MAXIMUS Inc. Reports Operating Results (10-Q)
Maximus, Inc. has a market cap of $2.45 billion; its shares were traded at around $71.9 with a P/E ratio of 32.8947 and P/S ratio of 2.3838. The dividend yield of Maximus, Inc. stocks is 0.5%. Maximus, Inc. had an annual average earning growth of 16.6% over the past 10 years.
Highlight of Business Operations:In August 2009, the Company commenced work for the United Kingdom government as a provider of services under the Flexible New Deal, a welfare-to-work initiative. The work was performed in the Companys Human Services Segment. This initiative was terminated for all contract providers during the 2011 fiscal year and replaced with the Work Programme, under which MAXIMUS also performs services. As part of the Flexible New Deal contract, MAXIMUS was entitled to reimbursement for costs incurred as a consequence of early termination, as well as a contract settlement for payments the Company would have received for realizing certain long-term goals under the contract. During the three month period ended December 31, 2011, the Company received a one-time settlement payment of $2.7 million for revenue foregone and $1.7 million of cost recoveries, net of subcontractor expenses.
The Company acquired PSI on April 30, 2012 and the financial results for the three month period ended December 31, 2012 include the performance of PSI. PSI contributed $34.1 million of revenue in this period. We provide organic revenue growth information to provide a framework for assessing how our business performed excluding the effects of acquisitions. Organic revenue growth comparisons between fiscal 2013 and fiscal 2012 are performed excluding all PSI revenues.
The provision for income taxes in the quarter ended December 31, 2012 was $13.3 million, reflecting an effective tax rate of 38.0%. The comparative charge in the quarter ended December 31, 2011 was $10.4 million, an effective rate of 37.0%. The tax rate has increased owing to an increased share of profits being anticipated in jurisdictions which have higher tax rates, notably for our domestic business, compared to the prior year.
Revenue increased by 11.4% to $176.0 million for the three month period ended December 31, 2012, compared to the same period in fiscal year 2012. Revenue growth was driven by the acquisition of PSI, and organic growth from new work, the expansion of existing contracts and higher volumes on transaction-based programs. Most notably, we experienced higher volumes in our Federal Medicare appeals business, we secured work related to health insurance exchanges and we continued to benefit from the shift of new populations from fee-for-service Medicaid into fully capitated Medicaid managed care. Our operating margin increased to 11.7% for the three month period ended December 31, 2012 compared to 10.6% in the prior year. This margin expansion was a result of accretive, organic revenue growth from existing contracts. In addition, the operating margin in fiscal 2012 was tempered by margin dilution from a contract that experienced a temporary spike in low-margin revenue.
Revenues increased 35.2% for the three month period ended December 31, 2012, compared to the same period in fiscal year 2012. Revenue growth was driven by the acquisition of PSI, as well as organic growth principally from our international welfare-to-work operations including the expected ramp-up from the Work Programme in the United Kingdom, and new work in Canada and Saudi Arabia. During the first quarter of fiscal 2012, revenue was tempered by the start-up of the Work Programme because revenue is derived from both fixed fees, which are deferred over the period of engagement with a jobseeker, and outcome fees which are paid once a jobseeker remains employed for a specified period of time (typically six months). Accordingly, revenue in earlier periods was moderated by revenue deferral and the required time taken to achieve outcomes. These fees are now being earned as the contract reaches maturity.
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