On August 7, 2024, Maximus Inc (MMS, Financial) released its 8-K filing for the third quarter of fiscal year 2024, showcasing robust financial performance that exceeded analyst estimates. Maximus Inc is an operator of government health and human services programs in the United States, United Kingdom, Canada, Australia, and Saudi Arabia. The company offers business solutions to improve the cost-effectiveness, efficiency, and quality of government-sponsored benefit programs, such as Medicaid, Medicare, Health Insurance BC, and child support programs. Most of its revenue is derived from long-term contractual arrangements with governments around the world, with the U.S. Federal Services segment being the primary revenue driver.
Performance Overview
Maximus Inc (MMS, Financial) reported a 10.6% increase in revenue to $1.31 billion for the third quarter, compared to $1.19 billion in the prior year period. This growth was driven by all three segments, with the U.S. Federal Services Segment being the primary contributor. The company's diluted earnings per share (EPS) were $1.46, and adjusted diluted EPS were $1.74, significantly higher than the prior year's $0.50 and $0.78, respectively.
Segment Analysis
The U.S. Federal Services Segment saw a 17.0% increase in revenue to $683.3 million, driven by volume growth on clinical programs. The segment's operating margin improved to 15.5% from 12.7% in the prior year period. The U.S. Services Segment reported a 5.2% increase in revenue to $472.3 million, with an operating margin of 13.0%, up from 10.5% in the previous year. The Outside the U.S. Segment experienced a modest 2.3% revenue increase to $159.3 million, with an operating loss of $1.4 million, an improvement from the $15.2 million loss in the prior year period.
Financial Achievements
Maximus Inc (MMS, Financial) achieved significant financial milestones, including an improved net debt to EBITDA ratio of 1.5 times, compared to 1.7 times in the prior quarter. The company declared a quarterly cash dividend of $0.30 per share, payable on August 31, 2024. Additionally, the company repurchased approximately 611,000 shares, totaling $50.6 million, at an average price of $82.79 per share during the third quarter.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $1.31 billion | $1.19 billion |
| Gross Profit | $332.3 million | $264.4 million |
| Operating Income | $141.7 million | $58.4 million |
| Net Income | $89.8 million | $30.9 million |
| Diluted EPS | $1.46 | $0.50 |
Balance Sheet and Cash Flow
As of June 30, 2024, Maximus Inc (MMS, Financial) had cash and cash equivalents totaling $103 million and gross debt of $1.16 billion. The company generated $199 million in cash from operating activities and $165 million in free cash flow for the third quarter. The Days Sales Outstanding (DSO) improved to 59 days from 62 days in the previous quarter.
Guidance and Outlook
Maximus Inc (MMS, Financial) raised its fiscal year 2024 guidance, now expecting revenue to range between $5.25 billion and $5.35 billion, an increase of $100 million from the midpoint of prior guidance. Adjusted operating income is projected to be between $570 million and $590 million, and adjusted diluted EPS is expected to range between $6.00 and $6.20 per share. Free cash flow is anticipated to be between $350 million and $380 million.
Our third quarter demonstrates our ability to capitalize on favorable tailwinds that have persisted across this year, where we accomplished high quality and efficient delivery, at scale," said Bruce Caswell, President and Chief Executive Officer. "I want to acknowledge and thank all our teams for their respective roles in delivering exceptional performance this quarter, enabling us to solidly beat expectations and continue the momentum of the business this year."
For more detailed information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Maximus Inc for further details.
