US Market News
2 months ago
Maximus Reports Fiscal Year 2026 Second Quarter ResultsMay 7, 2026 6:30 AM
Business Wire Raises earnings outlook and announces $400 million share repurchase program Maximus (NYSE: MMS), a leading provider of government services, reported financial results for the three and six months ended March 31, 2026. Highlights for the second quarter of fiscal year 2026 include: Revenue of $1.31 billion was consistent with our full fiscal year 2026 expectations, and compares to $1.36 billion for the prior year period. Diluted earnings per share were $1.80 and adjusted diluted earnings per share were $2.07, compared to $1.69 and $2.01, respectively, for the prior year period. We are raising our adjusted EBITDA margin expectation by 20 basis points to approximately 14.2% and raising our adjusted diluted earnings per share expectation by $0.20 to range between $8.25 and $8.55 per share for the full fiscal year 2026. We are reiterating previous fiscal year 2026 revenue and free cash flow guidance. Repurchases of Maximus common stock in the quarter totaled 1.4 million shares for $111 million, with an additional 0.6 million shares totaling $39.9 million repurchased through May 1, 2026. The Board of Directors authorized a refresh to the repurchase program for Maximus common stock up to an aggregate of $400 million. A quarterly cash dividend of $0.33 per share is payable on June 1, 2026, to shareholders of record on May 15, 2026. "Our second consecutive earnings guidance increase reflects growing confidence in our ability to leverage in-house AI and other technology capabilities to improve efficiency and support margin expansion. We continue to execute our capital deployment strategy, as highlighted by the refresh of our share repurchase authorization up to an aggregate of $400 million," said Bruce Caswell, President and Chief Executive Officer. Caswell continued, "Our state customers are gaining clarity and beginning to take action to help address challenges with Medicaid community engagement, SNAP administration, and unemployment insurance support services. We’re pleased to be playing a role in devising these solutions and expect momentum to continue to build." Second Quarter Results Revenue for the second quarter of fiscal year 2026 was $1.31 billion and on track with full fiscal year 2026 expectations. Prior year period revenue was $1.36 billion and benefited from natural disaster support work and temporary clinical volume surges in both domestic segments. For the second quarter of fiscal year 2026, operating margin was 11.4% and adjusted EBITDA margin was 14.4%. This compares to margins of 11.2% and 13.7%, respectively, for the prior year period. Diluted earnings per share were $1.80, and adjusted diluted earnings per share were $2.07. This compares to $1.69 and $2.01, respectively, for the prior year period. Consolidated earnings improved over the prior year period primarily due to efficiency gains through automation, including AI-enabled tools, across multiple program areas. The second quarter of fiscal year 2026 included a non-cash impairment charge that decreased the U.S. Services segment's operating income by $6.9 million, or $0.09 per share, and a discrete research & development tax benefit that reduced the income tax expense by $4.2 million, which equated to a $0.08 per share benefit. Both non-recurring items were excluded from adjusted EBITDA and had offsetting impacts on adjusted diluted earnings per share. U.S. Federal Services Segment U.S. Federal Services Segment revenue for the second quarter of fiscal year 2026 was $753 million. Prior year period revenue was $778 million and benefited from natural disaster support. We anticipated the absence of this work in our fiscal year 2026 guidance, and, excluding this support work, segment organic revenue growth was 1.5% over the prior year period. The segment operating margin for the second quarter of fiscal year 2026 was 17.6%, compared to 15.3% reported for the prior year period. Technology initiatives, including automation that enables greater volume processing without a commensurate increase in labor costs, were the primary driver of the improved margin and the increase to the segment’s full fiscal year margin expectation. The full fiscal year 2026 operating margin for the U.S. Federal Services Segment is expected to be approximately 17.5%. U.S. Services Segment U.S. Services Segment revenue for the second quarter of fiscal year 2026 was $416 million and on track to improve segment revenue growth anticipated by the end of the fiscal year. The prior year period segment revenue was $442 million. The segment operating margin for the second quarter of fiscal year 2026 was 9.3%, or 10.9% excluding the $6.9 million non-cash charge related to an asset impairment. The prior year period segment operating margin was 12.2%. The full fiscal year 2026 operating margin for the U.S. Services Segment is expected to be approximately 10.0% as a result of the non-cash charge this quarter. Outside the U.S. Segment Outside the U.S. Segment revenue for the second quarter of fiscal year 2026 was $137 million, compared to $142 million in the prior year period. Following previous reshaping actions, the segment now comprises the United Kingdom, Canada, and the Gulf Region, all of which are tracking opportunities that we believe have the potential to drive future growth. The segment realized an operating loss of $3.1 million for the second quarter of fiscal year 2026, compared to an operating profit of $4.8 million in the prior year period. We continue to anticipate future margin improvement over time in this segment, which is now expected to break even on a full fiscal year 2026 basis. Sales and Pipeline Year-to-date signed contract awards at March 31, 2026, totaled $913 million, and contracts pending (awarded but unsigned) totaled $322 million. The sales pipeline at March 31, 2026, totaled $56.8 billion, comprised of approximately $4.55 billion in proposals pending, $1.48 billion in proposals in preparation, and $50.7 billion in opportunities we are tracking. New work opportunities represent approximately 59% of the total sales pipeline, and U.S. Federal Services Segment opportunities represent approximately 58% of the total sales pipeline. Balance Sheet and Cash Flows At March 31, 2026, unrestricted cash and cash equivalents totaled $157 million, and gross debt was $1.55 billion. The ratio of debt, net of allowed cash, to consolidated EBITDA for the quarter ended March 31, 2026, as calculated on a trailing twelve-month basis in accordance with our credit agreement, was 1.8x. This is unchanged from the ratio at December 31, 2025, and remains below our target net leverage ratio of 2x to 3x. For the second quarter of fiscal year 2026, cash provided by operating activities totaled $190 million, and free cash flow was $179 million. DSO were 78 days at March 31, 2026, and unchanged from the DSO at December 31, 2025. We expect collections to increase in the second half of fiscal year 2026, which supports our full-year free cash flow guidance. During the second quarter of fiscal year 2026, we purchased approximately 1.4 million shares of Maximus common stock totaling $111 million. Subsequent to March 31, 2026, and through May 1, 2026, we purchased an additional 0.6 million shares totaling $39.9 million. The Board of Directors authorized a refresh to the repurchase program for Maximus common stock up to an aggregate of $400 million, which becomes effective May 11, 2026. On April 6, 2026, our Board of Directors declared a quarterly cash dividend of $0.33 for each share of our common stock outstanding. The dividend is payable on June 1, 2026, to shareholders of record on May 15, 2026. Fiscal Year 2026 Earnings Guidance Raise Maximus is raising fiscal year 2026 earnings guidance and reiterating revenue and free cash flow guidance. The full year adjusted EBITDA margin guidance improves by 20 basis points to approximately 14.2%, as compared to prior guidance. Guidance for adjusted diluted earnings per share increases by $0.20 and is now expected to range between $8.25 and $8.55 per share for fiscal year 2026. Revenue guidance is maintained between $5.2 billion and $5.35 billion, and free cash flow guidance is maintained between $450 million and $500 million for fiscal year 2026. Interest expense is estimated to be $84 million, and the full fiscal year tax rate is expected to range between 24.0% and 25.0% for fiscal year 2026. Conference Call and Webcast Information Maximus will host a conference call this morning, May 7, 2026, 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, 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 provides tech-enabled services to government agencies, including innovative business process management 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, diluted EPS adjusted for amortization of intangible assets and divestiture-related charges and gains, adjusted EBITDA, adjusted EBITDA margin, 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. Included in this release are forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "on track,” "opportunity," "could," "potential," "believe," "project," "estimate," "expect," "continue," "forecast," "strategy," "future," "likely," "may," "should," "will," and similar references to future periods. Forward-looking statements that are not historical facts, including statements about our confidence, strategies and initiatives, guidance and expectations about revenues, results of operations, profitability, future contracts, liquidity, market opportunities, market demand, acceptance of our products and service offerings, or acquisitions and divestitures, 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. A summary of risk factors can be found in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed on November 20, 2025, and subsequent filings with the Securities and Exchange Commission (SEC). Our SEC filings are accessible on maximus.com. Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to update the guidance herein or any other forward-looking statement as circumstances evolve. FY26 Guidance Reconciliation - Non-GAAP ($ in millions except per share items) Low End High End Net income $ 394 $ 411 Add: Interest expense / Other (income) 84 84 Add: Provision for income taxes 128 133 Add: Amortization of intangible assets 81 81 Add: Depreciation & amortization of property, equipment and capitalized software 54 54 Add: Capitalized software impairment charges 7 7 Add: Divestiture-related gains (9 ) (9 ) Adjusted EBITDA $ 739 $ 761 Revenue $ 5,200 $ 5,350 Net income margin 7.6 % 7.7 % Adjusted EBITDA margin 14.2 % 14.2 % Diluted EPS $ 7.27 $ 7.57 Add: effect of amortization of intangible assets on diluted EPS 1.10 1.10 Add: effect of divestiture-related gains on diluted EPS (0.12 ) (0.12 ) Adjusted diluted EPS $ 8.25 $ 8.55 Cash flows from operating activities $ 485 $ 535 Remove: purchases of property and equipment and capitalized software costs (35 ) (35 ) Free cash flow $ 450 $ 500 Maximus, Inc. Consolidated Statements of Operations (Unaudited) For the Three Months Ended For the Six Months Ended March 31, 2026 March 31, 2025 March 31, 2026 March 31, 2025 (in thousands, except per share amounts) Revenue $ 1,305,967 $ 1,361,786 $ 2,651,013 $ 2,764,461 Cost of revenue 963,703 1,022,965 1,990,079 2,124,083 Gross profit 342,264 338,821 660,934 640,378 Selling, general, and administrative expenses 173,479 162,857 325,639 354,592 Amortization of intangible assets 20,298 22,996 40,598 46,031 Operating income 148,487 152,968 294,697 239,755 Interest expense 22,111 21,469 42,927 38,991 Other (income)/expense, net (158 ) (963 ) (1,031 ) (651 ) Income before income taxes 126,534 132,462 252,801 201,415 Provision for income taxes 28,471 35,893 60,795 63,650 Net income $ 98,063 $ 96,569 $ 192,006 $ 137,765 Earnings per share: Basic $ 1.81 $ 1.70 $ 3.52 $ 2.36 Diluted $ 1.80 $ 1.69 $ 3.50 $ 2.35 Weighted average shares outstanding: Basic 54,242 56,892 54,547 58,330 Diluted 54,585 57,057 54,925 58,553 Dividends declared per share $ 0.33 $ 0.30 $ 0.63 $ 0.60 Maximus, Inc. Consolidated Balance Sheets March 31, 2026 September 30, 2025 (unaudited) (in thousands) Assets: Cash and cash equivalents $ 157,452 $ 222,351 Accounts receivable, net 1,114,960 898,095 Income taxes receivable 64,792 3,904 Prepaid expenses and other current assets 171,644 128,574 Total current assets 1,508,848 1,252,924 Property and equipment, net 27,178 30,972 Capitalized software, net 202,583 214,260 Operating lease right-of-use assets 84,097 100,514 Goodwill 1,780,507 1,782,095 Intangible assets, net 497,342 538,266 Deferred contract costs, net 62,737 63,332 Deferred compensation plan assets 58,472 63,272 Deferred income taxes 7,590 11,491 Other assets 9,820 12,513 Total assets $ 4,239,174 $ 4,069,639 Liabilities and Shareholders' Equity: Liabilities: Accounts payable and accrued liabilities $ 281,984 $ 296,888 Accrued compensation and benefits 152,362 236,948 Deferred revenue, current portion 37,910 53,784 Income taxes payable 959 17,321 Long-term debt, current portion 63,930 52,680 Operating lease liabilities, current portion 35,400 38,605 Other current liabilities 109,142 68,937 Total current liabilities 681,687 765,163 Deferred revenue, non-current portion 37,662 43,757 Deferred income taxes 212,703 149,020 Long-term debt, non-current portion 1,471,816 1,281,593 Deferred compensation plan liabilities, non-current portion 58,171 62,145 Operating lease liabilities, non-current portion 56,640 71,289 Other liabilities 23,534 22,637 Total liabilities 2,542,213 2,395,604 Shareholders' equity: Common stock, no par value; 100,000 shares authorized; 53,110 and 54,805 shares issued and outstanding as of March 31, 2026, and September 30, 2025, respectively 639,269 628,118 Accumulated other comprehensive loss (21,055 ) (17,867 ) Retained earnings 1,078,747 1,063,784 Total shareholders' equity 1,696,961 1,674,035 Total liabilities and shareholders' equity $ 4,239,174 $ 4,069,639 Maximus, Inc. Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended For the Six Months Ended March 31, 2026 March 31, 2025 March 31, 2026 March 31, 2025 (in thousands) Cash flows from operating activities: Net income $ 98,063 $ 96,569 $ 192,006 $ 137,765 Adjustments to reconcile net income to cash flows from operations: Depreciation and amortization of property, equipment, and capitalized software 12,328 9,440 25,217 17,895 Capitalized software impairment charges 6,914 — 6,914 — Amortization of intangible assets 20,298 22,996 40,598 46,031 Amortization of debt issuance costs and debt discount 736 672 1,472 1,310 Deferred income taxes 39,917 (2,747 ) 67,781 (590 ) Stock compensation expense 9,899 12,623 16,918 19,575 Divestiture-related charges/(gains) — 1,002 (8,985 ) 39,343 Change in assets and liabilities, net of effects of business combinations and divestitures: Accounts receivable 30,710 (131,428 ) (222,665 ) (234,882 ) Prepaid expenses and other current assets 6,054 10,443 5,963 7,943 Deferred contract costs 3,740 (1,549 ) 438 (1,915 ) Accounts payable and accrued liabilities 19,569 14,093 (14,238 ) 5,943 Accrued compensation and benefits 27,269 45,035 (73,431 ) (48,001 ) Deferred revenue (10,759 ) (3,061 ) (21,602 ) (11,293 ) Income taxes (73,428 ) (18,541 ) (74,463 ) (6,465 ) Operating lease right-of-use assets and liabilities (1,074 ) (14 ) (1,473 ) (2,363 ) Other assets and liabilities (710 ) (12,819 ) 4,674 (7,578 ) Net cash provided by/(used in) operating activities 189,526 42,714 (54,876 ) (37,282 ) Cash flows from investing activities: Purchases of property and equipment and capitalized software (10,509 ) (17,206 ) (16,772 ) (40,198 ) Proceeds from divestitures — — 12,895 736 Other — (2,165 ) — (2,165 ) Net cash used in investing activities (10,509 ) (19,371 ) (3,877 ) (41,627 ) Cash flows from financing activities: Cash dividends paid to Maximus shareholders (17,821 ) (16,901 ) (34,159 ) (34,961 ) Purchases of Maximus common stock (114,440 ) (77,850 ) (155,002 ) (306,443 ) Tax withholding related to RSU vesting — — (17,325 ) (16,441 ) Payments for debt financing costs — (1,658 ) — (1,658 ) Proceeds from borrowings 300,000 524,000 665,000 959,000 Principal payments for debt (332,500 ) (418,375 ) (465,000 ) (597,639 ) Other, including customer escrowed funds 51,484 (282 ) 50,109 (1,181 ) Net cash (used in)/provided by financing activities (113,277 ) 8,934 43,623 677 Effect of exchange rate changes on cash, cash equivalents, and restricted cash (568 ) 791 (632 ) (1,593 ) Net change in cash, cash equivalents, and restricted cash 65,172 33,068 (15,762 ) (79,825 ) Cash, cash equivalents, and restricted cash, beginning of period 179,525 122,870 260,459 235,763 Cash, cash equivalents, and restricted cash, end of period $ 244,697 $ 155,938 $ 244,697 $ 155,938 Maximus, Inc. Consolidated Results of Operations by Segment (Unaudited) For the Three Months Ended March 31, 2026 (dollars in thousands) U.S. Federal Services % (1 ) U.S. Services % (1 ) Outside the U.S. % (1 ) Total Revenue $ 753,143 $ 415,754 $ 137,070 $ 1,305,967 Cost of revenue 527,698 70.1 % 315,245 75.8 % 120,760 88.1 % 963,703 Gross profit 225,445 29.9 % 100,509 24.2 % 16,310 11.9 % 342,264 Other segment items (2) 92,741 12.3 % 61,919 14.9 % 19,395 14.1 % 174,055 Segment operating income/(loss) $ 132,704 17.6 % $ 38,590 9.3 % $ (3,085 ) (2.3 )% 168,209 Other (4) 576 Amortization of intangible assets (20,298 ) Operating income $ 148,487 For the Three Months Ended March 31, 2025 (dollars in thousands) U.S. Federal Services % (1) U.S. Services % (1) Outside the U.S. % (1) Total Revenue $ 777,927 1 $ 442,350 $ 141,509 $ 1,361,786 Cost of revenue 575,869 74.0 % 330,580 74.7 % 116,516 82.3 % 1,022,965 Gross profit 202,058 26.0 % 111,770 25.3 % 24,993 17.7 % 338,821 Other segment items (2) 83,076 10.7 % 57,963 13.1 % 20,197 14.3 % 161,236 Segment operating income $ 118,982 15.3 % $ 53,807 12.2 % $ 4,796 3.4 % 177,585 Divestiture-related gains/(charges) (3) (1,002 ) Other (4) (619 ) Amortization of intangible assets (22,996 ) Operating income $ 152,968 For the Six Months Ended March 31, 2026 (dollars in thousands) U.S. Federal Services % (1) U.S. Services % (1) Outside the U.S. % (1) Total Revenue $ 1,539,744 1 $ 831,002 $ 280,267 $ 2,651,013 Cost of revenue 1,099,364 71.4 % 646,099 77.7 % 244,616 87.3 % 1,990,079 Gross profit 440,380 28.6 % 184,903 22.3 % 35,651 12.7 % 660,934 Other segment items (2) 177,943 11.6 % 117,027 14.1 % 40,116 14.3 % 335,086 Segment operating income $ 262,437 17.0 % $ 67,876 8.2 % $ (4,465 ) (1.6 )% 325,848 Divestiture-related gains/(charges) (3) 8,985 Other (4) 462 Amortization of intangible assets (40,598 ) Operating income $ 294,697 For the Six Months Ended March 31, 2025 (dollars in thousands) U.S. Federal Services % (1) U.S. Services % (1) Outside the U.S. % (1) Total Revenue $ 1,558,582 $ 894,600 $ 311,279 $ 2,764,461 Cost of revenue 1,183,209 75.9 % 687,826 76.9 % 253,048 81.3 % 2,124,083 Gross profit 375,373 24.1 % 206,774 23.1 % 58,231 18.7 % 640,378 Other segment items (2) 157,291 10.1 % 112,121 12.5 % 45,315 14.6 % 314,727 Segment operating income $ 218,082 14.0 % $ 94,653 10.6 % $ 12,916 4.1 % 325,651 Divestiture-related gains/(charges) (3) (39,343 ) Other (4) (522 ) Amortization of intangible assets (46,031 ) Operating income $ 239,755 (1) Percentage of respective revenue, as applicable. (2) Other segment items are principally selling, general, and administrative expenses allocated to segments. (3) During fiscal years 2026 and 2025, we divested businesses from our U.S. Services and Outside the U.S. Segments, respectively. (4) Other expenses include 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, 2026 March 31, 2025 March 31, 2026 March 31, 2025 (in thousands) Net cash provided by/(used in) operating activities 189,526 42,714 (54,876 ) (37,282 ) Purchases of property and equipment and capitalized software (10,509 ) (17,206 ) (16,772 ) (40,198 ) Free cash flow (Non-GAAP) $ 179,017 $ 25,508 $ (71,648 ) $ (77,480 ) Maximus, Inc. Non-GAAP Adjusted Results - Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share (Unaudited) For the Three Months Ended For the Six Months Ended March 31, 2026 March 31, 2025 March 31, 2026 March 31, 2025 (dollars in thousands, except per share data) Net income $ 98,063 $ 96,569 $ 192,006 $ 137,765 Provision for income taxes 28,471 35,893 60,795 63,650 Interest expense 22,111 21,469 42,927 38,991 Other (income)/expense, net (158 ) (963 ) (1,031 ) (651 ) Amortization of intangible assets 20,298 22,996 40,598 46,031 Divestiture-related charges/(gains) — 1,002 (8,985 ) 39,343 Depreciation and amortization of property, equipment, and capitalized software 12,328 9,440 25,217 17,895 Capitalized software impairment charges 6,914 — 6,914 — Adjusted EBITDA (Non-GAAP) $ 188,027 $ 186,406 $ 358,441 $ 343,024 Net income margin (GAAP)* 7.5 % 7.1 % 7.2 % 5.0 % Adjusted EBITDA margin (Non-GAAP)* 14.4 % 13.7 % 13.5 % 12.4 % * Margins are calculated as a percentage of revenue Net income $ 98,063 $ 96,569 $ 192,006 $ 137,765 Add back: Amortization of intangible assets, net of tax 14,960 16,948 29,921 33,925 Add back: Divestiture-related charges/(gains), net of tax — 1,002 (6,622 ) 39,343 Adjusted net income excluding amortization of intangible assets and divestiture-related adjustments (Non-GAAP) $ 113,023 $ 114,519 $ 215,305 $ 211,033 Diluted earnings per share $ 1.80 $ 1.69 $ 3.50 $ 2.35 Add back: Effect of amortization of intangible assets on diluted earnings per share 0.27 0.30 0.54 0.58 Add back: Effect of divestiture-related charges/(gains) on diluted earnings per share — 0.02 (0.12 ) 0.67 Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related adjustments (Non-GAAP) $ 2.07 $ 2.01 $ 3.92 $ 3.60 View source version on businesswire.com: https://www.businesswire.com/news/home/20260507878692/en/ James Francis, VP - IR
IR@maximus.com Original: Maximus Reports Fiscal Year 2026 Second Quarter Results
US Market News
5 months ago
Maximus Reports Fiscal Year 2026 First Quarter ResultsFebruary 5, 2026 6:30 AM
Business Wire
Earnings outlook raised on resilient performance and strong pipeline supports future outlook
Maximus (NYSE: MMS), a leading provider of government services, reported financial results for the three months ended December 31, 2025.
Highlights for the first quarter of fiscal year 2026 include:
Revenue of $1.35 billion compared to $1.40 billion for the prior year period, in line with expectations entering the quarter.
Diluted earnings per share were $1.70 and adjusted diluted earnings per share were $1.85, compared to $0.69 and $1.61, respectively, for the prior year period.
The company is narrowing revenue guidance and raising earnings guidance for fiscal year 2026. Full-year revenue is expected to range between $5.2 billion and $5.35 billion, reflecting a small divestiture completed in the quarter and updated new work assumptions. The company is raising the adjusted EBITDA margin expectation 30 basis points to approximately 14% and now expects adjusted diluted earnings per share to range between $8.05 and $8.35 per share for the full fiscal year 2026.
A quarterly cash dividend of $0.33 per share is payable on March 2, 2026, to shareholders of record on February 13, 2026.
"Our first quarter results reflect resilient execution and a portfolio focused on essential government programs. With a strong pipeline, expanding opportunities related to the Working Families Tax Cut Act, and continued progress in technology-enabled service delivery, we remain focused on delivering high-quality services for our government partners and the communities they serve," said Bruce Caswell, President and Chief Executive Officer.
Caswell continued, "We are expanding the use of automation, including AI, to augment how work is done, enhance citizen experience, and support productivity and margins. We are deploying these capabilities in production and expect them to contribute to improved outcomes and program performance over time."
First Quarter Results
Revenue for the first quarter of fiscal year 2026 decreased 4.1% to $1.35 billion, compared to $1.40 billion for the prior year period. Divestiture-related activity contributed to approximately 1.5% of the decline, and organic movements were primarily responsible for the remainder. These results were consistent with our expectations entering the quarter.
For the first quarter of fiscal year 2026, operating margin was 10.9% and adjusted EBITDA margin was 12.7%. This compares to margins of 6.2% and 11.2%, respectively, for the prior year period. Diluted earnings per share were $1.70, and adjusted diluted earnings per share were $1.85. This compares to $0.69 and $1.61, respectively, for the prior year period.
The improvement to consolidated earnings over the prior year period was attributable to a combination of stronger performance in the U.S. Federal Services Segment and divestiture-related activity, which is not reflected in the adjusted metrics. The first quarter of fiscal year 2025 included divestiture-related charges of approximately $38 million related to the sale of the Australian and South Korean businesses. The first quarter of fiscal year 2026 included a divestiture-related gain of $9 million from selling our child support business in the U.S. Services Segment.
U.S. Federal Services Segment
U.S. Federal Services Segment revenue for the first quarter of fiscal year 2026 increased 0.8% to $787 million, compared to $781 million reported for the prior year period. All growth was organic, and the prior year period benefited from unexpected volume growth on core programs along with high levels of natural disaster support, which did not recur in the current quarter.
The segment operating margin for the first quarter of fiscal year 2026 was 16.5%, compared to 12.7% reported for the prior year period. Stability of volumes across multiple program areas, combined with wider adoption of technology initiatives that enhanced the productivity of staff drove the improved margin. The full-year fiscal 2026 operating margin for the U.S. Federal Services Segment is now expected to range between 16.5% and 17%.
U.S. Services Segment
U.S. Services Segment revenue for the first quarter of fiscal year 2026 decreased 8.2% to $415 million, compared to $452 million in the prior year period. As contemplated in our total company guidance for fiscal year 2026, several programs are experiencing lower volumes or demand for engagement compared to prior years.
The segment operating margin for the first quarter of fiscal year 2026 was 7.1%, compared to 9.0% reported for the prior year period. Both periods had depressed margins compared to the remainder of their respective fiscal years, which was also contemplated in our total company guidance for fiscal year 2026. The full-year fiscal 2026 operating margin for the U.S. Services Segment is now expected to range between 10.5% and 11%.
Outside the U.S. Segment
Outside the U.S. Segment revenue for the first quarter of fiscal year 2026 decreased to $143 million, compared to $170 million in the prior year period. A majority of the revenue reduction was due to the divestiture of the Australian and South Korean employment services businesses in the prior year period, with additional reduction from slightly lower volumes on several programs.
The segment realized an operating loss of $1.4 million for the first quarter of fiscal year 2026, compared to an operating profit of $8.1 million in the prior year period. The loss resulted primarily from planned business development costs, while forecasted revenue tied to new work opportunities was delayed. We continue to expect margin improvement over time in this segment. The full-year fiscal 2026 operating margin for the Outside the U.S. Segment is now expected to range between 1% and 3%.
Sales and Pipeline
Year-to-date signed contract awards at December 31, 2025, totaled $246 million, and contracts pending (awarded but unsigned) totaled $699 million. The U.S. federal government shutdown within the quarter had a direct impact on award activity. The company views this as a timing dynamic rather than a structural change, with award activity expected to increase over the remaining quarters of fiscal 2026.
The sales pipeline at December 31, 2025, totaled $59.1 billion, comprised of approximately $3.82 billion in proposals pending, $2.36 billion in proposals in preparation, and $52.9 billion in opportunities we are tracking. New work opportunities represent approximately 59% of the total sales pipeline, and U.S. Federal Services Segment opportunities represent approximately 61% of the total sales pipeline.
Balance Sheet and Cash Flows
At December 31, 2025, unrestricted cash and cash equivalents totaled $138 million, and gross debt was $1.58 billion. The ratio of debt, net of allowed cash, to consolidated EBITDA for the quarter ended December 31, 2025, as calculated on a trailing twelve-month basis in accordance with our credit agreement, was 1.8x and trended higher from anticipated working capital needs within the quarter. This compares to 1.5x at September 30, 2025, and remains below our target net leverage ratio of 2x to 3x.
For the first quarter of fiscal year 2026, cash used in operating activities totaled $244 million, and free cash flow was an outflow of $251 million. The anticipated cash flow results reflect seasonality around cash payments and temporary delays of collections in the U.S. Federal Services Segment stemming from administrative delays. DSO were 78 days at December 31, 2025, compared with 62 days at September 30, 2025.
On January 6, 2026, our Board of Directors declared a quarterly cash dividend of $0.33 for each share of our common stock outstanding. The dividend is payable on March 2, 2026, to shareholders of record on February 13, 2026.
Fiscal Year 2026 Guidance Update
Maximus is raising fiscal year 2026 earnings guidance and narrowing the range for revenue guidance, while maintaining free cash flow guidance. Revenue is now expected to range between $5.2 billion and $5.35 billion, with $25 million of the change from prior guidance attributable to the divested U.S. Services Segment business.
The full year adjusted EBITDA margin guidance, which excludes divestiture-related gains, improves by 30 basis points to approximately 14%, compared to prior guidance. Guidance for adjusted diluted earnings per share, which excludes expense for amortization of intangible assets and divestiture-related gains, increases by $0.10 and is now expected to range between $8.05 and $8.35 per share for fiscal year 2026.
Free cash flow guidance is maintained with an expected range between $450 million and $500 million for fiscal year 2026. Interest expense is estimated to be $75 million, and the full-year tax rate is expected to range between 24.5% and 25.5% for fiscal year 2026.
Conference Call and Webcast Information
Maximus will host a conference call this morning, February 5, 2026, 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, 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 provides tech-enabled services to government agencies, including innovative business process management 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, diluted EPS adjusted for amortization of intangible assets and divestiture-related charges and gains, adjusted EBITDA, adjusted EBITDA margin, 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.
Included in this release are forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek,“ “on track,” "opportunity," "could," "potential," "believe," "project," "estimate," "expect," "continue," "forecast," "strategy," "future," "likely," "may," "should," "will," and similar references to future periods. Forward-looking statements that are not historical facts, including statements about our confidence, strategies and initiatives, guidance and expectations about revenues, results of operations, profitability, future contracts, liquidity, market opportunities, market demand, acceptance of our products, or acquisitions and divestitures, 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. A summary of risk factors can be found in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed on November 20, 2025, and subsequent filings with the Securities and Exchange Commission (SEC). Our SEC filings are accessible on maximus.com.
Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to update the guidance herein or any other forward-looking statement as circumstances evolve.
FY26 Guidance Reconciliation - Non-GAAP
($ in millions except per share items)
Low End
High End
Operating income
$
600
$
622
Add: amortization of intangible assets
81
81
Add: depreciation & amortization of property, equipment and capitalized software
55
55
Add: divestiture-related gains
(9
)
(9
)
Adjusted EBITDA
$
727
$
749
Revenue
$
5,200
$
5,350
Adjusted EBITDA Margin
14.0
%
14.0
%
Diluted EPS
$
7.09
$
7.39
Add: effect of amortization of intangible assets on diluted EPS
1.08
1.08
Add: effect of divestiture-related gains on diluted EPS
(0.12
)
(0.12
)
Adjusted diluted EPS
$
8.05
$
8.35
Cash flows from operating activities
$
485
$
535
Remove: purchases of property and equipment and capitalized software costs
(35
)
(35
)
Free cash flow
$
450
$
500
Maximus, Inc.
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended
December 31, 2025
December 31, 2024
(in thousands, except per share amounts)
Revenue
$
1,345,046
$
1,402,675
Cost of revenue
1,026,376
1,101,118
Gross profit
318,670
301,557
Selling, general, and administrative expenses
152,160
191,735
Amortization of intangible assets
20,300
23,035
Operating income
146,210
86,787
Interest expense
20,816
17,522
Other (income)/expense, net
(873
)
312
Income before income taxes
126,267
68,953
Provision for income taxes
32,324
27,757
Net income
$
93,943
$
41,196
Earnings per share:
Basic
$
1.71
$
0.69
Diluted
$
1.70
$
0.69
Weighted average shares outstanding:
Basic
54,842
59,733
Diluted
55,299
60,002
Dividends declared per share
$
0.30
$
0.30
Maximus, Inc.
Consolidated Balance Sheets
December 31, 2025
September 30, 2025
(unaudited)
(in thousands)
Assets:
Cash and cash equivalents
$
137,594
$
222,351
Accounts receivable, net
1,147,740
898,095
Income taxes receivable
5,305
3,904
Prepaid expenses and other current assets
132,569
128,574
Total current assets
1,423,208
1,252,924
Property and equipment, net
28,108
30,972
Capitalized software, net
210,503
214,260
Operating lease right-of-use assets
93,724
100,514
Goodwill
1,781,156
1,782,095
Intangible assets, net
517,916
538,266
Deferred contract costs, net
66,636
63,332
Deferred compensation plan assets
65,109
63,272
Deferred income taxes
11,755
11,491
Other assets
10,185
12,513
Total assets
$
4,208,300
$
4,069,639
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and accrued liabilities
$
263,281
$
296,888
Accrued compensation and benefits
125,464
236,948
Deferred revenue, current portion
46,566
53,784
Income taxes payable
17,753
17,321
Long-term debt, current portion
58,305
52,680
Operating lease liabilities, current portion
37,484
38,605
Other current liabilities
59,193
68,937
Total current liabilities
608,046
765,163
Deferred revenue, non-current portion
39,958
43,757
Deferred income taxes
176,521
149,020
Long-term debt, non-current portion
1,509,205
1,281,593
Deferred compensation plan liabilities, non-current portion
67,447
62,145
Operating lease liabilities, non-current portion
65,268
71,289
Other liabilities
22,043
22,637
Total liabilities
2,488,488
2,395,604
Shareholders' equity:
Common stock, no par value; 100,000 shares authorized; 54,549 and 54,805 shares issued and outstanding as of December 31, 2025, and September 30, 2025, respectively
628,867
628,118
Accumulated other comprehensive loss
(19,026
)
(17,867
)
Retained earnings
1,109,971
1,063,784
Total shareholders' equity
1,719,812
1,674,035
Total liabilities and shareholders' equity
$
4,208,300
$
4,069,639
Maximus, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended
December 31, 2025
December 31, 2024
(in thousands)
Cash flows from operating activities:
Net income
$
93,943
$
41,196
Adjustments to reconcile net income to cash flows from operations:
Depreciation and amortization of property, equipment, and capitalized software
12,889
8,455
Amortization of intangible assets
20,300
23,035
Amortization of debt issuance costs and debt discount
736
638
Deferred income taxes
27,864
2,157
Stock compensation expense
7,019
6,952
Divestiture-related (gains)/charges
(8,985
)
38,341
Change in assets and liabilities, net of effects of business combinations and divestitures:
Accounts receivable
(253,375
)
(103,454
)
Prepaid expenses and other current assets
(91
)
(2,500
)
Deferred contract costs
(3,302
)
(366
)
Accounts payable and accrued liabilities
(33,807
)
(8,150
)
Accrued compensation and benefits
(100,700
)
(93,036
)
Deferred revenue
(10,843
)
(8,232
)
Income taxes
(1,035
)
12,076
Operating lease right-of-use assets and liabilities
(399
)
(2,349
)
Other assets and liabilities
5,384
5,241
Net cash used in operating activities
(244,402
)
(79,996
)
Cash flows from investing activities:
Purchases of property and equipment and capitalized software
(6,263
)
(22,992
)
Proceeds from divestitures
12,895
736
Net cash provided by/(used in) investing activities
6,632
(22,256
)
Cash flows from financing activities:
Cash dividends paid to Maximus shareholders
(16,338
)
(18,060
)
Purchases of Maximus common stock
(40,562
)
(228,593
)
Tax withholding related to RSU vesting
(17,325
)
(16,441
)
Proceeds from borrowings
365,000
435,000
Principal payments for debt
(132,500
)
(179,264
)
Other
(1,375
)
(899
)
Net cash provided by/(used in) financing activities
156,900
(8,257
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(64
)
(2,384
)
Net change in cash, cash equivalents, and restricted cash
(80,934
)
(112,893
)
Cash, cash equivalents, and restricted cash, beginning of period
260,459
235,763
Cash, cash equivalents, and restricted cash, end of period
$
179,525
$
122,870
Maximus, Inc.
Consolidated Results of Operations by Segment
(Unaudited)
For the Three Months Ended December 31, 2025
(dollars in thousands)
U.S. Federal
Services
% (1 )
U.S.
Services
% (1 )
Outside the
U.S.
% (1 )
Total
Revenue
$
786,601
$
415,248
$
143,197
$
1,345,046
Cost of revenue
571,666
72.7
%
330,854
79.7
%
123,856
86.5
%
1,026,376
Gross profit
214,935
27.3
%
84,394
20.3
%
19,341
13.5
%
318,670
Other segment items (2)
85,202
10.8
%
55,108
13.3
%
20,721
14.5
%
161,031
Segment operating income/(loss)
$
129,733
16.5
%
$
29,286
7.1
%
$
(1,380
)
(1.0
)%
157,639
Divestiture-related gains (3)
8,985
Other (4)
(114
)
Amortization of intangible assets
(20,300
)
Operating income
$
146,210
For the Three Months Ended December 31, 2024
(dollars in thousands)
U.S. Federal
Services
% (1)
U.S.
Services
% (1)
Outside the
U.S.
% (1)
Total
Revenue
$
780,655
1
$
452,250
$
169,770
$
1,402,675
Cost of revenue
607,340
77.8
%
357,246
79.0
%
136,532
80.4
%
1,101,118
Gross profit
173,315
22.2
%
95,004
21.0
%
33,238
19.6
%
301,557
Other segment items (2)
74,215
9.5
%
54,158
12.0
%
25,118
14.8
%
153,491
Segment operating income
$
99,100
12.7
%
$
40,846
9.0
%
$
8,120
4.8
%
148,066
Divestiture-related charges (3)
(38,341
)
Other (4)
97
Amortization of intangible assets
(23,035
)
Operating income
$
86,787
(1)
Percentage of respective revenue, as applicable.
(2)
Other segment items are principally selling, general, and administrative expenses allocated to segments.
(3)
During fiscal years 2026 and 2025, we divested businesses from our U.S. Services and Outside the U.S. Segments, respectively.
(4)
Other expenses include 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
December 31, 2025
December 31, 2024
(in thousands)
Net cash used in operating activities
(244,402
)
(79,996
)
Purchases of property and equipment and capitalized software
(6,263
)
(22,992
)
Free cash flow (Non-GAAP)
$
(250,665
)
$
(102,988
)
Maximus, Inc.
Non-GAAP Adjusted Results - Operating Income, Adjusted EBITDA, Net Income, and Diluted Earnings per Share
(Unaudited)
For the Three Months Ended
December 31, 2025
December 31, 2024
(dollars in thousands, except per share data)
Operating income
$
146,210
$
86,787
Add back: Amortization of intangible assets
20,300
23,035
Add back: Divestiture-related (gains)/charges
(8,985
)
38,341
Add back: Depreciation and amortization of property, equipment, and capitalized software
12,889
8,455
Adjusted EBITDA (Non-GAAP)
$
170,414
$
156,618
Adjusted EBITDA margin (Non-GAAP)
12.7
%
11.2
%
Net income
$
93,943
$
41,196
Add back: Amortization of intangible assets, net of tax
14,961
16,977
Add back: Divestiture-related (gains)/charges, net of tax
(6,624
)
38,341
Adjusted net income excluding amortization of intangible assets and divestiture-related adjustments (Non-GAAP)
$
102,280
$
96,514
Diluted earnings per share
$
1.70
$
0.69
Add back: Effect of amortization of intangible assets on diluted earnings per share
0.27
0.28
Add back: Effect of divestiture-related (gains)/charges on diluted earnings per share
(0.12
)
0.64
Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related adjustments (Non-GAAP)
$
1.85
$
1.61
View source version on businesswire.com: https://www.businesswire.com/news/home/20260205866284/en/
James Francis, VP - IR
IR@maximus.com
Original: Maximus Reports Fiscal Year 2026 First Quarter Results
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