Chicago group announces intent to purchase Studer Group

The Chicago-based Huron Consulting Group announced today on its website its intent to purchase the Studer Group for $325 million,paid via $323 million in cash and $2 million in Huron common stock. The transaction is expected to close next month.

“The healthcare industry is facing immense pressure to enhance the quality of clinical outcomes and reduce the cost of providing patient care,” said James H. Roth, chief executive officer and president, Huron Consulting Group. “Studer Group is the market leader in driving cultural transformation to help hospitals improve performance. The combination of Huron and Studer Group will create the premier professional services firm focused on improving healthcare providers’ clinical, operational, and financial outcomes.”

“Our experience working with hospitals and health systems indicates that the key to success is combining a deep focus on operational excellence while optimizing human potential to provide the leadership needed for transformation,” said Gordon Mountford, executive vice president, Huron Healthcare. “Healthcare providers have invested deeply in technology and analytics, and their leadership teams are now focused on implementing the human side of change. The combination of Huron Healthcare and Studer Group will help our clients navigate all aspects of the transformation process, resulting in improved clinical outcomes and enhanced efficiency.”

Quint Studer said, “Since beginning as individuals in healthcare, then as the Studer Group, our focus has always been to make healthcare a better place for employees to work, physicians to practice medicine, and patients to receive care. We create methods, tools and processes to improve outcomes and build cultures of sustainable high performance. Becoming part of Huron, we will strengthen our foundation and together, Huron and Studer Group will have an even greater impact to improve quality and access while reducing cost.”

“Huron and Studer Group share a passion to make a difference. Our offerings are complementary in all areas of client service to meet the needs of leadership in the emerging healthcare environment. In combination, Huron and Studer Group will bring to hospital and healthcare organizations the ‘best of the best’ in performance improvement and cultural transformation to truly hardwire excellence,” said Barry Graham (B.G.) Porter, chief executive officer and president, Studer Group.

Together, the combined organization will have more than 1,500 dedicated healthcare professionals working to empower transformation for healthcare providers. The acquisition will also add proprietary, market-leading technology tools that uniquely bolster Huron Healthcare’s core solutions.

Roth said, “Huron and Studer Group together are a great strategic fit, and the combination will enhance Huron’s strong reputation in the healthcare market. We expect the acquisition to be accretive to our 2015 financial results, enhance our growth, margins, cash flow, and non-GAAP earnings per share. The strength of our balance sheet provides us with the flexibility to finance the transaction, and the strength of our cash flow will enable us to continue investing in growth opportunities across our businesses. We are excited for the Huron Healthcare and Studer Group teams to join forces, and we feel that we have found a business partner that shares our commitment to improving healthcare.”

Transaction Overview

Under the terms of the acquisition agreement, Huron will purchase Studer Group for $325 million, paid via $323 million in cash and $2 million in Huron common stock. The cash component of the transaction will be financed with cash on hand and borrowings under the Company’s senior secured credit facility. For the twelve months ended September 30, 2014, the combined companies will have pro forma revenues of approximately $904 million and non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”)(1) of approximately $190 million. As of September 30, 2014, the Company’s pro forma leverage, as defined in the Company’s senior secured credit facility, would have been 2.4x net debt to last twelve months adjusted EBITDA. The Company expects the transaction to be accretive to 2015 non-GAAP adjusted diluted earnings per share in a range of $0.47 to $0.52. This non-GAAP adjusted diluted earnings per share estimate cannot be reconciled to GAAP diluted earnings per share because the impact of acquisition related adjustments on earnings, as required by GAAP, cannot be reasonably estimated as the information needed is not currently available.

For reporting purposes, Studer Group will be included in the Huron Healthcare segment, which currently accounts for more than 50% of Huron’s overall revenue. The transaction is expected to close in February 2015, and is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions.