Maximus posted fiscal year 2025 second-quarter revenue of $1.36 billion, up 1 percent from the prior-year period, and organic growth of 3 percent due to the strong performance of its U.S. federal services segment.
In an earnings release published Thursday, the Tysons, Virginia-based government services contractor said it recorded $1.69 in diluted earnings per share and adjusted diluted EPS of $2.01 during the quarter.
The company’s Q2 operating margin was 11.2 percent and its adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, margin was 13.7 percent.
Applying AI, Automation Under Maximus Forward Initiative
During Thursday’s earnings call, Bruce Caswell, president and CEO of Maximus, said the company pursued the implementation of technologies, such as artificial intelligence, machine learning and automation, to achieve operational efficiency and improve customer satisfaction as part of the Maximus Forward transformation initiative.
Caswell, a four-time Wash100 awardee, cited examples of how the company applied technologies to enable its personnel to focus on higher value functions.
“First, on our federal No Surprises Act contract, where we provide arbitration services to resolve out of network payment disputes between insurance providers and care facilities, we recently implemented an AI solution that is designed to streamline the independent dispute resolution process,” the chief executive told investors and analysts.
“Secondly, working with the Department of Veterans Affairs or VA, we’ve invested significantly to accelerate case preparation on our MDE contract,” he said of the Medical Disability Exam contract work.
For the second example, Caswell said the company leveraged tools such as AWS GovCloud and Amazon Textract to build a proprietary AI and machine learning-powered records processing system, “enabling us to shift labor to higher value work, such as quality assurance, contributing to the VA’s objective of faster claim resolution for our deserving veterans.”
“It’s a great early indicator that the investments that we’ve been focused on in terms of robotic process automation initially, but then into machine learning and artificial intelligence are really starting to pay off,” he noted.
Federal Services Segment’s Q2 Financial Results
The company’s U.S. federal services segment reported $777.9 million in FY 2025 Q2 revenue, an increase of 10.9 percent from the same period the previous year. Maximus associated the organic growth with multiple sources, including clinical assessment volume from several program areas.
The segment’s Q2 operating margin was 15.3 percent, compared to 11.9 percent for the prior year period. The segment is expected to record a full FY 2025 margin of 12.5 percent to 13 percent.
“At the Federal level, we believe our focus on technology innovation, including AI to modernize program delivery, aligns with Administration goals. At the state level, renewed flexibility to contract with private sector partners creates needed optionality for our customers. We remain focused on our goal of capitalizing on this unprecedented period across government service delivery,” Caswell said in the earnings release.
Contract Awards & Sales Pipeline
Maximus logged $2.92 billion in year-to-date signed contract awards and $451 million in pending contracts.
As of March 31, the company’s sales pipeline totaled $41.2 billion, with new work opportunities accounting for 55 percent of the total pipeline.
Updated FY 2025 Guidance
“We are proud of our teams across the business who are focused on mission-critical service delivery of important government programs,” Caswell said. “As a result, we delivered a robust quarter that enables a second consecutive guidance raise.”
For its FY 2025 guidance, Maximus expects to record revenue of $5.25 billion to $5.4 billion and adjusted diluted EPS of $6.30 to $6.60.
The contractor expects its FY 2025 free cash flow to range between $355 million and $385 million. For the full year, an adjusted EBITDA margin of 11.7 percent is anticipated.
