ヒューロン・コンサルティング・グループ（HURN）2026年第3四半期決算説明会：過去最高のRBRとEPS見通し上方修正

主要なポイント

• ヒューロン・コンサルティング・グループは、2026年第3四半期の精算前売上高（RBR）が前年同期の4億3240万ドルから11.6%増の4億8250万ドルとなり、四半期として過去最高を記録したと発表しました。全3事業セグメントで成長を達成しました。
• 調整後EBITDAは7730万ドル（RBR比16.0%）に達し、過去8年間で最高の四半期調整後EBITDAマージンとなりました。調整後希薄化後EPSは24.8%増の2.62ドルに増加しました。
• ヘルスケアのRBRは16.5%増の2億5580万ドルと過去最高を更新しました。オーガニック成長率は9%となり、ヘルスケア・マネージド・サービスのRBRはほぼ倍増し、3四半期連続で40%を超えるオーガニック成長を達成しました。
• 直近6か月間のデジタル機能における受注の65%以上が、直接的なAIプロジェクトまたはヒューロンのAIツールによって大幅に強化された支援案件となり、2025年同期の約50%から増加しました。
• 9月30日までの6か月間における全社受注高は、ヘルスケアおよび教育分野が牽引し、前年同期比で20%以上増加しました。経営陣は、この受注残高とパイプラインが2027年に向けた継続的な成長を裏付けていると述べています。
• ヒューロンは通期RBR予想のレンジを18億5500万ドル〜18億8500万ドルへと絞り込み、調整後非GAAP EPS予想を9.20ドル〜9.40ドルに引き上げました。通期フリーキャッシュフロー予想は、主に回収時期の影響により1億5000万ドル〜1億7000万ドルに更新されました。

主要財務データ

9月30日時点で、ヒューロンの負債額は8億1500万ドル、現金は2560万ドル、純負債額は7億8940万ドルでした。レバレッジ比率は6月30日時点の2.8倍から調整後EBITDAの2.6倍に低下しました。

ヒューロンは第3四半期中に約17万3000株を2630万ドルで自社株買いしました。年初来の自社株買いは合計2億3490万ドル（約170万株、1株あたり平均価格136ドル）となりました。10月31日時点で、2億5590万ドルの自社株買い枠が残っています。

事業および業績ハイライト

ヘルスケア

ヘルスケアは全社RBRの53%を占めました。セグメントRBRは16.5%増の2億5580万ドルとなり、これにはRelateCareおよびAXIOMの買収による1670万ドルが含まれます。この成長は、マネージド・サービス、業績改善、財務アドバイザリー、およびデジタル製品に対する需要を反映しています。

同セグメントの営業利益率は、前年同期の30.9%に対して30.5%となりました。経営陣は、この緩やかな低下の主な要因として人件費の上昇とRelateCareの統合費用を挙げています。

ヘルスケア・マネージド・サービスは引き続き主要な成長ドライバーとなりました。RBRは前年同期比でほぼ倍増し、オーガニック成長率は3四半期連続で40%を超えました。経営陣は、新規顧客の獲得、既存顧客との取引拡大、成果報酬型収益、顧客の取引量増加など、広範な要因により成長が達成されたと説明しました。また、RelateCareは患者アクセス、臨床運営、およびトリアージ管理におけるクロスセルの機会を創出しています。

教育

教育は全体RBRの29%を占めました。デジタルおよびマネージド・サービス需要に牽引され、売上高はすべてオーガニック成長により6.6%増の1億3800万ドルとなりました。

営業利益率は25.7%から29.1%に拡大しました。人件費の増加を売上成長が上回ったほか、支援人員およびテクノロジー費用が減少しました。経営陣はまた、デジタル支援および独自ツールにおける稼働率向上と生産性改善を挙げました。

データおよびテクノロジーの近代化、AIを活用したオペレーション、より持続可能な運用モデルへの需要が引き続き中心となりました。しかし、教育コンサルティングの受注転換は経営陣の想定よりも緩やかな推移にとどまりました。

商業

商業セグメントはRBRの18%を占めました。セグメント売上高は6.4%増の8880万ドルとなり、これには主にWilson Perumal買収による430万ドルの追加RBRが含まれます。コンサルティングが約11%成長したもののデジタルが1%減少したため、オーガニック成長率は1桁台前半となりました。

商業セグメントの営業利益率は16.4%から13.9%に低下しました。これは業績連動賞与の増加に加え、ビジネス開発、リーダーシップ、デリバリー人材への220万ドルの投資を反映したものです。経営陣は、これらの投資を、特に金融サービス、エネルギー・公益事業、産業・製造業における2027年の成長を支えるための積極的な施策であると説明しました。

業績予想・経営見通し

経営陣は、ヘルスケアセグメントの通期成長率が10%台半ばの後半（15%強）となり、セグメント利益率は30%〜32%になると見込んでいます。教育セグメントは1桁台半ばから後半の成長に向けて順調に推移しており、利益率は従来予想の上限付近またはそれを超える可能性があります。商業セグメントの成長率は2桁台前半に達する可能性があり、利益率は従来の19%〜21%のレンジの下限に向かって推移しています。

リスクと注視すべき分野

• 通期のフリーキャッシュフロー予想には、長期契約1件の支払いスケジュールの改定や、ヘルスケアにおける成果報酬型手数料の比率上昇など、契約スケジュールに伴う回収の遅延が反映されています。経営陣は、これに関連する運転資金が2027年に回収されると見込んでいます。
• 成果報酬型契約は、今後もヘルスケア売上高の中で高い割合を占めると予想されます。経営陣によると、この割合は従来の約20%から、2026年には20%台半ばへと上昇しており、運転資金の必要性を高めています。
• 一部のAI関連プロジェクトおよびその他のプロジェクトの契約締結および開始に想定以上の時間を要したため、商業デジタルの売上高は1%減少しました。また、商業セグメントの利益率も成長投資の影響を受け続けています。
• 高等教育機関の顧客は、在籍者数、人口統計、資金調達、コスト、規制に関する懸念に引き続き直面しており、教育コンサルティングの受注転換は予想よりも遅れています。
• 医療提供者は、継続的な人手不足およびコスト圧力、診療報酬の改定、ならびに2027年に施行が予定されているメディケイドの受給資格および償還要件の厳格化に直面しています。

アナリスト質疑応答の要点

AI需要とユースケース：経営陣によると、顧客は2025年末から2026年初めにかけて見られた躊躇を経て、AIプロジェクトの開始に積極的になっています。ユースケースには、AIガバナンス、デジタルツイン、データ準備、ERP関連の効率化、企業業績管理、ならびにヘルスケアにおける臨床および管理アプリケーションが含まれます。

受注状況と2027年の見通し：直近6か月間の受注高は、ヘルスケアと教育が牽引し20%以上増加しました。商業受注は1桁台半ばの増加となりました。経営陣は、全体的な受注水準が第4四半期の業績予想を支え、2027年の成長に向けた基盤を提供していると説明しました。

ヘルスケアの見通し：経営陣は、メディケイドの変更や医療保険制度改革法（ACA）の加入圧力により未補償医療費が増加する可能性があり、医療提供者である顧客にとって2027年はより厳しい年になると予想しています。同社は、こうした状況が業績改善やマネージド・サービスへの需要を後押しすると考えています。

マネージド・サービスのマージン：ヘルスケア・マネージド・サービスのマージンは、概ねセグメント全体の平均と同水準です。経営陣は、成果連動型契約、グローバルなデリバリーリソース、自動化、AI、および固定費の回収率向上を改善の要因として挙げました。

稼働率と生産性：経営陣は第3四半期の稼働率水準について、予想の上限に近いものの持続可能なレベルであると評価しました。コンサルティングの稼働率は76%、デジタルの稼働率は81%に達しました。ヒューロンは、生産性向上への取り組みが継続する中で、売上高が人員数の増加ペースを上回って成長すると見込んでいます。

決算説明会（トランスクリプト）全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good afternoon, and welcome to Huron Consulting Group's webcast to discuss financial results for the third quarter of 2026. [Operator Instructions] As a reminder, this conference call is being recorded.

Before we begin, I would like to point all of you to the disclosure at the end of the company's news release for information about any forward-looking statements that may be made or discussed on this call. The news release is posted on Huron's website. Please review that information along with the filings with the SEC for a disclosure of factors that may impact subjects discussed in this afternoon's webcast.

The company will be discussing 1 or more non-GAAP financial measures. Please look at the earnings release and on Huron's website for all of the disclosures required by the SEC, including reconciliation to the most comparable GAAP numbers.

And now I would like to turn the call over to Mike -- Mark Hussey, Chief Executive Officer and President of Huron Consulting Group.

Mr. Hussey, please go ahead.

C. Hussey

Good afternoon, and welcome to Huron Consulting Group's Third Quarter 2026 Earnings Call. With me today are John Kelly, our Chief Financial Officer; and Ronnie Dail, our Chief Operating Officer. We achieved record revenues before reimbursable expenses or RBR in the third quarter of 2026, reflecting 12% growth over the third quarter of 2025. Our third quarter performance was driven by organic growth across all 3 of our operating segments and double-digit percentage growth in both our Consulting and Managed Services and our Digital capabilities.

AI continues to drive demand for our digital services. In the trailing 6 months of 2026, greater than 65% of our Digital capability bookings involve direct AI scope, and delivery that was significantly enabled by our AI tools, and that was up from approximately 50% in the same period in 2025. Our third quarter results continue our strong multiyear performance and further demonstrate the consistent execution by our highly talented global team as well as the differentiation of our industry-focused proprietary offerings.

Combined with our year-to-date performance, our strong backlog and pipeline give us confidence to narrow our full year RBR guidance range and raise our earnings guidance. At the midpoint, our updated guidance continues to reflect year-over-year double-digit RBR growth and continued margin expansion while establishing a solid base for continued growth in 2027.

Now I'll share some additional insights into our third quarter performance. In the Healthcare segment, we achieved record RBR in the third quarter. RBR grew 16% (sic) [ 16.5% ] for the third quarter of 2025 (sic) [ 2026 ] and which was on top of 20% growth in Q3 2025 over Q3 of 2024. The increase in RBR in the quarter was driven by strong demand for our Managed Services, performance improvement, financial advisory, and digital offerings as well as incremental RBR from our acquisitions. Excluding the impact of the acquisitions, organic RBR growth for the Healthcare segment was 9% in Q3 2026 compared to Q3 2025.

Underlying market conditions remain favorable for driving strong demand for our Healthcare business. Healthcare systems and hospitals continue to operate in a challenging environment characterized by persistent cost and workforce pressures, evolving reimbursement models, and increasing expectations to improve access, outcomes, and the patient experience. Healthcare industry is also preparing for the next phase of the OBBBA, which takes effect in 2027 and includes stricter requirements related to Medicaid eligibility and reimbursement.

We believe the impending regulatory changes together with the broader structural challenges facing health care providers will drive continued demand for our Healthcare business. Our comprehensive portfolio of offerings across Consulting, Digital, and Managed Services positions us well to address each client's distinct challenges. We believe our multiyear track record of proven results, coupled with our proprietary data and methodologies and delivered by our highly experienced team provides a strong competitive advantage for Huron, so our clients build a more sustainable future for their organizations.

I'd also like to highlight the performance of our Healthcare Managed Services business, for which RBR nearly doubled the third quarter of 2026 compared to the third quarter of 2025. Q3 2026 marked the third consecutive quarter of 40% plus organic year-over-year revenue growth for this team. The strong steady growth is reflective of the recurring nature of this offering and our outcomes-based approach that consistently delivers meaningful, positive financial and operational results for our clients.

Beyond the impressive growth in financial performance, we're pleased with how this business has organically expanded into a broader scope of functional areas, enhanced through our acquisition of RelateCare earlier this year. Our Healthcare Managed Services team has also delivered with the highest quality, achieving a Net Promoter Score of 92, which far exceeds the industry benchmark and states the clear value that we're delivering for our clients.

Next turning to the Education segment. In the third quarter of 2026, Education RBR grew nearly 7% compared to the third quarter of 2025, driven by strong demand for our Digital and Managed Services offerings. Higher education institutions continue to navigate a broad array of pressures, including demographic headwinds, enrollment challenges, and cost and revenue pressures. Uncertainty also remains around research funding in the midst of growing regulatory complexity.

Institutions are also grappling with the risks and opportunities resulting from rapid advances in AI across their workflows and their learning environments. Increasingly, these challenges require institutions to simultaneously rethink their strategies and business models while preserving a clear focus on achieving their missions. We continue to see robust demand for digital transformation engagements as clients seek to modernize their data and technology foundations, build AI-enabled operations and create a more sustainable operating model.

As institutions make increasingly consequential decisions about their future, we believe the depth of our expertise, the breadth of our capabilities and the deep relationships built over decades provide Huron with a strong competitive advantage. We remain confident in our ability to help clients navigate this period of transformation, while continuing to build upon our competitive position in the education market.

Now moving to the Commercial segment. Third quarter Commercial RBR grew 6% (sic) [ 6.4% ] over the prior year quarter. The increase in RBR was driven by our Q3 2025 acquisition of Wilson Perumal as well as continued organic growth from our strategy offerings. Commercial organizations are navigating an increasingly complex operating environment marked by cost and productivity pressures, rapid advances in technology and AI, evolving customer expectations, and continued economic and regulatory uncertainty.

These challenges are increasingly interconnected, requiring partners that can bring together deep industry expertise across a wide array of capabilities. Similar to our Healthcare and Education businesses, we believe the growing breadth of our capabilities, along with an increasing depth of industry expertise, positions us well to help clients address these challenges with end-to-end solutions across our Commercial segment.

Over the past several years, we've strategically strengthened our Commercial business by investing in the expansion of our capabilities and industry expertise, and importantly, creating greater connectivity across our businesses. Wilson Perumal acquisition completed just over a year ago is a great example. Wilson Perumal's expertise in driving performance improvement through managing the strategic and operational impact of complexity on businesses complements our strategy, financial advisory, and digital offerings.

Together, we're creating a strategy to execution, value proposition to help our clients understand and reduce complexity that erodes value in their businesses. We've seen the benefits of the strategy in the market, greater collaboration across our teams is expanding how we engage with clients, strengthening our competitive differentiation, and creating new opportunities to serve them across a full range of needs. We believe this combination of deep industry expertise, broader capabilities, and a collaborative go-to-market approach provides a strong platform for continued growth in our Commercial segment.

Now let me turn to our outlook for the year. Today, we're updating our annual guidance by narrowing our RBR guidance range to a $30 million range of $1.855 billion to $1.885 billion, affirming our adjusted EBITDA guidance range of 14.5% to 15% and increasing and narrowing our adjusted non-GAAP EPS to a range of $9.20 to $9.40. We're pleased with our performance to date in 2026 and the midpoint of our RBR guidance reflects our expectation of continued strong growth in the fourth quarter, consistent with our backlog and pipeline.

We remain focused on advancing our growth strategy and executing with discipline to deliver strong financial performance for our business and for our shareholders. And now let me turn it over to John for a more detailed discussion of our financial results. John?

John Kelly

Thank you, Mark, 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-Q, and Investor Relations page on the Huron website have reconciliations of these non-GAAP measures to the most comparable GAAP measures, along with the discussion of why management uses these non-GAAP measures and why management believes they provide useful information to investors regarding our financial condition and operating results.

Before discussing our financial results for the quarter, I would like to discuss 1 housekeeping item: our Healthcare segment results do include a full quarter of operating results from our acquisition of RelateCare which closed in June of this year.

Now I'll share some of the key financial results for the third quarter. Third quarter of 2026 produced record RBR of $482.5 million, up 11.6% from $432.4 million in the same quarter of 2025. The increase in RBR for the quarter was driven by growth across all 3 operating segments, a double-digit percentage growth in both our Consulting and Managed Services and our Digital capabilities. Net income for the third quarter of 2026 was $28.4 million or $1.75 per diluted share compared to net income of $30.4 million or $1.71 per diluted share in the third quarter of 2025.

As a percentage of total revenues, net income decreased to 5.8% in the third quarter of 2026, and compared to 6.9% in the third quarter of 2025. Diluted earnings per share in the third quarter of 2026 reflects noncash credit loss recognized on our convertible debt investment in a third party, which had a $0.36 unfavorable impact on diluted earnings per share for the quarter. Our effective tax rate in the third quarter of 2026 was 32.9%, which is less favorable than the statutory rate, inclusive of state income taxes, primarily due to certain nondeductible expense items and the inability to recognize tax benefits related to the credit loss recognized on our convertible debt investment in the third party.

We now expect a full year effective tax rate between 27% and 29%. Adjusted EBITDA was $77.3 million in Q3 2026 or 16% of RBR compared to $67.4 million in Q3 2025, or 15.6% of RBR. The 16% adjusted EBITDA margin is our highest quarterly adjusted EBITDA margin in the last 8 years. Increase in adjusted EBITDA was primarily attributable to increases in Healthcare and Education segment operating income, excluding the impact of segment depreciation and amortization and segment restructuring charges, partially offset by an increase in certain unallocated corporate expenses.

The increase in adjusted EBITDA margin to 16% from 15.6% and in the prior year period is reflective of an increase in Education segment operating income margin, scaling of our unallocated SG&A expenses. Adjusted net income was $42.6 million or $2.62 per diluted share in Q3 2026 compared to $37.4 million or $2.10 per diluted share in the third quarter of 2025, growing adjusted diluted earnings per share by 24.8% year-over-year.

Now I'll discuss the performance of each of our operating segments. The Healthcare segment generated 53% of total company RBR during the third quarter of 2026. Segment posted record RBR of $255.8 million, up $36.2 million or 16.5% from the third quarter of 2025, driven by strong demand for our Managed Services, performance improvement, financial advisory and Digital offerings as well as incremental RBR from our acquisitions. RBR in the third quarter of 2026 included $16.7 million from our acquisitions of RelateCare and [ AXIOM. ]

Operating income margin for the Healthcare segment was 30.5% in Q3 2026 compared to 30.9% in Q3 2025. Slight decrease in segment operating income margin was primarily driven by an increase in total compensation expense as a percentage of RBR and includes the impact of the integration of RelateCare into our business. We have maintained strong margin performance in 2025 and into the first 9 months of 2026, reflective of the highly disciplined execution delivered by our Healthcare team. The Education segment generated 29% of total company RBR during the third quarter of 2026. Education segment RBR in the third quarter of 2026 was $138 million, up $8.6 million or 6.6% compared to the third quarter of 2025.

The increase in RBR was entirely organic and driven by strong demand for our Digital and Managed Services offerings. The operating income margin for Education increased to 29.1% for Q3 2026 compared to 25.7% for the third quarter of 2025. The increase was primarily driven by revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals and decreases in salaries and related expenses for our support personnel and technology costs.

The Commercial segment generated 18% of total company RBR during the third quarter of 2026. Commercial segment RBR was $88.8 million in Q3 2026, up $5.4 million or 6.4% from the third quarter of 2025. The increase in RBR reflects $4.3 million of incremental RBR primarily from our acquisition of Wilson Perumal, as well as strong demand for our strategy offerings. Operating income margin for the Commercial segment was 13.9% for Q3 2026 compared to 16.4% in the same quarter in 2025. The decrease was primarily driven by increases in performance bonus expenses, reflecting increased full year performance expectations for certain teams within the segment.

In addition to the increase in performance bonus expense, the decline in margin also reflects continued investment in key business development, leadership, and delivery talent that we expect to drive above company average growth in 2027. These growth-oriented investments totaled $2.2 million or 2.5% of segment RBR for Q4 (sic) [ Q3 ]. Corporate expenses not allocated at the segment level, excluding restructuring charges, were $58.7 million in Q3 2026 compared to $56.5 million in Q3 2025. Unallocated corporate expenses in the third quarter of 2026, included income of $200,000 compared to expense of $2.7 million in Q3 2025 related to the changes in the liability of our deferred compensation plan, which are offset by the change in fair value of the investment assets used to fund that plan reflected in other income.

Excluding the impact of the deferred compensation plan in both periods, unallocated corporate expenses increased approximately $5.1 million, primarily driven by increases in compensation costs for our support personnel, software and data hosting expenses, partially offset by a decrease in legal expenses.

Now turning to the balance sheet and cash flows. DSO came in at 83 days for the third quarter of 2026 compared to 79 days in the second quarter of 2026. The increase when compared to the second quarter of 2026, is primarily attributable to the impact of collections on certain Healthcare projects in alignment with the contractual payment schedules.

Cash flow from operations in the third quarter of 2026 was $57 million compared to $93.8 million in the prior year period. During the third quarter of 2026, we used $7.9 million to invest in capital expenditures, inclusive of internally developed software costs, resulting in free cash flow of $49.1 million. We now expect full year free cash flow to be in a range of $150 million to $170 million. Net cash taxes and interest and excluding noncash stock compensation. This update primarily reflects the timing of collections, including a revised payment schedule on a specific multiyear engagement and a higher mix of performance improvement projects with performance-based fee elements within our Healthcare segment during 2026.

We expect to collect working capital related to such projects in 2027 in accordance with our contractual terms. Our leverage ratio as defined in our senior bank agreement, was 2.6x adjusted EBITDA as of September 30, 2026 compared to 2.8x as of June 30, 2026. We remain confident that we are on track to achieving a leverage ratio between 2x and 2.5x by the end of 2026, in alignment with the capital allocation strategy outlined in our most recent Investor Day. Total debt as of September 30, 2026, was $815 million, consisting entirely of our senior bank debt. We finished the quarter with cash of $25.6 million for net debt of $789.4 million.

This was a $13.4 million decrease in net debt compared to Q2 2026, which incorporates the share repurchases made during the quarter. In the third quarter of 2026, we used $26.3 million to repurchase approximately 173,000 shares bringing our total year-to-date repurchases to $234.9 million or approximately 1.7 million shares, reflecting an average repurchase price of $136 per share. Year-to-date repurchases represent 10% of our common stock outstanding as of December 31, 2025.

As of October 31, 2026, $255.9 million remained available for share repurchases, inclusive of the $200 million increase authorized by our Board of Directors in October 2026. Finally, let me turn to our guidance for full year 2026. As Mark mentioned, today, we are updating our annual guidance by narrowing our RBR guidance to a range of $1.855 billion to $1.885 billion, affirming our adjusted EBITDA guidance range of 14.5% to 15%, and increasing and narrowing our adjusted non-GAAP EPS to a range of $9.20 to $9.40.

Thanks, everyone. I would now like to open the call to questions. Operator?

Operator

[Operator Instructions] Our first question comes from the line of Andrew Nicholas of William Blair.

質疑応答

Andrew Nicholas

To start with the Commercial, a little bit of a weaker quarter on an organic basis. Could you unpack what kind of businesses within that segment did during the quarter? And then maybe speak a little bit more to the investments that you described. Are there specific areas that you're focused on with those investments? And I guess, relatedly, are those investments in response to recent results or kind of[ proactive ] to spurring growth next year?

John Kelly

Yes. Andrew, I can start with just the question about the growth rate for the quarter. So from an organic perspective, Consulting overall was up about 11%. And we talked on the last call, about expecting the growth rate within Consulting to moderate from where it was earlier in the year. And that moderation primarily came from the restructuring and turnaround business where they add a couple of large assignments in the first half of the year that really drove above-average growth that normalized during the third quarter and landed more in this low double-digit percent range.

From a Digital perspective, it was down 1%, so roughly flat during the quarter. Our commentary there is, from a pipeline perspective, we see significant growth in terms of pipeline. We see good opportunities. We see continued opportunities as it relates to AI enablement projects or helping clients with AI use case projects just the execution on closing out some of those projects and getting them started was a little bit behind what our expectations were for the quarter, which led to the roughly flat results in the third quarter. The Digital part of the business is a bigger mix within commercial. So the net of all that was the low single-digit organic growth rate.

C. Hussey

Yes. Let me add on the second part of your question, Andrew. I think the -- these are not at all in response to anything in the quarter. In fact, if you turn the clock back a couple of years at least for the multiyear journey we've been building our Commercial business into a much more, call it, industry focused, enablement on an end-to-end basis. And so I mean, even turning back clock to like, AXIA, we did, which was more in the Digital area.

But more recently, if I answer your question specifically, we have now gotten to the time where the capability across the businesses for reaching the scale that the addition of deeper industry expertise in a number of the verticals makes a lot of sense for us because now we can leverage across the full set of capabilities we have, and so what you're seeing is some of the anticipation of growth in 2027, some of the investments where we're bringing in leaders to help us scale from an industry perspective.

Andrew Nicholas

Very helpful. And then you touched on it at various points during the prepared remarks also in response to my last question. But just broadly on pipeline development, any areas that are especially strong or accelerating or on the other side of the coin, softening a little bit relative to what you described last quarter. It sounds like general bookings are good. But any color there would be great.

John Kelly

Yes, Andrew, from a -- maybe I'll just start from an overall perspective. From an overall company-wide bookings perspective, for the trailing 6-month period ended September 30. Bookings were up 20% year-over-year -- over 20% year-over-year. I think the strength of those bookings, that's not only helpful in terms of delivering the fourth quarter guidance, but we also feel good that, that really helps set the table for the next leg of growth as we start to think about 2027.

In terms of the areas, I would say the majority of the bookings strength there was within the Healthcare and Education segment. And importantly, Digital within both of those segments was a key part of that. Within Healthcare, it was also broader in terms of performance improvement and the Managed Services offerings. And then on the Education side of the shop. I think the strength was really Digital and Managed Services. There was growth in terms of bookings for the Consulting part of the business, but we continue to see a little bit of a slower than we expected sales conversion rate within Consulting and Education.

And then from a Commercial perspective, that was more in the mid-single-digit range percent in terms of increase in bookings during the 6 months ended 9/30 versus a year ago. And what's in there, I'd say it was pretty well balanced between the different lines of business within the Commercial segment.

Operator

Our next question comes from the line of Tobey Sommer of Truist Securities.

Tobey Sommer

I wanted to ask a question about Healthcare and PI specifically. The order of the magnitude of change in terms of enrollment in insurance rules, the Affordable Care Act this year, that changed compared to the another leg down that is forecast in the Medicaid and the 340B drug pricing? Which year between this year and next is harder on your clients? Just trying to get a sense for what you may hear from them in the coming months or if we turn the calendar to '27?

C. Hussey

Tobey, I think you could say next year, we expect to be harder because what you're going to see is a lot of that Medicaid rolls to come back in the form of unreimbursed care. And you've got compounded by some of the ACA pressures that you've seen on enrollment. So I think it's been well expected for some period of time. But I think until you really get into it and see magnitude. So we expect '27 should be a very strong year from a Healthcare perspective, especially because now we will be into the new parts of the regulation that will take effect January 1.

Tobey Sommer

On Managed Services, maybe -- are there new services within there that you're expecting to offer your customers? Perhaps I'm kind of curious what the next modules of revenue cycle that you think the company is getting more receptivity and adoption from your customers to drive growth in '27 and '28?

C. Hussey

Well, I think the first thing to understand is that we have both end-to-end revenue cycle where we kind of lift and shift and re-badge their people and then execute under, call it, outcomes-based, performance-based contracts. But I would say an increasing number is on our point solutions that are on various parts of the revenue cycle. And then I would say with businesses like we just acquired with RelateCare, what you're seeing is an extension into some of the access areas.

And so I think there is quite a bit of adjacency that's still left to be -- left to be executed there. So I think really within, call it, both the traditional revenue cycle as well as getting into some of the access related clinical operations and just some of the triage management are definitely areas that we see really good opportunities.

Tobey Sommer

Last one for me. Margins in Managed Services going forward. Could you give us your outlook there kind of not just for the fourth quarter, but a little bit longer term and broad strokes, please?

John Kelly

Yes. Tobey, this is John. I would say, from our perspective, this has been 1 of the really great parts of our Managed Services business story over the past few years. We've seen steady margin improvement in that business. And when you think about our Healthcare Managed Services, the margin profile segment level for our Managed Services offering are generally in line with the overall segment average. They tend to be a little bit below the performance improvement, Consulting, which has its performance-based fee opportunities and above the Digital offerings, which tend to blend a little bit lower.

And when we first got into the Managed Services business, at this point, 7 years ago, that wasn't the expectation. We actually, at that point, were thinking that the Managed Services business would be high growth, which has proven to be, but that would blend in at a lower margin rate. So it's been a really positive change for us. In terms of what is unlocked that margin growth, I think it's a few things. But first and foremost, it's the outcomes-based approach that our teams take with our clients.

So we're very focused on delivering key financial and operational metrics for our clients and to the extent that we're successful in doing that. That creates opportunity for us to expand our revenue on those projects. But as well, our team has done a great job of taking advantage of our global resources. And then this is an area where I think across the entire company, when we look at the advancements we made in automation using AI. The team has also shown great leadership in those areas too.

So you put all those things together and plus just some nice scaling now of the fixed components of the SG&A for that business. It's proven to be really margin accretive to us, coupled with the strong growth rates that Mark highlighted in his remarks.

C. Hussey

And of course, the recurring nature.

John Kelly

Yes.

Operator

Our next question comes from the line of Bill Sutherland of StoneX Financial.

William Sutherland

I can't help but notice the sequential trend in headcount, professional headcount in Education down a bit in the 9 months and then a nice expansion in margin over the same 3 quarters. And just wondering about that relationship or whether there's other factors? And also how you're thinking about headcount planning for Education going forward?

John Kelly

Yes. So this is -- I'll touch on Education. I think it's a broader comment, though, really across the company too, right? The Education headcount was down. I think generally speaking, if you're looking sequentially, excluding Managed Services, our headcount was roughly flat across the entire business. And I think the story behind that is, during the quarter, we were able to hit our growth objectives for the quarter as well as keeping an eye on our fourth quarter expectations, really with the scale of the current team that we have.

And so some of that is utilization, and you see that in the increased utilization metrics in our report. But some of that is increased productivity from our teams, too. And I'd highlight a couple of different areas where we've seen that increased productivity, delivery of digital projects. I think that's a place where we've seen some fairly rapid advancement in terms of our efficiency, and delivering those projects. But then also the support teams that enable some of the revenue that we have through our proprietary tools and products, of which that's a key component of our Education business.

We've also seen increased productivity in that area, too. So I think that the combination of increased utilization plus higher per consultant productivity are really the 2 ingredients that drove our ability to both grow and to improve margins without necessarily adding the same amount of headcount. I do think you'll see us continue to add head count as we grow. But our expectation is we should be able to grow the top line as we start to think about our plans into next year at a faster pace than we're necessarily growing the headcount, primarily due to some of these initiatives we have around driving increased productivity.

William Sutherland

Got it. The -- I want to just go back to Commercial for a second, thinking about what you said about the investments you're making that you expect will take Commercial's growth above the company's average growth rate next year. And then also kind of like footing that to the situation with the pipeline. So is it -- I guess I'm sort of expecting this to be a case of some pipeline conversion that's been held up and then you'll have bookings that definitely support the cases that you're making for faster growth in '27. Is that about the right way to think about it?

C. Hussey

And I'd say, Bill, adding new pipeline as these layers come up to speed and are effectively getting into the market, and that normally takes some amount of time just to onboard kind of reacclimate with the other folks around understand the breadth of what our capabilities are. So there's always a slight delay between hitting the door on day 1 and when you're actually highly effective in the market. So based on the quality of the people that we're hiring, I feel highly confident that you'll see that acceleration.

The areas that we're building into are inherently good industry areas we've talked about in the past: financial services, energy utilities, industrials and manufacturing. Each of these have lots of good compelling opportunities, some in various parts of the business versus others. But yes, that's to me, I think you may not see it as of the end of Q3, but I certainly -- I think coming in at '27, that's our expectation.

William Sutherland

Okay. That makes sense. And then if I could sneak 1 more in. I'm thinking about what your clients are kind of grappling with adoption of different levels of AI for their whatever projects they are putting out there or trying to move into? And is it -- to what degree is it having an impact on the sales cycle, decision-making process or maybe the project implementation pace. Is there anything that you're noticing?

John Kelly

I think, Bill, we're -- I think we felt a little bit of maybe what was some hesitation on the part of clients towards the end of last year, early part of this year when that -- everyone was becoming aware of the rapid pace change with the technology and some clients wanting to make sure that whatever path, they were going down made sense in light of how the technology was evolving. I think as the year has progressed, a lot of the challenges that we've -- our clients are going through in their different industries, none of those are going away. And our clients continue to be under pressure there.

And so I think many of our clients at this point have taken more an approach of let's now start to chart the path forward, increasing confidence about how some of these tools can be used to help drive outcomes. There's a greater repository of use cases now and kind of proof of how you can use some of these tools to go and achieve some of those objectives. And I think at this point, you're seeing a little bit more assertiveness for many of our clients about now wanting to launch and wanting to -- whether that's taking advantage of some of the AI that's native to some of the big platforms that our clients implement to take advantage of that AI or whether it's working with some of the frontier firms to do more the stope building out -- bespoke building out of tools that sit on top of some of those platforms.

We see it in both ways, depending on the clients' preferences. But I think we see a shift towards more proactivity at this point versus maybe where we were a year ago.

C. Hussey

Maybe I'll Just quickly add -- go ahead, Bill.

William Sutherland

Yes. No, go ahead.

C. Hussey

I was going to just say, listen, I think the other thing we're seeing here is interesting traditional delivery of price where we've had strength as an example in the past, bringing in an AI component into what they're doing. And it really is, in many respects, automating, and accelerating speed to value for clients in important areas of their business. And so you can imagine like we've done a lot in enterprise performance management over the years. It's been a very important area that we have, very good strength across the commercial businesses and the addition of AI enablement into some of that delivery ends up being really impactful when you look across how it's deployed, like planning budgeting type approach to running the business. And so that's actually been accretive to us as well.

Operator

[Operator Instructions] Our next question comes from the line of Kevin Steinke of Barrington Research Associates.

Kevin Steinke

Just following up on the AI discussion. Wondering if you could possibly just give us the flavor as to some of the key themes or use cases that your clients are looking to deploy AI for, maybe touching on each of the segments?

C. Hussey

Yes, absolutely. Let me start again, just building on what I was just talking about from a commercial standpoint. So certainly from the range of AI governance and just the oversight of just management of the, call it the, strategy work is one that we see. But also then, I would say, when you look at it as an example, specific application like one is building out a digital twin as an example, to replicate more clients' environment and being able to kind of model around various scenarios within their environment.

Some of it is around the data and setting up integration of how you kind of get your data in shape to take advantage of that as well. I'd say in Education, it tends to be a little bit more operational focused right now. And so if you think about the implementation of ERP as an example, how do we bring either native capabilities or outside foundational elements to help them reduce costs and increase our effectiveness. And Healthcare is a little bit all over the map. I mean there's very strong demand in Healthcare. It's both the ranging from strategy to use cases across both the clinical and the administrative areas that can drive -- generally, the theme is around trying to generate returns.

Kevin Steinke

Okay. Got it. And with regard to the 40% plus organic growth you've seen with Healthcare Managed Services over the last few quarters here. I was just wondering how broad-based that's been from a client perspective? Are there a couple of larger deployments that have been driving that? Or is it broader than that? And also the same with regard to what you're seeing in the pipeline?

John Kelly

Kevin, it's broader than that. We certainly had our fair share of significant new logos that we've been able to add with larger scope that we've been able to take care of. But when I look at the growth we've seen this year, I wouldn't characterize it at all as highly concentrated to any specific new client relationships. We've had some of those, but we've also had expansion of where we're able to help our clients on some existing client relationships.

We've had achievement of some of the success metrics that we have in those projects that drive good outcomes. And then a lot of our clients that we partner with are growing as well and as they grow, we're helping them with larger and larger volumes. So you kind of put all those different dynamics together, growth at existing clients via adding new modules as well as just partnering along with that as they grow plus the adding of those new client relationships.

And I think increasingly, we're going to see the opportunity to, after our acquisition of RelateCare, to capture some synergies there as well in terms of clients that were RelateCare clients, where we're now able to also help them with revenue cycle managed services or vice versa, some of our Managed Services and Consulting clients from a performance improvement perspective are very interested in the offerings of RelateCare. So I think that's another factor of growth that we're really just scratching the surface on right now.

Kevin Steinke

Okay. Just lastly, with the midterm elections here, any particular themes that you're watching or your clients are watching from a policy perspective? And if not, I mean, that's okay too. Just curious if there's anything on that front?

C. Hussey

I would say, Kevin, there's an anticipation that even if there's a change in the party that's in charge of Congress that the policies that have been put out there are largely kind of baked from where we are right now. So I think at least in the short term, there's nothing that really is going to be the cavalry coming to the rescue from where some of the clients are facing the challenges right now. Certainly, over time, I think it will depend on how things go.

But if you take a step back and effectively with the size of Healthcare spending and the rate of increase, it is far beyond a political issue. It is really one that is kind of spans both sides of the political spectrum. And so in some respects, it doesn't matter because the ultimate drivers are more so just what are the real costs of delivering health care and all the access that goes along with it.

Operator

Our next question comes from the line of Steven Wahrhaftig of Wedbush Securities.

Steven Wahrhaftig

I kind of have a few topics that I want to talk on. So specifically for the demand drivers across all 3 segments, it seems like everything is sustainable and it's very durable, but they're kind of the same demand drivers that we've seen across the business over the past couple of quarters.

Are you starting to see the demand accelerate for your services as we start to head into fiscal year '27 and as clients start to rethink their budgets? Or is it kind of the same demand profile across each business?

C. Hussey

Steven, if you go back, I mean, a really long time. So I mean, if I just said, in summary, what's driving the business? It's constrained revenue in Healthcare and Education, whether it's from reimbursements that are under pressure or tuition and other kind of funding that has been -- through the governmental through pressure on research funding. And at the same time, you're seeing high cost inflation in general, both in many areas within health care, but also the investments have been made by higher education over the years and their administrative programs and other things that have just driven call it, an upside down relationship that is hard on profitability.

And so those are long-term kind of static trends. And that's why we feel -- so when we talk about our long-term growth outlook, with 80% of our business being in Healthcare and Education, those are very long-term kind of established drivers that don't vary with the broader economic environment either. I think on the Commercial side, it really depends on what area of the business because it ranges from restructuring turnaround capabilities, which have kind of a countercyclical area, but then we also have more increasing new performance improvement, investing in digital technology.

And that may be a little bit more industry-specific over time. But yes, I think '27 for that reason, we feel like the outlook for a projection consistent with the financial objectives that we've outlined is very much our expectation.

John Kelly

And maybe the -- a couple of things I would add in agreement with what Mark's commentary would be, one, those same pressures that Mark talked about, that is a big catalyst for Managed Services offerings. That's another way that our clients engage with us to achieve some of those same objectives to help to offset some of that pressure that they're under. And then the other one would be within the digital side of our business. I think our clients are very eager to capture some of the returns on their investments from an AI perspective.

And I think whether that's in the form of operating efficiencies, whether that's -- how do you use those tools to help drive growth? And our clients value propositions, I think that's another area where we see a lot of demand that's probably a new theme this year and then certainly into next year versus maybe a theme going back a couple of years. So -- and that's just some extra color there.

Steven Wahrhaftig

All right. Got it. And I kind of want to talk a little bit more about utilization because when we're looking at some of the utilization metrics across both the Managed Services and the Consulting businesses, both of them are up pretty materially year-over-year. We're looking at the Consulting business that was 76% and Digital at 81%.

Do you think that, that's going to be a sustainable clip that you can continue to execute against? Or do you think that this was more so onetime in nature and then it's going to start to return to the high 70s for Digital and then closer to the mid- to low 70s for Consulting?

John Kelly

I think it is sustainable where it's at there, Steven. I wouldn't call in expectations that from those levels you saw in the third quarter that there's a lot of upward movement from there. But I think we've always said, look, that high 70s is sweet spot. So I think there's a little bit of room on the consulting side. From a digital perspective, it was a little bit higher than that this quarter. But I mean, if you look at the trend now at this point, we've been able to sustain that for really the better part of the last 2 quarters.

So I think the team is doing a great job kind of optimizing how they're delivering on projects to really get us into that low 80% range. So I think we feel good about where we're at. I don't -- I wouldn't describe it as a onetime surge by any means. But it also is probably approaching the upper end of what we expect versus something that I would describe as having a lot of upward movement from that spot.

Steven Wahrhaftig

Okay. Understood. And then last question from me, specifically on the cash flow guidance because it was kind of a material downtick in the cash flow guidance to the $150 million to $170 million for fiscal year '26. And then you also attributed to the collection, specifically for some of the Healthcare projects that are in longer term. So do you expect this to just be a short-term impact? Or do you think the definite carry forward into fiscal year '27 where there might be some pressure on free cash flow going into next year?

John Kelly

No, I think it's just a timing impact. Everything that we described is all aligned with contractual terms. So it's not like seeing delinquency in payments or anything like that. I think it's when our Healthcare business particularly the performance improvement side of the Healthcare business is performing strong. They tend to have a heavier weighting towards performance-based fees.

And those are great projects for us. They are great opportunities for us to partner with our clients to drive great outcomes. But you do make a working capital investment in those projects sometimes. I think the weighting of projects that have performance-based fee is towards the higher end for us this year. And so that's creating a little bit of a timing gap in terms of cash flow into next year. But I think we've seen this cycle before. So it's not something that gives us pause. It's just a dynamic that shifts cash from 2026 into 2027.

Operator

Our next question comes from the line of Andrew Nicholas of William Blair.

Andrew Nicholas

Just 1 quick one, John. Just curious if you have any changes to segment level outlooks with just 1 quarter left, I wanted to make sure I asked that on the public call?

John Kelly

Andrew, no big changes. I'd say a little bit of extra color that I can give I think guided to mid-teen percent full year growth from a Healthcare perspective, I think we're probably trending a little bit higher there in terms of the higher mid-teens. And I think our margin objectives that we put out there, that 30% to 32%. I think we feel comfortable that we're landing within that range.

From an Education perspective, the mid- to upper single-digit guide that we put, I think we're on track for that. From a margin perspective, I'd say, if anything, we're off towards the upper end of that, if not higher than that from a margin perspective. Commercial for the full year, we described as low teens. That may end up being more in the low double-digit percent range. And then from a margin perspective, it's probably trending to the low end of the guidance that we put out there, the 19% to 21%. But to net all that keeps us on track with our consolidated guidance.

Operator

Our next question comes from the line of Tobey Sommer of Truist Securities.

Tobey Sommer

Within your business focused on -- or exposed to performance fees, does -- your commentary suggest that there's a outlook for an increased percentage of performance fees as we look out into '27, just if you could frame that a little bit, that would be helpful.

John Kelly

Yes, Tobey, I would say I would expect it to be continued high demand for performance-based fee contracts in the '27. So the way we framed it before is, oftentimes, if you look back over history, about 20% of the Healthcare segment's revenue has been under performance-based fee contracts. An example here would be 2024, we saw that shifts up pretty significantly towards the mid-20s percent range. And then it came back down in 2025 back towards the 20%. This year, it's another year we're shifting up towards the mid-20% range.

And I would say the indications as we now think about 2027. I don't know if I would call it higher than that at this point, but I think it feels to us that we would expect it to be consistently high like it was in 2026.

Operator

Seeing no more questions in queue. I'd like to turn the call back to Mr. Hussey. Sir?

C. Hussey

Well, thank you very much for spending time with us this afternoon. We look forward to speaking with you again in February when we announce our fourth quarter results. Have a good evening.

Operator

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