Maximus Reports Fiscal Year 2025 Second Quarter Results

Further Raise to FY25 Revenue and Earnings Guidance

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.

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.

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

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James Francis, VP - IR

Jessica Batt, VP - IR

[email protected]