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NEW YORK - On Thursday, Maximus, Inc. (NYSE:MMS) reported third-quarter fiscal 2025 earnings that significantly exceeded analyst expectations, driven by strong performance in its U.S. Federal Services segment.
The government services provider’s shares climbed 3.51% in pre-market trading after the release.
The company reported adjusted earnings per share of $2.16 for the quarter ended June 30, beating the analyst consensus of $1.56 by 38%. Revenue came in at $1.35 billion, surpassing estimates of $1.29 billion and representing a 2.5% increase from the same period last year, or 4.3% on an organic basis.
Maximus also raised its full-year guidance, now expecting fiscal 2025 adjusted earnings per share of $7.35-$7.55, up from its previous forecast of $6.30-$6.60 and above the analyst consensus of $6.62. Revenue guidance was increased to $5.37-5.47 billion from $5.25-5.4 billion.
"We have the ability to gain operating leverage when program volumes are higher than anticipated, which is due, in part, to intentional investments in technology, workflow optimization, and cost models," said David Mutryn, Chief Financial Officer of Maximus.
The U.S. Federal Services segment was the standout performer, with revenue increasing 11.4% YoY to $761.2 million and operating income surging 29.9% to $137.9 million. The segment’s operating margin expanded to 18.1% from 15.5% a year earlier.
The U.S. Services segment saw revenue decline 6.9% to $439.8 million, primarily due to the completion of Medicaid unwinding exercises that boosted results in the prior year. Outside the U.S. segment revenue fell 7.5% to $147.4 million due to divestitures, though organic growth was positive at 7.3%.
Adjusted EBITDA margin reached 14.7%, exceeding the company’s target range of 10-13%. The company anticipates strong fourth-quarter cash flows after collecting more than $300 million related to a U.S. Federal Services program following the quarter’s end.
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