Further Raise to FY25 Revenue and Earnings Guidance

TYSONS, Va., May 08, 2025--(BUSINESS WIRE)--Maximus (NYSE: MMS), a leading provider of government services, reported financial results for the three and six months ending March 31, 2025.

Highlights for the second quarter of fiscal year 2025 include:

Revenue increased 1.0% to $1.36 billion, compared to $1.35 billion for the prior year period. Organic growth was 3.0% driven primarily by strong performance in the U.S. Federal Services Segment.

Diluted earnings per share were $1.69 and adjusted diluted earnings per share were $2.01, compared to $1.31 and $1.57, respectively, for the prior year period.

The company is raising revenue and earnings guidance for fiscal year 2025. Full year revenue is expected to range between $5.25 billion and $5.4 billion. Adjusted EBITDA margin is expected to be approximately 11.7% and adjusted diluted earnings per share are expected to range between $6.30 and $6.60 per share for the full fiscal year 2025.

A quarterly cash dividend of $0.30 per share is payable on May 31, 2025, to shareholders of record on May 15, 2025.

"We are proud of our teams across the business who are focused on mission-critical service delivery of important government programs," said Bruce Caswell, President and Chief Executive Officer. "As a result, we delivered a robust quarter that enables a second consecutive guidance raise."

Caswell added, "Our performance reflects the trust our customers place in Maximus as a partner in delivering outcomes that matter. At the Federal level, we believe our focus on technology innovation, including AI to modernize program delivery, aligns with Administration goals. At the state level, renewed flexibility to contract with private sector partners creates needed optionality for our customers. We remain focused on our goal of capitalizing on this unprecedented period across government service delivery."

Second Quarter Results

Revenue for the second quarter of fiscal year 2025 increased 1.0% to $1.36 billion, compared to $1.35 billion for the prior year period. Organic growth was 3.0% due primarily to strong performance in the U.S. Federal Services Segment and partially offset by the expected revenue and earnings normalization of the U.S. Services Segment following the prior year period's over-performance from Medicaid-related activities.

For the second quarter of fiscal year 2025, operating margin was 11.2% and the adjusted EBITDA margin was 13.7%. This compares to margins of 9.5% and 11.7%, respectively, for the prior year period. Diluted earnings per share were $1.69 and adjusted diluted earnings per share were $2.01. This compares to $1.31 and $1.57, respectively, for the prior year period.

Story Continues

U.S. Federal Services Segment

U.S. Federal Services Segment revenue for the second quarter of fiscal year 2025 increased 10.9% to $777.9 million, compared to $701.7 million reported for the prior year period. All growth was organic and originated from multiple sources across the segment, including clinical assessment volume from several different program areas.

The segment operating margin for the second quarter of fiscal year 2025 was 15.3%, compared to 11.9% reported for the prior year period. Processing of higher clinical assessment volume across several different program areas benefited this quarter’s margin. The full-year fiscal 2025 margin for the U.S. Federal Services Segment is now expected to be between 12.5% and 13%.

U.S. Services Segment

U.S. Services Segment revenue for the second quarter of fiscal year 2025 decreased 9.0% to $442.4 million, compared to $486.1 million reported in the prior year period. Similar to the first quarter of this year, the decrease resulted from the prior year period containing excess volumes from Medicaid-related activities, including the unwinding exercise that drove extra redeterminations.

The segment operating margin for the second quarter of fiscal year 2025 was 12.2%, compared to 14.0% reported for the prior year. The higher margin in the prior year period was a direct benefit of the excess volumes that were temporary. Results this quarter reflected anticipated, sequential improvement over the first quarter of this year. The full-year fiscal 2025 margin expectation for the U.S. Services Segment is unchanged at approximately 11%.

Outside the U.S. Segment

Outside the U.S. Segment revenue for the second quarter of fiscal year 2025 decreased to $141.5 million, compared to $160.5 million reported in the prior year period. The segment revenue reduction was due to the multiple divestitures of employment services businesses in prior periods, and partially offset by positive organic growth of 4.6%.

The segment operating margin for the second quarter of fiscal year 2025 was 3.4%, compared to 0.4% in the prior year period. Profitability for the segment has improved in recent periods due to the previously divested businesses.

Sales and Pipeline

Year-to-date signed contract awards at March 31, 2025, totaled $2.92 billion, and contracts pending (awarded but unsigned) totaled $451 million. The book-to-bill ratio at March 31, 2025, was 0.8x as calculated on a trailing twelve-month basis.

The sales pipeline at March 31, 2025, totaled $41.2 billion, comprised of approximately $1.97 billion in proposals pending, $3.00 billion in proposals in preparation, and $36.3 billion in opportunities we are tracking. New work opportunities represent approximately 55% of the total sales pipeline.

Balance Sheet and Cash Flows

At March 31, 2025, cash and cash equivalents totaled $108 million, and gross debt was $1.51 billion. The ratio of debt, net of allowed cash, to consolidated EBITDA for the quarter ended March 31, 2025, as calculated on a trailing twelve month basis in accordance with our credit agreement, was 1.9x and has trended higher from increased purchases of Maximus common stock. This compares to 1.8x at December 31, 2024 and remains below the target net leverage range of 2x to 3x.

For the second quarter of fiscal year 2025, cash provided by operating activities totaled $42.7 million and free cash flow was $25.5 million. Operating cash flows were impacted primarily due to an increase DSO to 73 days at March 31, 2025, compared with 62 days at December 31, 2024. The primary driver of the increase is the result of a single contract with one of our U.S. state customers attributable to a delay in finalizing an extension. As we anticipate executing the extension during the second half of this fiscal year, our full fiscal year 2025 cash flow guidance is unchanged.

During the second quarter of fiscal year 2025, we purchased approximately 0.9 million shares for $72.8 million. The current Board of Directors authorization announced in December 2024 has $65.8 million available for future purchases.

On April 5, 2025, our Board of Directors declared a quarterly cash dividend of $0.30 for each share of our common stock outstanding. The dividend is payable on May 31, 2025, to shareholders of record on May 15, 2025.

Raising Fiscal Year 2025 Guidance

Maximus is raising revenue and earnings guidance for fiscal year 2025. Revenue guidance is increasing by $50 million, which is all organic, and now expected to range between $5.25 billion and $5.4 billion.

The full year adjusted EBITDA margin, which excludes divestiture-related charges, improves by 50 basis points to approximately 11.7%, compared to prior guidance. Adjusted diluted earnings per share, which excludes expense for amortization of intangible assets and divestiture-related charges is expected to increase by $0.40 and is now expected to range between $6.30 and $6.60 per share for fiscal year 2025.

Free cash flow guidance of between $355 million and $385 million is unchanged for fiscal year 2025. Interest expense is now estimated to be $78 million for fiscal year 2025. The full year tax rate is still expected to range between 28% and 29% and the weighted average shares outstanding forecast of approximately 58 million shares is unchanged for fiscal year 2025.

Conference Call and Webcast Information

Maximus will host a conference call this morning, May 8, 2025, at 9:00 a.m. ET.

The call is open to the public and available by webcast or by phone at:

877.407.8289 (Domestic) / +1.201.689.8341 (International)

For those unable to listen to the live call, a recording of the webcast will be available on investor.maximus.com.

About Maximus

As a leading strategic partner to government, Maximus helps improve the delivery of public services amid complex technology, health, economic, environmental, and social challenges. With a deep understanding of program service delivery, acute insights that achieve operational excellence, and an extensive awareness of the needs of the people being served, our employees advance the critical missions of our partners. Maximus delivers innovative business process management, impactful consulting services, and technology solutions that provide improved outcomes for the public and higher levels of productivity and efficiency of government-sponsored programs. For more information, visit maximus.com.

Non-GAAP Measures and Forward-Looking Statements

This release contains non-GAAP measures and other indicators, including organic growth, free cash flow, operating income and EPS adjusted for amortization of intangible assets and divestiture-related charges, adjusted EBITDA, consolidated EBITDA (as defined by our credit agreement) and other non-GAAP measures.

A description of these non-GAAP measures and details as to how they are calculated are included with our earnings presentation and forthcoming Form 10-Q.

The presentation of these non-GAAP numbers is not meant to be considered in isolation, nor as alternatives to cash flows from operations, revenue growth, operating income, or net income as measures of performance. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies.

Statements that are not historical facts, including statements about our confidence and strategies, and our guidance and expectations about revenues, results of operations, profitability, future contracts, market opportunities, market demand, or acceptance of our products are forward-looking statements that involve risks and uncertainties.

These risks could cause our actual results to differ materially from those indicated by such forward-looking statements. The guidance is only effective as of the date given. We undertake no obligation to update the guidance herein as circumstances evolve. A Special Note Regarding Forward-Looking Statements is included within our forthcoming Form 10-Q and a summary of risk factors can be found in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended September 30, 2024, which was filed with the Securities and Exchange Commission (SEC) on November 21, 2024. Our SEC reports are accessible on maximus.com.

FY25 Guidance Reconciliation - Non-GAAP ($ in millions except per share items) Low End  High End Operating income $ 439   $ 464  Add: amortization of intangible assets  92    92  Add: depreciation & amortization of property, equipment and capitalized software  41    41  Add: divestiture-related charges  39    39  Adjusted EBITDA $ 611   $ 636  Revenue $ 5,250   $ 5,400  Adjusted EBITDA Margin  11.6 %   11.8 %  Diluted EPS $ 4.45   $ 4.75  Add: effect of amortization of intangible assets on diluted EPS  1.17    1.17  Add: effect of divestiture-related charges on diluted EPS  0.68    0.68  Adjusted diluted EPS $ 6.30   $ 6.60   Cash flows from operating activities $ 427   $ 457  Remove: purchases of property and equipment and capitalized software costs  (72 )   (72 ) Free cash flow $ 355   $ 385

Maximus, Inc. Consolidated Statements of Operations (Unaudited) For the Three Months Ended  For the Six Months Ended March 31, 2025  March 31, 2024  March 31, 2025  March 31, 2024 (in thousands, except per share amounts) Revenue $ 1,361,786  $ 1,348,357  $ 2,764,461  $ 2,675,398 Cost of revenue  1,022,965   1,030,768   2,124,083   2,057,755 Gross profit  338,821   317,589   640,378   617,643 Selling, general, and administrative expenses  162,857   168,454   354,592   337,649 Amortization of intangible assets  22,996   21,641   46,031   44,990 Operating income  152,968   127,494   239,755   235,004 Interest expense  21,469   20,366   38,991   41,873 Other income, net  963   822   651   334 Income before income taxes  132,462   107,950   201,415   193,465 Provision for income taxes  35,893   27,440   63,650   48,807 Net income $ 96,569  $ 80,510  $ 137,765  $ 144,658  Earnings per share:  Basic $ 1.70  $ 1.31  $ 2.36  $ 2.36 Diluted $ 1.69  $ 1.31  $ 2.35  $ 2.35 Weighted average shares outstanding:  Basic  56,892   61,371   58,330   61,330 Diluted  57,057   61,622   58,553   61,573  Dividends declared per share $ 0.30  $ 0.30  $ 0.60  $ 0.60

Maximus, Inc. Consolidated Balance Sheets March 31, 2025  September 30, 2024 (unaudited)  (in thousands) Assets:  Cash and cash equivalents $ 108,059   $ 183,123  Accounts receivable, net  1,097,404    879,514  Income taxes receivable  3,491    5,282  Prepaid expenses and other current assets  119,313    132,625  Total current assets  1,328,267    1,200,544  Property and equipment, net  34,883    38,977  Capitalized software, net  210,980    187,677  Operating lease right-of-use assets  118,302    133,594  Goodwill  1,780,726    1,782,871  Intangible assets, net  584,229    630,569  Deferred contract costs, net  60,800    59,432  Deferred compensation plan assets  52,523    55,913  Deferred income taxes  10,035    14,801  Other assets  19,027    27,130  Total assets $ 4,199,772   $ 4,131,508  Liabilities and Shareholders' Equity:  Liabilities:  Accounts payable and accrued liabilities $ 306,445   $ 303,321  Accrued compensation and benefits  165,350    237,121  Deferred revenue, current portion  79,447    83,238  Income taxes payable  17,677    26,535  Long-term debt, current portion  47,055    40,139  Operating lease liabilities, current portion  38,788    47,656  Other current liabilities  66,475    69,519  Total current liabilities  721,237    807,529  Deferred revenue, non-current portion  36,431    45,077  Deferred income taxes  166,632    169,118  Long-term debt, non-current portion  1,445,746    1,091,954  Deferred compensation plan liabilities, non-current portion  52,321    57,599  Operating lease liabilities, non-current portion  88,487    97,221  Other liabilities  21,444    20,195  Total liabilities  2,532,298    2,288,693  Shareholders' equity:  Common stock, no par value; 100,000 shares authorized; 56,349 and 60,352 shares issued and outstanding as of March 31, 2025, and September 30, 2024, respectively  616,315    598,304  Accumulated other comprehensive loss  (18,375 )   (32,460 ) Retained earnings  1,069,534    1,276,971  Total shareholders' equity  1,667,474    1,842,815  Total liabilities and shareholders' equity $ 4,199,772   $ 4,131,508

Maximus, Inc. Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended  For the Six Months Ended March 31, 2025  March 31, 2024  March 31, 2025  March 31, 2024 (in thousands) Cash flows from operating activities:  Net income $ 96,569  $ 80,510  $ 137,765  $ 144,658 Adjustments to reconcile net income to cash flows from operations:  Depreciation and amortization of property, equipment, and capitalized software 9,440  8,205  17,895  16,616 Amortization of intangible assets 22,996  21,641  46,031  44,990 Amortization of debt issuance costs and debt discount 672  601  1,310  1,202 Deferred income taxes (2,747)  (6,150)  (590)  (8,315) Stock compensation expense 12,623  8,697  19,575  18,124 Divestiture-related charges 1,002  —  39,343  1,018 Change in assets and liabilities, net of effects of business combinations and divestitures:  Accounts receivable (131,428)  (57,006)  (234,882)  (92,385) Prepaid expenses and other current assets 10,443  9,876  7,943  19,932 Deferred contract costs (1,549)  (2,712)  (1,915)  (3,600) Accounts payable and accrued liabilities 14,093  9,242  5,943  (6,301) Accrued compensation and benefits 45,035  56,836  (48,001)  (10,556) Deferred revenue (3,061)  9,828  (11,293)  10,705 Income taxes (18,541)  (8,940)  (6,465)  13,310 Operating lease right-of-use assets and liabilities (14)  703  (2,363)  (385) Other assets and liabilities (12,819)  (843)  (7,578)  3,083 Net cash provided by/(used in) operating activities 42,714  130,488  (37,282)  152,096 Cash flows from investing activities:  Purchases of property and equipment and capitalized software (17,206)  (25,300)  (40,198)  (47,547) Asset acquisition —  (18,006)  —  (18,006) Proceeds from divestitures —  1,263  736  3,078 Other (2,165)  —  (2,165)  — Net cash used in investing activities (19,371)  (42,043)  (41,627)  (62,475) Cash flows from financing activities:  Cash dividends paid to Maximus shareholders (16,901)  (18,309)  (34,961)  (36,608) Purchases of Maximus common stock (77,850)  —  (306,443)  — Tax withholding related to RSU vesting —  —  (16,441)  (13,455) Payments for contingent consideration —  (5,349)  —  (8,168) Payments for debt financing costs (1,658)  —  (1,658)  — Proceeds from borrowings 524,000  195,000  959,000  423,409 Principal payments for debt (418,375)  (298,129)  (597,639)  (464,787) Other (282)  3,918  (1,181)  5,122 Net cash provided by/(used in) financing activities 8,934  (122,869)  677  (94,487) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 791  (731)  (1,593)  1,115 Net change in cash, cash equivalents, and restricted cash 33,068  (35,155)  (79,825)  (3,751) Cash, cash equivalents, and restricted cash, beginning of period 122,870  153,495  235,763  122,091 Cash, cash equivalents, and restricted cash, end of period $ 155,938  $ 118,340  $ 155,938  $ 118,340

Maximus, Inc. Consolidated Results of Operations by Segment (Unaudited) For the Three Months Ended  For the Six Months Ended March 31, 2025  March 31, 2024  March 31, 2025  March 31, 2024 Amount  % (1)  Amount  % (1)  Amount  % (1)  Amount  % (1) (dollars in thousands) Revenue:  U.S. Federal Services $ 777,927     $ 701,702     $ 1,558,582     $ 1,378,780  U.S. Services  442,350      486,115      894,600      975,960  Outside the U.S.  141,509      160,540      311,279      320,658  Revenue $ 1,361,786     $ 1,348,357     $ 2,764,461     $ 2,675,398  Gross profit:  U.S. Federal Services $ 202,058   26.0 %  $ 163,337   23.3 %  $ 375,373   24.1 %  $ 319,999   23.2 % U.S. Services  111,770   25.3 %   130,122   26.8 %   206,774   23.1 %   248,485   25.5 % Outside the U.S.  24,993   17.7 %   24,130   15.0 %   58,231   18.7 %   49,159   15.3 % Gross profit $ 338,821   24.9 %  $ 317,589   23.6 %  $ 640,378   23.2 %  $ 617,643   23.1 % Selling, general, and administrative expenses:  U.S. Federal Services $ 83,076   10.7 %  $ 79,867   11.4 %  $ 157,291   10.1 %  $ 167,722   12.2 % U.S. Services  57,963   13.1 %   62,201   12.8 %   112,121   12.5 %   114,501   11.7 % Outside the U.S.  20,197   14.3 %   23,460   14.6 %   45,315   14.6 %   48,601   15.2 % Divestiture-related charges (2)  1,002   NM    —   NM    39,343   NM    1,018   NM  Other (3)  619   NM    2,926   NM    522   NM    5,807   NM  Selling, general, and administrative expenses $ 162,857   12.0 %  $ 168,454   12.5 %  $ 354,592   12.8 %  $ 337,649   12.6 % Operating income:  U.S. Federal Services $ 118,982   15.3 %  $ 83,470   11.9 %  $ 218,082   14.0 %  $ 152,277   11.0 % U.S. Services  53,807   12.2 %   67,921   14.0 %   94,653   10.6 %   133,984   13.7 % Outside the U.S.  4,796   3.4 %   670   0.4 %   12,916   4.1 %   558   0.2 % Amortization of intangible assets  (22,996 )  NM    (21,641 )  NM    (46,031 )  NM    (44,990 )  NM  Divestiture-related charges (2)  (1,002 )  NM    —   NM    (39,343 )  NM    (1,018 )  NM  Other (3)  (619 )  NM    (2,926 )  NM    (522 )  NM    (5,807 )  NM  Operating income $ 152,968   11.2 %  $ 127,494   9.5 %  $ 239,755   8.7 %  $ 235,004   8.8 %

Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM." During fiscal years 2025 and 2024, we have divested businesses from our Outside the U.S. Segment. Other expenses includes credits and costs that are not allocated to a particular segment.

Maximus, Inc. Consolidated Free Cash Flows - Non-GAAP (Unaudited) For the Three Months Ended  For the Six Months Ended March 31, 2025  March 31, 2024  March 31, 2025  March 31, 2024 (in thousands) Net cash provided by/(used in) operating activities  42,714    130,488    (37,282 )   152,096  Purchases of property and equipment and capitalized software  (17,206 )   (25,300 )   (40,198 )   (47,547 ) Free cash flow (Non-GAAP) $ 25,508   $ 105,188   $ (77,480 )  $ 104,549

Maximus, Inc. Non-GAAP Adjusted Results - Operating Income, Adjusted EBITDA, Net Income, and Diluted Earnings per Share (Unaudited) For the Three Months Ended  For the Six Months Ended March 31, 2025  March 31, 2024  March 31, 2025  March 31, 2024 (dollars in thousands, except per share data) Operating income $ 152,968   $ 127,494   $ 239,755   $ 235,004  Add back: Amortization of intangible assets  22,996    21,641    46,031    44,990  Add back: Divestiture-related charges  1,002    —    39,343    1,018  Add back: Depreciation and amortization of property, equipment, and capitalized software  9,440    8,205    17,895    16,616  Adjusted EBITDA (Non-GAAP) $ 186,406   $ 157,340   $ 343,024   $ 297,628  Adjusted EBITDA margin (Non-GAAP)  13.7 %   11.7 %   12.4 %   11.1 %  Net income $ 96,569   $ 80,510   $ 137,765   $ 144,658  Add back: Amortization of intangible assets, net of tax  16,948    15,949    33,925    33,158  Add back: Divestiture-related charges  1,002    —    39,343    1,018  Adjusted net income excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) $ 114,519   $ 96,459   $ 211,033   $ 178,834   Diluted earnings per share $ 1.69   $ 1.31   $ 2.35   $ 2.35  Add back: Effect of amortization of intangible assets on diluted earnings per share  0.30    0.26    0.58    0.53  Add back: Effect of divestiture-related charges on diluted earnings per share  0.02    —    0.67    0.02  Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) $ 2.01   $ 1.57   $ 3.60   $ 2.90

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Contacts

James Francis, VP - IR
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