MAXIMUS Inc. Reports Operating Results (10-Q)
Maximus Inc. has a market cap of $1.51 billion; its shares were traded at around $44.91 with a P/E ratio of 20.2 and P/S ratio of 1.6. The dividend yield of Maximus Inc. stocks is 0.8%. Maximus Inc. had an annual average earning growth of 11.3% over the past 10 years.
Highlight of Business Operations:Revenue for the three month period ended December 31, 2011 increased 11.9% to $239.6 million. On a constant currency basis, the growth would have been 11.5%. Revenue increases were driven by growth in the Health Services Segment which offset lower revenue in the Human Services Segment resulting from the transition to the new Work Programme in the United Kingdom.
Selling, general and administrative expense (SG&A) consists of costs related to general management, marketing and administration. These costs include salaries, benefits, bid and proposal efforts, travel, recruiting, continuing education, employee training, non-chargeable labor costs, facilities costs, printing, reproduction, communications, equipment depreciation, intangible amortization, and legal expenses incurred in the ordinary course of business. SG&A as a percentage of revenue was consistent during the quarter ended December 31, 2011 and 2010 at 13.7% and 13.4%, respectively.
Revenue increased by 21.6% for the three month period ended December 31, 2011, compared to the same period in fiscal year 2011. The improvement of revenue in the quarter was driven by the expansion of Medicaid managed care on our Texas contract and other organic growth. Operating income in the three month period ended December 31, 2011 was lower compared to the same period last year due to normal contract life-cycle fluctuations and the timing of a project change order on an existing contract. In addition, the health margin experienced dilution in the first quarter of fiscal 2012 related to the growth on the Texas contract which is a lower margin, cost-reimbursable contract.
Revenues declined 3.0% for the three month period ended December 31, 2011, compared to the same period in fiscal year 2011. On a constant currency basis, revenue would have declined 4.1%. Revenue was lower due to the expected ramp up of revenue related to the transition to the new Work Programme contract in the United Kingdom. The Work Programme replaced the predecessor Flexible New Deal contract, which was terminated by the United Kingdom Government during fiscal 2011. Results for the three month period ended December 31, 2011 included a termination payment, related to the Flexible New Deal contract, for $2.7 million of revenue earned and $1.5 million of expense recoveries. The termination payment partially offset losses from the ramp-up of the new Work Programme. Operating income improved to $10.3 million in the three month period ended December 31, 2011, compared with $8.5 million in the comparable quarter of fiscal 2011. Operating results in the prior period were dampened by cost growth of $3.2 million on a fixed-price contract.
Cash receipts from customers increased by less than the overall increase in revenue. Cash receipts during the three months ended December 31, 2010 benefitted from the timing of cash payments from customers who had delayed payments at the end of fiscal 2010. This resulted in a decline in accounts receivable of approximately $22.1 million in the three months ended December 31, 2010 which did not reoccur in fiscal 2012. The three month period ended December 31, 2011 received the benefit of cash receipts from advanced payments on contracts, principally the United Kingdom Work Programme.
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