Maximus Reports Fiscal Year 2026 Second Quarter Results
Maximus (NYSE: MMS), a leading provider of government services, reported financial results for the three and six months ended March 31, 2026. Highlights for the second quarter of fiscal year 2026 incl...
Raises earnings outlook and announces $400 million share repurchase program
TYSONS, Va.: Maximus (NYSE: MMS), a leading provider of government services, reported financial results for the three and six months ended March 31, 2026.
Highlights for the second quarter of fiscal year 2026 include:
- Revenue of $1.31 billion was consistent with our full fiscal year 2026 expectations, and compares to $1.36 billion for the prior year period.
- Diluted earnings per share were $1.80 and adjusted diluted earnings per share were $2.07, compared to $1.69 and $2.01, respectively, for the prior year period.
- We are raising our adjusted EBITDA margin expectation by 20 basis points to approximately 14.2% and raising our adjusted diluted earnings per share expectation by $0.20 to range between $8.25 and $8.55 per share for the full fiscal year 2026. We are reiterating previous fiscal year 2026 revenue and free cash flow guidance.
- Repurchases of Maximus common stock in the quarter totaled 1.4 million shares for $111 million, with an additional 0.6 million shares totaling $39.9 million repurchased through May 1, 2026.
- The Board of Directors authorized a refresh to the repurchase program for Maximus common stock up to an aggregate of $400 million.
- A quarterly cash dividend of $0.33 per share is payable on June 1, 2026, to shareholders of record on May 15, 2026.
"Our second consecutive earnings guidance increase reflects growing confidence in our ability to leverage in-house AI and other technology capabilities to improve efficiency and support margin expansion. We continue to execute our capital deployment strategy, as highlighted by the refresh of our share repurchase authorization up to an aggregate of $400 million," said Bruce Caswell, President and Chief Executive Officer.
Caswell continued, "Our state customers are gaining clarity and beginning to take action to help address challenges with Medicaid community engagement, SNAP administration, and unemployment insurance support services. We’re pleased to be playing a role in devising these solutions and expect momentum to continue to build."
Second Quarter Results
Revenue for the second quarter of fiscal year 2026 was $1.31 billion and on track with full fiscal year 2026 expectations. Prior year period revenue was $1.36 billion and benefited from natural disaster support work and temporary clinical volume surges in both domestic segments.
For the second quarter of fiscal year 2026, operating margin was 11.4% and adjusted EBITDA margin was 14.4%. This compares to margins of 11.2% and 13.7%, respectively, for the prior year period. Diluted earnings per share were $1.80, and adjusted diluted earnings per share were $2.07. This compares to $1.69 and $2.01, respectively, for the prior year period.
Consolidated earnings improved over the prior year period primarily due to efficiency gains through automation, including AI-enabled tools, across multiple program areas. The second quarter of fiscal year 2026 included a non-cash impairment charge that decreased the U.S. Services segment's operating income by $6.9 million, or $0.09 per share, and a discrete research & development tax benefit that reduced the income tax expense by $4.2 million, which equated to a $0.08 per share benefit. Both non-recurring items were excluded from adjusted EBITDA and had offsetting impacts on adjusted diluted earnings per share.
U.S. Federal Services Segment
U.S. Federal Services Segment revenue for the second quarter of fiscal year 2026 was $753 million. Prior year period revenue was $778 million and benefited from natural disaster support. We anticipated the absence of this work in our fiscal year 2026 guidance, and, excluding this support work, segment organic revenue growth was 1.5% over the prior year period.
The segment operating margin for the second quarter of fiscal year 2026 was 17.6%, compared to 15.3% reported for the prior year period. Technology initiatives, including automation that enables greater volume processing without a commensurate increase in labor costs, were the primary driver of the improved margin and the increase to the segment’s full fiscal year margin expectation. The full fiscal year 2026 operating margin for the U.S. Federal Services Segment is expected to be approximately 17.5%.
U.S. Services Segment
U.S. Services Segment revenue for the second quarter of fiscal year 2026 was $416 million and on track to improve segment revenue growth anticipated by the end of the fiscal year. The prior year period segment revenue was $442 million.
The segment operating margin for the second quarter of fiscal year 2026 was 9.3%, or 10.9% excluding the $6.9 million non-cash charge related to an asset impairment. The prior year period segment operating margin was 12.2%. The full fiscal year 2026 operating margin for the U.S. Services Segment is expected to be approximately 10.0% as a result of the non-cash charge this quarter.
Outside the U.S. Segment
Outside the U.S. Segment revenue for the second quarter of fiscal year 2026 was $137 million, compared to $142 million in the prior year period. Following previous reshaping actions, the segment now comprises the United Kingdom, Canada, and the Gulf Region, all of which are tracking opportunities that we believe have the potential to drive future growth.
The segment realized an operating loss of $3.1 million for the second quarter of fiscal year 2026, compared to an operating profit of $4.8 million in the prior year period. We continue to anticipate future margin improvement over time in this segment, which is now expected to break even on a full fiscal year 2026 basis.
Sales and Pipeline
Year-to-date signed contract awards at March 31, 2026, totaled $913 million, and contracts pending (awarded but unsigned) totaled $322 million.
The sales pipeline at March 31, 2026, totaled $56.8 billion, comprised of approximately $4.55 billion in proposals pending, $1.48 billion in proposals in preparation, and $50.7 billion in opportunities we are tracking. New work opportunities represent approximately 59% of the total sales pipeline, and U.S. Federal Services Segment opportunities represent approximately 58% of the total sales pipeline.
Balance Sheet and Cash Flows
At March 31, 2026, unrestricted cash and cash equivalents totaled $157 million, and gross debt was $1.55 billion. The ratio of debt, net of allowed cash, to consolidated EBITDA for the quarter ended March 31, 2026, as calculated on a trailing twelve-month basis in accordance with our credit agreement, was 1.8x. This is unchanged from the ratio at December 31, 2025, and remains below our target net leverage ratio of 2x to 3x.
For the second quarter of fiscal year 2026, cash provided by operating activities totaled $190 million, and free cash flow was $179 million. DSO were 78 days at March 31, 2026, and unchanged from the DSO at December 31, 2025. We expect collections to increase in the second half of fiscal year 2026, which supports our full-year free cash flow guidance.
During the second quarter of fiscal year 2026, we purchased approximately 1.4 million shares of Maximus common stock totaling $111 million. Subsequent to March 31, 2026, and through May 1, 2026, we purchased an additional 0.6 million shares totaling $39.9 million. The Board of Directors authorized a refresh to the repurchase program for Maximus common stock up to an aggregate of $400 million, which becomes effective May 11, 2026.
On April 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 June 1, 2026, to shareholders of record on May 15, 2026.
Fiscal Year 2026 Earnings Guidance Raise
Maximus is raising fiscal year 2026 earnings guidance and reiterating revenue and free cash flow guidance.
The full year adjusted EBITDA margin guidance improves by 20 basis points to approximately 14.2%, as compared to prior guidance. Guidance for adjusted diluted earnings per share increases by $0.20 and is now expected to range between $8.25 and $8.55 per share for fiscal year 2026.
Revenue guidance is maintained between $5.2 billion and $5.35 billion, and free cash flow guidance is maintained between $450 million and $500 million for fiscal year 2026. Interest expense is estimated to be $84 million, and the full fiscal year tax rate is expected to range between 24.0% and 25.0% for fiscal year 2026.
Conference Call and Webcast Information
Maximus will host a conference call this morning, May 7, 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 organic growth, 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 | $ | 394 |
|
| $ | 411 |
|
Add: Interest expense / Other (income) |
| 84 |
|
|
| 84 |
|
Add: Provision for income taxes |
| 128 |
|
|
| 133 |
|
Add: Amortization of intangible assets |
| 81 |
|
|
| 81 |
|
Add: Depreciation & amortization of property, equipment and capitalized software |
| 54 |
|
|
| 54 |
|
Add: Capitalized software impairment charges |
| 7 |
|
|
| 7 |
|
Add: Divestiture-related gains |
| (9 | ) |
|
| (9 | ) |
Adjusted EBITDA | $ | 739 |
|
| $ | 761 |
|
Revenue | $ | 5,200 |
|
| $ | 5,350 |
|
|
|
|
| ||||
Net income margin |
| 7.6 | % |
|
| 7.7 | % |
Adjusted EBITDA margin |
| 14.2 | % |
|
| 14.2 | % |
|
|
|
| ||||
Diluted EPS | $ | 7.27 |
|
| $ | 7.57 |
|
Add: effect of amortization of intangible assets on diluted EPS |
| 1.10 |
|
|
| 1.10 |
|
Add: effect of divestiture-related gains on diluted EPS |
| (0.12 | ) |
|
| (0.12 | ) |
Adjusted diluted EPS | $ | 8.25 |
|
| $ | 8.55 |
|
|
|
|
| ||||
Cash flows from operating activities | $ | 485 |
|
| $ | 535 |
|
Remove: purchases of property and equipment and capitalized software costs |
| (35 | ) |
|
| (35 | ) |
Free cash flow | $ | 450 |
|
| $ | 500 |
|
Maximus, Inc. | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(Unaudited) | |||||||||||||||
| For the Three Months Ended |
| For the Six Months Ended | ||||||||||||
| March 31, 2026 |
| March 31, 2025 |
| March 31, 2026 |
| March 31, 2025 | ||||||||
| (in thousands, except per share amounts) | ||||||||||||||
Revenue | $ | 1,305,967 |
|
| $ | 1,361,786 |
|
| $ | 2,651,013 |
|
| $ | 2,764,461 |
|
Cost of revenue |
| 963,703 |
|
|
| 1,022,965 |
|
|
| 1,990,079 |
|
|
| 2,124,083 |
|
Gross profit |
| 342,264 |
|
|
| 338,821 |
|
|
| 660,934 |
|
|
| 640,378 |
|
Selling, general, and administrative expenses |
| 173,479 |
|
|
| 162,857 |
|
|
| 325,639 |
|
|
| 354,592 |
|
Amortization of intangible assets |
| 20,298 |
|
|
| 22,996 |
|
|
| 40,598 |
|
|
| 46,031 |
|
Operating income |
| 148,487 |
|
|
| 152,968 |
|
|
| 294,697 |
|
|
| 239,755 |
|
Interest expense |
| 22,111 |
|
|
| 21,469 |
|
|
| 42,927 |
|
|
| 38,991 |
|
Other (income)/expense, net |
| (158 | ) |
|
| (963 | ) |
|
| (1,031 | ) |
|
| (651 | ) |
Income before income taxes |
| 126,534 |
|
|
| 132,462 |
|
|
| 252,801 |
|
|
| 201,415 |
|
Provision for income taxes |
| 28,471 |
|
|
| 35,893 |
|
|
| 60,795 |
|
|
| 63,650 |
|
Net income | $ | 98,063 |
|
| $ | 96,569 |
|
| $ | 192,006 |
|
| $ | 137,765 |
|
|
|
|
|
|
|
|
| ||||||||
Earnings per share: |
|
|
|
|
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