Huron is a global consultancy that helps clients drive growth, enhance performance and sustain leadership in the markets they serve. We partner with clients to develop strategies and implement solutions that enable the transformative change our clients need to own their future.

The accompanying unaudited consolidated financial statements reflect the financial position, results of operations, and cash flows as of and for the three and six months ended ~~March 31,~~June 30, 2019 and 2018. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ~~(“GAAP”~~("GAAP") for annual financial statements. In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows for the interim periods presented in conformity with GAAP. These financial statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2018 included in our Annual Report on Form ~~10-K.~~10-K and our Quarterly Report on Form 10-Q for the period ended March 31, 2019. Our results for any interim period are not necessarily indicative of results for a full year or any other interim period.

Identifiable intangible assets with finite lives are amortized over their estimated useful lives. Customer relationships, as well as certain trade names and technology and software, are amortized on an accelerated basis to correspond to the cash flows expected to be derived from the assets. All other intangible assets with finite lives are amortized on a straight-line basis.

For the three months ended ~~March 31,~~June 30, 2019 and 2018, we recognized revenues of ~~$204.4~~$220.8 million and ~~$193.7~~$197.5 million, respectively. Of the ~~$204.4~~$220.8 million recognized in the ~~first~~second quarter of 2019, we recognized revenues of ~~$3.9~~$3.6 million from obligations satisfied, or partially satisfied, in prior periods, primarily due to the release of allowances on unbilled services due to securing contract amendments. During the ~~first~~second quarter of 2019, we recognized a ~~$1.2~~$0.3 million decrease to revenues due to changes in the estimates of our variable consideration under performance-based billing arrangements. Of the ~~$193.7~~$197.5 million recognized in the ~~first~~second quarter of 2018, we recognized revenues of ~~$5.9~~$5.2 million from obligations satisfied, or partially satisfied, in prior periods, of which ~~$3.1~~$2.9 million was primarily due to the release of allowances on unbilled services due to securing contract amendments and ~~$2.8~~$2.3 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements.

For the six months ended June 30, 2019 and 2018, we recognized revenues of $425.2 million and $391.2 million, respectively. Of the $425.2 million recognized in the first six months of 2019, we recognized revenues of $2.1 million from obligations satisfied, or partially satisfied, in prior periods, primarily due to the release of allowances on unbilled services due to securing contract amendments. During the first six months of 2019, we recognized a $1.5 million decrease to revenues due to changes in the estimates of our variable consideration under performance-based billing arrangements. Of the $391.2 million recognized in the first six months of 2018, we recognized revenues of $8.1 million from obligations satisfied, or partially satisfied, in prior periods, of which $4.7 million was due to changes in the estimates of our variable consideration under performance-based billing arrangements and $3.4 million was primarily due to the release of allowances on unbilled services due to securing contract amendments.

Client prepayments and retainers are classified as deferred revenues and recognized over future periods in accordance with the applicable engagement agreement and our revenue recognition policy. Our deferred revenues balance as of ~~March 31,~~June 30, 2019 and December 31, 2018, was ~~$30.0~~$27.6 million and $28.1 million, respectively. The ~~$1.9~~$0.5 million ~~increase~~decrease primarily reflects timing differences between client payments in accordance with their contract terms and the completion of our performance obligations. For the three and six months ended ~~March 31,~~June 30, 2019, ~~$11.7~~$10.7 million and $22.5 million, respectively, of revenues recognized were included in the deferred revenue balance as of December 31, 2018.

Basic earnings per share excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period, excluding unvested restricted common stock. Diluted earnings per share reflects the potential reduction in earnings per share that could occur if securities or other contracts to issue common stock were exercised or converted into common stock under the treasury stock method. Such securities or other contracts include unvested restricted stock awards, outstanding common stock options, convertible senior notes, and outstanding warrants, to the extent dilutive. In periods for which we report a net loss from continuing operations, diluted weighted average common shares outstanding excludes all potential common stock equivalents as their impact on diluted net loss from continuing operations per share would be anti-dilutive.

See Note 8 “Financing Arrangements” for further information on the convertible senior notes and warrants related to the issuance of convertible notes.

We currently have a share repurchase program permitting us to repurchase up to $125 million of our common stock through October 31, 2019 (the “Share Repurchase Program”). The amount and timing of the repurchases will be determined by management and will depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements. No shares were repurchased during the first ~~three~~six months of 2019 and 2018. As of ~~March 31,~~June 30, 2019, $35.1 million remains available for share repurchases.

Upon conversion, the Convertible Notes will be settled, at our election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. Our current intent and policy is to settle conversions with a combination of cash and shares of common stock with the principal amount of the Convertible Notes paid in cash, in accordance with the settlement provisions of the Indenture.

The initial conversion rate for the Convertible Notes is 12.5170 shares of our common stock per $1,000 principal amount of the Convertible Notes, which is equal to an initial conversion price of approximately $79.89 per share of our common stock. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest, except in certain limited circumstances described in the Indenture. Upon the occurrence of a “make-whole fundamental change” (as defined in the Indenture) the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its Convertible Notes in connection with such make-whole fundamental change. Additionally, if the Company undergoes a “fundamental change” (as defined in the Indenture), a holder will have the option to require the Company to repurchase all or a portion of its Convertible Notes for cash at a price equal to 100% of the principal amount of the Convertible Notes being repurchased plus any accrued and unpaid interest. As discussed below, the convertible note hedge transactions and warrants, which were entered into in connection with the Convertible Notes, effectively raise the price at which economic dilution would occur from the initial conversion price of approximately $79.89 to approximately $97.12 per share.

On or after July 1, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or a portion of its Convertible Notes, regardless of the foregoing circumstances.

We have separated the Convertible Notes into liability and equity components. The carrying amount of the liability component was determined by measuring the fair value of a similar liability that does not have an associated convertible feature, assuming our non-convertible debt borrowing rate. The carrying value of the equity component representing the conversion option, which is recognized as a debt discount, was determined by deducting the fair value of the liability component from the proceeds of the Convertible Notes. The debt discount is amortized to interest expense using an effective interest rate of 4.751% over the term of the Convertible Notes. As of ~~March 31,~~June 30, 2019, the remaining life of the Convertible Notes is ~~six~~three months. The equity component will not be remeasured as long as it continues to meet the conditions for equity classification.

The transaction costs related to the issuance of the Convertible Notes were separated into liability and equity components based on their relative values, as determined above. Transaction costs attributable to the liability component are recorded as a deduction to the carrying amount of the liability and amortized to interest expense over the term of the Convertible Notes; and transaction costs attributable to the equity component are netted with the equity component of the Convertible Notes in stockholders’ equity. Total debt issuance costs were approximately $7.3 million, of which $6.2 million was allocated to liability issuance costs and $1.1 million was allocated to equity issuance costs.

The following table presents the amount of interest expense recognized related to the Convertible Notes for the periods presented.

As of ~~March 31,~~June 30, 2019, our restructuring charge liability related to office space reductions of ~~$1.1~~$1.0 million represented the present value of the remaining estimated operating expense payments for vacated office spaces, primarily in Chicago, Illinois; Washington, D.C.; and Middleton, Wisconsin. This restructuring charge liability is included as a component of accrued expenses and other current liabilities and deferred compensation and other liabilities. ~~All of the $0.3~~The $0.1 million restructuring charge liability related to employee costs at ~~March 31,~~June 30, 2019 is expected to be paid in the next 12 months. The restructuring charge liability related to employee costs is included as a component of accrued payroll and related benefits.

We recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. We have designated this derivative instrument as a cash flow hedge. Therefore, changes in the fair value of the derivative instrument are recorded to other comprehensive income (“OCI”) and reclassified into interest expense upon settlement. As of ~~March 31,~~June 30, 2019, it was anticipated that ~~$0.2 million~~an immaterial amount of the ~~gains,~~losses, net of tax, currently recorded in accumulated other comprehensive income will be reclassified into earnings within the next 12 months.

The table below sets forth additional information relating to the interest rate swap designated as a cash flow hedging instrument as of ~~March 31,~~June 30, 2019 and December 31, 2018.

All of our derivative instruments are transacted under the International Swaps and Derivatives Association (ISDA) master agreements. These agreements permit the net settlement of amounts owed in the event of default and certain other termination events. Although netting is permitted, it is our policy to record all derivative assets and liabilities on a gross basis on our consolidated balance sheet.

We do not use derivative instruments for trading or other speculative purposes. Refer to Note 12 “Other Comprehensive Income (Loss)” for additional information on our derivative instrument.

To determine the appropriate accounting treatment for our investment, we performed a variable interest entity (“VIE”) analysis and concluded that Shorelight does not meet the definition of a VIE. We also reviewed the characteristics of our investment to confirm that the convertible notes are not in-substance common stock that would warrant equity method accounting. After we reviewed all of the terms of the investment, we concluded the appropriate accounting treatment to be that of an available-for-sale debt security.

The convertible debt investment is carried at fair value with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income. We estimate the fair value of our investment using a Monte Carlo simulation model, cash flow projections discounted at a risk-adjusted rate, and certain assumptions related to equity volatility and applicable holding period, all of which are Level 3 inputs. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of the investment, which would result in different impacts to our consolidated balance sheet and comprehensive income. Actual results may differ from our estimates. The fair value of the convertible debt investment is recorded in long-term investment on our consolidated balance sheets.

maintained within a trust. The cash surrender value of the life insurance policies approximates fair value and is based on third-party broker statements which provide the fair value of the life insurance policies' underlying investments, which are Level 2 inputs. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The Plan assets are included in other non-current assets on our consolidated balance sheets. Realized and unrealized gains (losses) from the deferred compensation assets are recorded to other income (expense), net in our consolidated statements of operations.

Financial assets and liabilities not recorded at fair value are as follows:

The carrying value of our borrowings outstanding under our senior secured credit facility is stated at cost. Our carrying value approximates fair value, using Level 2 inputs, as the senior secured credit facility bears interest at variable rates based on current market rates as set forth in the Amended Credit Agreement. Refer to Note 8 “Financing Arrangements” for additional information on our senior secured credit facility.

The carrying value of our promissory note due 2024 is stated at cost. Our carrying value approximates fair value, using Level 2 inputs, as the promissory note bears interest at rates based on current market rates as set forth in the terms of the promissory note. Refer to Note 8 “Financing Arrangements” for additional information on our promissory note due 2024.

The differences between the $250 million principal amount of the Convertible Notes and the carrying amounts shown above represent the unamortized debt discount and issuance costs. As of ~~March 31,~~June 30, 2019, and December 31, 2018, the carrying value of the equity component of $39.3 million was unchanged from the date of issuance. Refer to Note 8 “Financing Arrangements” for additional information on our Convertible Notes. The estimated fair value of the Convertible Notes was determined based on the quoted bid price of the Convertible Notes in an over-the-counter market, which is a Level 2 input, on the last day of trading for the quarters ended ~~March 31,~~June 30, 2019 and December 31, 2018.

Based on the closing price of our common stock of ~~$47.22~~$50.38 on ~~March 31,~~June 30, 2019, the if-converted value of the Convertible Notes was less than the principal amount.

Cash and cash equivalents are stated at cost, which approximates fair market value. The carrying values of all other financial instruments not described above reasonably approximate fair market value due to the nature of the financial instruments and the short-term maturity of these items.

The table below sets forth the components of other comprehensive income (loss), net of tax, for the three and six months ended ~~March 31,~~June 30, 2019 and 2018.

The before tax amounts reclassified from accumulated other comprehensive income related to our cash flow hedges are recorded to interest expense, net of interest income.

For the three months ended ~~March 31,~~June 30, 2019, our effective tax rate was ~~29.0%~~24.8% as we recognized income tax expense from continuing operations of ~~$1.4~~$3.5 million on income from continuing operations of ~~$4.7~~$14.0 million. The effective tax rate of ~~29.0%~~24.8% was ~~less~~more favorable than the statutory rate, inclusive of state income taxes, of 26.4% primarily due to ~~$0.5 million of foreign losses with no~~non-taxable gains on our investments used to fund our deferred compensation liability and federal tax benefit, which had an unfavorable impact of 2.9% on the effective tax rate; and $0.1 million of additional tax expense related to disallowed executive compensation deductions, which had an unfavorable impact of 1.8% on the effective tax rate. These unfavorable adjustments to our effective tax rate werecredits, partially offset by ~~$0.1 million of discrete tax benefit for share-based compensation awards that vested during the first quarter of 2019 and which had a favorable impact of 1.8% on the effective tax rate.~~

For the six months ended June 30, 2019, our effective tax rate was 25.8% as we recognized income tax expense from continuing operations of $4.8 million on income from continuing operations of $18.8 million. The effective tax rate of 25.8% was more favorable than the statutory rate, inclusive of state income taxes, of 26.4% primarily due to non-taxable gains on our investments used to fund our deferred compensation liability, federal tax credits and share-based compensation awards that vested during the year; partially offset by non-deductible business expenses. For the six months ended June 30, 2018, our effective tax rate was 53.0% as we recognized income tax expense from continuing operations of $3.0 million on income from continuing operations of $5.6 million. The effective tax rate of 53.0% was less favorable than the statutory rate, inclusive of state income taxes, of 26.0% primarily due to discrete tax expense for share-based compensation awards that vested during the first quarter of 2018, ~~and~~ which had an unfavorable impact of ~~43.7%~~22.5% on the effective tax ~~rate.~~rate, and non-deductible business expenses.

As of June 30, 2019, we had $0.8 million of unrecognized tax benefits which would affect the effective tax rate of continuing operations if recognized.

During the second quarter of 2018, we reached a settlement agreement related to Huron's claim in a class action lawsuit, resulting in a gain of $2.5 million. We collected the $2.5 million cash settlement during the second quarter of 2018.

From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date of this Quarterly Report on Form 10-Q, we are not a party to any litigation or legal proceeding that, in the current opinion of management, could have a material adverse effect on our financial position or results of operations. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results.

Guarantees in the form of letters of credit totaling $1.6 million were outstanding at both ~~March 31,~~June 30, 2019 and December 31, 2018, primarily to support certain office lease obligations.

To the extent permitted by law, our bylaws and articles of incorporation require that we indemnify our officers and directors against judgments, fines and amounts paid in settlement, including attorneys’ fees, incurred in connection with civil or criminal action or proceedings, as it relates to their services to us if such person acted in good faith. Although there is no limit on the amount of indemnification, we may have recourse against our insurance carrier for certain payments made.

Segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker, who is our chief executive officer, manages the business under three operating segments, which are our reportable segments: Healthcare, Business Advisory, and Education.

Segment operating income consists of the revenues generated by a segment, less the direct costs of revenue and selling, general and administrative expenses that are incurred directly by the segment. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. These administrative function costs include costs for corporate office support, certain office facility costs, costs relating to accounting and finance, human resources, legal, marketing, information technology, and company-wide business development functions, as well as costs related to overall corporate management.

In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “Huron,” “Company,” “we,” “us” and “our” refer to Huron Consulting Group Inc. and its subsidiaries.

Statements in this Quarterly Report on Form 10-Q 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 (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,” “continues,” “guidance,” or “outlook,” or similar expressions. 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 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 our Annual Report on Form 10-K for the year ended December 31, 2018 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 is a global consultancy that helps clients drive growth, enhance performance and sustain leadership in the markets they serve. We partner with clients to develop strategies and implement solutions that enable the transformative change our clients need to own their future.

We provide professional services through three operating segments: Healthcare, Business Advisory, and Education.

A large portion of our revenues is generated by our full-time consultants who provide consulting services to our clients and are billable to our clients based on the number of hours worked. A smaller portion of our revenues is generated by our other professionals, also referred to as full-time equivalents, some of whom work variable schedules as needed by our clients. Full-time equivalent professionals consist of our leadership coaches and their support staff from our ~~Studer Group~~Healthcare Leadership solution, specialized finance and operational consultants, and our employees who provide software support and maintenance services to our clients. We translate the hours that these other professionals work on client engagements into a full-time equivalent measure that we use to manage our business. We refer to our full-time consultants and other professionals collectively as revenue-generating professionals.

Revenues generated by our full-time consultants are primarily driven by the number of consultants we employ and their utilization rates, as well as the billing rates we charge our clients. Revenues generated by our other professionals, or full-time equivalents, are largely dependent on the number of consultants we employ, their hours worked, and billing rates charged. Revenues generated by our leadership coaches are largely dependent on the number of coaches we employ and the total value, scope, and terms of the consulting contracts under which they provide services, which are primarily fixed-fee contracts.

We generate our revenues from providing professional services under four types of billing arrangements: fixed-fee (including software license revenue); time-and-expense; performance-based; and software support, maintenance and subscriptions.

In fixed-fee billing arrangements, we agree to a pre-established fee in exchange for a predetermined set of professional services. We set the fees based on our estimates of the costs and timing for completing the engagements. It is the client’s expectation in these engagements that the pre-established fee will not be exceeded except in mutually agreed upon circumstances. We generally recognize revenues under fixed-fee billing arrangements using a proportionate performance approach, which is based on work completed to-date versus our estimates of the total services to be provided under the engagement. Contracts within our ~~Studer Group~~Healthcare Leadership solution include fixed-fee partner contracts with multiple performance obligations, which primarily consist of coaching services, as well as speaking engagements, conferences, publications and software products (“Partner Contracts”). Revenues for coaching services and software products are generally recognized on a straight-line basis over the length of the contract. All other revenues under Partner Contracts, including speaking engagements, conferences and publications, are recognized at the time the goods or services are provided.

Fixed-fee arrangements also include software licenses for our revenue cycle management software and research administration and compliance software. Licenses for our revenue cycle management software are sold only as a component of our consulting projects, and the services we provide are essential to the functionality of the software. Therefore, revenues from these software licenses are recognized over the term of the related consulting services contract. License revenue from our research administration and compliance software is generally recognized in the month in which the software is delivered.

Fixed-fee engagements represented ~~47.8%~~45.1% and ~~48.5%~~47.3% of our revenues for the three months ended ~~March 31,~~June 30, 2019 and 2018, respectively, and 46.4% and 47.9% of our revenues for the six months ended June 30, 2019 and 2018, respectively.

Time-and-expense billing arrangements require the client to pay based on the number of hours worked by our revenue-generating professionals at agreed upon rates. Time-and-expense arrangements also include certain speaking engagements, conferences and publications purchased by our clients outside of Partner Contracts within our ~~Studer Group~~Healthcare Leadership solution. We recognize revenues under time-and-expense billing arrangements as the related services or publications are provided. Time-and-expense engagements represented ~~40.8%~~39.5% and ~~40.1%~~41.5% of our revenues for the three months ended ~~March 31,~~June 30, 2019 and 2018, respectively, and 40.1% and 40.8% of our revenues for the six months ended June 30, 2019 and 2018, respectively.

In performance-based fee billing arrangements, fees are tied to the attainment of contractually defined objectives. We enter into performance-based engagements in essentially two forms. First, we generally earn fees that are directly related to the savings formally acknowledged by the client as a

result of adopting our recommendations for improving operational and cost effectiveness in the areas we review. Second, we have performance-based engagements in which we earn a success fee when and if certain predefined outcomes occur. Often, performance-based fees supplement our

Clients that have purchased one of our software licenses can pay an annual fee for software support and maintenance. We also generate subscription revenue from our cloud-based analytic tools and solutions. Software support, maintenance and subscription revenues are recognized ratably over the support or subscription period. These fees are billed in advance and included in deferred revenues until recognized. Software support, maintenance and subscription revenues represented ~~5.3%~~5.2% and ~~5.7%~~5.4% of our revenues for the three months ended ~~March 31,~~June 30, 2019 and 2018, respectively, and 5.3% and 5.5% of our revenues for the six months ended June 30, 2019 and 2018, respectively.

Our quarterly results are impacted principally by our full-time consultants’ utilization rate, the bill rates we charge our clients, and the number of our revenue-generating professionals who are available to work. Our utilization rate can be negatively affected by increased hiring because there is generally a transition period for new professionals that results in a temporary drop in our utilization rate. Our utilization rate can also be affected by seasonal variations in the demand for our services from our clients. For example, during the third and fourth quarters of the year, vacations taken by our clients can result in the deferral of activity on existing and new engagements, which would negatively affect our utilization rate. The number of business work days is also affected by the number of vacation days taken by our consultants and holidays in each quarter. We typically have fewer business work days available in the fourth quarter of the year, which can impact revenues during that period.

Time-and-expense engagements do not provide us with a high degree of predictability as to performance in future periods. Unexpected changes in the demand for our services can result in significant variations in utilization and revenues and present a challenge to optimal hiring and staffing. Moreover, our clients typically retain us on an engagement-by-engagement basis, rather than under long-term recurring contracts. The volume of work performed for any particular client can vary widely from period to period.

Our primary strategy is to meet the needs of our clients by providing a balanced portfolio of service offerings and capabilities so that we can adapt quickly and effectively to emerging opportunities in the marketplace. To achieve this, we continue to hire highly qualified professionals and have entered into select acquisitions of complementary businesses.

To expand our business, we will remain focused on growing our existing relationships and developing new relationships, executing our managing director compensation plan to attract and retain senior practitioners, continuing to promote and provide an integrated approach to service delivery, broadening the scope of our existing services, and acquiring complementary businesses. We will regularly evaluate the performance of our practices to ensure our investments meet these objectives. Furthermore, we intend to enhance our visibility in the marketplace by refining our overarching messaging and value propositions for the organization as well as each practice. We will continue to focus on reaching our client base through clear, concise, and endorsed messages.

We also assess our results of operations using certain non-GAAP financial measures. These non-GAAP financial measures differ from GAAP because the non-GAAP financial measures we calculate to measure 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 exclude a number of items required by GAAP, each discussed below. These non-GAAP financial 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 GAAP. Our non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how we define our non-GAAP financial measures.

Our management uses the non-GAAP financial measures to gain an understanding of our comparative operating performance, for example 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 and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results.

These non-GAAP financial measures include adjustments for the following items:

Revenues increased ~~$10.8~~$23.2 million, or ~~5.6%~~11.7%, to ~~$204.4~~$220.8 million for the ~~first three months~~second quarter of 2019 from ~~$193.7~~$197.5 million for the ~~first three months~~second quarter of 2018. Of the overall ~~$10.8~~$23.2 million increase in revenues, ~~$13.6~~$20.2 million was attributable to an increase in revenues from our full-time billable consultants and $3.0 million was attributable to an increase in revenues from our full-time equivalents.

The increase in full-time billable consultant revenues reflected strengthened demand for services in all of our segments, as discussed below in Segment Results, and was primarily attributable to increases in the average number of billable consultants and the consultant utilization rate for the second quarter of 2019 compared to the same prior year period.

The increase in full-time equivalent revenues was primarily attributable to our Healthcare segment, as discussed below in Segment Results; and reflected an increase in the average number of full-time equivalents, partially offset by a ~~$2.8~~decrease in revenue per full-time equivalent for the second quarter of 2019 compared to the same prior year period.

Our total direct costs, including amortization of intangible assets and software development costs, increased $14.3 million, or 11.1%, to $142.8 million in the three months ended June 30, 2019, from $128.5 million in the three months ended June 30, 2018. The $14.3 million increase primarily related to a $6.7 million increase in performance bonus expense for our revenue-generating professionals and a $5.3 million increase in salaries and related expenses for our revenue-generating professionals, which was largely driven by increased headcount in our Business Advisory and Education segments. Additional increases to our total direct costs include a $1.4 million increase in contractor expense and a $1.0 million increase in share-based compensation expense for our revenue-generating professionals. As a percentage of revenues, our total direct costs decreased to 64.7% during the second quarter of 2019 compared to 65.1% during the second quarter of 2018, primarily due to revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals, partially offset by the increases in performance bonus expense for our revenue-generating professionals and contractor expense, as percentages of revenues.

Total direct costs for the three months ended June 30, 2019 included $1.2 million of amortization expense for internal software development costs and intangible assets, compared to $1.0 million of amortization expense for the same prior year period. The $0.2 million increase in amortization expense was primarily attributable to an increase in amortization for internal software development costs. Intangible asset amortization included within direct costs for the three months ended June 30, 2019 and 2018 primarily related to technology and software, certain customer relationships and customer contracts acquired in connection with our business acquisitions. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on our intangible assets.

Selling, general and administrative expenses increased by $7.0 million, or 15.5%, to $52.5 million in the second quarter of 2019 from $45.5 million in the second quarter of 2018. The overall $7.0 million increase primarily related to a $1.3 million increase in salaries and related expenses for our support personnel; a $1.2 million increase in legal expenses; a $0.9 million increase in computer and related equipment expenses; a $0.8 million increase in share-based compensation expense for our support personnel; a $0.8 million increase in accounting, tax and audit fees; a $0.5 million increase in performance bonus expense for our support personnel; a $0.4 million increase in practice administration and meetings expenses; and a $0.3 million increase in training expenses. The increase in legal and accounting fees was primarily due to third-party transaction-related expenses related to the evaluation of a potential acquisition that ultimately did not consummate. As a percentage of revenues, selling, general and administrative expenses increased to 23.8% during the second quarter of 2019 compared to 23.0% during the second quarter of 2018. This increase was primarily due to the increases in legal expenses, accounting, tax and audit fees, computer and related equipment expenses, and share-based compensation expense for our support personnel, all as percentages of revenues; largely offset by revenue growth that outpaced the increase in salaries and related expenses for our support personnel and a decrease in facilities expense.

Business Advisory segment. See Note 9 "Restructuring Charges" within the notes to our consolidated financial statements for additional information on our restructuring charges.

Litigation and other gains, net totaled $0.5 million for the second quarter of 2019, and consisted of remeasurement gains for the decrease in the estimated fair value of our liabilities for contingent consideration payments related to a business acquisition. Litigation and other gains, net totaled $6.7 million for the second quarter of 2018, and consisted of $4.2 million of net remeasurement gains for the decrease in the estimated fair value of contingent consideration liabilities and a $2.5 million litigation settlement gain for the resolution of Huron's claim in a class action lawsuit. In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. See Note 11 "Fair Value of Financial Instruments" within the notes to our consolidated financial statements for additional information on the fair value of contingent consideration liabilities.

Depreciation and amortization expense was $7.2 million in the three months ended June 30, 2019 compared to $8.9 million in the three months ended June 30, 2018. The $1.8 million decrease in depreciation and amortization expense was primarily attributable to decreasing amortization expense of the trade name and customer relationships acquired in our Studer Group acquisition, due to the accelerated basis of amortization in prior periods, as well as certain customer relationships acquired in other business acquisitions that were fully amortized in prior periods. Intangible asset amortization expense included within operating expenses primarily related to certain customer relationships, trade names, and non-competition agreements acquired in connection with our business acquisitions. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information on our intangible assets.

Operating income decreased $1.3 million to $17.9 million in the second quarter of 2019 from $19.1 million in the second quarter of 2018. Operating margin, which is defined as operating income expressed as a percentage of revenues, was 8.1% in the three months ended June 30, 2019, compared to 9.7% in the three months ended June 30, 2018. The decrease in operating margin was primarily attributable to the increase in performance bonus expense for our revenue-generating professionals, as a percentage of revenues, and the decrease in litigation and other gains, net; partially offset by the revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals and the decrease in restructuring charges.

Total other expense, net decreased $6.9 million to $3.8 million in the second quarter of 2019 from $10.7 million in the second quarter of 2018. The decrease in total other expense, net was primarily attributable to a $5.8 million loss on the divestiture of our Middle East practice within our Business Advisory segment recorded in the second quarter of 2018. During the second quarter of 2018, we sold our Middle East business to a former employee who was the practice leader of that business at the time. Interest expense, net of interest income decreased $0.5 million to $4.5 million in the second quarter of 2019 from $5.0 million in the second quarter of 2018. The decrease in interest expense was due to lower levels of borrowing under our credit facility, partially offset by higher interest rates during the second quarter of 2019 compared to the second quarter of 2018.

For the three months ended June 30, 2019, our effective tax rate was 24.8% as we recognized income tax expense from continuing operations of $3.5 million on income from continuing operations of $14.0 million. The effective tax rate of 24.8% was more favorable than the statutory rate, inclusive of state income taxes, of 26.4% primarily due to non-taxable gains on our investments used to fund our deferred compensation liability and federal tax credits, partially offset by non-deductible business expenses. For the three months ended June 30, 2018, our effective tax rate was 30.4% as we recognized income tax expense from continuing operations of $2.6 million on income from continuing operations of $8.4 million. The effective tax rate of 30.4% was less favorable than the statutory rate, inclusive of state income taxes, of 26.0% primarily due to non-deductible business expenses.

Net income from continuing operations increased $4.7 million to $10.6 million for the three months ended June 30, 2019 from $5.9 million for the same period last year. As a result of the increase in net income from continuing operations, diluted income per share from continuing operations for the second quarter of 2019 was $0.47 compared to $0.27 for the second quarter of 2018.

EBITDA increased $3.6 million to $26.9 million for the three months ended June 30, 2019 from $23.3 million for the three months ended June 30, 2018. Adjusted EBITDA increased $4.5 million to $29.2 million in the second quarter of 2019 from $24.7 million in the second quarter of 2018. The increase in EBITDA was primarily attributable to the increase in revenues for the second quarter of 2019 compared to the second quarter of 2018 and the loss on the divestiture of our Middle East business within our Business Advisory segment recorded in the second quarter of 2018. These increases to EBITDA were partially offset by the increases in selling, general and administrative expenses, salaries and related expenses for our revenue-generating professionals, and performance bonus expense for our revenue-generating professionals; as well as the decrease in litigation and other gains, net recognized in the second quarter of 2019 compared to the same prior year period. The increase in adjusted EBITDA was

primarily attributable to the increase in revenues, partially offset by the increases in selling, general and administrative expenses, salaries and related expenses for our revenue-generating professionals, and performance bonus expense for our revenue-generating professionals in the second quarter of 2019 compared to the second quarter of 2018.

Adjusted net income from continuing operations increased $4.3 million to $17.1 million in the second quarter of 2019 compared to $12.8 million in the second quarter of 2018. As a result of the increase in adjusted net income from continuing operations, adjusted diluted earnings per share from continuing operations was $0.76 for the second quarter of 2019, compared to $0.58 for the second quarter of 2018.

Healthcare segment revenues increased $10.4 million, or 11.4%, to $101.9 million for the second quarter of 2019 from $91.5 million for the second quarter of 2018.

During the three months ended June 30, 2019, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 58.5%, 14.0%, 21.6%, and 5.9% of this segment’s revenues, respectively, compared to 67.5%, 15.5%, 10.1%, and 6.9% of this segment’s revenues, respectively, for the same prior year period. Performance-based fee revenue was $22.0 million for the second quarter of 2019 compared to $9.2 million for the second quarter of 2018. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide.

Of the overall $10.4 million increase in revenues, $7.4 million was attributable to an increase in revenues from our full-time billable consultants and $3.0 million was attributable to an increase in revenues generated by our full-time equivalents.

The increase in revenues attributable to our full-time billable consultants reflected increases in the average billing rate and the average number of billable consultants, partially offset by a decrease in the consultant utilization rate in the second quarter of 2019 compared to the same prior year period. The increase in revenues attributable to our full-time equivalents was driven by a temporary increase in the usage of contractors; and reflected an increase in the average number of full-time equivalents, partially offset by a decrease in revenue per full-time equivalent in the second quarter of 2019 compared to the same prior year period.

Healthcare segment operating income increased $6.3 million, or 23.2%, to $33.3 million for the three months ended June 30, 2019 from $27.1 million for the three months ended June 30, 2018. The Healthcare segment operating margin, defined as segment operating income expressed as a percentage of segment revenues, increased to 32.7% for the second quarter of 2019 from 29.6% in the same period last year. The increase in this segment’s operating margin was primarily attributable to a slight decrease in salaries and related expenses for our revenue-generating professionals and revenue growth that outpaced a slight increase in salaries and related expenses for our support personnel. These increases to the operating margin were partially offset by increases in contractor expense, share-based compensation expense for our revenue-generating professionals and performance bonus expense for our revenue-generating professionals, all as percentages of revenues.

Business Advisory segment revenues increased $4.6 million, or 7.9%, to $62.3 million for the second quarter of 2019 from $57.7 million for the second quarter of 2018.

During the three months ended June 30, 2019, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented 42.9%, 54.3%, 0.8%, and 2.0% of this segment’s revenues, respectively, compared to 40.8%, 53.4%, 3.9%, and 1.9% of this segment's revenues, respectively, for the same prior year period. Performance-based fee revenue was $0.5 million for the second quarter of 2019 compared to $2.3 million for the second quarter of 2018. The level of performance-based fees earned may vary based on our clients’ preferences and the mix of services we provide.

Of the overall $4.6 million increase in revenues, $5.3 million was attributable to an increase in revenues from our full-time billable consultants; partially offset by a $0.7 million decrease in revenues generated by our full-time equivalents. The increase in revenues from our full-time billable consultants reflected increases in the average number of billable consultants and the consultant utilization rate, partially offset by a decrease in the average billing rate in the second quarter of 2019 compared to the same prior year period. The decrease in revenues generated by our full-time equivalents was driven by a decreased use of contractors; and reflected a decrease in the average number of full-time equivalents, partially offset by an increase in revenue per full-time equivalent in the second quarter of 2019 compared to the same prior year period.

Business Advisory segment operating income decreased by $2.7 million, or 19.3%, to $11.5 million for the three months ended June 30, 2019 from $14.2 million for the three months ended June 30, 2018. The Business Advisory segment operating margin decreased to 18.4% for the second quarter of 2019 from 24.6% in the same period last year. The decrease in this segment’s operating margin was primarily attributable to an increase in performance bonus expense for our revenue-generating professionals, as well as increases in share-based compensation expense for our revenue-generating professionals and promotion and marketing expenses, all as percentages of revenues. These decreases to the operating margin were partially offset by decreases in restructuring charges and contractor expense.

Education segment revenues increased $8.2 million, or 17.0%, to $56.5 million for the second quarter of 2019 from $48.3 million for the second quarter of 2018.

During the three months ended June 30, 2019, revenues from fixed-fee engagements; time-and-expense engagements; and software support, maintenance and subscription arrangements represented 23.2%, 69.1%, and 7.7% of this segment’s revenues, respectively, compared to 16.8%, 76.4%, and 6.8% of this segment’s revenues, respectively, for the same prior year period.

Of the overall $8.2 million increase in revenues, $7.5 million was attributable to our full-time billable consultants and $0.7 million was attributable to our full-time equivalents. The increase in revenues attributable to our full-time billable consultants reflected increases in the average number of full-time billable consultants, the average billing rate, and the consultant utilization rate in the second quarter of 2019 compared to the same prior year period. The increase in revenues from our full-time equivalents was primarily driven by an increase in software and data hosting revenues; and reflected an increase in revenue per full-time equivalent, partially offset by a decrease in the average number of full-time equivalents in the second quarter of 2019 compared to the same prior year period.

Education segment operating income increased $4.9 million, or 44.0%, to $16.2 million for the three months ended June 30, 2019 from $11.3 million for the three months ended June 30, 2018. The Education segment operating margin increased to 28.7% for the second quarter of 2019 from 23.3% in the same period last year. The increase in this segment’s operating margin was primarily attributable to revenue growth that outpaced the increases in salaries and related expenses and performance bonus expense for our revenue-generating professionals, as well as decreases in promotion and marketing expense and share-based compensation for our revenue-generating professionals. These increases to the operating margin were partially offset by an increase in contractor expense, as a percentage of revenues.

Revenues increased $34.0 million, or 8.7%, to $425.2 million for the first six months of 2019 from $391.2 million for the first six months of 2018. Of the overall $34.0 million increase in revenues, $33.8 million was attributable to an increase in revenues from our full-time billable consultants and $0.2 million was attributable to our full-time equivalents.

The increase in full-time billable consultant revenues was attributable to strengthened demand for services in all of our segments, as discussed below in Segment Results; and reflected increases in the average number of full-time billable consultants, the consultant utilization rate, and the average billing rate during the first ~~three~~six months of 2019 compared to the same prior year period.

The ~~decrease~~increase in full-time equivalent revenues was attributable to ~~decreases~~increases in full-time equivalent revenues in ~~all of~~ our Healthcare and Education segments, largely offset by a decrease in full-time equivalent revenues in our Business Advisory segment, as discussed below in Segment Results; and reflected an overall ~~decrease in revenue per full-time equivalent, partially offset by an overall~~ increase in the average number of full-time ~~equivalents.~~equivalents, partially offset by an overall decrease in revenue per full-time equivalent.

Our total direct costs, including amortization of intangible assets and software development costs, increased ~~$4.9~~$19.2 million, or ~~3.7%~~7.3%, to ~~$138.9~~$281.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, from ~~$134.0~~$262.5 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The overall ~~$4.9~~$19.2 million increase primarily related to ~~a $3.1~~an $8.4 million increase in salaries and related expenses for our revenue-generating professionals, which was largely driven by increased headcount in our Education and Business Advisory ~~segments, and~~segments; a ~~$1.2~~$7.8 million increase in performance bonus expense for our revenue-generating ~~professionals.~~professionals; a $1.4 million increase in share-based compensation expense for our revenue-generating professionals; and a $0.8 million increase in contractor expense. As a percentage of revenues, our total direct costs decreased to ~~67.9%~~66.3% during the first ~~three~~six months of 2019 compared to ~~69.2%~~67.1% during the first ~~three~~six months of 2018 primarily due to revenue growth that outpaced the increase in salaries and related expenses for our ~~revenue-generating professionals and a decrease in contractor expenses. These decreases to direct costs as a percentage of revenues were~~revenue-

generating professionals, partially offset by ~~increases~~the increase in ~~signing, retention and other~~performance bonus expense for our revenue-generating professionals, ~~and project costs,~~ as ~~percentages~~a percentage of ~~revenues, for the first three months of 2019 compared to the same prior year period.~~revenues.

Total direct costs for the ~~three~~six months ended ~~March 31,~~June 30, 2019 included ~~$1.1~~$2.3 million of amortization expense for internal software development costs and intangible assets, compared to ~~$1.2~~$2.2 million of amortization expense for the same prior year period. The $0.1 million ~~decrease~~increase in amortization expense was ~~primarily~~attributable to a $0.6 million increase in amortization for internal software development costs, largely offset by a $0.5 million decrease in intangible asset amortization attributable to certain intangible assets acquired in our Studer Group acquisition which were fully amortized ~~largely offset by an increase~~ in ~~amortization for internal software development costs.~~prior periods. Intangible asset amortization included within direct costs for the six months ended June 30, 2019 and 2018 primarily ~~relates~~related to technology and software, certain customer relationships, publishing content and customer contracts acquired in connection with our business acquisitions. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information about our intangible assets.

Selling, general and administrative expenses increased ~~$3.7~~$10.7 million, or ~~7.8%~~11.6%, to ~~$50.7~~$103.3 million in the ~~three~~six months ended ~~March 31,~~June 30, 2019, from ~~$47.1~~$92.6 million in the ~~three~~six months ended ~~March 31,~~June 30, 2018. The overall ~~$3.7~~$10.7 million increase ~~was~~ primarily related to a ~~$3.3~~$4.7 million increase in salaries and related expenses for our support ~~personnel,~~personnel; a ~~$0.5~~$1.4 million increase in legal expenses; a $1.3 million increase in computer and related equipment ~~expenses, and~~expenses; a ~~$0.4~~$1.2 million increase in share-based compensation expense for our support ~~personnel. These increases were partially offset by~~personnel; and a ~~$0.3~~$0.5 million ~~decrease~~increase in accounting, tax and audit fees. The increase in legal and accounting fees was primarily due to third-party transaction-related expenses related to the evaluation of a potential acquisition that ultimately did not consummate. As a percentage of revenues, selling, general and administrative expenses increased to ~~24.8%~~24.3% during the first ~~three~~six months of 2019 compared to ~~24.3%~~23.7% during the first ~~three~~six months of 2018, primarily due to the ~~increase~~increases in salaries and related expenses for our support personnel, legal expenses, share-based compensation expense for our support personnel and computer and related equipment expenses, all as ~~a percentage~~percentages of revenues. These increases were partially offset by a decrease in facilities expense.

~~Other losses (gains),~~Litigation and other gains, net totaled a gain of ~~$0.5~~$0.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, which primarily consisted of ~~a $0.4~~$0.9 million of remeasurement ~~gain~~gains to decrease the estimated fair value of our liabilities for contingent consideration payments related to business acquisitions. ~~Other losses (gains),~~Litigation and other gains, net totaled ~~a loss of $0.8~~$5.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018, which ~~represented increases~~consisted of $3.4 million of net remeasurement gains for the decrease in the estimated fair value of our ~~liabilities for~~ contingent consideration ~~payments related to business acquisitions.~~liabilities and a $2.5 million litigation settlement gain for the resolution of Huron's claim in a class action lawsuit. In connection with certain business acquisitions, we may be required to pay post-closing consideration to the sellers if specific financial performance targets are met over a number of years as specified in the related purchase agreements. See Note 11 "Fair Value of Financial Instruments" within the notes to our consolidated financial statements for additional information on the fair value of contingent consideration liabilities.

Depreciation and amortization expense decreased by ~~$1.6~~$3.4 million to ~~$7.2~~$14.3 million in the ~~three~~six months ended ~~March 31,~~June 30, 2019, from ~~$8.8~~$17.7 million in the ~~three~~six months ended ~~March 31,~~June 30, 2018. The decrease was primarily attributable to decreasing amortization expense of the trade name and customer relationships acquired in our Studer Group acquisition ~~as well as certain customer relationships acquired in~~and other business acquisitions, due to the accelerated basis of amortization in prior periods, as well as certain customer relationships acquired in other business acquisitions that were fully amortized in prior periods. Intangible asset amortization included within operating expenses for the six months ended June 30, 2019 and 2018 primarily ~~relates~~related to certain customer relationships, trade names and non-competition agreements acquired in connection with our business acquisitions. See Note 4 "Goodwill and Intangible Assets" within the notes to our consolidated financial statements for additional information about our intangible assets.

Operating income increased ~~$4.4~~$3.2 million to ~~$6.8~~$24.6 million in the first ~~three~~six months of 2019 from ~~$2.3~~$21.5 million in the first ~~three~~six months of 2018. Operating margin, which is defined as operating income expressed as a percentage of revenues, increased to ~~3.3%~~5.8% for the ~~three~~six months ended ~~March 31,~~June 30, 2019, compared to ~~1.2%~~5.5% for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The increase in operating margin was primarily attributable to the revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals and the decrease in intangible asset amortization expense, and the remeasurement gain recognized in the first quarter of 2019 related to our liabilities for contingent consideration compared to the remeasurement loss recognized in the first quarter of 2018. These increases to the operating margin wereexpense; partially offset by the increase in ~~salaries and related expenses~~performance bonus expense for our ~~support personnel,~~revenue-generating professionals, as a percentage of revenues, ~~during~~and the ~~first three months of 2019 compared to the same prior year period.~~

Total other expense, net decreased by ~~$3.1~~$10.0 million to ~~$2.0~~$5.9 million in the first ~~three~~six months of 2019 from ~~$5.1~~$15.8 million in the first ~~three~~six months of 2018. The decrease in total other expense, net was primarily attributable to a ~~$2.1~~$5.8 million loss on the divestiture of our Middle East practice within our Business Advisory segment recorded in the second quarter of 2018. During the second quarter of 2018, we sold our Middle East business to a former employee who was the practice leader of that business at the time. The decrease in total other expense, net was also attributable to a $2.8 million gain inrecognized during the first six months of 2019 for the market value of our investments that are used to fund our deferred compensation liability, compared to a gain of $0.2 million ~~loss in~~during the ~~same prior year period, and a $0.7 million decrease in interest~~first six months of 2018. Interest expense, net of interest income decreased $1.2 million to $8.8 million in the first ~~quarter~~six months of 2019 ~~compared to~~from $10.0 million in the first ~~quarter~~six months of 2018. The decrease in interest expense was due to lower levels of borrowing under our credit facility during the first ~~three~~six months of 2019 compared to the same prior year period, partially offset by higher interest rates during the first ~~three~~six months of 2019 compared to the same prior year period.

For the ~~three~~six months ended ~~March 31,~~June 30, 2019, our effective tax rate was ~~29.0%~~25.8% as we recognized income tax expense from continuing operations of ~~$1.4~~$4.8 million on income from continuing operations of ~~$4.7~~$18.8 million. The effective tax rate of ~~29.0%~~25.8% was ~~less~~more favorable than the statutory rate, inclusive of state income taxes, of 26.4% primarily due to ~~$0.5 million of foreign losses with no~~non-taxable gains on our investments used to fund our deferred compensation liability, federal tax ~~benefit, which had an unfavorable impact of 2.9% on the effective tax rate;~~credits and $0.1 million of additional tax expense related to disallowed executive compensation deductions, which had an unfavorable impact of 1.8% on the effective tax rate. These unfavorable adjustments to our effective tax rate were partially offset by $0.1 million of discrete tax benefit for share-based compensation awards that vested during the ~~first quarter of 2019 and which had a favorable impact of 1.8% on the effective tax rate.~~

Net income from continuing operations increased by ~~$6.6~~$11.3 million to ~~$3.4~~$13.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, from ~~a net loss from continuing operations of $3.2~~$2.6 million for the same prior year period. As a result of the increase in net income from continuing operations, diluted earnings per share from continuing operations for the first ~~three~~six months of 2019 was ~~$0.15~~$0.62 compared to ~~diluted loss per share from continuing operations of $0.15~~$0.12 for the first ~~three~~six months of 2018.

EBITDA increased ~~$5.1~~$8.6 million to ~~$17.3~~$44.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, from ~~$12.2~~$35.5 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. Adjusted EBITDA increased ~~$4.3~~$8.8 million to ~~$18.0~~$47.2 million in the first ~~three~~six months of 2019 from ~~$13.7~~$38.4 million in the first ~~three~~six months of 2018. The increase in EBITDA was primarily attributable to the increase in revenues for the first six months of 2019 compared to the same prior year period and the loss on the divestiture of our Middle East business within our Business Advisory segment recorded in the second quarter of 2018. These increases to EBITDA were partially offset by the increases in ~~EBITDA~~selling, general and administrative expenses, salaries and related expenses for our revenue-generating professionals, and performance bonus expense for our revenue-generating professionals; as well as the decrease in litigation and other gains, net recognized in the first six months of 2019 compared to the same prior year period. The increase in adjusted EBITDA ~~were~~was primarily attributable to the increase in revenues, partially offset by the increases in selling, general and administrative expenses, salaries and related expenses for ~~both our support personnel and~~ our revenue-generating professionals and performance bonus expense for our revenue-generating ~~professionals.~~professionals in the first six months of 2019 compared to the same prior year period.

Adjusted net income from continuing operations increased ~~$4.6~~$8.9 million to ~~$8.9~~$25.9 million in the first ~~three~~six months of 2019 compared to ~~$4.2~~$17.0 million in the first ~~three~~six months of 2018. As a result of the increase in adjusted net income from continuing operations, adjusted diluted earnings per share from continuing operations for the first ~~three~~six months of 2019 was ~~$0.40~~$1.16 compared to ~~$0.19~~$0.78 for the first ~~three~~six months of 2018.

Healthcare segment revenues increased ~~$3.8~~$14.2 million, or ~~4.2%~~7.8%, to ~~$93.7~~$195.6 million for the first ~~three~~six months of 2019 from ~~$89.9~~$181.4 million for the first ~~three~~six months of 2018.

During the ~~three~~six months ended ~~March 31,~~June 30, 2019, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented ~~67.9%~~63.0%, ~~13.6%~~13.8%, ~~12.6%~~17.3%, and 5.9% of this segment’s revenues, respectively, compared to ~~67.0%~~67.3%, ~~14.2%~~14.9%, ~~11.4%~~10.7%, and ~~7.4%~~7.1% of this segment’s revenues, respectively, for the same prior year period. Performance-based fee revenue was ~~$11.8~~$33.8 million during the first ~~three~~six months of 2019, compared to ~~$10.2~~$19.4 million during the first ~~three~~six months of 2018. The level of performance-based fees earned may vary based on our clients’ risk sharing preferences and the mix of services we provide.

Of the overall ~~$3.8~~$14.2 million increase in revenues, ~~$5.5~~$12.9 million was attributable to an increase in revenues from our full-time billable consultants ~~partially offset by a $1.8~~and $1.3 million ~~decrease in revenues~~was attributable to our full-time equivalents. The increase in revenues attributable to our full-time billable consultants reflected increases in the average billing rate and the average number of full-time billable consultants, partially offset by a

Healthcare segment operating income increased ~~$3.4~~$9.7 million, or ~~13.9%~~18.8%, to ~~$27.9~~$61.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, from ~~$24.5~~$51.5 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The Healthcare segment operating margin increased to ~~29.7%~~31.3% for the first ~~three~~six months of 2019 from ~~27.2%~~28.4% in the same period last year. The increase in this segment’s operating margin was primarily attributable to ~~decreases~~a slight decrease in salaries and related expenses for our revenue-generating professionals, ~~which included an increase in capitalization of salaries and related expenses related to internal software development projects, and contractor expense;~~ partially offset by increases in ~~salaries and related expenses~~performance bonus expense for our ~~support personnel, practice administration~~revenue-generating professionals and ~~meetings expense and project~~amortization of internal software development costs, ~~all~~both as percentages of revenues.

Business Advisory segment revenues increased ~~$2.9~~$7.5 million, or ~~5.2%~~6.6%, to ~~$58.8~~$121.1 million for the first ~~three~~six months of 2019 from ~~$55.9~~$113.6 million for the first ~~three~~six months of 2018.

During the first ~~three~~six months of 2019, revenues from fixed-fee engagements; time-and-expense engagements; performance-based arrangements; and software support, maintenance and subscription arrangements represented ~~36.9%~~39.9%, ~~60.0%~~57.1%, ~~1.1%~~1.0%, and 2.0% of this segment’s revenues, respectively, compared to ~~40.1%~~40.5%, ~~56.1%~~54.7%, ~~1.6%~~2.8%, and ~~2.2%~~2.0% of this segment’s revenues, respectively, during the same prior year period. Performance-based fee revenue was ~~$0.7~~$1.2 million for the first ~~three~~six months of 2019, compared to ~~$0.9~~$3.2 million for the first ~~three~~six months of 2018. The level of performance-based fees earned may vary based on our clients’ preferences and the mix of services we provide.

Of the overall ~~$2.9~~$7.5 million increase in revenues, ~~$3.7~~$9.0 million was attributable to an increase in revenues from our full-time billable consultants, partially offset by a ~~$0.8~~$1.5 million decrease in revenues attributable to our full-time equivalents. The increase in revenues from our full-time billable consultants was primarily driven by increases in the ~~consultant utilization rate and the~~ average number of full-time billable consultants and the consultant utilization rate, partially offset by a decrease in the average billing ~~rate.~~rate in the first six months of 2019 compared to the same prior year period. The decrease in revenues from our full-time equivalents was driven by a decreased use of contractors and our part-time project consultants; and reflected a decrease in the average number of full-time equivalents, partially offset by an increase in revenue per full-time equivalent in the first ~~three~~six months of 2019 compared to the same prior year period.

Business Advisory segment operating income ~~increased~~decreased by ~~$0.6~~$2.2 million, or ~~6.5%~~9.3%, to ~~$9.6~~$21.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, from ~~$9.0~~$23.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The Business Advisory segment operating margin ~~increased~~decreased to ~~16.3%~~17.4% for the first ~~three~~six months of 2019 from ~~16.1%~~20.4% in the same period last year. The ~~increase~~decrease in this segment’s operating margin was primarily attributable to ~~revenue growth that outpaced increases~~an increase in ~~salaries and related expenses and~~ performance bonus expense for our revenue-generating professionals. These increases to the segment's operating margin were largely offset by increases in signing, retention and other bonus expense and share-based compensation expense for our revenue generating professionals, ~~both~~ as ~~percentages~~a percentage of revenues.

Education segment revenues increased ~~$4.1~~$12.3 million, or ~~8.5%~~12.8%, to ~~$52.0~~$108.5 million for the first ~~three~~six months of 2019 from ~~$47.9~~$96.2 million for the first ~~three~~six months of 2018.

For the ~~three~~six months ended ~~March 31,~~June 30, 2019, revenues from fixed-fee engagements; time-and-expense engagements; and software support, maintenance and subscription arrangements represented ~~23.8%~~23.5%, ~~68.1%~~68.6%, and ~~8.1%~~7.9% of this segment’s revenues, respectively, compared to ~~23.6%~~20.2%, ~~69.8%~~73.1%, and ~~6.6%~~6.7% of this segment's revenues, respectively, during the same prior year period.

Of the overall ~~$4.1~~$12.3 million increase in revenues, ~~$4.4~~$11.9 million was attributable to ~~an increase in~~ revenues ~~from to~~generated by our full-time billable consultants ~~partially offset by a $0.3~~and $0.4 million ~~decrease in revenues~~was attributable to revenues generated by our full-time equivalents. The increase in revenues from our full-time billable consultants reflected increases in the average number of full-time billable consultants and the consultant utilization rate in the first six months of 2019 compared to the same prior year period. The increase in revenues from our full-time equivalents was primarily driven by an increase in software and data hosting revenues; and reflected an increase in revenue per full-time equivalent, partially offset by a decrease in the average ~~billing rate. The decrease in revenues from our full-time equivalents was driven by a decreased use of our part-time project consultants; and reflected decreases in the average~~ number of full-time equivalents ~~partially offset by an increase in revenue per full-time equivalent~~ in the first ~~three~~six months of 2019 compared to the same prior year period.

Education segment operating income increased ~~$1.2~~$6.1 million, or ~~10.4%~~27.1%, to ~~$12.6~~$28.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, from ~~$11.4~~$22.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. The Education segment operating margin increased to ~~24.3%~~26.6% for the first ~~three~~six months of 2019 from ~~23.9%~~23.6% in the same period last year. The increase in this segment’s operating margin was primarily attributable to ~~a decrease in practice administration and meetings expense,~~ revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals ~~and~~as well as decreases in ~~technology~~practice administration and meetings expenses, promotion and marketing expenses, and share-based compensation expense ~~and salaries and related expenses~~ for our ~~support personnel, as percentages of revenues.~~revenue-generating professionals. These increases to the segment's operating margin were partially offset by ~~increases~~an increase in ~~performance bonus~~contractor expense, ~~for our revenue-generating professionals, contractor expenses, and promotion and marketing expenses, all~~ as ~~percentages~~a percentage of revenue.

Cash and cash equivalents decreased ~~$24.6~~$23.9 million to ~~$8.5~~$9.2 million at ~~March 31,~~June 30, 2019 from $33.1 million at December 31, 2018. As of ~~March 31,~~June 30, 2019, our primary sources of liquidity are cash on hand, cash flows from our U.S. operations, and borrowing capacity available under our credit facility.

Net cash used in operating activities totaled ~~$38.3 million and $36.3~~$6.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, ~~and~~compared to net cash provided by operating activities of $6.9 million for the six months ended June 30, 2018, respectively. Our operating assets and liabilities consist primarily of receivables from billed and unbilled services, accounts payable and accrued expenses, accrued payroll and related benefits, and deferred revenues. The volume of services rendered and the related billings and timing of collections on those billings, as well as payments of our accounts payable and salaries, bonuses, and related benefits to employees affect these account balances.

The increase in cash used in operating activities for the first ~~three~~six months of 2019 compared to cash provided by operating activities in the same prior year period was primarily attributable to an increase in the amount paid for annual performance bonuses during the first quarter of 2019 compared to the first quarter of 2018, largely offset by an increase in cash collections from ~~clients.~~clients for the six months ended June 30, 2019 compared to the six months ended June 30, 2018.

Net cash used in investing activities was ~~$8.1~~$14.9 million and ~~$3.8~~$10.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018, respectively.

The use of cash in the first ~~three~~six months of 2019 primarily consisted of ~~$3.6 million for contributions to our life insurance policies which fund our deferred compensation plan; $2.3~~$6.4 million for purchases of property and equipment, primarily related to purchases of computers and related ~~equipment;~~equipment and ~~$2.1~~leasehold improvements for new office spaces in certain locations; $4.4 million for payments related to internally developed ~~software.~~

We estimate that cash utilized for purchases of property and equipment and software development in 2019 will be approximately ~~$15~~$18 million to ~~$20~~$22 million, primarily consisting of information technology related equipment to support our corporate infrastructure, leasehold improvements for certain office locations, and software development costs.

Net cash ~~provided by~~used in financing activities was ~~$21.7~~$2.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019. During the first ~~three~~six months of 2019, we paid $10.0 million to the sellers of certain business acquisitions for achieving specified financial performance targets in accordance with the related purchase agreements. Of the total $10.0 million payments made, $4.7 million is classified as a cash outflow from financing activities and represents the amount paid up to the fair value of the contingent consideration liability recorded as of the acquisition date. The remaining $5.3 million is classified as a cash outflow from operating activities. During the first six months of 2019, we borrowed ~~$40.5~~$87.5 million under our credit facility, primarily to fund our annual performance bonus payment, and made repayments on our ~~credit facility~~borrowings of ~~$14.5~~$81.8 million.

Net cash ~~provided by~~used in financing activities was ~~$29.5~~$3.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2018. During the first ~~three~~six months of 2018, we borrowed ~~$91.5~~$139.3 million under our credit facility, primarily to fund our annual performance bonus payment, and made repayments on our ~~credit facility~~borrowings of ~~$58.0~~$134.0 million.

We currently have a share repurchase program permitting us to repurchase up to $125 million of our common stock through October 31, 2019 (the "Share Repurchase Program"). The amount and timing of the repurchases will be determined by management and will depend on a variety of factors, including the trading price of our common stock, capacity under our credit facility, general market and business conditions, and applicable legal requirements. No shares were repurchased in the first ~~three~~six months of 2019 or 2018. As of ~~March 31,~~June 30, 2019, $35.1 million remains available for share repurchases.

At ~~March 31,~~June 30, 2019, we had $250.0 million principal amount of our 1.25% convertible senior notes outstanding, ~~$76.0~~$56.0 million outstanding under our senior secured credit facility, and ~~$4.2~~$4.1 million outstanding under a promissory note, as discussed below.

In September 2014, we issued $250.0 million principal amount of the Convertible Notes in a private offering. The Convertible Notes are senior unsecured obligations of the Company and will pay interest semi-annually on April 1 and October 1 of each year at an annual rate of 1.25%. The Convertible Notes will mature on October 1, 2019, unless earlier repurchased by the Company or converted in accordance with their terms. We expect to refinance the principal amount of the outstanding notes at maturity with the borrowing capacity available under our revolving credit facility.

Upon conversion, the Convertible Notes will be settled, at our election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. Our current intent and policy is to settle conversions with a combination of cash and shares of common stock with the principal amount of the Convertible Notes paid in cash, in accordance with the settlement provisions of the Indenture.

The initial conversion rate for the Convertible Notes is 12.5170 shares of our common stock per $1,000 principal amount of the Convertible Notes, which is equal to an initial conversion price of approximately $79.89 per share of our common stock.

In connection with the issuance of the Convertible Notes, we entered into convertible note hedge transactions and warrant transactions. The convertible note hedge transactions are intended to reduce the potential future economic dilution associated with the conversion of the Convertible Notes and, combined with the warrants, effectively raise the price at which economic dilution would occur from the initial conversion price of approximately $79.89 to approximately $97.12 per share.

The carrying amount of our Convertible Notes as of ~~March 31,~~June 30, 2019 and December 31, 2018, was ~~$245.1~~$247.5 million and $242.6 million, respectively, which represented the $250.0 million principal amount net of unamortized debt discount and issuance costs. The carrying amount of our Convertible Notes is included in current maturities of long-term debt on the consolidated balance sheet.

For further information, see Note 8 “Financing Arrangements” within the notes to our consolidated financial statements.

The Company has a $500 million senior secured revolving credit facility, subject to the terms of a Second Amended and Restated Credit Agreement dated as of March 31, 2015, as amended to date (as amended and modified the "Amended Credit Agreement"), that becomes due and payable in full upon maturity on March 23, 2023. The Amended Credit Agreement provides the option to increase the revolving credit facility or establish term loan facilities in an aggregate amount of up to $150 million, subject to customary conditions and the approval of any lender whose commitment would be increased, resulting in a maximum available principal amount under the Amended Credit Agreement of $650 million. The initial borrowings under the Amended Credit Agreement were used to refinance borrowings outstanding under a prior credit agreement, and future borrowings under the Amended Credit Agreement may be used for working capital, capital expenditures, acquisitions of businesses, share repurchases, and general corporate purposes.

Fees and interest on borrowings vary based on our Consolidated Leverage Ratio (as defined in the Amended Credit Agreement). At our option, borrowings under the Amended Credit Agreement will bear interest at one, two, three or six-month LIBOR or an alternate base rate, in each case plus the applicable margin. The applicable margin will fluctuate between 1.25% per annum and 2.00% per annum, in the case of LIBOR borrowings, or between 0.25% per annum and 1.00% per annum, in the case of base rate loans, based upon our Consolidated Leverage Ratio at such time.

Amounts borrowed under the Amended Credit Agreement may be prepaid at any time without premium or penalty. We are required to prepay the amounts outstanding under the Amended Credit Agreement in certain circumstances, including a requirement to pay all amounts outstanding under the Amended Credit Agreement 90 days prior to the Convertible Indebtedness Maturity Date (as defined in the Amended Credit Agreement) unless (1) the Convertible Indebtedness Maturity Date is waived or extended to a later date, (2) the Company can demonstrate (a) Liquidity (as defined in the Amended Credit Agreement) in an amount at least equal to the principal amount due on the Convertible Indebtedness Maturity Date, and (b) financial covenant compliance after giving effect to such payments and any additional indebtedness incurred on a pro forma basis, or (3) this requirement is waived by the Required Lenders (as defined in the Amended Credit Agreement). In addition, we have the right to permanently reduce or terminate the unused portion of the commitments provided under the Amended Credit Agreement at any time.

The Amended Credit Agreement contains restricted payment provisions, including a potential limit on the amount of dividends we may pay. Pursuant to the terms of the Amended Credit Agreement, if our Consolidated Leverage Ratio is greater than 3.00, the amount of dividends and other Restricted Payments (as defined in the Amended Credit Agreement) we may pay is limited to an amount up to $75 million plus 50% of cumulative consolidated net income (as defined in the Amended Credit Agreement) from the closing date of the Amended Credit Agreement plus 50% of the net cash proceeds from equity issuances after the closing date of the Amended Credit Agreement.

Borrowings outstanding under the Amended Credit Agreement at ~~March 31,~~June 30, 2019 totaled ~~$76.0~~$56.0 million. These borrowings carried a weighted average interest rate of ~~4.5%~~3.9%, including the impact of the interest rate swap in effect as of ~~March 31,~~June 30, 2019 and described in Note 10 “Derivative Instrument and Hedging Activity” within the notes to the consolidated financial statements. Borrowings outstanding under the Amended Credit Agreement at December 31, 2018 were $50.0 million and carried a weighted average interest rate of 3.7%, including the impact of the interest rate swap described in Note 10 “Derivative Instrument and Hedging Activity” within the notes to the consolidated financial statements. The borrowing capacity under the revolving credit facility is reduced by any outstanding borrowings under the revolving credit facility and outstanding letters of credit. At ~~March 31,~~June 30, 2019, we had outstanding letters of credit totaling $1.6 million, which are primarily used as security deposits for our office facilities. As of ~~March 31,~~June 30, 2019, the unused borrowing capacity under the revolving credit facility was ~~$422.4~~$442.4 million.

On June 30, 2017, in conjunction with our purchase of an aircraft related to the acquisition of Innosight, we assumed, from the sellers of the aircraft, a promissory note with an outstanding principal balance of $5.1 million. The principal balance of the promissory note is subject to scheduled monthly principal payments until the maturity date of March 1, 2024, at which time a final payment of $1.5 million, plus any accrued and unpaid interest, will be due. Under the terms of the promissory note, we will pay interest on the outstanding principal amount at a rate of one-month LIBOR plus 1.97% per annum. The obligations under the promissory note are secured pursuant to a Loan and Aircraft Security Agreement with Banc of America Leasing & Capital, LLC, which grants the lender a first priority security interest in the aircraft. At ~~March 31,~~June 30, 2019, the outstanding principal amount of the promissory note was ~~$4.2~~$4.1 million, and the aircraft had a carrying amount of ~~$5.6~~$5.4 million. At December 31, 2018, the outstanding principal amount of the promissory note was $4.4 million, and the aircraft had a carrying amount of $5.8 million.

For further information, see Note 8 “Financing Arrangements” within the notes to the consolidated financial statements.

Our primary financing need has been to fund our growth. Our growth strategy is to expand our service offerings, which may require investments in new hires, acquisitions of complementary businesses, possible expansion into other geographic areas, and related capital expenditures. We believe our internally generated liquidity, together with our available cash, the borrowing capacity available under our revolving credit facility, and access to external capital resources will be adequate to fund our long-term growth and capital needs arising from cash commitments and debt service obligations. Our ability to secure short-term and long-term financing in the future will depend on several factors, including our future profitability, the quality of our accounts receivable and unbilled services, our relative levels of debt and equity, and the overall condition of the credit markets.

We are not a party to any material off-balance sheet arrangements.

Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. We regularly review our financial reporting and disclosure practices and accounting policies to ensure that our financial reporting and disclosures provide accurate information relative to the current economic and business environment. The preparation of financial statements in conformity with GAAP requires management to make assessments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Critical accounting policies are those policies that we believe present the most complex or subjective measurements and have the most potential to impact our financial position and operating results. While all decisions regarding accounting policies are important, we believe there are five accounting policies that could be considered critical: revenue recognition, allowances for doubtful accounts and unbilled services, business combinations, carrying values of goodwill and other intangible assets, and accounting for income taxes. For a detailed discussion of these critical accounting policies, see ~~“Item~~Item 7. ~~Management’s~~"Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting ~~Policies”~~Policies" in our Annual Report on Form 10-K for the year ended December 31, 2018. There have been no material changes to our critical accounting policies during the first ~~three~~six months of 2019.

Refer to Note 3 ~~“New~~"New Accounting ~~Pronouncements”~~Pronouncements" within the notes to the consolidated financial statements for information on new accounting pronouncements.

We are exposed to market risks primarily from changes in interest rates and changes in the market value of our investments.

The value of our Convertible Notes is exposed to interest rate risk. Generally, the fair value of our fixed interest rate Convertible Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of our Convertible Notes is affected by our stock price. The carrying value of our Convertible Notes was ~~$245.1~~$247.5 million as of ~~March 31,~~June 30, 2019, which represents the liability component of the $250.0 million principal balance. The estimated fair value of our Convertible Notes at ~~March 31,~~June 30, 2019 was ~~$246.2~~$247.7 million, and was determined based on the quoted bid price of the Convertible Notes in an over-the-counter market as of the last day of trading for the quarter ended ~~March 31,~~June 30, 2019, which was ~~$98.476~~$99.073 per $100 principal amount. At December 31, 2018, the carrying value of our Convertible Notes was ~~$242.6~~$242.6 million,, and the estimated fair value of our Convertible Notes was ~~$242.9~~$242.9 million,, which was determined based on the quoted bid price of the Convertible Notes in an over-the-counter market as of the last day of trading for the year ended December 31, 2018, which was ~~$97.176~~$97.176 per $100 principal amount.

Concurrent with the issuance of the Convertible Notes, we entered into separate convertible note hedge and warrant transactions. The convertible note hedge transactions are intended to reduce the potential future economic dilution associated with the conversion of the Convertible Notes and, combined with the warrants, effectively raise the price at which economic dilution would occur from the initial conversion price of approximately $79.89 to approximately $97.12 per share. Under the convertible note hedge transactions, we have the option to purchase a total of approximately

3.1 million shares of our common stock, which is the number of shares initially issuable upon conversion of the Convertible Notes in full, at a price of approximately $79.89, which corresponds to the initial conversion price of the Convertible Notes, subject to customary anti-dilution adjustments substantially similar to those in the Convertible Notes. Under the warrant transactions, the holders of the warrants have the option to purchase a total of approximately 3.1 million shares of our common stock at a price of approximately $97.12. If the average market value per share of our common stock for the reporting period exceeds the strike price of the warrants, the warrants will have a dilutive effect on our earnings per share.

We have exposure to changes in interest rates associated with borrowings under our bank credit facility, which has variable interest rates tied to LIBOR or an alternate base rate, at our option. At ~~March 31,~~June 30, 2019, we had borrowings outstanding under the credit facility totaling ~~$76.0~~$56.0 million that carried a weighted average interest rate of ~~4.5%~~3.9%, including the impact of the interest rate swap described below. A hypothetical 100 basis point change in this interest rate would have a ~~$0.3~~$0.1 million effect on our pretax income, on an annualized basis, including the effect of the interest rate swap. At December 31, 2018, we had borrowings outstanding under the credit facility totaling $50.0 million that carried a weighted average interest rate of 3.7% including the impact of the interest rate swap described below. As of December 31, 2018, these variable rate borrowings were fully hedged against changes in interest rates by the interest rate swap, which had a notional amount of $50.0 million. As our variable rate borrowings were fully hedged as of December 31, 2018, a change in the interest rate would have had no impact on our consolidated financial statements.

On June 22, 2017, we entered into a forward interest rate swap agreement effective August 31, 2017 and ending August 31, 2022, with a notional amount of $50.0 million. We entered into this derivative instrument to hedge against the interest rate risks of our variable-rate borrowings. Under the terms of the interest rate swap agreement, we receive from the counterparty interest on the notional amount based on one-month LIBOR and we pay to the counterparty a fixed rate of 1.900%.

We also have exposure to changes in interest rates associated with the promissory note assumed on June 30, 2017 in connection with our purchase of an aircraft, which has variable interest rates tied to LIBOR. At ~~March 31,~~June 30, 2019, the outstanding principal amount of the promissory note was ~~$4.2~~

We do not use derivative instruments for trading or other speculative purposes. From time to time, we invest excess cash in short-term marketable securities. These investments principally consist of overnight sweep accounts. Due to the short maturity of these investments, we have concluded that we do not have material market risk exposure.

We have a non-interest bearing convertible debt investment in a privately-held company, which we account for as an available-for-sale debt security. As such, the investment is carried at fair value with unrealized holding gains and losses excluded from earnings and reported in other comprehensive income. As of ~~March 31,~~June 30, 2019, the fair value of the investment was ~~$54.0~~$59.4 million, with a total cost basis of $27.9 million. At December 31, 2018, the fair value of the investment was $50.4 million, with a total cost basis of $27.9 million.

Our management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ~~“Exchange Act”~~"Exchange Act")) as of ~~March 31,~~June 30, 2019. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~March 31,~~June 30, 2019, our disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports we file or submit under the Exchange Act, and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended ~~March 31,~~June 30, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The information required by this Item is incorporated by reference from Note 14 "Commitments, Contingencies and Guarantees" included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date of this Quarterly Report on Form 10-Q, we are not a party to any litigation or legal proceeding that, in the current opinion of management, could have a material adverse effect on our financial position or results of operations. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results.

Our Stock Ownership Participation Program, 2012 Omnibus Incentive Plan, and 2004 Omnibus Stock Plan, which was replaced by the 2012 Omnibus Incentive Plan, permit the netting of common stock upon vesting of restricted stock awards to satisfy individual tax withholding requirements. During the quarter ended ~~March 31,~~June 30, 2019, we reacquired ~~94,500~~1,538 shares of common stock with a weighted average fair market value of ~~$46.40~~$49.03 as a result of such tax withholdings.

None.

Not applicable.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Delaware		01-0666114
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	HURN	NASDAQ Global Select Market



Large ~~accelerated filer~~Accelerated Filer		ý	☒	Accelerated ~~filer~~Filer	☐	o

Non-accelerated ~~filer~~Filer	☐	o Smaller Reporting Company		~~Smaller reporting company~~		o

			☐	Emerging ~~growth company~~Growth Company		o☐



		Page
Part I – Financial Information

Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations and Other Comprehensive Income	2
	Consolidated Statements of Stockholders’ Equity	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2325

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3642

Item 4.	Controls and Procedures	3743

Part II – Other Information

Item 1.	Legal Proceedings	3743

Item 1A.	Risk Factors	3744

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3744

Item 3.	Defaults Upon Senior Securities	3844

Item 4.	Mine Safety Disclosures	3844

Item 5.	Other Information	3844

Item 6.	Exhibits	3945

Signature		4046


	March 31, 2019			December 31, 2018			June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	8,526		$	33,107		$	9,177		$	33,107
Receivables from clients, net	104,674			109,677			116,665			109,677
Unbilled services, net	86,504			69,613			91,751			69,613
Income tax receivable	3,209			6,612			846			6,612
Prepaid expenses and other current assets	13,596			13,922			14,766			13,922
Total current assets	216,509			232,931			233,205			232,931
Property and equipment, net	38,359			40,374			40,189			40,374
Deferred income taxes, net	1,302			2,153			1,094			2,153
Long-term investment	54,038			50,429			59,357			50,429
Operating lease right-of-use assets	53,805			—			55,045			—
Other non-current assets	38,345			30,525			41,482			30,525
Intangible assets, net	43,461			47,857			39,037			47,857
Goodwill	645,541			645,263			645,266			645,263
Total assets	$	1,091,360		$	1,049,532		$	1,114,675		$	1,049,532
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	7,469		$	10,020		$	9,456		$	10,020
Accrued expenses and other current liabilities	16,611			17,207			20,663			17,207
Accrued payroll and related benefits	53,966			109,825			78,619			109,825
Accrued contingent consideration for business acquisitions	10,014			9,991			535			9,991
Current maturities of long-term debt	245,569			243,132			248,034			243,132
Current maturities of operating lease liabilities	10,293			—			10,536			—
Deferred revenues	30,023			28,130			27,575			28,130
Total current liabilities	373,945			418,305			395,418			418,305
Non-current liabilities:
Deferred compensation and other liabilities	25,886			20,875			27,367			20,875
Accrued contingent consideration for business acquisitions, net of current portion	1,115			1,450			95			1,450
Long-term debt, net of current portion	79,722			53,853			59,590			53,853
Operating lease liabilities, net of current portion	60,280			—			62,130			—
Deferred lease incentives	—			13,693			—			13,693
Deferred income taxes, net	759			732			1,714			732
Total non-current liabilities	167,762			90,603			150,896			90,603
Commitments and contingencies
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 25,275,901 and 25,114,739 shares issued at March 31, 2019 and December 31, 2018, respectively	247			244
Treasury stock, at cost, 2,392,531 and 2,568,288 shares at March 31, 2019 and December 31, 2018, respectively	(126,983		)	(124,794		)
Common stock; $0.01 par value; 500,000,000 shares authorized; 25,316,458 and 25,114,739 shares issued at June 30, 2019 and December 31, 2018, respectively							247			244
Treasury stock, at cost, 2,399,279 and 2,568,288 shares at June 30, 2019 and December 31, 2018, respectively							(127,133		)	(124,794		)
Additional paid-in capital	457,748			452,573			463,190			452,573
Retained earnings	199,410			196,106			209,882			196,106
Accumulated other comprehensive income	19,231			16,495			22,175			16,495
Total stockholders’ equity	549,653			540,624			568,361			540,624
Total liabilities and stockholders’ equity	$	1,091,360		$	1,049,532		$	1,114,675		$	1,049,532



ý☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31,							Three Months Ended June 30,						Six Months Ended June 30,
	2019				2018			2019			2018			2019			2018
Revenues and reimbursable expenses:
Revenues	$	204,445			$	193,679		$	220,754		$	197,544		$	425,199		$	391,223
Reimbursable expenses	18,617				17,619			23,534			20,733			42,151			38,352
Total revenues and reimbursable expenses	223,062				211,298			244,288			218,277			467,350			429,575
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
Direct costs	137,780				132,786			141,628			127,574			279,408			260,360
Amortization of intangible assets and software development costs	1,117				1,218			1,171			968			2,288			2,186
Reimbursable expenses	18,669				17,549			23,657			20,915			42,326			38,464
Total direct costs and reimbursable expenses	157,566				151,553			166,456			149,457			324,022			301,010
Operating expenses and other losses (gains), net
Operating expenses and other gains, net
Selling, general and administrative expenses	50,749				47,078			52,537			45,488			103,286			92,566
Restructuring charges	1,275				712			754			1,984			2,029			2,696
Other losses (gains), net	(456		)		830
Litigation and other gains, net								(485		)	(6,707		)	(941		)	(5,877		)
Depreciation and amortization	7,172				8,803			7,151			8,917			14,323			17,720
Total operating expenses and other losses (gains), net	58,740				57,423
Total operating expenses and other gains, net								59,957			49,682			118,697			107,105
Operating income	6,756				2,322			17,875			19,138			24,631			21,460
Other income (expense), net:
Interest expense, net of interest income	(4,258		)		(4,986		)	(4,524		)	(5,022		)	(8,782		)	(10,008		)
Other income (expense), net	2,217				(145		)	695			(5,693		)	2,912			(5,838		)
Total other expense, net	(2,041		)		(5,131		)	(3,829		)	(10,715		)	(5,870		)	(15,846		)
Income (loss) from continuing operations before taxes	4,715				(2,809		)
Income from continuing operations before taxes								14,046			8,423			18,761			5,614
Income tax expense	1,365				413			3,477			2,561			4,842			2,974
Net income (loss) from continuing operations	3,350				(3,222		)
Net income from continuing operations								10,569			5,862			13,919			2,640
Loss from discontinued operations, net of tax	(46		)		(42		)	(97		)	(490		)	(143		)	(532		)
Net income (loss)	$	3,304			$	(3,264	)
Net earnings (loss) per basic share:
Net income (loss) from continuing operations	$	0.15			$	(0.15	)
Net income								$	10,472		$	5,372		$	13,776		$	2,108
Net earnings per basic share:
Net income from continuing operations								$	0.48		$	0.27		$	0.63		$	0.12
Loss from discontinued operations, net of tax	—				—			—			(0.02		)	—			(0.02		)
Net income (loss)	$	0.15			$	(0.15	)
Net earnings (loss) per diluted share:
Net income (loss) from continuing operations	$	0.15			$	(0.15	)
Net income								$	0.48		$	0.25		$	0.63		$	0.10
Net earnings per diluted share:
Net income from continuing operations								$	0.47		$	0.27		$	0.62		$	0.12
Loss from discontinued operations, net of tax	—				—			—			(0.02		)	—			(0.02		)
Net income (loss)	$	0.15			$	(0.15	)
Net income								$	0.47		$	0.25		$	0.62		$	0.10
Weighted average shares used in calculating earnings per share:
Basic	21,868			��	21,592			21,997			21,709			21,933			21,651
Diluted	22,311				21,592			22,400			21,918			22,356			21,866
Comprehensive income (loss):
Net income (loss)	$	3,304			$	(3,264	)
Comprehensive income:
Net income								$	10,472		$	5,372		$	13,776		$	2,108
Foreign currency translation adjustments, net of tax	316				34			(359		)	(954		)	(43		)	(920		)
Unrealized gain on investment, net of tax	2,657				2,166			3,915			3,159			6,572			5,325
Unrealized gain (loss) on cash flow hedging instruments, net of tax	(237		)		432			(612		)	183			(849		)	615
Other comprehensive income	2,736				2,632			2,944			2,388			5,680			5,020
Comprehensive income (loss)	$	6,040			$	(632	)
Comprehensive income								$	13,416		$	7,760		$	19,456		$	7,128



	Three Months Ended June 30,
	Common Stock			Treasury Stock					Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount		Shares		Amount			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income		Stockholders’ Equity
Balance at March 31, 2019	24,682,802	$	247	(2,738,850	)	$	(126,983	)	$	457,748		$	199,410	$	19,231	$	549,653
Comprehensive income												10,472		2,944		13,416
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	18,391	—		(2,438	)	(75		)	75							—
Exercise of stock options	10,000	—							234							234
Share-based compensation									5,133							5,133
Shares redeemed for employee tax withholdings				(1,538	)	(75		)								(75		)
Balance at June 30, 2019	24,711,193	$	247	(2,742,826	)	$	(127,133	)	$	463,190		$	209,882	$	22,175	$	568,361

Balance at March 31, 2018	24,307,368	$	243	(2,632,790	)	$	(123,235	)	$	438,325		$	179,135	$	13,002	$	507,470
Comprehensive income												5,372		2,388		7,760
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	7,934	—		(82	)	56			(56		)					—
Exercise of stock options	10,000	1							234							235
Share-based compensation									3,310							3,310
Shares redeemed for employee tax withholdings				(883	)	(36		)								(36		)
Balance at June 30, 2018	24,325,302	$	244	(2,633,755	)	$	(123,215	)	$	441,813		$	184,507	$	15,390	$	518,739



	Six Months Ended June 30,
	Common Stock			Treasury Stock					Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount		Shares		Amount			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income		Stockholders’ Equity
Balance at December 31, 2018	24,418,252	$	244	(2,671,962	)	$	(124,794	)	$	452,573		$	196,106	$	16,495	$	540,624
Comprehensive income												13,776		5,680		19,456
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	272,941	3		25,174		2,121			(2,124		)					—
Exercise of stock options	20,000	—							468							468
Share-based compensation									12,273							12,273
Shares redeemed for employee tax withholdings				(96,038	)	(4,460		)								(4,460		)
Balance at June 30, 2019	24,711,193	$	247	(2,742,826	)	$	(127,133	)	$	463,190		$	209,882	$	22,175	$	568,361

Balance at December 31, 2017	24,098,822	$	241	(2,591,135	)	$	(121,994	)	$	434,256		$	180,443	$	10,370	$	503,316
Comprehensive income												2,108		5,020		7,128
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	206,480	2		34,095		1,499			(1,501		)					—
Exercise of stock options	20,000	1							468							469
Share-based compensation									8,590							8,590
Shares redeemed for employee tax withholdings				(76,715	)	(2,720		)								(2,720		)
Cumulative-effect adjustment from adoption of ASC 606												1,956				1,956
Balance at June 30, 2018	24,325,302	$	244	(2,633,755	)	$	(123,215	)	$	441,813		$	184,507	$	15,390	$	518,739



	Three Months Ended March 31, 2019
	Common Stock			Treasury Stock					Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount		Shares		Amount			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income		Stockholders’ Equity
Balance at December 31, 2018	24,418,252	$	244	(2,671,962	)	$	(124,794	)	$	452,573		$	196,106	$	16,495	$	540,624
Comprehensive income												3,304		2,736		6,040
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	254,550	3		27,612		2,196			(2,199		)					—
Exercise of stock options	10,000	—							234							234
Share-based compensation									7,140							7,140
Shares redeemed for employee tax withholdings				(94,500	)	(4,385		)								(4,385		)
Balance at March 31, 2019	24,682,802	$	247	(2,738,850	)	$	(126,983	)	$	457,748		$	199,410	$	19,231	$	549,653



	Three Months Ended March 31, 2018
	Common Stock			Treasury Stock					Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount		Shares		Amount			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income		Stockholders’ Equity
Balance at December 31, 2017	24,098,822	$	241	(2,591,135	)	$	(121,994	)	$	434,256		$	180,443		$	10,370	$	503,316
Comprehensive income												(3,264		)	2,632		(632		)
Issuance of common stock in connection with:
Restricted stock awards, net of cancellations	198,546	2		34,177		1,443			(1,445		)						—
Exercise of stock options	10,000	—							234								234
Share-based compensation									5,280								5,280
Shares redeemed for employee tax withholdings				(75,832	)	(2,684		)									(2,684		)
Cumulative-effect adjustment from adoption of ASC 606												1,956					1,956
Balance at March 31, 2018	24,307,368	$	243	(2,632,790	)	$	(123,235	)	$	438,325		$	179,135		$	13,002	$	507,470



	As of December 31, 2018		ASC 842 Adjustment			As of January 1, 2019
Assets
Operating lease right-of-use assets	$	—	$	56,463		$	56,463

Liabilities
Accrued expenses and other current liabilities	$	17,207	$	(2,557	)	$	14,650
Current maturities of operating lease liabilities	$	—	$	10,537		$	10,537
Deferred compensation and other liabilities	$	20,875	$	(536	)	$	20,339
Deferred lease incentives	$	13,693	$	(13,693	)	$	—
Operating lease liabilities, net of current portion	$	—	$	62,712		$	62,712



	Healthcare			Business Advisory			Education		Total
Balance as of December 31, 2018:
Goodwill	$	636,810		$	301,700		$	102,829	$	1,041,339
Accumulated impairment losses	(208,081		)	(187,995		)	—		(396,076		)
Goodwill, net as of December 31, 2018	428,729			113,705			102,829		645,263
Foreign currency translation	—			3			—		3
Goodwill, net as of June 30, 2019	$	428,729		$	113,708		$	102,829	$	645,266



		As of June 30, 2019				As of December 31, 2018
	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer relationships	4 to 13	$	91,968	$	60,482	$	98,235	$	60,462
Trade names	5 to 6	28,930		24,537		28,930		23,181
Technology and software	3 to 5	5,694		3,581		5,694		2,842
Non-competition agreements	3 to 5	2,540		1,495		3,650		2,241
Favorable lease contract	3	—		—		720		646
Total		$	129,132	$	90,095	$	137,229	$	89,372



Year Ending December 31,	Estimated Amortization Expense
2019	$	17,206
2020	$	12,083
2021	$	8,064
2022	$	6,090
2023	$	3,512
2024	$	741


Future Lease Payments	March 31, 2019			December 31, 2018 ^{(1, 2)}		June 30, 2019			December 31, 2018 ^{(1, 2)}
2019	$	10,136		$	13,701	$	6,851		$	13,701
2020	12,717			12,724		13,606			12,724
2021	11,595			11,590		12,536			11,590
2022	10,775			10,766		11,646			10,766
2023	10,711			10,707		11,622			10,707
Thereafter	27,035			27,033		28,747			27,033
Total operating lease payments	$	82,969		$	86,521	$	85,008		$	86,521
Less: imputed interest	(12,396		)	n/a		(12,342		)	n/a
Present value of operating lease liabilities	$	70,573		n/a		$	72,666		n/a



		As of March 31, 2019				As of December 31, 2018
	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer relationships	4 to 13	$	98,338	$	63,653	$	98,235	$	60,462
Trade names	5 to 6	28,930		23,859		28,930		23,181
Technology and software	3 to 5	5,694		3,211		5,694		2,842
Non-competition agreements	3 to 5	3,650		2,446		3,650		2,241
Favorable lease contract	3	720		702		720		646
Total		$	137,332	$	93,871	$	137,229	$	89,372



Balance Sheet	June 30, 2019
Operating lease right-of-use assets	$	55,045

Current maturities of operating lease liabilities	$	10,536
Operating lease liabilities, net of current portion	62,130
Total lease liabilities	$	72,666


Lease Cost	Three Months Ended March 31, 2019			Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Operating lease cost	$	3,000		$	3,055		$	6,055
Short-term leases ⁽¹⁾	47			128			175
Variable lease costs	374			301			675
Sublease income	(617		)	(618		)	(1,235		)
Net lease cost ⁽²⁾⁽⁴⁾	$	2,804		$	2,866		$	5,670


(1)	Includes variable lease costs related to short-term leases.


(2)	Net lease cost includes $0.2 million for both the three and six months ended June 30, 2019 recorded as restructuring charges as they relate to vacated office spaces. See Note 9 "Restructuring Charges" for additional information on our vacated office spaces.


(3)	Net lease cost includes $0.1 million for both the three and six months ended June 30, 2019 related to vacated office spaces directly related to discontinued operations.


(4)	Rent expense, including operating expenses, real estate taxes and insurance, recorded under ASC 840 for the three and six months ended ~~March 31,~~June 30, 2018 was ~~$3.9 million.~~$3.7 million and $7.6 million, respectively.


(1)	The expected lease payments as of December 31, 2018 represent our future minimum rental commitments as defined by ASC 840.


(2)	As of December 31, 2018, the expected total future minimum sublease income to be received was $10.2 million.



Other Information	Six Months Ended June 30, 2019
Cash paid for operating lease liabilities	$	7,056
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	3,611

Weighted average remaining lease term - operating leases	6.7 years
Weighted average discount rate - operating leases	4.7		%



	As of June 30,
	2019	2018
Unvested restricted stock awards	—	63
Outstanding common stock options	—	37
Convertible senior notes	3,129	3,129
Warrants related to the issuance of convertible senior notes	3,129	3,129
Total anti-dilutive securities	6,258	6,358



	As of March 31,
	2019	2018
Unvested restricted stock awards	12	723
Outstanding common stock options	—	184
Convertible senior notes	3,129	3,129
Warrants related to the issuance of convertible senior notes	3,129	3,129
Total anti-dilutive securities	6,270	7,165



	June 30, 2019			December 31, 2018
1.25% convertible senior notes due 2019	$	247,512		$	242,617
Senior secured credit facility	56,000			50,000
Promissory note due 2024	4,112			4,368
Total long-term debt	$	307,624		$	296,985
Current maturities of long-term debt	(248,034		)	(243,132		)
Long-term debt, net of current portion	$	59,590		$	53,853



	March 31, 2019			December 31, 2018
1.25% convertible senior notes due 2019	$	245,051		$	242,617
Senior secured credit facility	76,000			50,000
Promissory note due 2024	4,240			4,368
Total long-term debt	$	325,291		$	296,985
Current maturities of long-term debt	(245,569		)	(243,132		)
Long-term debt, net of current portion	$	79,722		$	53,853



	Principal Payments of Long-Term Debt
2019	$	250,259
2020	$	529
2021	$	544
2022	$	559
2023	$	56,575
Thereafter	$	1,646



	Principal Payments of Long-Term Debt
2019	$	250,387
2020	$	529
2021	$	544
2022	$	559
2023	$	76,575
Thereafter	$	1,646


	Employee Costs			Office Space Reductions			Total			Employee Costs			Office Space Reductions			Total
Balance as of December 31, 2018	$	443		$	2,468		$	2,911		$	443		$	2,468		$	2,911
Adoption of ASC 842 ⁽¹⁾	—			(1,119		)	(1,119		)	—			(1,119		)	(1,119		)
Balance as of January 1, 2019	443			1,349			1,792			443			1,349			1,792
Additions ⁽²⁾	247			289			536			429			65			494
Payments	(435		)	(371		)	(806		)	(784		)	(442		)	(1,226		)
Adjustments⁽³⁾⁽²⁾	(2		)	65			63			(5		)	38			33
Non-cash items	—			(249		)	(249		)
Balance as of March 31, 2019	$	253		$	1,083		$	1,336
Balance as of June 30, 2019										$	83		$	1,010		$	1,093


(1)	Upon adoption of ASC 842 on January 1, 2019, we reclassified the restructuring charge liabilities, which represented the present value of remaining lease payments, net of estimated sublease income, for vacated office spaces from restructuring charge liabilities to operating lease right-of-use assets. See Note 3 "New Accounting Pronouncements" for additional information on the impact of adoption.


~~(3)~~	Adjustments for the three months ended March 31, 2019 includes restructuring charges of $0.1 million related to updated operating expense assumptions for vacated office spaces directly related to discontinued operations.



	Fair Value (Derivative Asset and Liability)
Balance Sheet Location	June 30, 2019		December 31, 2018
Prepaid expenses and other current assets	$	—	$	302
Other non-current assets	$	—	$	451
Accrued expenses and other current liabilities	$	16	$	—
Deferred compensation and other liabilities	$	383	$	—