Transcripts
Maximus, Inc.'s management answers for the business every quarter. These are the exchanges that explain it best — verbatim, from the call transcripts preserved in Sources. Each link opens the full transcript at that page in a new tab.
Q2 FY2026 Earnings Call — Q2 FY2026
The most recent call: where the margin story now comes from, how H.R. 1 work is actually arriving, and why federal automates faster than state. · Open the full transcript →
Federal margin is being driven by decoupling labor cost from volume, not by more volume.
David W. Mutryn (Chief Financial Officer): The operating income margin for this segment in the second quarter was 17.6% as compared to 15.3% in the prior-year period. Another item I mentioned on the February call when we increased the full-year segment margin guide is the anticipated durability of this segment’s margins. This quarter’s segment margin is delivering on that commitment thanks to technology initiatives embedded in our programs that decouple labor costs from our ability to process more volumes. In fact, we are raising the margin guide for this segment again this quarter
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The capital allocation rule stated plainly: buy back only below intrinsic value, inside a 2x–3x leverage constraint.
David W. Mutryn (Chief Financial Officer): We have long said that we are opportunistic in our share repurchasing. To be more direct, we prioritize repurchasing when we believe our share price does not reflect the intrinsic value of the business based on a disciplined and conservative assessment. Going forward, we will continue to execute on our capital deployment priorities while considering near-term liquidity, the potential M&A opportunity set, and all within the constraint of our stated target net debt ratio of 2x to 3x. Even amidst market conditions that are favorable to share repurchases, we continue to seek acquisition targets to accelerate longer-term organic growth. We remain focused on targets that add capabilities, add and expand customer relationships, and create revenue synergy opportunities. We also remain disciplined in our evaluation of targets and require that valuations must be reasonable in the context of current market conditions, and the expected return must exceed our cost of capital.
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The near-term EBITDA margin target is reset from 10–13% to 12–15%, with the caveat that new ramps dilute it.
David W. Mutryn (Chief Financial Officer): Approximately 18 months ago, we laid out a near-term adjusted EBITDA margin target range of 10% to 13%. At that time, our margin was around 11.6%, and we are now guiding to approximately 14.2% for fiscal 2026. Much of the improvement has come from technology enhancements and cost actions that we believe have staying power. Given that progress, we are raising our near-term adjusted EBITDA margin target range to 12% to 15%. We expect to operate toward the upper end of that range in periods with stable volumes and continued technology leverage, while recognizing that new program ramps and mix can affect margins in any given year.
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How H.R. 1 work reaches the P&L — often as volume on existing contracts rather than as new awards.
Bruce L. Caswell (President and Chief Executive Officer): On the state side, we are seeing solid traction in a number of areas related to H.R. 1, or the Working Families Tax Cut Act. Presently, there are two states working with us toward arrangements that could utilize our existing contracts to support Medicaid community engagement, or MCE, compliance. Depending on the contracting mechanism, these opportunities may either show up as higher volumes under existing contracts or be reported as new awards. One of these examples we estimate could drive a more than 30% increase in current program revenue, subject to final scope and implementation timing.
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The cash-flow question: why DSO sits at 78 days and why management treats the receivable as collectible.
Will Gilday (CJS Securities); David W. Mutryn (Chief Financial Officer): I guess for David, any more color on the higher DSOs in the quarter? And you refreshed the buyback authorization, but how are you thinking about capacity for share buybacks considering the cash flow lumpiness? […] Yes, thanks. A little more color on the higher DSO. It stems from a major federal customer, as I said, and it is the same customer that contributed to the temporarily higher DSO in ou fiscal year 2025. We did anticipate a buildup of accounts receivable in our November guidance and then again in February when we said we expected DSO to remain elevated in Q2. A little more detail: this is a large program with extremely complex and data-intensive invoicing requirements. The slowdown in collections has occurred since November as we have worked with our customer on incorporating new and evolving requirements, many of which are retroactive, so may require rework of prior period invoices. This is a federal agency. We are operating under a funded contract, so we have full confidence that the outstanding invoices will be collected. We continue to regularly collect, but this customer’s AR increased in Q2, and our current view is that it may remain flat in Q3 before declining in Q4 as we expect to catch up and collect more than our revenue. That matches with my prepared remarks that we believe DSO may remain elevated as of June 30, then improve in Q4.
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The best explanation of why automation lands in Federal first: contract scale, public trust, and state legacy systems.
Will Gilday (CJS Securities); Bruce L. Caswell (President and Chief Executive Officer): And then you keep raising the margin outlook on U.S. Federal based on tech initiatives and efficiency gains. Maybe add some more color on exactly what those efficiency gains are and why we have not yet seen a similar dynamic in the U.S. Services segment? […] First, our federal contracts are generally larger, meaning that when you implement technology initiatives, they get applied in that segment to programs that are larger from a scale and volume standpoint, so they are by definition going to be more impactful on the margins of the business. Second, many of our U.S. Services contracts, particularly in Medicaid and the health benefit exchange area, involve us delivering services directly to consumers, and that issue of public trust is front and center for our state customers. As a consequence, they have expressed decidedly more caution in the adoption of AI and other automation tools without first really understanding how guardrails can be put in place to ensure compliance with program regulations, which is super important to them. It is also worth noting that there is a patchwork quilt of regulations at the state level that our clients must individually navigate, whereas that is less the case at the federal level presently. Third, U.S. Services contracts certainly have great incremental technology opportunities in them, but they also operate in a fairly sophisticated environment that incorporates a lot of state systems. Therefore, there are multiple points of integration with state legacy systems required in executing our program delivery model. To give you an example, in one state our employees are trained across five different state systems in order to do their work. Environments like this are much more challenging to apply automation to, particularly when this has to be done across multiple vendor contracts that must be coordinated. Finally, to overlay all of this, our state customers already have a lot on their plates, particularly with the requirements for implementing H.R. 1. In many cases, they have limited bandwidth and do not have the budget resources to do a lot more than that. Performing the “system surgery” needed to really drive significant automation and change an already very stable and positive end user experience has become less of an immediate priority for them.
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The largest recompete in the portfolio — VBA exams — with no rebid timeline yet published.
Will Gilday (CJS Securities); Bruce L. Caswell (President and Chief Executive Officer): Switching back to federal, do you have any updates on the VBA contract? Is a recompete still expected in the summer, or do you think there will most likely be an extension? And you have an industry day later this month—what are you looking to accomplish or learn there? […] The current contract, as a reminder, goes through December 31, 2026 for all vendors. The VA has not yet released a formal timeline for the rebid, and we expect to learn at the upcoming industry day what that timeline is intended to be. Generally speaking, agencies across government have the ability, if needed, to extend existing contracts as they complete their recompete process. We do not know yet if the VA will need or intend to do that; we may learn that at the industry day as well. We would expect to be able to share more information on subsequent calls as it becomes available from the customer. In the meantime, we are remaining completely focused on providing first-class service to veterans and to the VBA. We think we have earned the reputation for delivering a high-quality veteran experience. This is very much made possible by the many employees in our Veterans Evaluation Services subsidiary who themselves have served and are veterans. They understand the experience and how to navigate these programs, and they do so with a great deal of empathy and compassion. We feel like we are delivering great value to the VBA under the current contract and therefore we are optimistic about the future outcome of the rebid. We have a strong track record with the VBA, demonstrated delivery capabilities at scale and capacity, and we have made significant technology investments—continuing to invest—in further improving the veteran experience, with a specific focus on reducing the time that veterans spend in our portion of the MDE claims process. That is the update I am able to provide at this time.
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Q1 FY2026 Earnings Call — Q1 FY2026
The clearest statement of how state revenue is actually earned — per transaction, not per enrollee — plus the size and timing of the H.R. 1 ramp. · Open the full transcript →
The single most important mechanic in the state business: volumes track engagements per beneficiary, not enrollment.
Bruce Caswell (President and CEO): We're fortunate to have strong working relationships through existing contracts with many of the expansion states for whom we already perform eligibility support services. We continue to see more frequent eligibility support driving up engagement with Medicaid beneficiaries. As we've noted previously, more frequent engagement is the principal driver of volumes on many of our state contracts. In other words, activity levels per beneficiary, not absolute enrollment, are the key drivers for many contracts.
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Why states are forced to act on SNAP: an error rate above 6% shifts benefit and administrative cost onto them.
Bruce Caswell (President and CEO): Beginning in government fiscal year 2028, if a state has a payment error rate greater than 6%, which an estimated 43 states including DC do, they're required to begin contributing to the benefit in a manner correlated to their error rate. States may either use their FY '25 or FY '26 error rate for calculation of their share of food costs, making actions this year potentially consequential for many to reduce their payment error rates. Finally, under the WFTC Act, beginning in government fiscal year 2027, all states will be responsible for 75% of the administrative funding for SNAP.
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The SNAP offering explained end to end — tool licence first, business-process redesign as the larger follow-on.
Bruce Caswell (President and CEO): To address it directly, the receptivity to our Accuracy Assistant has been really positive. It's a great tool. It's a tool quite frankly, think states have really needed because it allows you first of all to kind of to mine the datasets of existing cases and understand what the root causes are that could be driving error rates up in the first place. Sometimes those root causes are there are just fundamental inaccuracies between the data that an applicant is providing and data that could be available through third-party data sources that you want to check against. And that might be just because, you know, the data is stale or the individual is reporting the data in a different manner than, has been reported through other electronic means. Can also have inaccuracies that are related to just the training of individuals collecting the information. I know that I struggle with, you know, semi-monthly versus biweekly income. Which is which right that kind of thing. So the accuracy assistant tool helps first of all by learning and then it can be used real-time as cases are coming in and being processed. Processed to identify cases that have the attributes that could lead to an error if is not taken. It then allows the worker and that worker could be a state or county worker or it could be a Maximus, Inc. employee to intercede and collect further information from the beneficiary before you put inaccurate data into the database against which a rules engine runs that might make an inaccurate determination. It's important to recall too that error rate at state level both the positive errors and the negative errors in the sense that if you're underpaying someone, that's as much an error as if you're overpaying someone. So it's the collective score that a state has that has to be below 6%. […] Would say one other thing, and that's we'd expect the initial conversations with states to lead to interest in the tool and the licensing and deployment and implementation operation of the tool. And then on top of that, that's the near-term kind of effect. But in the longer term what you really want to do is have a conversation of how do we look at the workflow, business process, what fundamentally has led us to the state that we're in, honestly. And figure out how to redesign that and instrument that business process differently. So we think that there's a almost a consultative that could lead to business process services opportunities in the medium to longer term with the SNAP population with these states.
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Management sizes the combined Medicaid and SNAP opportunity and dates the full run rate to FY2028.
David Mutryn (CFO): We had shared last year and really for the combination of emerging needs for Medicaid and SNAP with a multitude of assumptions, we estimated that potential needs by states for both Medicaid and SNAP all combined could create a high single to low double-digit organic growth opportunity for US services and we continue to believe that this is a reasonable estimate for the ultimate revenue run rate from this work once it's fully ramped. And as far as timing goes, we'd expect if new work would layer in over fiscal year 2027, and into fiscal year 2028. So fiscal year '28 at some point, could be kind of the full run rate of the new normal under these requirements.
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Corrects the common modelling error — semiannual redeterminations do not create a January 2027 surge.
Bruce Caswell (President and CEO): I think as you're thinking about the future years, for Medicaid too, there's a dynamic that I don't think we've called out succinctly before that we wanted to make sure we were clear on. That is, the Medicaid, community engagement requirements for the expansion population are as you know effective 01/01/2027 but we likely will see activity in the '26 '27 as there's a lot of outreach activities that states have to engage in to that eligible population. And so they're sending letters, they're making phone calls and so forth saying, ready for this. This is gonna be a new requirement for you and so forth. That activity is something I think where states are still working through what portion of the population they actually have to directly reach out to. In some cases, the state might say, well, if I can, through data matching, preliminarily determine that a certain cohort of this expansion population doesn't actually qualify for the work requirement because they have certain conditions that meet exemption requirements. I'm not even gonna bother reaching out to them. But that's ground that hasn't been covered yet. And I think lawyers are talking about, well, do you just reach out to everybody? And then take it from there. So you'll see a bit of you know, kind of volatility in that as that shakes out. And I think CMS's guidance to states and the activities around as, you know, their recent announcement and so forth supporting states will help bring some clarity to that. The work requirement or community engagement requirement is a real thing as of January 1 with even some activities preceding that. The dynamic that we want to also focus on, though, is the redetermination. When you think about it the requirement for semi-annual redeterminations doesn't happen until January 1 and that means that the activity won't happen until July. Because you could have a new you know somebody who's newly determined eligible on 01/01/2027 you're not gonna need to redetermine their eligibility till July of that year. But I think there's been some thinking that you see this like major surge in redetermination activity starting in January. Not really the case. It's the cohorts that start rippling through mid-year. That's why David made the point earlier that '27 is a building and you get the full run rate benefit of these activities in '28.
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Q4 FY2025 Earnings Call — FY2025 / Q4 FY2025
The annual call: the FY2026 guidance bridge, the deepest walk-through of the SNAP opportunity, and the M&A criteria in management's own words. · Open the full transcript →
Over half of revenue sits on performance-based contracts — the disclosure management treats as its differentiator.
Bruce Caswell (President and CEO): To our knowledge, Maximus is the only public company in our sector that has formally documented its mix of contracts that are performance-based, which stands at 54.4% for fiscal year 2025. We believe this distinction reinforces our leadership in driving accountable and measurable results.
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Why a book-to-bill below 1.0 is not the signal it looks like in a business with long, large contracts.
Bruce Caswell (President and CEO): As a reminder, we continue to view book-to-bill as a relevant forward indicator to pipeline conversion over the broader horizon, but not the sole determinant of the business' ability to grow organically. Also, in periods of lower than normal rebid activity, as we've experienced recently, the TTM book-to bill is expected to be below 1.0. Then in periods of greater rebid activity and given our larger contract lengths and values, the metric tends to show outsized performance.
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The FY2026 revenue bridge: a 3% headwind from non-recurring surge and disaster work against 1% organic growth.
David Mutryn (CFO): With the revenue guidance reflecting how a portion of the excess volumes in fiscal 2025 are not anticipated to recur in fiscal 2026 along with seasonal natural disaster support that is inherently difficult to forecast. Those components are responsible for a year-over-year revenue headwind of approximately 3%, which we expect to partially offset with 1% of organic growth netting to a 2% year-over-year delta at the midpoint of guidance.
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Guidance philosophy on margin: keep the range intact because new work starts at lower margin and improves.
David Mutryn (CFO): Notably, the margin guidance exceeds the company's target range of 10% to 13% that I stated at this point last year. Our intent is to leave this range intact and target the high end for the periods following fiscal 2026 to account for the prospect of a higher share of new work in the business. Often new programs at Maximus begin at a lower margin and improve over time, with the profile depending on the nature and pricing structure of the work.
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The shutdown test: essential-service designation meant fewer than a dozen of ~40,000 employees were affected.
Bruce Caswell (President and CEO): We really don't anticipate any negative impacts on our delivery on our contract portfolio in Q1 FY 2026. Nearly all of our programs were deemed essential services by the government. And in some cases, some of those programs had received sufficient funding prior to the shutdown through other legislative vehicles like the IRA, for example. And my top comment there would be that this really reflects the very deliberate strategy of the company over the years to develop a very durable contract portfolio that fares well in these types of situations. So to put a little more color on it, I believe that across our base of nearly 40,000 employees, we were very fortunate to have fewer than a dozen that were impacted by funding curtailments in the portfolio.
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The M&A screen: defense and national security, bought for customer access, capability, or business systems.
Bruce Caswell (President and CEO); David Mutryn (CFO): We've been fairly explicit with our investors in the marketplace noting that our priority in the near term is growth in the U.S. Federal market. And within that, we do have a bias toward the defense and national security space. Our research suggests that the CAGR in that area over the next several years is north of about 9%. We also believe from our research that the overall services marketplace and software spend in the defense community is well in excess of $150 billion and we believe the addressable component for Maximus to be nearly $50 billion. So an excellent market and one that's growing and one candidly that we've now established, our ability to win in on an organic basis. So if we think about how we would further accelerate our growth potential as a business, there are three categories, if you will, that we've been considering. The first is access to customer relationships, because qualified past performance is just so important in this market to win in this market. And in some cases, there would be contract vehicles that we could potentially gain access to through a combination with another company. The second category is technical capabilities to augment what we are already bringing to bear in the marketplace through the mission threads and the accelerator work that I mentioned in my prepared remarks. And the third is business system capabilities. While some of those can be and certifications, if you will, while some of those can be achieved organically like the CMMC level two certification that we've mentioned, others like having a certified purchasing procurement system, the faster path to those is sometimes through a combination or an acquisition. […] But I do want to emphasize that our primary reason for M&A is to unlock organic growth potential, which we believe can deliver significant value over the longer term. So that's really what we look for is revenue synergies and organic growth acceleration.
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Q3 FY2025 Earnings Call — Q3 FY2025
The landmark call on the One Big Beautiful Bill Act — what it changes, what it could be worth, and why a conflict-free operator is advantaged. · Open the full transcript →
Medicaid work requirements arrive in 2027 — and the law bars managed care plans from doing the verification.
Bruce L. Caswell (President and CEO): Starting January 1, 2027, states will be required to verify with participants completion of 80 hours per month of qualifying activities. This is a major policy change, but not one with which we lack familiarity. During President Trump's prior administration, at the direction of one of our state clients, Maximus developed and implemented operational modifications designed to make beneficiary work requirement reporting as accessible and efficient as possible while meeting policy objectives. With this new statute in effect, we are again working with our state customers to demonstrate how to modify program operations to comply with the new law while maintaining a high level of quality of beneficiary engagement. Notably, the new law prohibits managed care plans from performing work activity verifications or handling exemption requests, which would constitute a conflict of interest. As an established conflict-free partner, Maximus has the independence necessary to support our state clients with compliance under the new legislation.
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Book-to-bill in context: on-contract growth, not awards, drove the last year of revenue and EBITDA.
Bruce L. Caswell (President and CEO): In a BPO-centric business like ours, with average contract length and values at the higher end of the industry, the TTM book-to-bill metric is naturally sensitive to rebid timing. […] As such, we view book-to-bill as only one measure of future growth. To illustrate, our book-to-bill at the end of the third quarter of fiscal year 2024 was 0.6x. Since then, revenue has grown 4.3% and adjusted EBITDA 15%, underscoring how on-contract growth is another important source of organic growth, providing added strength and resilience to our portfolio.
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Why margin overshoots in surge quarters — incremental volume drops through on an already-built cost base.
David W. Mutryn (CFO): This quarter's adjusted EBITDA margin is noticeably above the high end of our target range. This can happen in periods where volumes are stronger than anticipated, thanks to our ability to gain operating leverage on incremental volumes. This leverage is partly the result of our intentional investments in technology, workflow optimization, and cost models.
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Management translates the legislation into a segment growth rate, and dates the contribution to FY2027.
Charles S. Strauzer (CJS Securities); Bruce L. Caswell (President and CEO): Could you start by discussing the Big Beautiful Bill and how Maximus might benefit from potential opportunities? What are the main drivers behind those opportunities? […] As we've examined market opportunities, it’s worth noting that the prospects in other program areas are actually more significant than those in the Medicaid sector. To elaborate, the One Big Beautiful Bill Act, or OBBBA, has notable implications for our U.S. Services segment, particularly within Medicaid and SNAP to start. There's a greater focus on program eligibility and work requirements, which I mentioned earlier. We believe these will positively influence U.S. Services organic growth, although we're not factoring them heavily into our fiscal year 2026 guidance at this time. We see them as contributing to growth in fiscal year 2027 due to the time needed to move from legislation to implementing regulations, which we understand won't be finalized until June 2026. States will then have until December 2026 to prepare for implementation in January 2027. Historically, we have seen the U.S. Services segment capable of low to mid-single-digit organic growth, while the federal side trends toward mid- to highsingle digits. We anticipate that the Medicaid work requirements and the need to reassess eligibility for the expansion population twice a year will provide a positive boost to the U.S. Services growth rate, potentially moving it to the mid- to high-single-digit range over time.
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The competitive moat: conflict-free status, 23 states, ~60% of Medicaid enrollees, and infrastructure the state already paid for.
Charles S. Strauzer (CJS Securities); Bruce L. Caswell (President and CEO): And just looking at your competitive advantage against potential competitors that are out there. When you think about the conflict-free nature of your business, are there many competitors that can claim the same level of conflict-free? […] We've said for many years that we've made a very deliberate decision to remain independent and conflict-free and in particular, have no direct or indirect financial relationships with payers or providers, which is very critical to the work that we do in the Medicaid space and to a certain degree as well with Medicare. It was very important to us that from a work requirement standpoint, this work needs to be done in a conflict-free manner where beneficiaries are reporting, obviously, whether they're engaged in work, but more importantly, whether they may have a qualifying condition that could exempt them from those requirements. As I noted, that then becomes really off limits in terms of managed care plan engagement with beneficiaries. That's an important element of the law that's been passed that I think is only now becoming recognized within the state community, and we're helping to ensure that that's the case. In terms of other companies in a similar position, we've noted smaller privately held companies that have similar characteristics. But I would just say size matters in this market, and we have an established presence as the Medicaid managed care enrollment broker in about 23 states presently. We probably serve roughly 60% of the individuals nationally in the Medicaid program. As evidence in the results this quarter, scale is everything in this area of the business. We think that the invested infrastructure that's been bought and paid for by government can be easily modified at an incremental expense and not a massive new cost of investment, which puts Maximus in a great position to help address these opportunities and creates a bit of a competitive barrier.
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Q2 FY2025 Earnings Call — Q2 FY2025
The call where the DOGE shock was actually sized — a $4 million revenue impact on a $5 billion base — and the pricing-concession risk was named. · Open the full transcript →
Two concrete AI deployments and what they bought: backlog cleared, temporary labour cut, staff shifted to QA.
Bruce L. Caswell (President and CEO): First, on our federal No Surprises Act contract, where we provide arbitration services to resolve out-ofnetwork payment disputes between insurance providers and care facilities, we recently implemented an AI solution that is designed to streamline the independent dispute resolution process. This greatly enhanced process efficiency, cutting down on manual effort and boosting throughput. This automation helped clear a backlog of disputes, ensured SLA targets were met, reduced temporary labor costs, provided more meaningful work for our employees, and supported significant growth in project volumes. Secondly, working with the Department of Veterans Affairs, or VA, we've invested significantly to accelerate case preparation on our MDE contract. In the past, organizing and categorizing the information in medical records was a labor-intensive and highly repetitive process, with case files averaging between 5,500 pages. Given the importance of this program to the VA and our commitment to provide timely service to our nation's veterans, there was an urgent need for investment in automation. By leveraging tools such as AWS, GovCloud, and Amazon Textract, Maximus developed a proprietary AI and machine learning-powered records processing system. Since implementation, we have reduced the time required for manual case preparation, enabling us to take on greater volumes in the wake of the PACT Act. This solution has also enabled us to shift labor to higher-value work, such as quality assurance, contributing to the VA's objective of faster claim resolution for our deserving veterans.
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The federal cost-cutting shock, quantified: roughly $4 million of FY2025 revenue, with pricing concessions still live.
Bruce L. Caswell (President and CEO): The impact of DOGE decisions on the business to date has been limited to a handful of small contracts where budget or scope has now been modified, some of which were already scheduled to end this fiscal year. More specifically, to date, these actions are estimated to total about $4 million in FY 2025 revenue, a de minimis figure on our base of $5 billion plus of revenue. That said, the environment in which we are operating continues to evolve, and we are maintaining a balanced stance of both supporting our customers in response to inquiries as well as leaning into opportunities to shape the future of certain programs. As an example, like others in our sector, we have fielded requests for pricing concessions on certain contracts, which leads to a process of mutual negotiation in due course. We recognize that this is an ongoing process, which may lead to further requests and reflects the systematic review of government spending that has been a communicated priority of the administration.
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"Flexibility to contract" — the merit-system certification that lets states outsource program administration.
Bruce L. Caswell (President and CEO): Recently, guidance was issued to reaffirm states' authority to use private sector partners that meet merit system principles. This framework, administered by the Office of Personnel Management, or OPM, is fundamental to the agency's mandate to ensure transparency, fairness, and merit-based management of employees across the public and private sectors. The challenge for states is that managing growing complex populations often exceeds the realistic constraints of the government workforce, leading to reduced service quality and a poor citizen experience. For many states, scaling up a permanent workforce is neither a practical nor cost-effective solution. Maximus was the first organization in our sector to certify that its systems of personnel management meet the high standards government demands of its own workforce, fully complying with government merit system principles.
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Why Medicaid cuts need not be a revenue headwind — activity, not headcount, drives the contracts.
Bruce L. Caswell (President and CEO): As discussed in February, changes that require customer engagement, such as verifying eligibility, typically increase our activity volume, which is our primary contracting model for state Medicaid programs. Therefore, a reduction in Medicaid recipients may not necessarily decrease consumer engagement, especially if eligibility verification or activity reporting requirements become more frequent than today. Additionally, in many of our largest states, we also manage state-based exchanges where customers can enroll if they are no longer eligible for Medicaid. This helps maintain our ongoing engagement with those consumers.
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Guidance philosophy under uncertainty: bank the beat, hold the back half, and build in room for downside.
Charlie Strauzer (CJS Securities); David Mutryn (CFO): It looks like the raise is basically encompassing the amount of the beat in the quarter, kind of leaving the back half of the year largely unchanged. How should we think about that and also the weighting between Q3 and Q4? […] As I said in our prepared remarks, our intent with the guidance range was to reflect the Q2 overperformance, as you said, and then effectively maintain guidance for Q3 and Q4. So that does result in a natural step down from the exceptional Q2 performance. As always, we assess the risks and the opportunities as we see them today and as you can imagine, the range of outcomes is a bit wider than typical for us at this point of the year. And our intent with guidance is to provide a range that we have a high probability of delivering. So said differently, in a normal environment, we may have raised the guidance a bit more, but in this environment of both risk and opportunities, we felt it prudent to hold the remainder of the year guidance. So just a few more points I'll make to be clear about what our guidance assumes. First, a natural step down from Q2 to Q3 that we do have visibility into, and that would be some moderation to clinical volumes, as I said in my prepared remarks. Also, less seasonal work, such as disaster response support that we provide to FEMA, and in some cases, ramping up of costs on certain contracts. Second, a reminder that we have no reliance on new work contributing to the fiscal year, which we had also derisked in our prior guidance. And that's despite our continued optimism on the new business front, which includes, of course, opportunities that may arise from emerging customer priorities. And then last, by holding it flat, we've also allowed for some level of uncertainty to be accommodated. Related to headwinds that we don't have visibility to, may potentially arise from the macro environment. So we're deliberately taking a cautious approach that can accommodate some downside by design.
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Q4 FY2024 Earnings Call — FY2024 / Q4 FY2024
The pre-transition baseline: how the portfolio is built to survive administration change, how book-to-bill really works, and where the 10–13% margin target came from. · Open the full transcript →
The structural argument: entitlement and mandatory-spending programs with bipartisan support, and a still-undigitised government.
Bruce Caswell (President and CEO): Our position as the largest partner to government in the administration of well-established entitlement and related mandatory spending programs has enabled us to deliver strong financial results with positive long-term trend lines spanning many administrations. Some of the largest mandatory spending programs we support, such as compensation and pension benefits for veterans, are perennially supported on a bipartisan basis. When we set our last strategic vision for the company, there was a deliberate focus on bipartisan priorities that are fundamental to the government's role in supporting its citizens. For example, with considerable government business still transacted on paper, the need for citizen services digitally enabled is undisputed. To date, only two percent of federal government forms have been digitized.
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Book-to-bill decoded: rebid timing, not demand, is what pushes the ratio below 1.0.
Bruce Caswell (President and CEO): For context, about half of our awards were new work, so only 0.2 times came from rebids. Despite a historically consistent rebid win rate of about ninety percent. If rebids were evenly distributed, a typical year would have nearly 1.0 times coming from rebids alone.
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The CMS contact-center recompete: Maximus took its own customer to the Court of Federal Claims over the solicitation terms.
Bruce Caswell (President and CEO): As a reminder, the increased pipeline is largely driven by the CMS contact center operations or CCO contract, valued at $6.6 billion. Our commitment to challenging the basis for and legality of the CCO solicitation remains unchanged. Last month, after receiving a partially sustained ruling from our GAO protest, we filed suit in the US Court of Federal Claims or COC. Concurrently, we sought and received a stay of award from the government until March 15th, 2025, to facilitate judicial review and allow the court to render its decision […] We remain steadfast in our view that the labor harmony agreement requirements in the solicitation are unnecessary, inappropriate, and illegal.
p. 3 · Read in context →
How guidance is de-risked: only ~2% of revenue from work not yet won, versus a normal 5%.
David Mutryn (CFO): However, given the risk of procurement delays relating to the transition of the new administration, we have been prudent in derisking our revenue guidance which now includes only about two percent of revenue from new work not yet won. Typically, that figure would be five percent or a bit more. This small amount of new work that we have included assumes partial contributions in fiscal 2025 but would drive more significant contributions to fiscal 2026 and beyond.
p. 6 · Read in context →
Where the 10–13% adjusted EBITDA target range was set — the benchmark later raised to 12–15%.
David Mutryn (CFO): Looking further ahead and following the transition to adjusted EBITDA guidance, we wanted to provide a current view on our near-term margin expectation. We believe a reasonable range in the near term is 10 percent to 13 percent adjusted EBITDA margin. With our guidance for fiscal year 2025 of approximately 11 percent, this range demonstrates our view that there are further opportunities for margin enhancement in the years following fiscal 2025. We also have some contingency built into the low end of the range to account for uncertainty that is inherent looking further into the future.
p. 7 · Read in context →
More calls
Q1 FY2025 Earnings Call — Q1 FY2025 · 8 pages · The first read on the new administration and DOGE, plus the completed exit from Australia and South Korea that reshaped the Outside the U.S. segment. · Open →
Q3 FY2024 Earnings Call — Q3 FY2024 · 10 pages · Management pre-announces the normalisation: more than half of the FY2024 guidance raise is flagged as volume that will not recur. · Open →
Q2 FY2024 Earnings Call — Q2 FY2024 · 9 pages · Peak Medicaid-unwinding economics — both domestic segments at the top of their long-term margin targets, with the Maximus Forward build-out underway. · Open →
Q1 FY2024 Earnings Call — Q1 FY2024 · 10 pages · The mechanics of Medicaid redeterminations while they were running, and the first framing of Maximus Forward as a reinvestment programme. · Open →
Q4 FY2023 Earnings Call — FY2023 / Q4 FY2023 · 13 pages · The trough year explained: the public-health emergency, deferred student loan payments, the $22 million cyber incident, and the start of the international reshaping. · Open →
Q3 FY2023 Earnings Call — Q3 FY2023 · 10 pages · The quarter redeterminations restarted and the cybersecurity incident was disclosed — the baseline against which every later 'excess volume' comparison is made. · Open →