Maximus, Inc. Q3 FY2025 earnings call

Bruce highlighted a record-breaking quarter with adjusted diluted earnings per share at $2.16 (24% YOY growth), 15% growth in adjusted EBITDA, and Q3 revenue of $1.35 billion (4.3% organic growth YOY). He discussed the impact of legislation on Medicaid and SNAP, Maximus' win at the Department of Defense (a $77 million contract), achieving CMMC Level 2 certification, and the company's 50 years of service. David discussed segment results, cash flow items (DSO, payment delays), updated guidance for FY 2025, and early thoughts on FY 2026 with uncertainties around volumes and budget constraints.

For the third quarter of fiscal 2025, the U.S. Federal Services segment had revenue increase 11.4% to $761 million, with organic growth and an operating income margin of 18.1% in the third quarter. The U.S. Services segment saw revenue decrease slightly to $440 million compared to the prior year period, with an operating income margin of 10.2%. The outside the U.S. segment had revenue decrease to $147 million, with organic growth of 7.3% and an operating income margin of 4.0%.

For fiscal year 2025, revenue is forecasted to be in the range of $5.375 billion to $5.475 billion, adjusted EPS is between $7.35 and $7.55, and free cash flow is between $370 million and $390 million. Early thoughts on fiscal year 2026 include uncertainties around volume-based contributions and budget constraints, but potential opportunities from proposals and the One Big Beautiful Bill.

Payment delays leading to higher DSO, budget constraints affecting federal and state agencies, and the uncertain timing of opportunities from recent legislation.

Q: Talk about the Big Beautiful Bill and Maximus' potential benefits, competitive advantage, and DoD win.

A: Bruce discussed opportunities in Medicaid, SNAP, and other program areas, Maximus' conflict-free nature as a competitive advantage, and the DoD win as evidence of expanding into adjacent agencies.

Q: Discuss VA work, volumes, and margins.

A: Bruce and David talked about technology investments in VA work, volume moderation expectations, and margin dynamics related to VA volumes and depreciation/amortization.