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Maximus Reports Fiscal Year 2026 Third Quarter Results
Maximus Reports Fiscal Year 2026 Third Quarter
About this update from Maximus, Inc.
Maximus (NYSE: MMS), a leading provider of government services, reported financial results for the three and nine months ended June 30, 2026. Highlights for the third quarter of fiscal year 2026 include: Revenue of $1.28 billion, compared to $1.35 billion for the prior year period, was in line with expectations and supports our full year revenue guidance outlook. Diluted earnings per share were $1.95 and adjusted diluted earnings per share were $2.22, compared to $1.86 and $2.16, respectively, for the prior year period. Revenue guidance is reiterated and expected to range between $5.2 billion and $5.35 billion for fiscal year 2026. Earnings guidance for fiscal year 2026 is updated to reflect a temporary customer-directed contractual modification on a major federal program. Adjusted diluted earnings per share are now expected to range between $7.90 and $8.20 per share, and adjusted EBITDA margin is expected to be approximately 13.7% for fiscal year 2026. Free cash flow guidance is updated to range between $425 million and $475 million. Repurchases of Maximus common stock in the quarter totaled 0.75 million shares for $50.4 million. A quarterly cash dividend of $0.33 per share is payable on August 31, 2026, to shareholders of record on August 14, 2026. "Our third quarter results demonstrate the resilience of the Maximus business and our ability to deliver strong earnings performance while continuing to invest in long-term growth opportunities," said Bruce Caswell, President and Chief Executive Officer. Caswell continued, "More broadly, we continue to see encouraging demand signals across our markets, increased adoption of AI-enabled solutions, growing interest in our SNAP-related offerings, and a substantial opportunity set in the defense and national security markets." Third Quarter Results Revenue for the third quarter of fiscal year 2026 was $1.28 billion and was consistent with our expectations entering the quarter. Prior year period revenue was $1.35 billion and benefited from elevated natural disaster support activity as well as temporary clinical volume surges within the U.S. Federal Services Segment. For the third quarter of fiscal year 2026, operating margin was 12.6% and adjusted EBITDA margin was 15.0%. This compares to margins of 12.3% and 14.7%, respectively, for the prior year period. Diluted earnings per share were $1.95, and adjusted diluted earnings per share were $2.22. This compares to $1.86 and $2.16, respectively, for the prior year period. Consolidated earnings improved over the prior year period primarily due, in part, to ongoing efficiency initiatives across multiple program areas, including broader deployment of automation and AI-enabled tools. U.S. Federal Services Segment U.S. Federal Services Segment revenue for the third quarter of fiscal year 2026 was $721 million. Prior year period revenue of $761 million benefited from elevated natural disaster response work and temporary clinical volume surges that did not recur at the same level in the current quarter. The segment operating margin for the third quarter of fiscal year 2026 was 18.6%, compared to 18.1% reported for the prior year period. Productivity improvements, technology-enabled efficiencies, and stable performance across core program areas contributed to the improvement. During the quarter, we received notification from a major customer regarding a temporary contractual modification effective July 1, 2026, through December 31, 2026, which affects profitability expectations for the remainder of fiscal year 2026. This is reflected in updated fiscal year 2026 guidance as well as the full-year operating margin for the U.S. Federal Services Segment, which is now expected to range between 16.5% and 17.0%. U.S. Services Segment U.S. Services Segment revenue for the third quarter of fiscal year 2026 was $418 million and was consistent with our expectation for continued sequential improvement as we progress toward the positive revenue growth anticipated by the end of the fiscal year. The prior year period segment revenue was $440 million. The segment operating margin for the third quarter of fiscal year 2026 was 10.8%, reflecting continued progression throughout the fiscal year, and compares to the prior year period segment operating margin of 10.2%. The full-year fiscal 2026 operating margin for the U.S. Services Segment is expected to range between 9.5% and 10.0%. Outside the U.S. Segment Outside the U.S. Segment revenue for the third quarter of fiscal year 2026 was $140 million, compared to $147 million in the prior year period. Variances in volumes across several programs, including both clinical and employment services contracts, were primarily responsible for the year-over-year revenue change. The segment operating margin for the third quarter of fiscal year 2026 was 0.9%, compared to 4.0% reported for the prior year period. With the segment still expected to break even for fiscal year 2026, we continue to focus on driving growth and further margin improvement through the successful conversion of this segment's sales pipeline. Sales and Pipeline Year-to-date signed contract awards at June 30, 2026, totaled $1.25 billion, and contracts pending (awarded but unsigned) totaled $1.35 billion. The sales pipeline at June 30, 2026, totaled $50.4 billion, comprised of approximately $2.86 billion in proposals pending, $2.42 billion in proposals in preparation, and $45.1 billion in opportunities we are tracking. New work opportunities represent approximately 57% of the total sales pipeline, and U.S. Federal Services Segment opportunities represent approximately 55% of the total sales pipeline. Balance Sheet and Cash Flows At June 30, 2026, unrestricted cash and cash equivalents totaled $57 million, and gross debt was $1.65 billion. The ratio of debt, net of allowed cash, to consolidated EBITDA for the quarter ended June 30, 2026, as calculated on a trailing twelve-month basis in accordance with our credit agreement, was 2.0x, compared to 1.8x at March 31, 2026. The ratio remains within our target net leverage ratio of 2x to 3x. For the third quarter of fiscal year 2026, cash used in operating activities totaled $125 million, and free cash flow was an outflow of $137 million. DSO were 98 days at June 30, 2026. Collections from a major federal customer accelerated during July, and we continue to expect DSO to finish fiscal year 2026 below 70 days. During the third quarter of fiscal year 2026, we purchased approximately 0.75 million shares of Maximus common stock totaling $50.4 million. In May 2026, the Board of Directors authorized a refresh to the repurchase program for Maximus common stock up to an aggregate of $400 million. As of June 30, 2026, the entire $400 million authorization remained available for future repurchases. On July 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 August 31, 2026, to shareholders of record on August 14, 2026. Fiscal Year 2026 Guidance Update We reiterate our fiscal year 2026 revenue guidance, which is expected to range between $5.2 billion and $5.35 billion, with results anticipated toward the lower end of the range. We are updating fiscal year 2026 earnings guidance to account for the temporary contractual modification. We now expect our adjusted EBITDA margin to be approximately 13.7% and adjusted diluted earnings per share to range between $7.90 and $8.20 per share for fiscal year 2026. We now expect free cash flow to range between $425 million and $475 million for fiscal year 2026, which corresponds to the earnings guidance change. Interest expense is estimated to be $88 million, and the full fiscal year tax rate is expected to range between 24.0% and 24.5% for fiscal year 2026. Conference Call and Webcast Information Maximus will host a conference call this morning, August 6, 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 adjusted net income, 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 $ 376 $ 392 Add: Interest expense and other expense/(income) 88 88 Add: Provision for income taxes 120 126 Add: Amortization of intangible assets 81 81 Add: Depreciation & amortization of property, equipment and capitalized software 50 50 Add: Capitalized software impairment charges 7 7 Add: Divestiture-related gains (10 ) (10 ) Adjusted EBITDA $ 712 $ 734 Revenue $ 5,200 $ 5,350 Net income margin 7.2 % 7.3 % Adjusted EBITDA margin 13.7 % 13.7 % Diluted EPS $ 6.94 $ 7.24 Add: effect of amortization of intangible assets on diluted EPS 1.10 1.10 Add: effect of divestiture-related gains on diluted EPS (0.14 ) (0.14 ) Adjusted diluted EPS $ 7.90 $ 8.20 Cash flows from operating activities $ 465 $ 515 Remove: purchases of property and equipment and capitalized software costs (40 ) (40 ) Free cash flow $ 425 $ 475 Maximus, Inc. Consolidated Statements of Operations (Unaudited) For the Three Months Ended For the Nine Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 (in thousands, except per share amounts) Revenue $ 1,278,971 $ 1,348,400 $ 3,929,984 $ 4,112,861 Cost of revenue 930,168 988,887 2,920,247 3,112,970 Gross profit 348,803 359,513 1,009,737 999,891 Selling, general, and administrative expenses 167,188 170,831 492,827 525,423 Amortization of intangible assets 20,187 23,010 60,785 69,041 Operating income 161,428 165,672 456,125 405,427 Interest expense 23,878 22,657 66,805 61,648 Other (income)/expense, net (608 ) 48 (1,639 ) (603 ) Income before income taxes 138,158 142,967 390,959 344,382 Provision for income taxes 34,565 36,986 95,360 100,636 Net income $ 103,593 $ 105,981 $ 295,599 $ 243,746 Earnings per share: Basic $ 1.96 $ 1.87 $ 5.48 $ 4.22 Diluted $ 1.95 $ 1.86 $ 5.45 $ 4.20 Weighted average shares outstanding: Basic 52,854 56,683 53,974 57,776 Diluted 53,057 56,984 54,243 58,100 Dividends declared per share $ 0.33 $ 0.30 $ 0.96 $ 0.90 Maximus, Inc. Consolidated Balance Sheets June 30, 2026 September 30, 2025 (unaudited) (in thousands) Assets: Cash and cash equivalents $ 56,953 $ 222,351 Accounts receivable, net 1,382,014 898,095 Income taxes receivable 31,019 3,904 Prepaid expenses and other current assets 171,377 128,574 Total current assets 1,641,363 1,252,924 Property and equipment, net 28,485 30,972 Capitalized software, net 201,373 214,260 Operating lease right-of-use assets 88,302 100,514 Goodwill 1,780,543 1,782,095 Intangible assets, net 477,031 538,266 Deferred contract costs, net 60,205 63,332 Deferred compensation plan assets 67,877 63,272 Deferred income taxes 8,047 11,491 Other assets 13,553 12,513 Total assets $ 4,366,779 $ 4,069,639 Liabilities and Shareholders' Equity: Liabilities: Accounts payable and accrued liabilities $ 263,220 $ 296,888 Accrued compensation and benefits 146,064 236,948 Deferred revenue, current portion 36,626 53,784 Income taxes payable 1,138 17,321 Long-term debt, current portion 71,599 52,680 Operating lease liabilities, current portion 38,280 38,605 Other current liabilities 121,142 68,937 Total current liabilities 678,069 765,163 Deferred revenue, non-current portion 35,863 43,757 Deferred income taxes 199,887 149,020 Long-term debt, non-current portion 1,565,336 1,281,593 Deferred compensation plan liabilities, non-current portion 66,468 62,145 Operating lease liabilities, non-current portion 56,603 71,289 Other liabilities 24,002 22,637 Total liabilities 2,626,228 2,395,604 Shareholders' equity: Common stock, no par value; 100,000 shares authorized; 52,358 and 54,805 shares issued and outstanding as of June 30, 2026, and September 30, 2025, respectively 647,138 628,118 Accumulated other comprehensive loss (20,721 ) (17,867 ) Retained earnings 1,114,134 1,063,784 Total shareholders' equity 1,740,551 1,674,035 Total liabilities and shareholders' equity $ 4,366,779 $ 4,069,639 Maximus, Inc. Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended For the Nine Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 (in thousands) Cash flows from operating activities: Net income $ 103,593 $ 105,981 $ 295,599 $ 243,746 Adjustments to reconcile net income to cash flows from operations: Depreciation and amortization of property, equipment, and capitalized software 11,874 9,607 37,091 27,502 Capitalized software impairment charges — — 6,914 — Amortization of intangible assets 20,187 23,010 60,785 69,041 Amortization of debt issuance costs and debt discount 842 736 2,314 2,046 Deferred income taxes (13,365 ) (5,239 ) 54,416 (5,829 ) Stock compensation expense 7,356 10,749 24,274 30,324 Divestiture-related charges/(gains) (1,162 ) — (10,147 ) 39,343 Change in assets and liabilities, net of effects of business combinations and divestitures: Accounts receivable (266,738 ) (318,415 ) (489,403 ) (553,297 ) Prepaid expenses and other current assets 7,189 1,398 13,152 9,341 Deferred contract costs 2,310 1,059 2,748 (856 ) Accounts payable and accrued liabilities (19,107 ) (27,751 ) (33,345 ) (21,808 ) Accrued compensation and benefits (6,303 ) (2,368 ) (79,734 ) (50,369 ) Deferred revenue (3,056 ) 2,618 (24,658 ) (8,675 ) Income taxes 33,959 12,090 (40,504 ) 5,625 Operating lease right-of-use assets and liabilities (1,341 ) (1,145 ) (2,814 ) (3,508 ) Other assets and liabilities (1,225 ) 4,952 3,449 (2,626 ) Net cash used in operating activities (124,987 ) (182,718 ) (179,863 ) (220,000 ) Cash flows from investing activities: Purchases of property and equipment and capitalized software (11,980 ) (15,488 ) (28,752 ) (55,686 ) Proceeds from divestitures 3,947 — 16,842 736 Other (2,500 ) — (2,500 ) (2,165 ) Net cash used in investing activities (10,533 ) (15,488 ) (14,410 ) (57,115 ) Cash flows from financing activities: Cash dividends paid to Maximus shareholders (17,278 ) (16,904 ) (51,437 ) (51,865 ) Purchases of Maximus common stock (49,917 ) — (204,919 ) (306,443 ) Tax withholding related to RSU vesting — (10 ) (17,325 ) (16,451 ) Payments for debt financing costs (2,393 ) — (2,393 ) (1,658 ) Proceeds from borrowings 703,675 376,208 1,368,675 1,335,208 Principal payments for debt (600,935 ) (212,535 ) (1,065,935 ) (810,174 ) Other, including customer escrowed funds 10,732 (643 ) 60,841 (1,824 ) Net cash provided by financing activities 43,884 146,116 87,507 146,793 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 188 1,528 (444 ) (65 ) Net change in cash, cash equivalents, and restricted cash (91,448 ) (50,562 ) (107,210 ) (130,387 ) Cash, cash equivalents, and restricted cash, beginning of period 244,697 155,938 260,459 235,763 Cash, cash equivalents, and restricted cash, end of period $ 153,249 $ 105,376 $ 153,249 $ 105,376 Maximus, Inc. Consolidated Results of Operations by Segment (Unaudited) For the Three Months Ended June 30, 2026 (dollars in thousands) U.S. Federal Services % (1 ) U.S. Services % (1 ) Outside the U.S. % (1 ) Total Revenue $ 720,991 $ 418,227 $ 139,753 $ 1,278,971 Cost of revenue 498,720 69.2 % 311,449 74.5 % 119,999 85.9 % 930,168 Gross profit 222,271 30.8 % 106,778 25.5 % 19,754 14.1 % 348,803 Other segment items (2) 88,231 12.2 % 61,589 14.7 % 18,548 13.3 % 168,368 Segment operating income $ 134,040 18.6 % $ 45,189 10.8 % $ 1,206 0.9 % 180,435 Divestiture-related gains/(charges) (3) 1,162 Other (4) 18 Amortization of intangible assets (20,187 ) Operating income $ 161,428 For the Three Months Ended June 30, 2025 (dollars in thousands) U.S. Federal Services % (1) U.S. Services % (1) Outside the U.S. % (1) Total Revenue $ 761,174 1 $ 439,818 $ 147,408 $ 1,348,400 Cost of revenue 535,040 70.3 % 333,886 75.9 % 119,961 81.4 % 988,887 Gross profit 226,134 29.7 % 105,932 24.1 % 27,447 18.6 % 359,513 Other segment items (2) 88,272 11.6 % 60,975 13.9 % 21,507 14.6 % 170,754 Segment operating income $ 137,862 18.1 % $ 44,957 10.2 % $ 5,940 4.0 % 188,759 Other (4) (77 ) Amortization of intangible assets (23,010 ) Operating income $ 165,672 For the Nine Months Ended June 30, 2026 (dollars in thousands) U.S. Federal Services % (1) U.S. Services % (1) Outside the U.S. % (1) Total Revenue $ 2,260,735 1 $ 1,249,229 $ 420,020 $ 3,929,984 Cost of revenue 1,598,084 70.7 % 957,548 76.7 % 364,615 86.8 % 2,920,247 Gross profit 662,651 29.3 % 291,681 23.3 % 55,405 13.2 % 1,009,737 Other segment items (2) 266,174 11.8 % 178,616 14.3 % 58,664 14.0 % 503,454 Segment operating income/(loss) $ 396,477 17.5 % $ 113,065 9.1 % $ (3,259 ) (0.8 )% 506,283 Divestiture-related gains/(charges) (3) 10,147 Other (4) 480 Amortization of intangible assets (60,785 ) Operating income $ 456,125 For the Nine Months Ended June 30, 2025 (dollars in thousands) U.S. Federal Services % (1) U.S. Services % (1) Outside the U.S. % (1) Total Revenue $ 2,319,756 $ 1,334,418 $ 458,687 $ 4,112,861 Cost of revenue 1,718,249 74.1 % 1,021,712 76.6 % 373,009 81.3 % 3,112,970 Gross profit 601,507 25.9 % 312,706 23.4 % 85,678 18.7 % 999,891 Other segment items (2) 245,563 10.6 % 173,096 13.0 % 66,822 14.6 % 485,481 Segment operating income $ 355,944 15.3 % $ 139,610 10.5 % $ 18,856 4.1 % 514,410 Divestiture-related gains/(charges) (3) (39,343 ) Other (4) (599 ) Amortization of intangible assets (69,041 ) Operating income $ 405,427 (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 Nine Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 (in thousands) Net cash (used in) operating activities (124,987 ) (182,718 ) (179,863 ) (220,000 ) Purchases of property and equipment and capitalized software (11,980 ) (15,488 ) (28,752 ) (55,686 ) Free cash flow (Non-GAAP) $ (136,967 ) $ (198,206 ) $ (208,615 ) $ (275,686 ) 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 Nine Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 (dollars in thousands, except per share data) Net income $ 103,593 $ 105,981 $ 295,599 $ 243,746 Provision for income taxes 34,565 36,986 95,360 100,636 Interest expense 23,878 22,657 66,805 61,648 Other (income)/expense, net (608 ) 48 (1,639 ) (603 ) Amortization of intangible assets 20,187 23,010 60,785 69,041 Divestiture-related charges/(gains) (1,162 ) — (10,147 ) 39,343 Depreciation and amortization of property, equipment, and capitalized software 11,874 9,607 37,091 27,502 Capitalized software impairment charges — — 6,914 — Adjusted EBITDA (Non-GAAP) $ 192,327 $ 198,289 $ 550,768 $ 541,313 Net income margin (GAAP)* 8.1 % 7.9 % 7.5 % 5.9 % Adjusted EBITDA margin (Non-GAAP)* 15.0 % 14.7 % 14.0 % 13.2 % * Margins are calculated as a percentage of revenue Net income $ 103,593 $ 105,981 $ 295,599 $ 243,746 Add back: Amortization of intangible assets, net of tax 14,878 16,958 44,799 50,883 Add back: Divestiture-related charges/(gains), net of tax (856 ) — (7,478 ) 39,343 Adjusted net income excluding amortization of intangible assets and divestiture-related adjustments (Non-GAAP) $ 117,615 $ 122,939 $ 332,920 $ 333,972 Diluted earnings per share $ 1.95 $ 1.86 $ 5.45 $ 4.20 Add back: Effect of amortization of intangible assets on diluted earnings per share 0.28 0.30 0.83 0.88 Add back: Effect of divestiture-related charges/(gains) on diluted earnings per share (0.01 ) — (0.14 ) 0.67 Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related adjustments (Non-GAAP) $ 2.22 $ 2.16 $ 6.14 $ 5.75 View source version on businesswire.com: https://www.businesswire.com/news/home/20260806885274/en/