Maximus, Inc. · NYSE:MMS
Maximus — Investor Day (July 2011)
56 slides from Maximus's investor day presentation, Jul 1, 2011
Slide 1: MAXIMUS Investor Day Welcome
MAXIMUS Investor Day Welcome Richard A. Montoni Chief Executive Officer A number of statements being made today will be forward-looking in nature. Such statements are only predictions and actual events or results may differ materially as a result of risks we face, including those discussed in our SE
Slide 2: Focus on Profitable Growth
Focus on Profitable Growth MAXIMUS in 2006 Systems Operations Consulting * Emphasis on sales growth © Three diverse business segments * 10% revenue from international operations MAXIMUS Today Health Services ¢ Emphasis on profitable growth ¢ Focus on health & human services ¢ 27% revenue from intern
Slide 3: Focus on Core Health & Human Services
Focus on Core Health & Human Services Health Services BPO and administration of public health programs Human Services Welfare-to-work Children’s services Health appeals Specialized & eHealth services Specialized services 3
Slide 4: Growth, Consistency & Predictability in Earnings
Growth, Consistency & Predictability in Earnings Annual Revenue* Adjusted Diluted EPS from Continuing Operations** 5-year CAGR: 11.7% 5-year CAGR: 23.8% 4 *Normalized to exclude revenue from the Corrections business which was sold and the Voting business which the Company exited. CAGR calculated on
Slide 5: A Dynamic Environment Demanding Outcomes
A Dynamic Environment Demanding Outcomes Continued Outcomes-Based Fiscal Pressures W lf Government R ti i G t Global Government S i Welfare Reform Retiring Government Workforce Services Health Care Reform Increasing Caseloads Aging Populations 5
Slide 6: A Disciplined Methodology for Global Expansion
A Disciplined Methodology for Global Expansion Global Scan Drives Initial Targets Target & Explore Land & Expand • Conduct high-level desk review • • Conduct country visits • Meet • Create & launch action plan • Form • Execute & perform • Build brand • Seek Compelling reason to outsource • Research
Slide 7: What Sets MAXIMUS Apart?
What Sets MAXIMUS Apart? 7 Efficient and Effective Services to our Government Clients
Slide 8: Largest High-Level Growth Drivers
Largest High-Level Growth Drivers Demographics: populations aging 8 Increasing populations, aging, incomes
Slide 9: EPS Growth Assuming 10% Annual Increase
EPS Growth Assuming 10% Annual Increase Managed care growth New work $3.62 9 Supported by Solid Base of Long-Term Recurring Revenue
Slide 10: Expect to Perform Towards Top of Guidance Range
Expect to Perform Towards Top of Guidance Range • Comfortable at the top of our guidance range • Both revenue and profit will be stronger in the third quarter than previously expected • Q3 will benefit from an acceleration of revenue and profit from Q4 from the legacy FND contract in the United King
Slide 11: Expected Ramp on the UK Contract
Expected Ramp on the UK Contract FY 11E FY 12E FY 13E FY 14E R ($ i illi ) $ 38 0 $25 0 $75 0 $95 0 Revenue in millions) 38.0 25.0 75.0 95.0 EBIT 5.5 (10.6) 11.3 14.3 Operating margin 14% -42% 15% 15% Net income 4.0 (7.8) 8.4 10.6 Tax rate 27.0% 26.0% 26.0% 26.0% Shares outstanding 17.8 17.8 17.8 17
Slide 12: Five-Year Adjusted EPS Growth Outlook
Five-Year Adjusted EPS Growth Outlook ACA launch UK ramp International growth ACA UK ramp International growth Managed care growth New work $3.62 UK start-up annual EPS assumptions 12 Note: Assumes targeted 10% growth, excluding M&A and stock buybacks, based on known events, not company-specific gui
Slide 13: MAXIMUS Investor Day: Health Segment Presenters
MAXIMUS Investor Day Bruce Caswell President, Health Segment Michael Lemberg President, Health West 13
Slide 14: Virtual Tour: Colorado Medical Assistance Program
Virtual Tour: Colorado Medical Assistance Program 14 video
Slide 15: FY Segment Revenue Mix by Service Line
FY 10 Segment Revenue Mix by Service Line Leading market share in Medicaid & CHIP administration*: • 16.7m of the 35.2m Medicaid managed care beneficiaries (47%) • 2.5m of 5.5m CHIP beneficiaries (45%) 11% market share in British Columbia BPO health market 15 *Based on 2009 CMS data, excludes fee-fo
Slide 16: Healthy Growth from New Programs and Expansion
Healthy Growth from New Programs and Expansion • FY 11 estimates based on 13 2% 5 CAGR 10% growth assumption • Recent Growth Drivers New programs: 13.2% 5-year - CO & NY Eligibility - CA & NY PCIP - PA LTC • Managed care expansion: - CA & TX • Existing work expansion: BC - & TX • Volume increases -
Slide 17: Typical Contract Structure and Pay Points
Typical Contract Structure and Pay Points FY 10 Contract Revenue Mix Typical Pay Points • Call volume • Call minutes • Mailings • Enrollments • Applications • Outreach support • Field operations support • Program participants 17
Slide 18: CHIP & Medicaid Managed Care Supply Chain
CHIP & Medicaid Managed Care Supply Chain 18
Slide 19: Benefiting from a Favorable Demand Environment
Benefiting from a Favorable Demand Environment Health Insurance Federal Opportunities Medicaid Expansion Exchanges Canadian Initiatives Managed Care Expansion 19
Slide 20: Established Provider for Expanded Managed Care
Established Provider for Expanded Managed Care • Largest administrative vendor • Shifting Medicaid & CHIP recipients from FFS to managed care saves money • Nearly 30% of Medicaid recipients on traditional FFS, but account for nearly 80% of total Medicaid spend • Superior positioning for Medicaid exp
Slide 21: Health Appeals Volume Trends Continue to Grow
Health Appeals Volume Trends Continue to Grow 21
Slide 22: Largest Health Appeals Provider in the Nation
Nearly one million appeals completed since 1989 Largest Health Appeals Provider in the Nation Typical Pay Points • Paid per case • Medicare averages between $100–$300 • State appeals average between $300–$2,000 • Pay variations based on scope of activities & complexity of case 22
Slide 23: A Growing Canadian Presence
A Growing Canadian Presence Federal Comprehensive Solution Emerging Opportunities • BPO • Call Centers Provincial • Call Centers • DIS Growth United States • Medigent® • Credentialing • DIS Modernization • Transformation 23
Slide 24: Implementation Timeline of Key ACA Provisions
Implementation Timeline of Key ACA Provisions 24
Slide 25: Potential Market Growth from New ACA Beneficiaries
Potential Market Growth from New ACA Beneficiaries • Number of eligible beneficiaries expected to double by 2017 • Vast majority of coverage will be addressed under Medicaid expansion Beneficiaries (in millions) Estimated incremental total addressable market: • $500m annually for individual exchange
Slide 26: Robust Health Insurance Exchange Solution
Robust Health Insurance Exchange Solution Intake Eligibility Enrollment 26
Slide 27: Robust Health Insurance Exchange Solution
Robust Health Insurance Exchange Solution Intake Eligibility Enrollment 27
Slide 28: Key Building Blocks of a Health Insurance Exchange
Key Building Blocks of a Health Insurance Exchange Deloitte ACS NCQA URAC (BrokerAdvantage) Accenture Curam HealthGrades ratemds.com vitals.com (CA EECAA) Meaningful Barriers Exist to New Entrants 28
Slide 29: State Business Challenge #1: No Wrong Door
State Business Challenge #1: No Wrong Door Policy Business Process Model Operations & BPO Solution “No Wrong Door” Seamless experience regardless of program or Process applications via exchange for both public and private health insurance Multilingual customer contact centers Web/mail/fax/phone chan
Slide 30: State Business Challenge #2: Simplified Eligibility
State Business Challenge #2: Simplified Eligibility Policy (MAGI) Simplified eligibility using Modified Adjusted Gross Income Determine eligibility for health insurance coverage subsidy Exception process for other income and data collection Perform (with SSA IRS Medicaid CHIP etc ) Business Process
Slide 31: State Business Challenge #3: Premium Processing
State Business Challenge #3: Premium Processing Policy Business Technology & Operations (BPO Solution) Process Model Premium collection Support multichannel methods of payment Tax credit; cost share; premium processing collection, aggregation, and distribution Premium accounting software integrated
Slide 32: Driving Long-Term Growth
Driving Long-Term Growth Leading Market Position Market Growth Drivers MAXIMUS Growth 32
Slide 33: Questions?
Questions? 33
Slide 34: Health Services Panel
MAXIMUS Investor Day MAXIMUS Investor Day Health Services Panel Governor Jim Douglas Cindy Gillespie Bruce Caswell Michael Lemberg Moderated by: Judy Feder 34
Slide 35: Break
Break 35
Slide 36: MAXIMUS Investor Day: Human Services Presenters
MAXIMUS Investor Day Akbar Piloti President, Human Services Segment Kathleen Kerr President, Human Services North America Michael Hobday President, Human Services International 36
Slide 37: Compelling Need for Reform Around the World
Compelling Need for Reform Around the World Fiscal Pressures Demographics Welfare Reform Outsourcing Rising Caseloads Aging Populations Unsustainable Social Outcomes & Accountability Benefits Programs 37
Slide 38: Welfare Reform Rooted in Wisconsin
Welfare Reform Rooted in Wisconsin • Breaking the cycle of welfare for life welfare-for- • Wisconsin Works (W-2) has become a primary model used around 38 the world
Slide 39: Wisconsin Works: Deanna's Success Story
Wisconsin Works: Deanna’s Success Story 39 video
Slide 40: FY Segment Revenue Mix by Service Line
FY 10 Segment Revenue Mix by Service Line 10% market share in Australian welfare-to-work <5% market share in the UK welfare-to-work market <3% market share in US welfare-to-work 10% market share in North American child support 40
Slide 41: Accelerated Growth Tied to Exceptional Performance
Accelerated Growth Tied to Exceptional Performance 5-year CAGR: 9.5% • FY 11 estimates based on 10% growth assumption • Recent growth driven by international business • FY 09 dip reflects the exit of the health care claiming business (approx. $20m) 41 Normalized to exclude revenue from the Correctio
Slide 42: Typical Contract Structure & Pay Points
Typical Contract Structure & Pay Points FY 10 Contract Revenue Mix • Dominated by outcomes based welfare-to-work − Attachment fees − Outcome fees − Sustained employment fees • Performance-based generally carry a higher margin • Expect performance-based to become larger part of mix 42
Slide 43: Established North American Footprint: Shelby County Child Support
Established North American Footprint Project Spotlight: Shelby County Child Support Full Service Child Support • Largest privatized program in U.S. • Locate absent parents • Establish parentage • Establish and enforce orders - Financial support - Medical support • Collect support • Assign wages • He
Slide 44: Established North American Footprint: Tennessee Works
Established North American Footprint Project Spotlight: Tennessee Works Employment Families First (TN TANF) • Employment case management Job readiness placement • readiness, placement, retention • Supportive services: training, programs to address barriers • Work experience & community service site
Slide 45: Emerging Opportunities in Canada
Emerging Opportunities in Canada • Transitioning towards outcomes-based contracts • Consolidating and integrating multiple programs into a “One-Stop” model • Employment First – Self services – Case management – Training • Focusing on removing severe barriers to employability • Funding shift from fed
Slide 46: Successful Land & Expand Strategy – Australia
Successful Land & Expand Strategy – Australia Top Rated Performance Driving Organic Growth • Revenue increased 800% in eight years • Outcomes-based model puts work with proven vendors Pay Points • Services fee at intake • Outcome fee at 13 weeks of sustained employment • 36 Outcome fee at weeks of s
Slide 47: National Leader in Australian Employment Services
National Leader in Australian Employment Services Finding Jobs, Changing Lives • 74 full-service employment sites 55 Breaking News: 3-year extension • outreach centers • Job Services Australia • Disability Employment Services • National Green Jobs Corps Primary services • Intake, assessment, job pla
Slide 48: Australia's Dramatic Savings through Outsourcing
Australia’s Dramatic Savings through Outsourcing 48
Slide 49: A Growing Presence: Land & Expand in the UK
A Growing Presence: Land & Expand in the UK •Top performing employment services provider in the UK • Awarded three Work Programme contracts: – West London, East London, & BBOH • Expectations: – 120,000 job seeker referrals/5 years – $ 90 million+ in annual revenue** – 15%+ operating margin** Update:
Slide 50: The United Kingdom's Work Programme
The United Kingdom’s Work Programme • Launched June 15th; fully operational July 4th • 44 delivery locations •Key management and staff in place • Launched Technology and WorkQWEST™ systems 50
Slide 51: Tying Compensation to Outcomes in the UK
Tying Compensation to Outcomes in the UK 51
Slide 52: Global Reform Generating Expansion and Growth
Global Reform Generating Expansion and Growth Global Fiscal Pressures Social Program Reform MAXIMUS Expansion and Growth 52
Slide 53: Human Services Panel
MAXIMUS Investor Day Human Services Panel Governor Jim Hodges Akbar Piloti Kathleen Kerr Michael Hobday M d t Ji H Moderator: Jim Hoge 53
Slide 54: MAXIMUS Investor Day Conclusion
MAXIMUS Investor Day Conclusion Richard A. Montoni Chief Executive Officer 54
Slide 55: Poised to Capitalize on Growth Opportunities
Poised to Capitalize on Growth Opportunities Established global leader Capitalizing On Growing Positioned for significant growth across both SegmentsDemand Strong financial dynamics Great management team 55
Slide 56: Questions?
Questions? 56