MAXIMUS, INC. (MMS): Results of Operations and Financial Condition
MAXIMUS, INC. (MMS) filed an SEC Form 8-K — Results of Operations and Financial Condition. FOR IMMEDIATE RELEASE CONTACT: James Francis, VP - IR IR@maximus.com Date: August 6, 2026 Maximus Reports Fiscal Year 2026 Third Quarter Results Strong earnings performance reflects disciplined execution (Tysons, Va. - August 6, 2026 ) - Maximus (NYSE: MMS), a leading provider of
How this was made
The 30-second read
Why it matters
The filing provides concrete updated FY2026 targets (adjusted diluted EPS, adjusted EBITDA margin, and free cash flow) and explains the change as a temporary contractual modification on a major federal program, effective July 1 through Dec 31, 2026. It also reiterates revenue guidance and discloses capital return (repurchases and a quarterly dividend).
Market read
Traders can update MMS valuation models using the updated FY2026 adjusted EPS range, adjusted EBITDA margin target, and free cash flow guidance, while monitoring the stated temporary nature of the contract modification.
What to watch
Free cash flow guidance is updated and operating cash flow was an outflow in Q3; traders may underweight liquidity/DSO dynamics versus EPS and EBITDA margin.
Maximus Reports Fiscal Year 2026 Third Quarter Results Strong earnings performance reflects disciplined execution
Earnings and operating margins improved from the prior-year period despite lower revenue, but fiscal 2026 earnings and free cash flow guidance were updated for a temporary customer-directed contractual modification on a major federal program.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $1.28 billion | – | – |
| Operating marginGAAP | 12.6% | – | – |
| Adjusted EBITDA marginnon-GAAP | 15.0% | – | – |
| Diluted earnings per shareGAAP | $1.95 | – | – |
| Adjusted diluted earnings per sharenon-GAAP | $2.22 | – | – |
| Cash used in operating activitiesGAAP | $125 million | – | – |
| Free cash flownon-GAAP | an outflow of $137 million | – | – |
| Year-to-date signed contract awards at June 30, 2026other | $1.25 billion | – | – |
| Contracts pending at June 30, 2026other | $1.35 billion | – | – |
| Sales pipeline at June 30, 2026other | $50.4 billion | – | – |
| Proposals pending at June 30, 2026other | approximately $2.86 billion | – | – |
| Proposals in preparation at June 30, 2026other | $2.42 billion | – | – |
| Opportunities being tracked at June 30, 2026other | $45.1 billion | – | – |
| New work opportunities as a percentage of total sales pipelineother | approximately 57% | – | – |
| U.S. Federal Services Segment opportunities as a percentage of total sales pipelineother | approximately 55% | – | – |
| Debt, net of allowed cash, to consolidated EBITDAother | 2.0x | – | – |
| DSO at June 30, 2026other | 98 days | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| U.S. Federal Services SegmentPrior year period revenue of $761 million benefited from elevated natural disaster response work and temporary clinical volume surges that did not recur at the same level in the current quarter. Segment operating margin was 18.6%, compared to 18.1% reported for the prior year period, with productivity improvements, technology-enabled efficiencies, and stable performance across core program areas contributing to the improvement. | $721 million | – | – |
| U.S. Services SegmentRevenue was consistent with the expectation for continued sequential improvement toward positive revenue growth anticipated by the end of the fiscal year. Prior year period segment revenue was $440 million. Segment operating margin was 10.8%, compared to 10.2% for the prior year period. | $418 million | – | – |
| Outside the U.S. SegmentPrior year period revenue was $147 million. Variances in volumes across several programs, including both clinical and employment services contracts, were primarily responsible for the year-over-year revenue change. Segment operating margin was 0.9%, compared to 4.0% reported for the prior year period. | $140 million | – | – |
fiscal year 2026 outlook
- Revenue$5.2 billion and $5.35 billion, with results anticipated toward the lower end of the range
- Tax rate24.0% and 24.5%
- NoteAdjusted EBITDA margin of approximately 13.7%
- NoteAdjusted diluted earnings per share of $7.90 and $8.20 per share
- NoteFree cash flow of $425 million and $475 million
- NoteInterest expense of $88 million
- NoteU.S. Federal Services Segment operating margin of 16.5% and 17.0%
- NoteU.S. Services Segment operating margin of 9.5% and 10.0%
- NoteOutside the U.S. Segment expected to break even
- NoteDSO to finish fiscal year 2026 below 70 days
Capital returns
- Purchased approximately 0.75 million shares of Maximus common stock totaling $50.4 million during the third quarter of fiscal year 2026.
- In May 2026, the Board of Directors authorized a refresh to the repurchase program up to an aggregate of $400 million.
- As of June 30, 2026, the entire $400 million authorization remained available for future repurchases.
- A quarterly cash dividend of $0.33 for each share of common stock outstanding is payable on August 31, 2026, to shareholders of record on August 14, 2026.
What drove it
- Consolidated earnings improved over the prior-year period primarily due, in part, to ongoing efficiency initiatives across multiple program areas, including broader deployment of automation and AI-enabled tools.
- U.S. Federal Services prior-year revenue benefited from elevated natural disaster support activity and temporary clinical volume surges.
- Management cited encouraging demand signals across its markets, increased adoption of AI-enabled solutions, growing interest in SNAP-related offerings, and opportunity in defense and national security markets.
- Productivity improvements, technology-enabled efficiencies, and stable performance across core U.S. Federal Services programs supported segment margin improvement.
Concerns
- Revenue was $1.28 billion, compared to $1.35 billion for the prior year period.
- A temporary customer-directed contractual modification on a major federal program is effective July 1, 2026, through December 31, 2026, and affects profitability expectations for the remainder of fiscal year 2026.
- Outside the U.S. Segment operating margin was 0.9%, compared to 4.0% reported for the prior year period.
- Free cash flow was an outflow of $137 million and DSO were 98 days at June 30, 2026.
What to watch
- The impact of the temporary contractual modification on U.S. Federal Services profitability through December 31, 2026.
- Revenue results within the reiterated $5.2 billion to $5.35 billion fiscal 2026 range, which management expects toward the lower end.
- Progress toward fiscal 2026 U.S. Federal Services Segment operating margin of 16.5% to 17.0%.
- U.S. Services Segment progression toward positive revenue growth anticipated by the end of the fiscal year.
- Outside the U.S. Segment's conversion of its sales pipeline and progress toward break-even for fiscal year 2026.
- DSO progress toward management's expectation to finish fiscal year 2026 below 70 days and delivery of $425 million to $475 million of free cash flow.
Balance sheet and cash flow
- Unrestricted cash and cash equivalents totaled $57 million at June 30, 2026.
- Gross debt was $1.65 billion at June 30, 2026.
- Debt, net of allowed cash, to consolidated EBITDA was 2.0x for the quarter ended June 30, 2026, compared to 1.8x at March 31, 2026.
- The target net leverage ratio is 2x to 3x.
- Cash used in operating activities totaled $125 million for the third quarter of fiscal year 2026.
- Free cash flow was an outflow of $137 million for the third quarter of fiscal year 2026.
- DSO were 98 days at June 30, 2026.
- Collections from a major federal customer accelerated during July.
Analysis
Third-quarter revenue was $1.28 billion, compared to $1.35 billion in the prior-year period. Management attributed the prior-year comparison to elevated natural disaster support activity and temporary clinical volume surges within U.S. Federal Services that did not recur at the same level. Despite the lower revenue base, diluted earnings per share were $1.95 versus $1.86, while adjusted diluted earnings per share were $2.22 versus $2.16. Operating margin rose to 12.6% from 12.3%, and adjusted EBITDA margin increased to 15.0% from 14.7%.
The earnings improvement was tied to efficiency initiatives across multiple program areas, including broader use of automation and AI-enabled tools. U.S. Federal Services produced $721 million of revenue and an 18.6% operating margin, compared with $761 million and an 18.1% margin in the prior-year period. U.S. Services recorded $418 million of revenue, compared with $440 million, while its operating margin improved to 10.8% from 10.2%. The Outside the U.S. Segment reported $140 million of revenue versus $147 million and a 0.9% operating margin versus 4.0%, leaving that business the principal margin weakness.
The fiscal 2026 revenue outlook was reiterated at $5.2 billion to $5.35 billion, although management expects results toward the lower end. Earnings-related outlook was updated for a temporary customer-directed contractual modification on a major federal program effective July 1, 2026, through December 31, 2026. The company now expects adjusted diluted earnings per share of $7.90 to $8.20 per share, adjusted EBITDA margin of approximately 13.7%, and free cash flow of $425 million to $475 million. The U.S. Federal Services Segment operating-margin outlook is now 16.5% to 17.0%.
Cash conversion was weak during the reported quarter, with cash used in operating activities of $125 million and free cash flow outflow of $137 million. Unrestricted cash and cash equivalents were $57 million, gross debt was $1.65 billion, and the debt, net of allowed cash, to consolidated EBITDA ratio was 2.0x, compared with 1.8x at March 31, 2026. DSO were 98 days, although management said collections from a major federal customer accelerated during July and expects DSO below 70 days at fiscal year-end.
Capital allocation included repurchases of approximately 0.75 million shares for $50.4 million, while the entire $400 million repurchase authorization remained available at June 30, 2026. The company also declared a quarterly cash dividend of $0.33 per share. Commercial indicators included $1.25 billion of year-to-date signed contract awards, $1.35 billion of contracts pending, and a $50.4 billion sales pipeline. The principal reported issues for the remainder of the year are the customer-directed contract modification, the cash-flow and DSO recovery, and improvement in the Outside the U.S. Segment.
Management, verbatim
Our third quarter results demonstrate the resilience of the Maximus business and our ability to deliver strong earnings performance while continuing to invest in long-term growth opportunities
Bruce Caswell, President and Chief Executive Officer
More broadly, we continue to see encouraging demand signals across our markets, increased adoption of AI-enabled solutions, growing interest in our SNAP-related offerings, and a substantial opportunity set in the defense and national security markets.
Bruce Caswell, President and Chief Executive Officer
Not in the filing
stated, not guessed- Gross profit and gross margin
- GAAP operating income
- GAAP net income for the third quarter
- Adjusted net income for the third quarter
- Diluted share count
- Nine-month revenue, operating income, net income, earnings per share, operating cash flow, and free cash flow
- Prior-quarter revenue, operating margin, adjusted EBITDA margin, earnings per share, segment revenue, and segment operating margins
- Reported percentage revenue growth or decline for consolidated revenue and each segment
- Prior-year cash flow, free cash flow, cash, debt, DSO, signed awards, contracts pending, and pipeline comparisons
- Fiscal 2026 gross-margin and operating-expense guidance
- Prior outlook for comparison with reported results
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is Maximus’ SEC Form 8-K (Item 2.02) releasing fiscal 2026 third-quarter results for the three and nine months ended June 30, 2026, along with an FY2026 guidance update.
Ticker impact
Maximus (MMS) reports FY2026 Q3 results and updates FY2026 earnings guidance due to a temporary customer-directed contractual modification on a major federal program.
Likely modest volatility around guidance and margin/cash-flow expectations, with focus on whether the modification is truly temporary and how it affects full-year EPS and EBITDA margin.
The filing reiterates revenue guidance but updates adjusted EPS, adjusted EBITDA margin, and free cash flow guidance, explicitly attributing the change to a temporary contractual modification effective July 1 through Dec 31, 2026.
Market effects
Government services contractors may see read-across on how temporary federal contract modifications flow through to margins and adjusted EPS.
Limited, primarily company-specific guidance update for a US federal services provider.
Low, US-focused government services earnings and guidance with no stated international catalyst.
Counterpoint
The revenue guidance is reiterated and Q3 margins improved year over year, so the guidance cut may be more about timing than underlying demand deterioration.
Key entities
- public_companyMaximus, Inc.
Government services provider reporting FY2026 Q3 results and updating FY2026 guidance due to a temporary contractual modification.
- customerMajor federal customer (unnamed)
Provided notification of a temporary contractual modification affecting profitability expectations for the remainder of FY2026.
- governanceBoard of Directors
Authorized a repurchase program refresh (up to $400 million) and declared a $0.33 quarterly cash dividend payable Aug 31, 2026.
