Good afternoon, ladies and gentlemen, and welcome to Huron Consulting Group's Webcast to discuss financial results for the fourth quarter and full year 2016. At this time, all conference call lines are on a listen-only mode. Later, we will conduct a question-and-answer session for conference call participants and instructions will follow at that time. As a reminder, this conference call is being recorded. Before we begin, I would like to point all of you to the disclosure at the end of the Company's news release for information about any forward-looking statements that may be made or discussed on this call. The news release is posted on Huron's Web site. Please review that information along with the filings with the SEC for a disclosure of factors that may impact subjects discussed in this afternoon's Webcast. The Company will be discussing one or more non-GAAP financial measures. Please look at the earnings release and on Huron's Web site for all of the disclosures required by the SEC, including reconciliation to the most comparable GAAP numbers. And now, I'd like to turn the call over to Jim Roth, Chief Executive Officer and President of Huron Consulting Group. Mr. Roth, please go ahead.

Good afternoon and welcome to Huron Consulting Group's fourth quarter and full year 2016 earnings call. With me today is John Kelly, our Chief Financial Officer, and Mark Hussey, our Chief Operating Officer. Last week we pre-released our estimated Q4 2016 results and 2017 guidance in order to provide context for 2017 expectations in light of our recently announced acquisition of growth strategy firm, Innosight. Today we will provide some additional color around our fourth quarter performance and our expectations for 2017. On a full year basis, healthcare segment revenues declined 5% from 2015. On an organic basis healthcare revenues decreased approximately 10% for the year. The year-over-year decline was primarily attributable to our revenue cycle solution which saw a rapid reduction in revenue during the second half 2016 and to a lesser extent our cost and clinical solution. Healthcare revenues in Q4 2016 declined approximately 14% over the same period in 2015. As I indicated on last week's call, the decline in revenue and earnings in the fourth quarter was primarily driven by our revenue cycle solution and again to a lesser extent, our cost and clinical solution. As noted earlier, the transition towards smaller, more discrete engagements, fewer performance based fees, and the uncertainty around the Affordable Care Act are collectively impacting the growth and margins of our healthcare business. Given these trends, we remain cautious about projecting growth for this business in the near-term. However we believe the prospects for our healthcare business remain positive over the long-term. Our education and life sciences or ELS segment achieved solid growth of approximately 7% in 2016 on a full year basis over 2015 results. Within the segment however, performance was mixed. Our education business saw continued strong demand across all solutions, achieving strong organic revenue growth year-over-year. Our cloud…

Thank you, Jim, and good afternoon, everyone. Before I begin, please note that I will be discussing non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted net income, adjusted EPS and free cash flow. Our press release, 10-K and Investor Relations page on the Huron Web site have reconciliations of these non-GAAP measures to the most comparable GAAP measures along with a discussion of why management uses these non-GAAP measures. Our recent acquisition of Pope Woodhead and Associates and pending acquisition of Innosight are not included in our fourth quarter financial results. Pope Woodhead will be included in the education and life sciences segment beginning in the first quarter of 2017. After close, Innosight will be included in the business advisory segment for reporting purposes. We anticipate the acquisition of Innosight will close in March 2017. In addition, we now expect the acquisition of the international business of ADI Strategies to close in the first half of 2017 at which time it will be included in our business advisory segment. Now let me walk you through some of the key financial results for the quarter. Revenues from continuing operations for the fourth quarter of 2016 were $178.1 million, down 3.8% from $185.1 million in the same quarter of 2015. Revenues for the fourth quarter of 2016 reflect our acquisitions of My Rounding, the U.S. business of ADI Strategies and HSM, which in aggregate generated $14.5 million of revenue during the quarter. On an organic basis, revenue declined 11.6%, primarily driven by a reduction in our revenue cycle and to a lesser extent, our cost and clinical solutions in the healthcare segment. Net income from continuing operations was $4.2 million or $0.19 per diluted share in the fourth quarter of 2016 compared to $32.5 million or $1.44 per share in the…

[Operator Instructions] Our first question comes from Tim McHugh with William Blair and Company. You may proceed.

Just to make sure I heard the number right. The contingent fees, was that $20 million to $30 million that you said for next year?

Yes. That’s correct.

Okay. All right. And I guess just to follow up because that's, I guess, an even bigger number than I would have thought. You've talked about revenues, I know a lot of the engagements are tied because that's where you get the contingent fees from. So the weakness there, I guess it plays through. But is this just timing of weakness and I guess we are now going to see that in contingent fees next year in terms of the pace of new engagements? Or is this more of a structural shift in how you would deliver work in that segment?

Tim, it's Jim. I think it's more of a structural shift. I think there was a very strong correlation between the larger the job was, the more likely it was to have some performance based fees associated with it as the average prices or as the average size has come down significantly. I think there isn't a much pressure on our clients to look for performance based fees. So I think if we are going to have a large 25-30, $35 million project or greater, I think there was always a tendency for the clients to want to have some portion of that be contingent. When they are smaller, it's just not necessary. So I think this is structural as long as we don’t have larger engagements in our portfolio.

Okay. And another part of it, I guess the education margin. What changed as much in the fourth quarter, though? It seemed the shift to cloud and so forth seemed to have been happening all year but it seems like the margin really stepped back here late in the year.

Yes. So Tim, I would say, it's really a few things. That if you look at the cloud impact during the fourth quarter, it was probably at its heaviest. We had a pickup in revenue related to the cloud in the fourth quarter and that revenue at this point still coming through at a relatively lower margin.

And on a full year basis the margin was really in line with what we expected on a full year basis.

That’s right.

Okay. And then on business advisory, it seems organic was negative there this quarter. I know you talked about one specific area that's weak. Have you seen improvement in that EFP practice, or what gives you confidence in that turning around as you think about '17?

We have -- well, I think the mix of our service offerings that we have in that segment are still reasonably strong. And I think we got hit a little bit by one of the vendors changes in the business which just slowed the sales process among our clients. I think we do expect it to be improved in 2017, we don’t have direct visibility into it right now but the market certainly seems to have firmed and so we feel good about the guidance that we have right now for that part of the business.

And then, Tim, it's John. One thing I would point out is we did have a, for the size of that practice anyway a relatively large contingent fee come through during the fourth quarter of 2015 and we just didn’t have one of those come through in 2016. So that’s actually a pretty significant factor in it quarter over quarter.

In the legacy business.

Yes.

Okay. And then just one other one to slip in. Studer, what was the growth of that business? I didn't hear it mentioned.

It was about mid-single digits for the full year.

For the full year, okay. Thank you.

And our next question is from Tobey Sommer with SunTrust. You may proceed.

This is Kwan Kim on for Tobey. Thank you for taking my question. I was wondering if you could provide some color on your utilization assumption for each segment in 2017? Thank you.

Sure, Kwan. For healthcare, our expectation right now is for utilization that’s relatively consistent with 2016 in 77% area. From an ELS perspective, we are projecting higher utilization in '17 and 2016 we expect it to be in the neighborhood of low 70%, 72%-73%, in that neighborhood. And then from a business advisory perspective, we expect it to be relatively consistent with 2016. So in the 73% to 74% area.

And our next question comes from Randy Reece with Avondale Partners. You may proceed.

Could you give a figure for success fee revenue for healthcare in the fourth quarter?

It was, for Q4, Randy, it was $14.7 million.

Very good. You talked about the impact on the tax rate of the change in accounting for stock-based compensation. Is there going to be a quarter of the year where there would be an exaggerated negative impact or will it be fairly consistent through the year?

That’s a good question, Randy. It's going to be, the heaviest would have to be in the first quarter.

So should we expect a significantly higher tax rate in the first quarter versus the rest of the year? How did you come up with the 41% number here?

Yes. The 41% is the blended rate for the entire year but we would expect it probably be at its highest during the first quarter and then blending out lower throughout the rest of the year to arrive at a full year of approximately 41%.

All right. That helps. When we are looking at the significant change in healthcare headcount and then we have an acquisition coming in, I was wondering if you could give me a feel for how to trend out expectations for billable consulting headcount in healthcare this year?

I think in healthcare, Randy this is Jim, I think in healthcare at this point until we get more visibility on the growth rates, I think we are going to be relatively flattish. Maybe up or down a little bit. There certainly are areas that we maybe hiring in but until we get a little bit more visibility on the revenue, we are going to be pretty conservative in terms of growth.

You talked about the weakest part of the business late in the year was revenue cycle. Do you have a feel for how close that business is maybe to reaching a trough run rate?

Well, that’s hard to say. We had a pretty precipitous drop off late in the year and we have seen some indications of some strengthening in the market, Randy. But I will tell you, given the pace at which things fell off in the second half, one of the reasons we took the approach we did to guidance right now was we just need to see more before we get comfort about returning to growth. So right now our guidance anticipates a continued reduction in the organic growth rate in healthcare for a bit and I think we just have to wait and see how things play out.

With your guidance, at what point in time did you include the pending acquisition? Where does it enter into the numbers guidance wise?

It enters in March, Randy.

In March?

So basically the assumption in the guidance is that you have one month of the acquisition.

Mr. Roth, we have concluded the allotted time for this call. I would like to turn the conference back over to you.

Thank you for spending time with us this afternoon. We look forward to speaking with you at our investor day on Tuesday and again in April when we announce our first quarter results. Have a good evening.

That concludes today's conference call. Thank you everyone for your participation.