Maximus Reports Fiscal Year 2025 Third Quarter Results

Third Consecutive Raise to FY25 Guidance

Maximus (NYSE:MMS), a leading provider of government services, reported financial results for the three and nine months ending June 30, 2025.

Highlights for the third quarter of fiscal year 2025 include:

• Revenue increased 2.5% to $1.35 billion, compared to $1.31 billion for the prior year period. Organic growth was 4.3% driven primarily by strong performance in the U.S. Federal Services Segment.
• Diluted earnings per share were $1.86 and adjusted diluted earnings per share were $2.16, compared to $1.46 and $1.74, 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 $5.375 billion and $5.475 billion. Adjusted EBITDA margin is expected to be approximately 13% and adjusted diluted earnings per share are expected to range between $7.35 and $7.55 per share for the full fiscal year 2025.
• A quarterly cash dividend of $0.30 per share is payable on August 31, 2025, to shareholders of record on August 15, 2025.

"Our third quarter results reflect once again the resilience of our business model that is underpinned by consistent delivery at scale of critical government services," said Bruce Caswell, President and Chief Executive Officer. "We are grateful to play a central role in supporting our customers' missions by delivering essential services efficiently and accountably."

Caswell added, "Over the 50 years that Maximus has served as a trusted and impartial delivery partner for government, we've consistently demonstrated adaptability as legislation and regulatory changes lead to new program imperatives and advanced technologies like AI reshape citizen services."

Third Quarter Results

Revenue for the third quarter of fiscal year 2025 increased 2.5% to $1.35 billion, compared to $1.31 billion for the prior year period. Organic growth was 4.3% primarily due to the U.S. Federal Services Segment and, to a lesser degree, contributions from the Outside the U.S. Segment. The U.S. Services Segment delivered expected results following the prior year period's over-performance from Medicaid-related activities.

For the third quarter of fiscal year 2025, operating margin was 12.3% and the adjusted EBITDA margin was 14.7%. This compares to margins of 10.8% and 13.1%, respectively, for the prior year period. Diluted earnings per share were $1.86 and adjusted diluted earnings per share were $2.16. This compares to $1.46 and $1.74, respectively, for the prior year period.

U.S. Federal Services Segment

U.S. Federal Services Segment revenue for the third quarter of fiscal year 2025 increased 11.4% to $761.2 million, compared to $683.3 million reported for the prior year period. All growth was organic and driven primarily by a trend across this fiscal year of elevated volumes on programs in the clinical portfolio.

The segment operating margin for the third quarter of fiscal year 2025 was 18.1%, compared to 15.5% reported for the prior year period. Processing of elevated volume on behalf of our customers across several different program areas provided additional benefit to this quarter's margin. The full-year fiscal 2025 operating margin for the U.S. Federal Services Segment is now expected to be approximately 15%.

U.S. Services Segment

U.S. Services Segment revenue for the third quarter of fiscal year 2025 decreased 6.9% to $439.8 million, compared to $472.3 million reported in the prior year period. Similar to the first two quarters 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 third quarter of fiscal year 2025 was 10.2%, compared to 13.0% reported for the prior year period. The higher margin in the prior year period was a direct benefit of the excess volumes that were temporary. The full-year fiscal 2025 operating margin for the U.S. Services Segment is now expected to be approximately 10.5%.

Outside the U.S. Segment

Outside the U.S. Segment revenue for the third quarter of fiscal year 2025 decreased to $147.4 million, compared to $159.3 million reported in the prior year period. The revenue reduction was due to the divestitures of multiple employment services businesses in prior periods, and partially offset by positive organic growth of 7.3%.

The segment operating margin for the third quarter of fiscal year 2025 was 4.0%, compared to an operating loss of 0.9% in the prior year period. A trend of improved profitability for the segment across this fiscal year continues following the divestitures of multiple employment services businesses.

Sales and Pipeline

Year-to-date signed contract awards at June 30, 2025, totaled $3.37 billion, and contracts pending (awarded but unsigned) totaled $1.44 billion. The book-to-bill ratio at June 30, 2025, was 0.8x as calculated on a trailing twelve-month basis.

The sales pipeline at June 30, 2025, totaled $44.7 billion, comprised of approximately $3.05 billion in proposals pending, $1.20 billion in proposals in preparation, and $40.4 billion in opportunities we are tracking. New work opportunities represent approximately 63% of the total sales pipeline.

Balance Sheet and Cash Flows

At June 30, 2025, unrestricted cash and cash equivalents totaled $59.8 million, and gross debt was $1.67 billion. The ratio of debt, net of allowed cash, to consolidated EBITDA for the quarter ended June 30, 2025, as calculated on a trailing twelve-month basis in accordance with our credit agreement, was 2.1x compared to 1.9x at March 31, 2025. The current debt ratio stands at the low end of our 2x to 3x target net leverage range and recent quarters of increased borrowings are due to a combination of Maximus common stock purchases and temporary working capital needs.

For the third quarter of fiscal year 2025, cash used in operating activities totaled $182.7 million and free cash flow was an outflow of $198.2 million. Operating cash flows were impacted primarily by payment delays on two large programs as contemplated in prior guidance in which Days Sales Outstanding (DSO) were estimated to peak in this quarter-ended June 30, 2025. DSO were 96 days at June 30, 2025, compared with 73 days at March 31, 2025. Subsequent to June 30, 2025, collections have improved substantially and are anticipated to continue through the end of this fiscal year. As a result, fiscal year 2025 guidance for free cash flow is increasing.

The current Board of Directors authorization announced in December 2024 has $65.8 million available for future purchases of Maximus common stock.

On July 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 August 31, 2025, to shareholders of record on August 15, 2025.

Raising Fiscal Year 2025 Guidance

Maximus is raising revenue, earnings, and free cash flow guidance for fiscal year 2025. Revenue guidance is increasing by $100 million at the midpoint and is now expected to range between $5.375 billion and $5.475 billion.

The full year adjusted EBITDA margin guidance, which excludes divestiture-related charges, improves by 130 basis points to approximately 13%, compared to prior guidance. Guidance for adjusted diluted earnings per share, which excludes expense for amortization of intangible assets and divestiture-related charges, increases by $1.00 at the midpoint and is now expected to range between $7.35 and $7.55 per share for fiscal year 2025.

Free cash flow guidance increases by $10 million at the midpoint and is now expected to range between $370 million and $390 million for fiscal year 2025. Interest expense is now estimated to be $81 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, August 7, 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, as supplemented by the risk factor set forth in Part II, Item 1A "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, which was filed with the SEC on May 8, 2025. Our SEC reports are accessible on maximus.com.

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James Francis, VP - IR

Jessica Batt, VP - IR

[email protected]