
the disruption of management's attention from our ongoing business
operations due to the proposed acquisition of Studer Group; changes
in the financial condition of the healthcare industry or higher
education industry that Studer Group serves; risks associated with
Studer Group's software offerings, tools and consulting services;
and risks relating to privacy, information security, and other
healthcare-related laws and standards.
These forward-looking statements involve known and unknown
risks, uncertainties and other factors, including, among others,
those described under "Item 1A. Risk Factors" in our Annual Report
on Form 10-K for the year ended December 31, 2013, and under "Item
1A. Risk Factors" in our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2014 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. We disclaim 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.Media Contact:Jennifer Frost
Hennagir,
312-880-3260jfrost-hennagir@huronconsultinggroup.comorInvestor
Contact:C. Mark Hussey or Ellen Wong,
312-583-8722investor@huronconsultinggroup.com
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