Maximus, Inc.

What they do

Maximus translates public policy into operating models for government agencies, running large health insurance eligibility and enrollment programs, clinical services such as assessments, appeals and independent medical reviews, and technology services. The company operates through three segments: U.S. Federal Services, U.S. Services, and Outside the U.S. It serves more than 100 million American citizens as well as citizens in the U.K., Canada and the Middle East.

Revenue drivers

• U.S. Federal Services — Generated 56% of total revenue in fiscal 2025; delivers program operations and management, clinical services and advanced technology solutions to U.S. federal agencies, including a CMS contract for eligibility and enrollment work. Third quarter fiscal 2026 revenue was $721 million.
• U.S. Services — Serves state and local government agencies; third quarter fiscal 2026 revenue was $418 million. Segment operating margin was 10.8% for the quarter.
• Outside the U.S. — Delivers services to governments in the U.K., Canada and the Middle East; third quarter fiscal 2026 revenue was $140 million, down from $147 million a year earlier.

Recent performance

Third quarter fiscal 2026 revenue was $1.28 billion, down 5.1% from $1.35 billion a year earlier, which the company said reflected lower natural disaster support activity and temporary clinical volume surges that did not recur. Diluted EPS was $1.95 and adjusted diluted EPS was $2.22, compared with $1.86 and $2.16 in the prior year period. Operating margin was 12.6% versus 12.3%, and adjusted EBITDA margin was 15.0% versus 14.7%. Nine-month revenue was $3.93 billion with diluted EPS of $5.45. The U.S. Federal Services segment margin improved to 18.6% from 18.1%, while the U.S. Services segment margin was 10.8%.

Strategy

Maximus is focused on tech-enabled customer service, including its FedRAMP-secure Total Experience Management platform, and on expanding clinical capabilities with machine learning and AI to handle rising health service demand. It is also pursuing technology modernization for civilian, defense, national security and health agencies to grow its federal footprint. The company says it continues to optimize processes, simplify its structure, and invest in attracting and retaining employees. Management cited encouraging demand signals, increased adoption of AI-enabled solutions, growing interest in SNAP-related offerings, and a substantial opportunity set in defense and national security markets.

Risks

• Concentration in government contracts — In fiscal 2025, approximately 55% of total revenue came from the U.S. federal government, about 33% from state and local agencies, roughly 60% from the ten largest contracts, and about one-fifth from a single federal agency.
• Contract termination or reduction — Termination or reduction of work on any significant contract could materially reduce revenue and net income and potentially trigger impairment charges on tangible and intangible assets, including goodwill.
• Limited customer base — The government services market is served by a relatively small number of agencies, limiting potential customers and making diversification difficult.
• Customer-directed contractual changes — A temporary customer-directed contractual modification on a major federal program, effective July 1 through December 31, 2026, led the company to lower its fiscal 2026 adjusted EPS guidance to a range of $7.90 to $8.20.

Outlook

Management reiterated fiscal year 2026 revenue guidance of $5.2 billion to $5.35 billion. Adjusted diluted EPS guidance was updated to $7.90 to $8.20 per share, and adjusted EBITDA margin is expected to be approximately 13.7%, reflecting the temporary federal contractual modification. Free cash flow guidance is now $425 million to $475 million. The U.S. Federal Services full-year operating margin is expected to be 16.5% to 17.0%, and the U.S. Services full-year operating margin is expected to be 9.5% to 10.0%, with the U.S. Services segment anticipated to return to positive revenue growth by the end of the fiscal year.