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What changed in MAXIMUS, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of MAXIMUS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+334 added−356 removedSource: 10-K (2025-11-20) vs 10-K (2024-11-21)

Top changes in MAXIMUS, INC.'s 2025 10-K

334 paragraphs added · 356 removed · 236 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

62 edited+33 added−68 removed10 unchanged
Biggest changeOur core capabilities include: • Application development & modernization: Modernize, develop, and deliver solutions utilizing automation and agile development, security, and operations (DevSecOps) practices. • Enterprise Business Solutions: Integrate and manage disparate business processes and systems. • Advanced Analytics & Emerging Technologies: Provide technology services to leverage and integrate the latest technologies for AI/ML, automation, and high-performance computing. • Cybersecurity: Deliver full spectrum cybersecurity services, including cyber engineering and operations, digital forensics, and incident response. • Infrastructure and Engineering: Deploy solutions that leverage cloud-hosted and on-premise designs to optimize costs. 6 Table of Contents We also build digital qualifications in the market.
Biggest changeOur core capabilities include: • Application development and modernization: Modernize, develop, and deliver solutions utilizing automation and agile development, security, and operations, known as DevSecOps, practices. • Enterprise Business Solutions: Integrate and manage disparate business processes and systems. • AI and Advanced Analytics: Provide data science, analytics, AI and machine learning, robotic process automation and high-performance computing to make informed decisions and solutions. • Cybersecurity: Deliver full spectrum cybersecurity services, including cyber engineering and operations, digital forensics, and incident response. • Cloud Infrastructure and Engineering: Deploy solutions that leverage cloud-hosted and on-premise designs to optimize costs. • Data Management: Define data modernization, engineering, operations and retention policies, manage data backups, ensure compliance with privacy regulations while enabling secure and efficient data access and help navigating complex data migrations. 7 Table of Contents We utilize machine learning and AI to build bespoke data models, providing predictive analytics designed to maximize process efficiency, as well as identify systemic process issues that can be isolated and prioritized for troubleshooting.
Our SEC filings may be accessed through the Investor Relations page of our website at investor.maximus.com . These materials, as well as similar materials for other SEC registrants, may be obtained directly from the SEC through its website at sec.gov . We also use our website as a channel of distribution for important company information.
Our SEC filings may be accessed through the Investor Relations page of our website at investor.maximus.com . These materials, as well as similar materials for other SEC registrants, may be obtained directly from the SEC through its website at sec.gov . We use our website as a channel of distribution for important company information.
Running our Business Ethically and with Integrity We have earned a reputation for service excellence and commitment to the highest ethical principles and values. To maintain this reputation, we strive to consistently demonstrate the highest standards of accountability, integrity, responsibility, and ethics in our daily activities, across the organization globally, and across all disciplines.
Running our Business Ethically and with Integrity We believe that we have earned a reputation for service excellence and commitment to the highest ethical principles and values. To maintain this reputation, we strive to consistently demonstrate the highest standards of accountability, integrity, responsibility, and ethics in our daily activities, across the organization globally, and across all disciplines.
Technology solutions offer state and local governments assistance with system planning, implementation oversight, and the construction and maintenance of client systems to allow processing of transactions. We also provide system implementation project management and independent verification and validation services to state and local clients.
Technology solutions offer state and local governments assistance with system planning, implementation oversight, and the construction and maintenance of client systems to allow processing of transactions. We also provide system implementation project management and Independent Verification and Validation (IV&V) services to state and local clients.
Our work covers a broad array of services, including the operation of large health insurance eligibility and enrollment programs; clinical services, including assessments, appeals, and independent medical reviews; and technology services. These services benefit from a market with increasing demographic demand, constrained government budgets, and an increased focus on technology as governments prioritize modernization.
Our work covers a broad array of services, including the operation of large health insurance eligibility and enrollment programs; clinical services, including assessments, appeals, and independent medical reviews; and technology services. These services benefit from an industry with increasing demand, constrained government budgets, and an increased focus on technology as governments prioritize modernization.
Services Segment provides a variety of services, such as program operations, clinical services, employment services and technology solutions and related consulting work for U.S. state and local government programs. These services support a variety of programs, including the programs under ACA, Medicaid, the Children's Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF), and child support programs.
Services Segment provides a variety of services, such as program operations, clinical services, employment services and technology solutions and related professional services work for U.S. state and local government programs. These services support a variety of programs, including the programs under Medicaid and Children's Health Insurance Program (CHIP), ACA marketplaces, Temporary Assistance to Needy Families (TANF), and child support programs.
In addition to competitive base wages, additional programs include incentive bonus opportunities, restricted stock units, performance stock units, global retirement programs including a company-matched 401(k) Plan in the U.S., healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, employee assistance programs, and supplemental programs to support our employees’ physical, mental, and financial well-being.
In addition to competitive base wages, additional programs include incentive bonus opportunities, restricted stock units, performance stock units, global retirement programs including a company-matched 401(k) Plan in the United States, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, employee assistance programs, and supplemental programs to support our employees’ physical, mental, and financial well-being.
Violations of our ethics standards and policies are taken seriously. Any director, officer, or employee may anonymously report suspected violations of the Maximus Standards for Business Conduct and Ethics, Company policies, or applicable laws and regulations. Maximus is committed to an environment where open, honest communications are the expectation, not the exception.
Any director, officer, or employee may anonymously report suspected violations of the Maximus Standards for Business Conduct and Ethics, Company policies, or applicable laws and regulations. Maximus is committed to an environment where open, honest communications are the expectation, not the exception.
Employees understand our efforts to act with integrity, which is summarized in our Standards for Business Conduct and Ethics, which includes the confidential ethics hotline contact information and is available at maximus.com . Environment The Board of Directors' Nominating and Governance Committee has oversight responsibility for Environmental, Social, and Governance (ESG) matters, which includes climate-related risks and opportunities.
Employees understand our efforts to act with integrity, which is summarized in our Standards for Business Conduct and Ethics, which includes the confidential ethics hotline contact information and is available at maximus.com . Environment The Board of Directors' Nominating and Governance Committee has oversight responsibility for sustainability matters, which includes climate-related risks and opportunities.
Federal Services Segment are General Dynamics Information Technology, Deloitte, Leidos, IBM, Accenture, Booz Allen Hamilton, and other federal contractors. U.S. Services Segment Our U.S. Services Segment generated 36% of our total revenue in fiscal year 2024. Our U.S.
Federal Services Segment are General Dynamics Information Technology, Deloitte, Leidos, IBM, Accenture, Booz Allen Hamilton, and other federal contractors. U.S. Services Segment Our U.S. Services Segment generated 32% of our total revenue in fiscal year 2025. Our U.S.
The SWP function is dedicated to ensuring we have the right people with the right skills at the right time to meet the demands of our government clients to effectively serve and support the citizens in our own communities.
The SWP function is designed so that we have the right people, with the right skills, at the right time, to meet the demands of our government clients to effectively serve and support the citizens in our own communities.
Our Independent Verification and Validation (IV&V) services provide comprehensive objective testing to confirm that requirements in client systems are correct, and validate that the system correctly implements the functionality and security requirements. Consistent with our overall corporate strategy, technology solutions in our U.S. Services Segment is an area of focus for growth.
Our IV&V services provide comprehensive objective testing to confirm that requirements in client systems are correct, and validate that the system correctly implements the functionality and security requirements. Consistent with our overall corporate strategy, technology solutions in our U.S. Services Segment is an area of focus for growth. The rest of the segment's revenue is from specialized services.
The FAS contract supersedes our flagship HAAS contract and is a hybrid contract with cost-plus elements coupled with a number of incentives and penalties to achieve the programmatic outcomes defined by the government in order to ensure quality and timeliness of service.
The FAS contract in the United Kingdom is a hybrid contract with cost-plus elements coupled with a number of incentives and penalties to achieve the programmatic outcomes defined by the government in order to ensure quality and timeliness of service.
The rest of the segment's revenue is from specialized consulting services. These services include financial consulting, including cost allocation plans, business process assessment and design, quality assurance processes, including policy and procedure reviews, and audit preparation and compliance, including grant and proposal reviews. The segment also assists commercial customers in claiming workforce and location-based tax benefits.
These services include financial services, including cost allocation plans, business process assessment and design, quality assurance processes, including policy and procedure reviews, and audit preparation and compliance, including grant and proposal reviews. The segment also assists commercial customers in claiming workforce and location-based tax benefits.
External competitors include Conduent, Automated Health Systems, TTEC, Acentra Health, GetInsured, Veritas, Public Consulting Group, and Deloitte. Some of these companies compete with the segment in a single market, while others compete in multiple markets.
Our primary competitors are government insourced operations. External competitors include Conduent, Automated Health Systems, TTEC, Acentra Health, GetInsured, Public Consulting Group, and Deloitte. Some of these companies compete with the segment in a single market, while others compete in multiple markets.
The services we provide vary from program to program but may include: • Centralized multilingual customer contact centers and multichannel, digital self-service options to better serve citizens' needs; • Application assistance and independent health plan choice counseling to beneficiaries to help them access benefits and make informed choices; • Beneficiary outreach, education, eligibility assistance, enrollment, and redeterminations services.
The services we provide vary from program to program but may include: • Centralized AI-enabled multilingual customer contact centers that include digital self-service options to better serve citizens' needs across a range of state programs; • Application assistance and independent health plan choice counseling to beneficiaries to help them access benefits and make informed choices; • Beneficiary outreach, education, eligibility assistance, enrollment, credentialling, and redeterminations services.
This initiative was designed with two primary focus areas: • Mobilizing our talent internally as the business needs, enabling us to move staff between projects, contracts, and functions, and; • Helping employees level-up for future skill needs; our employees are our collective talent, regardless of project or business function, and we are dedicated to developing, upskilling, and retaining them to meet our future organizational talent needs.
Learning and Organizational Development In Moving Our Talent Forward, we have two primary focus areas: • Mobilizing our talent internally as the business needs, enabling us to move staff between projects, contracts, and functions, and; • Helping employees level-up for future skill needs; our employees are our collective talent, regardless of project or business function, and we are dedicated to developing, upskilling, and retaining them to meet our future organizational talent needs.
Under this division, we execute on digital strategy to deliver technology solutions that advance agency missions, including the challenge to modernize, provide better customer experience, and drive process efficiencies.
We execute on digital strategy to deliver technology solutions that advance agency missions, including the challenge to modernize, provide better service delivery, and drive process efficiencies.
A group of other contracts in this segment earn their revenue on a cost-plus or time-and-materials basis, which typically carry lower levels of risk and lower levels of profit margin as compared to performance-based contracts.
A group of other contracts in this segment earn their revenue on a cost-plus or time-and-materials basis, which typically carry lower levels of risk and lower levels of profit margin as compared to performance-based contracts. A small number of U.S. federal agencies provide the majority of this segment's revenue.
In addition, even though the majority of our direct clients are state governments, a significant amount of our revenue is ultimately funded via the U.S. federal government in the form of cost-sharing arrangements with the states, as is the case with Medicaid. Our primary competitors are government insourced operations.
A small number of large states comprise a significant share of this segment's revenue. In addition, even though the majority of our direct clients are state governments, a significant amount of our revenue is ultimately funded via the U.S. federal government in the form of cost-sharing arrangements with the states, as is the case with Medicaid.
We also compete against specialized private companies, often within a regional or state focused market area, and nonprofit organizations that vary based on the nature of the work. 8 Table of Contents Outside the U.S. Segment Our Outside the U.S. Segment generated 12% of our total revenue in fiscal year 2024. Our Outside the U.S.
We also compete against specialized private companies, often within a regional or state focused market area, and nonprofit organizations that vary based on the nature of the work. Outside the U.S. Segment Our Outside the U.S. Segment generated 11% of our total revenue in fiscal year 2025. Our Outside the U.S. Segment provides BPS and other solutions for international governments.
We also continue to focus on our people - the foundation of our strategy. As an employer of choice, our goal is to continue to prioritize attracting, retaining, developing, and empowering employees as a central part of our plan for achieving future growth. Our Business Segments We operate our business through three segments: U.S. Federal Services, U.S.
As an employer of choice, our goal is to continue to prioritize attracting, retaining, developing, and empowering employees as a central part of our plan for achieving future growth. 6 Table of Contents Our Business Segments We operate our business through three segments: U.S. Federal Services, U.S. Services, and Outside the U.S. We operate in the United States and worldwide.
Engaged employees stay longer, provide a better consumer experience, and influence other employees. To better understand employee morale, satisfaction, and engagement, we administer an annual Global Employee Engagement survey. We utilize anonymous feedback to shape the employee experience and culture where our values of Respect, Compassion, Innovation, Accountability, Collaboration, and Customer Focus are lived out.
Employee Engagement We believe engaged employees stay longer, provide a better client experience, and influence other employees. To better understand employee morale, satisfaction, and engagement, we administer an annual Global Employee Engagement survey. We aim to use anonymous feedback to shape the employee experience and culture where our values are lived out.
In fiscal year 2022, our contract with the Centers for Medicare and Medicaid Service (CMS) to support the Contact Center Operations was renewed. This contract supports the federal marketplace under the Affordable Care Act (ACA) and serves as the primary support engagement center for Medicare, also known as 1-800-MEDICARE.
This includes our contract with the Centers for Medicare and Medicaid Service (CMS) to manage the Contact Center Operations (CCO), supporting the federal marketplace under the Affordable Care Act (ACA) and also serving as the primary support engagement center for Medicare, also known as 1-800-MEDICARE.
Maximus carries out these assessments on behalf of the Department for Work and Pensions (DWP), and the DWP makes the final decision on the level of benefit. The balance of the segment provides program administration and some specialized services. Seasonality is not significant to this segment. Contracts with government clients often contain "termination without cause" provisions.
Maximus carries out these assessments on behalf of the Department for Work and Pensions (DWP), and the DWP makes the final decision on the level of benefit. The balance of the segment provides program administration and some specialized services, including technology services and health care administration software. Seasonality is not significant to this segment.
Outside the U.S., we must also comply with local laws and regulations as determined by geography, as well as U.S. government laws. Adherence includes human rights protections, environmental regulation, and contract specifications.
Federal Services Segment, we must also comply with the Federal Acquisition Regulations (FAR), which regulates the procurement, award, administration, and performance of U.S. government contracts. Outside the United States, we must also comply with local laws and regulations as determined by geography, as well as U.S. government laws. Adherence includes human rights protections, environmental regulation, and contract specifications.
In line with our strategic focus for the future, this division continues to expand its clinical programs, most notably through the VA medical disability examinations (MDE) contracts.
In line with our strategic focus for the future, we continue to expand our clinical programs, most notably through the U.S. Department of Veteran Affairs (VA) medical disability examinations (MDE) contracts.
We are operating at higher volumes amidst strong demand and expect this to continue for the foreseeable future. The independent health and disability assessments and appeals portion of our business is a growing part of our overall portfolio, lending further credibility to our organic growth efforts with other Federal departments and in non-Federal markets. Technology Solutions.
The independent health and disability assessments and appeals portion of our business continues to be a growing part of our overall portfolio, lending further credibility to our organic growth efforts with other federal departments and in non-federal markets. Technology Solutions.
For more information on our segment presentation and geographic distribution of our business, including comparative revenue, gross profit, operating income, identifiable assets, and related financial information for the 2024, 2023, and 2022 fiscal years, see "Note 3. Business Segments" within Item 8 of this Annual Report on Form 10-K. 5 Table of Contents U.S. Federal Services Segment Our U.S.
For more information on our segment presentation and geographic distribution of our business for the 2025, 2024, and 2023 fiscal years, see "Note 3. Business Segments" within Item 8 of this Annual Report on Form 10-K. U.S. Federal Services Segment Our U.S. Federal Services Segment generated 56% of our total revenue in fiscal year 2025. Our U.S.
Aggregated results are dispersed throughout the organization to ensure all levels of management understand employee sentiment. Maximus empowers employee leaders alongside an organizational action committee to review the responses and create action plans to improve our culture and performance. Our employee engagement score had increased to +33 as of our last pulse survey in fiscal year 2024.
We disperse aggregated results throughout the organization to ensure all levels of management understand employee sentiment. Maximus empowers employee leaders alongside an organizational action committee to review the responses and create action plans to improve our culture and performance. Our overall employee engagement score is reflected as a net promoter score.
Payment for our services varies from contract to contract based upon factors such as the priorities of the customer and their willingness to share risks and rewards.
In some cases, clients award points for past performance tied to program outcomes. 9 Table of Contents Contract Payment Terms Payment for our services varies from contract to contract based upon factors such as the priorities of the customer and their willingness to share risks and rewards.
Given the nature of our business, we do not currently anticipate that the costs of complying with, or the liabilities associated with, environmental laws and regulations will materially affect us. However, we cannot ensure that we will not incur material costs or liabilities in the future. Government Regulations Our business is heavily regulated.
Our operations are subject to various local, state, federal, and international environmental laws and regulations. Given the nature of our business, we do not currently anticipate that the costs of complying with, or the liabilities associated with, environmental laws and regulations will materially affect us.
In programs such as Medicaid, Maximus does not make the final determination of eligibility; and • Administration of programs that provide subsidized telephone services for eligible consumers.
In programs such as Medicaid, Maximus does not make the final determination of eligibility; and • Administration of programs that provide subsidized telephone services for eligible consumers. As a leading supplier in many of the health program administration markets that we serve, we are the largest provider of Medicaid eligibility support and enrollment services and state-based health insurance exchange operations.
Such contractual language generally allows the government to terminate a contract at any time and enables us to recover only our costs incurred or committed and settlement expenses and profit, if any, on the work completed prior to termination.
These provisions allow the client to terminate or modify a contract at any time and enables us to recover only our costs incurred or committed and settlement expenses and profit, if any, on work completed prior to termination. Legislative Updates We actively monitor legislative initiatives and respond to opportunities as they develop.
The segment may experience seasonality due to transaction-based work, such as program open enrollment periods. Other fluctuations may arise from changes in programs directed by our clients and activity related to contract life cycles. Contracts with government clients often contain "termination without cause" provisions.
Services within this segment may be provided through a variety of media, including call centers, mailing operations, internet and mobile applications. The segment may experience seasonality due to transaction-based work, such as program open enrollment periods. Other fluctuations may arise from changes in programs directed by our clients and activity related to contract life cycles.
As part of Moving Our Talent Forward, we have seen initial successes in both primary focus areas. To support mobilizing our talent internally, we created a Strategic Workforce Planning (SWP) function to ensure we are taking an employee-centric approach to streamlining the redeployment of our workforce.
To support mobilizing our talent internally, we created a Strategic Workforce Planning (SWP) function to provide for an employee-centric approach to streamlining the redeployment of our workforce.
Some of our customers are requesting that their providers adopt and disclose their climate policies and principles and are using these in procurement decisions. These requirements vary between customers and are constantly evolving, often with limited notice. Such policies and principles may be subjective, and the manner of scoring our performance against our competitors may vary between bids.
However, we cannot ensure that we will not incur material costs or liabilities in the future. 12 Table of Contents Some of our customers are requesting that their providers adopt and disclose their climate policies and principles and are using these in procurement decisions. These requirements vary between customers and are constantly evolving, often with limited notice.
We also demonstrate the ability to move quickly, ranging from digitally enabled contact center support services for natural disaster response to swift establishments of public health and safety initiatives, examples of which occurred during the COVID-19 pandemic. Our organic growth through increased contract scope and entry into new markets has been supplemented by strategic acquisitions.
We also demonstrate the ability to move quickly, ranging from digitally enabled contact center support services for natural disaster response to swift establishments of public health and safety initiatives.
We support enterprise-wide professional development by offering a variety of instructor-led and self-paced learning programs for diverse audiences ranging from individual contributors to frontline supervisors and executive leadership. Our project training teams are positioned to manage customized programs supporting contract requirements, customer service, local leadership development, and employee engagement.
We value ongoing development and strive to provide meaningful learning opportunities for all employees. We support enterprise-wide professional development by offering a variety of instructor-led and self-paced learning programs for audiences ranging from individual contributors to frontline supervisors and executive leadership.
We strive to be champions for an inclusive and collaborative culture that is free from discrimination and harassment, where everyone is treated with respect and dignity. Our expectation is that Maximus and its employees always conduct business according to the highest standards of ethics and performance and in compliance with all applicable laws.
We aim to be champions for an inclusive and collaborative culture that is free from discrimination and harassment, where everyone is treated with respect and dignity. Violations of our ethics standards and policies are taken seriously.
Comprehensive employment services help vulnerable individuals transition from government assistance programs to sustainable employment and economic independence. These services cover a number of attributes, including eligibility determination, case management, job-readiness preparation and work capability assessments, job search and employer outreach, job retention and career advancement, and selected educational and training services. Payment terms are typically focused on achieving employment outcomes.
These services cover a number of attributes, including eligibility determination, case management, job-readiness preparation and work capability assessments, job search and employer outreach, job retention and career advancement, and selected educational and training services. Clinical Services. Clinical services includes appeals and assessments work. On these contracts, we are typically reimbursed for each transaction.
Our emphasis on innovation extended to our annual Global Leadership Conference, which aims to provide leaders with tools to advance the Company's strategy. 12 Table of Contents Other key events that contributed to our culture of engagement included Foundation Month, which is focused on our impacts on local non-profits, Customer Service Week, which celebrates all employees with virtual, interactive events, and the inaugural Values Icon Awards, which recognizes employees who demonstrate excellence in one of the company values.
We encourage our culture of engagement through other events including Foundation Month, which is focused on our impacts on local non-profits; Customer Service Week, which celebrates all employees with virtual, interactive events; and our Values Icon Awards, which recognize employees who demonstrate excellence in one of our values.
Our primary competitors in this segment include Atos, Capita, Serco, Staffline, Shaw Trust, Reed in Partnership, Ingeus, Advanced Personnel Management, IBM, Telus-Health, NTT Data, Pacific Blue Cross, Sawaeed, Elm, and other specialized private companies and nonprofit organizations.
Our primary competitors in this segment include Atos, Capita, Serco, Reed in Partnership, Ingeus, Advanced Personnel Management, IBM, NTT Data, Pacific Blue Cross, Sawaeed, Elm, and other specialized private companies and nonprofit organizations. Although the basis for competition varies from contract to contract, we believe that typical contracts are awarded based on a mix of comprehensive solutions and prices.
Officially launched on October 1, 2024, Eightfold will enable us to address talent needs and gaps more effectively as it is designed as a career hub that gives Maximus more data and insight into the skillsets of our employees, recommends internal roles based on skillsets and career aspirations, and connects employees to skill development opportunities.
It is structured as a career hub that gives us more data and insight into the skillsets of our employees, recommends internal roles based on skillsets and career aspirations, and connects employees with skill development opportunities. 11 Table of Contents Total Rewards We offer and maintain market-competitive total rewards programs for our employees designed to attract and retain superior talent.
This makes our hiring efforts significant and extensive, and as a result, our talent acquisition team focuses on finding top talent quickly. We believe our culture values individual skills, experiences, and differences that allow us to deliver robust and innovative approaches to solving some of our communities' most challenging needs.
Talent Acquisition Our success depends on our ability to attract talent to meet the needs of our customers and comply with our contracts. We believe our culture values skills and experiences that allow us to deliver robust and innovative approaches to solving some of our communities' most challenging needs.
This segment may experience seasonality with increased revenue in the first quarter of the fiscal year from cost-plus work tied to CMS's annual open enrollment period. Other fluctuations may result from volume variations or program maturity, with contracts recording lower revenue and profitability during program startup. Contracts with government clients often contain "termination without cause" provisions.
There is no significant seasonality in this segment's revenue, although certain contracts may experience some uptick in work tied to CMS's open enrollment period. Other fluctuations may result from volume variations or program maturity, with contracts recording lower revenue and profitability during program startup. Our primary competitors in the U.S.
We also provide many employees with online role-based and skill-based learning tools. Specifically, starting in 2023, to support our transition to a Skills-Based Organization, we invested in both internal cross-functional resources and into an innovative AI Total Talent Management System, Eightfold.
Our project training teams are positioned to manage customized programs supporting contract requirements, customer service, local leadership development, and employee engagement. We also provide many employees with online role-based and skill-based learning tools. We invest in both internal cross-functional resources and an innovative AI Total Talent Management System called Eightfold.
Employment services cover a number of attributes, including eligibility support, case management, job-readiness preparation, job search and employer outreach, job retention and career advancement, and selected educational and training services, including vocational training. Children services include full and specialized child support case management services through customer contact center operations and program and systems consulting services. Technology Solutions.
We provide clinical assessment services to some of the largest programs in the United States. Employment Services. Employment services cover a number of attributes, including eligibility support, case management, job-readiness preparation, job search and employer outreach, job retention and career advancement, and selected educational and training services, including vocational training.
Clinical services is a growing portion of the segment and demonstrates successful focus and execution of our continued strategy. Our services help governments engage with program recipients while at the same time helping improve the efficiency, cost-effectiveness, quality, and accountability of state health and disability benefits programs.
Our services help governments engage with program recipients while at the same time helping improve the efficiency, cost-effectiveness, quality, and accountability of state health and disability benefits programs. These include assessments of individuals in need of long-term services and support, including clinical eligibility for services, level of care assessments, plan of care assessments and Preadmission Screening and Resident Reviews.
Our culture, values, and unwavering commitment to our people define who we are, and they guide us in making a meaningful impact on the lives of those we serve. As of September 30, 2024, we had approximately 41,100 employees and 11,800 contingent workers, consisting of 15,400 employees in our U.S. Federal Services Segment, 15,600 employees in the U.S.
We believe that our culture, values and commitment to our people define who we are, and guide us in making a meaningful impact on the lives of those we serve.
Segment provides BPS and technology solutions for international governments. These services include health and disability assessments, program administration for employment services, wellbeing solutions and other job seeker-related services, digitally-enabled customer services, and advanced technologies for modernization.
These services include health and disability assessments, program administration for employment services, wellbeing solutions and other job seeker-related services, digitally-enabled customer services, and advanced technologies for modernization. We support programs and deliver services in the United Kingdom, including the Functional Assessment Services (FAS) contract and the Restart employment program. We also provide services in Canada and the Middle East.
This team partnered with the Company to implement 11 Table of Contents the “Beach,” which is a virtual status that bridges the gap between assignments, provides income and benefit continuity, proactively assists our employees during times of change, provides our employees with stability, and enables employees to move more seamlessly to new projects.
We implemented the “Beach,” which is a virtual status that bridges the gap between assignments, proactively assisting our employees during times of change, providing stability, and enabling employees to move more seamlessly to new projects. We utilize demand signal and pipeline strategies to match talent leaving one project with open positions on ongoing work.
Further our credibility as a technology leader, enabling the transformation of government programs and legacy system environments to be resilient, dynamic, integrated, and equitable. Our strategic plan is aligned with specific opportunities within all three segments and include a common focus on optimizing processes and simplifying our structure under our Maximus Forward corporate initiative.
Our strategic plan is aligned with specific opportunities within all three of our segments and includes a common focus on optimizing processes and simplifying our structure. We also continue to focus on our people - the foundation of our strategy.
Our teams continue to adapt to the recruiting, hiring, and training needs of our customers in both remote and onsite settings to ensure continuity of vital services. Talent Management and Talent Development We are committed to Moving Our Talent Forward.
Our recruiting programs broad approach allows us to develop a workforce with a variety of backgrounds, including veterans and people with disabilities, and those from various socioeconomic conditions. Our teams continue to adapt to the recruiting, hiring, and training needs of our customers in both remote and onsite settings to ensure continuity of vital services.
Our government clients have strict policies, procedures, and requirements in the procurement process, as well as regulations governing contract pricing and reimbursable costs. 13 Table of Contents Community Involvement We aim to give back to the communities where we live and work and believe that this commitment helps in our efforts to attract and retain employees.
The reductions of federal funding are scheduled to take effect in fiscal year 2028, which should incentivize states to improve the effectiveness and quality of program administration. 13 Table of Contents Community Involvement We aim to give back to the communities where we live and work and believe that this commitment helps in our efforts to attract and retain employees.
As procurement trends evolve, we are engaged in efforts to mature our programs and processes to meet the demands. In addition, our operations are subject to various local, state, federal, and international environmental laws and regulations.
As procurement trends evolve, we are engaged in efforts to mature our programs and processes to meet the demands. Additional information on risks pertaining to such matters may be found in Item "1A. Risk Factors." Government Regulations Our business is heavily regulated. In the United States, we must adhere to local, state, and federal laws and regulations. Within the U.S.
Federal Services Segment generated 52% of our total revenue in fiscal year 2024. Our U.S. Federal Services Segment delivers solutions that help various U.S. federal government agencies better deliver on their mission, including program operations and management, clinical services, and technology solutions. The segment also includes system and application development, Information Technology (IT) modernization, and maintenance services.
Federal Services Segment delivers solutions that help various U.S. federal government agencies better execute on their mission, including program operations and management, clinical services, and advanced technology solutions. Program Operations. Program operations include a range of business process services (BPS), including eligibility and enrollment, outreach, and other services for federal health and human services programs.
We are driven to strengthen communities and improve the lives of those we serve. We create value for our customers through our ability to translate health and human services public policy into operating models that achieve outcomes for governments at scale.
As a trusted and accountable partner to primarily U.S. federal and state customers, we proudly design, develop, and deliver innovative and efficient programs that improve government’s effectiveness in serving its citizens. We create value for our customers through our ability to translate public policy into operating models that achieve outcomes for governments at scale.
We view student loan servicing as an opportunity to apply our insights, expertise, and quality-driven approach through support for Federal Student Aid (FSA) and student borrowers. The manner in which we provide these services varies from contract to contract but may include a mix of digitally enabled contact centers, mail-room operations, and mobile and website media. Clinical Services.
We are an independent and conflict-free customer service provider assisting borrowers with Department of Education-originated loans. We view student loan servicing as an opportunity to apply our insights, expertise, and quality-driven approach through support for Federal Student Aid (FSA) and student borrowers.
This supports the prevention of potential reductions in force (RIFs) by redeploying over 2,000 employees to projects within Maximus, creates value by avoiding severance, recruitment, and rehiring expenses, and creates an atmosphere of increased employee security by ensuring that once their project is finished, their careers can continue.
As well as reducing costs of severance, recruitment, and rehiring, we believe this creates an atmosphere of increased employee security by providing that once their project is finished, employees can see opportunities to continue their careers. We endeavor to support our employees in developing skills by fostering a culture of continuous learning and professional growth.
As a leading supplier in many of the health program administration markets that we serve, we are the largest provider of Medicaid eligibility support and enrollment services and state-based health insurance exchange operations. 7 Table of Contents Clinical Services. Clinical services include our person-centered assessment services, primarily to determine consumers' eligibility for Medicaid Long-Term Care services.
Clinical Services. Clinical services include our person-centered assessment services, primarily to determine consumers' eligibility for Medicaid Long-Term Care services. Clinical services is a growing portion of the segment and demonstrates successful focus and execution of our continued strategy.
Some contracts are performed on a cost-plus basis, where we receive revenue based on the hours and costs incurred and typically operate at lower margins. Our employment services contracts typically have outcome-based payments to ensure that we help job seekers find long-term, sustained employment and achieve economic independence.
Revenue Recognition within Item 8 in this Annual Report on Form 10-K. • Our performance-based revenues are paid based upon metrics, such as the number of calls, assessments, enrollments, or the size of the membership pool being maintained. Our employment services contracts typically have outcome-based payments to ensure that we help job seekers find sustained employment and achieve economic independence.
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Item 1. Business General Maximus, under its mission of Moving People Forward, helps millions of people access the vital government services they need. With nearly 50 years of experience working with local, state, federal, and international government clients, we proudly design, develop, and deliver innovative and impactful programs that change lives.
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Item 1. Business General Maximus, a Virginia corporation established in 1975 and celebrating its 50th anniversary this year, is a leading provider of tech-enabled services to government agencies.
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In recent years, three acquisitions enhanced our qualifications for servicing the U.S. Federal Government in areas of clinical assessments, leading technology consulting solutions, and digitally-enabled contact center services. We are progressing through our strategic plan introduced in fiscal year 2022.
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By moving people, technology, and government forward, Maximus helps improve the delivery of public services for more than 100 million American citizens, as well as citizens in the U.K., Canada, and the Middle East, amid complex technological, health, economic, and social challenges.
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We believe in further expansion of our business and remain in a strong position to capitalize on organic growth opportunities in our core business. Our strategic plan consists of three central pillars: • Customer Services, Digitally Enabled. Elevate the customer experience to achieve higher levels of satisfaction, performance, and outcomes through intelligent automation and cognitive computing.
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Our past and future success is based upon our strategic priorities that we believe are aligned with long-term demand characteristics and bipartisan programs that shape the role of government in serving its citizens. • Tech-Enabled Customer Service. Maximus applies advances in business intelligence, predictive analytics and emerging technologies to advance a government agency’s mission.
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The launch of Maximus Total Experience Management (TXM) is evidence of this focus and commitment. TXM is an integrated solution designed to help federal agencies deliver trusted information and government services simply, consistently, and securely.
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We proactively detect and resolve barriers to reach target populations. In doing so, we aim to achieve higher levels of satisfaction, performance accuracy and accountability for our government customers. We take pride in our ability to implement complex public policy with efficient technology-based solutions.
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This new differentiated solution seamlessly integrates people, experience, data insights, and secure technologies into one digitally powered platform to reimagine government service delivery. • Future of Health.
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Our Total Experience Management is Federal Risk and Authorization Management Program (FedRAMP) secure, modular, and a scalable cloud-based platform that helps enable federal agencies to deliver smarter, citizen-centric services. We believe that this capability is an added differentiator for Maximus as governments seek service-based models to serve their citizens. • Focused on the Future of Health.
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Help governments reach the rising demand for health services by growing our clinical capabilities and increasing the level of sophistication of underlying tools to improve the health of people and their communities. • Advanced Technologies for Modernization .
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Maximus helps governments reach the rising demand for health services by automating complex processes and empowering health professionals with timely, actionable data – enabling them to focus on individuals while responding to community needs at scale.
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Services, and Outside the U.S. We operate in the United States and worldwide. For the year ended September 30, 2024, approximately 50% of our revenue was derived from U.S. federal government agencies, 36% from U.S. state government agencies, 12% from foreign government agencies, and the balance from other sources, including local municipalities and commercial customers.
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Our expanded clinical capabilities and scale also benefit from our adoption of sophisticated technology, including machine learning and AI, to improve the health of people and their communities. • Advancing Technological Modernization.
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Clinical services comprises appeals and assessments services, which includes managing the evaluation process for U.S. veterans and service members on behalf of the U.S. Department of Veterans Affairs (VA) and certain state-based assessments and appeals work that is part of the segment's heritage.
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Maximus provides technology modernization efforts for civilian, defense and national security, and health agencies, enabling us to support customers in the rapidly evolving and increasingly complex cybersecurity and geopolitical landscape. We view progress on this strategic imperative and expanding our federal footprint as critical to ensuring government programs are resilient, dynamic, and integrated.
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Under Technology Consulting Services (TCS), the segment executes on its digital strategy to deliver technology solutions that advance agency missions, including the challenge to modernize, provide better customer experience, and drive process efficiencies. Program Operations. Program operations include business process services (BPS), eligibility and enrollment, outreach, and other services for federal health and human services programs.
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We also support the Office of Personnel Management's Federal Employees Health Benefits program each year during its open enrollment period, handling the surge in customer calls. The way we deliver these services differs between contracts but may include a combination of digitally enabled contact centers, mail-room operations, and mobile or web-based platforms. Clinical Services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSimilarly, regulations governing the independence of Medicaid enrollment brokers and Medicare appeal providers prevent us from providing services to other organizations such as health plans and providers. We may face liabilities arising from divested or discontinued businesses. We have divested a number of businesses. The transaction documents for those divestitures typically contain a variety of representations, warranties, and indemnification obligations.
Biggest changeIn those situations, the divisions involved in operating such programs would likely be precluded from bidding on those RFPs. Similarly, regulations governing the independence of Medicaid enrollment brokers and Medicare appeal providers prevent us from providing services to other organizations such as health plans and providers.
Our business operates within a variety of complex regulatory environments, including but not limited to the FAR, Federal Cost Accounting Standards, the Truth in Negotiations Act, the Fair Debt Collection Practices Act (and similar national, state, and foreign laws), the Foreign Corrupt Practices Act, the United Kingdom Bribery Act, as well as the regulations governing Medicaid and Medicare and accounting standards.
Our business operates within a variety of complex regulatory environments, including but not limited to the FAR, Federal Cost Accounting Standards, the Truth in Negotiations Act, the Fair Debt Collection Practices Act (and similar national, state, and foreign laws), the Foreign Corrupt Practices Act (FCPA), the United Kingdom Bribery Act, as well as the regulations governing Medicaid and Medicare and accounting standards.
Our contracts typically run for a fixed number of years and may be extended for an additional specified number of years if the contracting entity or its agent elects to do so. When these contracts expire, they may be opened for bidding by competing bidders, and there is no guarantee that the contracts will be renewed or extended.
Our contracts typically run for a fixed number of years and may be extended for an additional specified number of years if the contracting entity or its agent elects to do so. When these contracts expire, they may be opened for bidding to competing bidders, and there is no guarantee that the contracts will be renewed or extended.
Our indebtedness contains financial or other covenants that limit our operational flexibility in a number of other ways, including: • causing us to be less able to take advantage of business opportunities, such as other acquisition opportunities, and to react to changes in market or industry conditions; • increasing our vulnerability to adverse economic, industry, or competitive developments; • affecting our ability to pay or refinance debts as they become due during adverse economic, financial market, and industry conditions; • requiring us to use a larger portion of cash flow for debt service, reducing funds available for other purposes; • decreasing our profitability and/or cash flow; • causing us to be disadvantaged compared to competitors with less leverage; and 23 Table of Contents • limiting our ability to borrow additional funds in the future to fund working capital, capital expenditures, and other general corporate purposes.
Our indebtedness contains financial or other covenants that limit our operational flexibility in a number of other ways, including: • causing us to be less able to take advantage of business opportunities, such as other acquisition opportunities, and to react to changes in market or industry conditions; • increasing our vulnerability to adverse economic, industry, or competitive developments; 25 Table of Contents • affecting our ability to pay or refinance debts as they become due during adverse economic, financial market, and industry conditions; • requiring us to use a larger portion of cash flow for debt service, reducing funds available for other purposes; • decreasing our profitability and/or cash flow; • causing us to be disadvantaged compared to competitors with less leverage; and • limiting our ability to borrow additional funds in the future to fund working capital, capital expenditures, and other general corporate purposes.
The risk of a security breach, system disruption, ransom-ware attack, or similar cyber-attack or intrusion, including by computer hackers, cyber terrorists, or foreign governments, is persistent and substantial as the volume, intensity, and sophistication of attempted attacks, intrusions and threats from around the world increase daily.
The risk of a security breach, system disruption, ransom-ware attack, or similar cyber-attack or intrusion, including by computer hackers, cyber terrorists, or foreign governments, is persistent, substantial, and increases as the volume, intensity, and sophistication of attempted attacks, intrusions and threats from around the world increase daily.
Our clients may elect to open bidding processes up earlier than anticipated, resulting in increased competition prior to the anticipated end of contracts. Our reputation and relationships with our clients are key factors in maintaining our business. Negative press reports or publicity, regardless of accuracy, could harm our reputation.
Our clients may elect to open bidding processes earlier than anticipated, resulting in increased competition prior to the anticipated end of contracts. Our reputation and relationships with our clients are key factors in maintaining our business. Negative press reports or publicity, regardless of accuracy, could harm our reputation.
Our growth strategy includes a program to identify and execute acquisitions to enable long-term, sustainable, organic growth by continuing to expand the business, enhance our clinical and digital capabilities, and extend into new market areas.
Our growth strategy includes a program to identify and execute acquisitions to enable long-term, sustainable, organic growth by continuing to expand the business, enhance our clinical and digital capabilities, and extend into new and adjacent market areas.
We are required to identify the fair value of assets acquired, such as customer relationships and technology, using estimates that are based upon factors such as expected future operations and the manner in which we will utilize these assets, which may be inaccurate or may change post-acquisition. In addition, we have recorded $1.78 billion of goodwill at September 30, 2024.
We are required to identify the fair value of assets acquired, such as customer relationships and technology, using estimates that are based upon factors such as expected future operations and the manner in which we will utilize these assets, which may be inaccurate or may change post-acquisition. In addition, we have recorded $1.78 billion of goodwill at September 30, 2025.
The comprehensive lifecycle utilization of AI, whether implemented directly by us or in collaboration with third parties, will necessitate ongoing investment in governance and security resources to help ensure its responsible use of AI and to safeguard against potential risks and vulnerabilities. The use of AI carries considerable risks, and we cannot guarantee the achievement of intended outcomes.
The comprehensive lifecycle utilization of AI, whether implemented directly by us or in collaboration with third parties, will necessitate ongoing investment in governance and security resources to help ensure our responsible use of AI and to safeguard against potential risks and vulnerabilities. The use of AI carries considerable risks, and we cannot guarantee the achievement of intended outcomes.
Within the U.S., state or local governments could be required to operate such programs with government employees as a condition of receiving federal funding. Moreover, under current law, in order to privatize certain functions of government programs, the U.S. federal government must grant consent and/or waiver to the petitioning state or local agency.
Within the United States, state or local governments could be required to operate such programs with government employees as a condition of receiving federal funding. Moreover, under current law, in order to privatize certain functions of government programs, the U.S. federal government must grant a consent and/or waiver to the petitioning state or local agency.
AI technologies create specific risks that require tailored governance and use case specific review. Insufficient oversight could lead to legal liability, financial loss, and reputational harm. We use artificial intelligence (AI) to sort, organize, analyze, and generate data for business purposes. AI encompasses machine learning, generative AI, and other standard techniques.
AI technologies create specific risks that require tailored governance and use case specific review. Insufficient oversight could lead to legal liability, financial loss, and reputational harm. We use AI to sort, organize, analyze, and generate data for business purposes. AI encompasses machine learning, generative AI, and other standard techniques.
This prohibition could impede or discourage an attempt to obtain control of us by requiring that any corporate actions initiated by shareholders be adopted only at properly called shareholder meetings. Item 1B. Unresolved Staff Comments None. 25 Table of Contents
This prohibition could impede or discourage an attempt to obtain control of us by requiring that any corporate actions initiated by shareholders be adopted only at properly called shareholder meetings. Item 1B. Unresolved Staff Comments None. 27 Table of Contents
Innovative, experienced, and technically proficient individuals are in great demand and are likely to remain a limited resource. There can be no assurance that we will be able to continue to attract and retain desirable executive officers, senior managers, and management personnel.
Innovative, experienced, and technically proficient individuals are in great demand and are likely to remain a limited resource. There can be no assurance that we will be able to continue to attract and retain desirable executive officers, senior managers, management personnel, and IT professionals.
To facilitate our ability to prepare bids in response to RFPs and retain existing work and secure new work on future procurements, we rely in part on establishing and maintaining relationships with officials of various government entities and agencies.
To facilitate our ability to prepare bids in response to competitive procurements, retain existing work, and secure new work on future procurements, we rely in part on establishing and maintaining relationships with officials of various government entities and agencies.
If a government audit finds improper or illegal activities by us or we otherwise determine that these activities have occurred, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines, and suspension or disqualification from doing business with the government.
If a government audit finds improper or illegal activities by us or we otherwise determine that these activities have occurred, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines, and suspension or disqualification from doing business with various governments.
As a result, a significant portion of our business operations are subject to foreign financial, tax, and business risks which could arise in the event of: • foreign currency exchange fluctuations, including unrealized foreign exchange gains and losses which may become realized in the event of a disposal or abandonment; • unexpected increases in tax rates or changes in U.S. or foreign tax laws; • non-compliance with international laws and regulations, such as data privacy, employment regulations, and trade barriers; • non-compliance with U.S. laws affecting the activities of U.S. companies in international locations, including the Foreign Corrupt Practices Act; • the absence in some jurisdictions of effective laws to protect our intellectual property rights; • new regulatory requirements or changes in local laws that materially affect the demand for our services or directly affect our foreign operations; • local economic and political conditions, including severe or protracted recessions in foreign economies and inflation risk; • the length of payment cycles and potential difficulties in collecting accounts receivable; • difficulty managing and communicating with teams outside the U.S.; • difficulty in maintaining our control environment, including controls over financial reporting; • unusual or unexpected monetary exchange controls, price controls, or restrictions on transfers of cash; or • civil disturbance, terrorism, or other geopolitical or catastrophic events that reduce business activity in other parts of the world.
As a result, a significant portion of our business operations are subject to foreign financial, tax, and business risks which could arise in the event of: • foreign currency exchange fluctuations, including unrealized foreign exchange gains and losses which may become realized in the event of a disposal or abandonment; • unexpected increases in tax rates or changes in U.S. or foreign tax laws; • non-compliance with international laws and regulations, such as data privacy, employment regulations, and trade barriers; • non-compliance with U.S. laws affecting the activities of U.S. companies in international locations, including the FCPA; • the absence in some jurisdictions of effective laws to protect our intellectual property rights; • new regulatory requirements or changes in local laws that materially affect the demand for our services or directly affect our foreign operations; • local economic and political conditions, including severe or protracted recessions in foreign economies and inflation risk; • the length of payment cycles and potential difficulties in collecting accounts receivable; • difficulty managing and communicating with teams outside the United States; • difficulty in maintaining our control environment, including controls over financial reporting; 26 Table of Contents • unusual or unexpected monetary exchange controls, price controls, or restrictions on transfers of cash; or • civil disturbance, terrorism, or other geopolitical or catastrophic events that reduce business activity in other parts of the world.
Those services include operating a Medicaid enrollment center pursuant to specified standards, designing and implementing information systems or applications, or delivering a planning document under a consulting arrangement.
Those services include operating a Medicaid enrollment center pursuant to specified standards, designing and implementing information systems or applications, or delivering a planning document under a professional services arrangement.
We cannot anticipate if, when, or to what extent a customer might terminate their contracts with us. If we fail to establish and maintain important relationships with government officials, entities and agencies, our ability to successfully bid under RFPs and retain existing work and secure new work on future procurements may be adversely affected.
We cannot anticipate if, when, or to what extent a customer might terminate their contracts with us. 17 Table of Contents If we fail to establish and maintain important relationships with government officials, entities and agencies, our ability to successfully bid under RFPs, retain existing work, and secure new work on future procurements may be adversely affected.
If our systems or networks are compromised, we could be adversely affected by losing confidential or protected information of program participants 16 Table of Contents and clients or by facing a demand for ransom to prevent disclosure of or to restore access to such information.
If our systems or networks are compromised, we could be adversely affected by losing confidential or protected information of program participants and clients or by facing a demand for ransom to prevent disclosure of or to restore access to such information.
The use of AI technologies involves issues associated with intellectual property, data privacy, consumer protection, competition, and equal opportunity, with potential for new regulations. AI is under review by U.S. Federal and State and international agencies, and the recent elections may influence the regulatory landscape in the United States.
The use of AI technologies involves issues associated with intellectual property, data privacy, consumer protection, competition, and equal opportunity, with potential for new regulations. AI is under review by U.S. federal and state and international agencies, and changes in administration may influence the regulatory landscape for AI in the United States.
The markets in which we sell our products are served by a relatively small number of governmental agencies, which limits the number of potential customers.
The markets in which we sell our services are served by a relatively small number of governmental agencies, which limits the number of potential customers.
These factors may lead to decreased revenues and profits, which could adversely affect our business, financial condition, and results of operations. 24 Table of Contents Our business could be materially and adversely impacted by natural or man-made factors outside of our control.
These factors may lead to decreased revenues and profits, which could adversely affect our business, financial condition, and results of operations. Our business could be materially and adversely impacted by natural or man-made factors outside of our control.
We may have disputes with our subcontractors, teaming partners, or other third parties arising from the quality and timeliness of their work, customer concerns about them, or other matters. Subcontractor or teaming partner performance deficiencies could result in a customer terminating our contract for default.
We have in the past and may in the future have disputes with our subcontractors, teaming partners, or other third parties arising from the quality and timeliness of their work, customer concerns about them, or other matters. Subcontractor or teaming partner performance deficiencies can result in a customer terminating our contract for default.
Any significant disruption or deterioration in our relationship with federal, state, and local governments and a corresponding reduction in these contracts would significantly reduce our revenue and could substantially harm our business. In fiscal year 2024, approximately 55% of our revenue came from our ten largest contracts.
Any significant disruption or deterioration in our relationship with federal, state, and local governments and a corresponding reduction in these contracts would significantly reduce our revenue and could substantially harm our business. In fiscal year 2025, approximately 60% of our revenue came from our ten largest contracts.
There can be no guarantee that our preventative and remediation efforts will be sufficient to protect the company's information systems, information, and other assets from significant harm and that future cybersecurity incidents will not have a material adverse effect on the company or its results of operations or financial condition or cause reputational or other harm to the company.
There can be no guarantee that our preventative and remediation efforts will be sufficient to protect our information systems, information, and other assets from significant harm and that future cybersecurity incidents will not have a material adverse effect on us or our results of operations or financial condition or cause reputational or other harm to us.
The effectiveness of these consultants may be reduced or eliminated if a significant political change occurs. In that circumstance, we may be unable to successfully manage our relationships with government entities and agencies and with elected officials and appointees. Any failure to maintain positive relationships with government entities and agencies may adversely affect our business.
The effectiveness of these resources may be reduced or eliminated if a significant political change or policy occurs. In that circumstance, we may be unable to successfully manage our relationships with government entities and agencies and with elected officials and appointees. Any failure to maintain active relationships with government entities and agencies may adversely affect our business.
Integration of acquired businesses may result in material challenges, including, without limitation: • Our management might have its attention diverted from ongoing business concerns while trying to integrate these operations, and we could experience performance shortfalls within our existing or acquired businesses as a result of the devotion of management's attention to integration efforts. • The integration process could take longer than anticipated and could result in the loss of key employees, the disruption of each company's ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, compliance requirements, procedures, and policies, any of which could materially adversely affect our ability to maintain relationships with customers, employees, or other third parties, or our ability to achieve the anticipated benefits of the transactions, and could harm our financial performance. • We could encounter unanticipated issues in integrating information technology, communications, and other systems that could harm our financial performance. • If we are unable to successfully or timely integrate our operations with those of our acquisitions, we may incur unanticipated liabilities and be unable to realize the revenue growth, synergies, and other anticipated benefits, and our business, results of operations, and financial condition could be materially adversely affected.
Integration of acquired businesses may result in material challenges, including, without limitation: • Our management might have its attention diverted from ongoing business concerns while trying to integrate these operations, and we could experience performance shortfalls within our existing or acquired businesses as a result of the devotion of management's attention to integration efforts. • The integration process could take longer than anticipated and could result in the loss of key employees, the disruption of each company's ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, IT systems, compliance requirements, procedures, and policies, any of which could materially adversely affect our ability to maintain relationships with customers, employees, or other third parties, or our ability to achieve the anticipated benefits of the transactions, and could harm our financial performance. • We could encounter unanticipated issues in integrating IT, communications, and other systems that could harm our financial performance. • If we are unable to successfully or timely integrate our operations with those of the companies or assets we acquire, we may incur unanticipated liabilities and be unable to realize the revenue growth, synergies, and other anticipated benefits, and our business, results of operations, and financial condition could be materially adversely affected. 21 Table of Contents We may face liabilities arising from divested or discontinued businesses.
Termination without cause provisions generally allow the government to terminate a contract at any time and enable us to recover only our costs incurred or committed and settlement expenses and profit, if any, on the work completed prior to termination.
Termination without cause provisions generally allow the government to terminate a contract entirely or partially for particular services at any time and enable us to recover only our costs incurred or committed and settlement expenses and profit, if any, on the work completed prior to termination.
We may be exposed to liability, and we and our clients may be adversely affected if a subcontractor or teaming partner fails to meet its contractual obligations. Risks Pertaining to Data and Data Security Our use of artificial intelligence (AI) involves risks such as potential liability, regulatory issues, competition, and reputational damage.
We may be exposed to liability, and we and our clients may be adversely affected if a subcontractor or teaming partner fails to meet its contractual obligations. 19 Table of Contents Risks Pertaining to Technology, Data and Data Security Our use of AI involves risks such as potential liability, regulatory issues, competition, and reputational damage.
For example, our fixed-price and performance-based contracts typically include labor escalators but varying market conditions could require wage increases exceeding the priced escalators, which would adversely impact margins. This is one of many factors that may impact profitability on multi-year fixed-price and performance-based contracts.
For example, our fixed-price and performance-based contracts typically include labor escalators but varying market conditions could require wage increases exceeding the priced escalators, which would adversely impact margins. This has happened in the past and may happen again in the future. This is one of many factors that may impact profitability on multi-year fixed-price and performance-based contracts.
We have experienced cybersecurity incidents in the past that were immaterial, and in the third quarter of fiscal year 2023, we experienced a material cybersecurity incident as the personal information of a significant number of individuals was accessed by an unauthorized third party by exploiting a zero-day vulnerability in a third-party vendor's file transfer application used by many organizations, including us.
In the third quarter of fiscal year 2023, we experienced a material cybersecurity incident as the personal information of a significant number of individuals was accessed by an unauthorized third party by exploiting a zero-day vulnerability in a third-party vendor's file transfer application used by many organizations, including us.
Further, as a government contractor subject to the types of regulatory schemes described above, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits, and other legal actions and liabilities to which other private sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows, and financial condition.
Further, as a government contractor subject to the types of regulatory schemes described above, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits, and other legal actions and liabilities to which other private sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows, and financial condition. 22 Table of Contents Adverse judgments or settlements in legal disputes could harm our operating results, cash flows, and financial condition.
Factors that may cause our cash flows and results of operations to vary from quarter to quarter include: • the commencement of new contracts; 22 Table of Contents • caseloads and other factors where revenue is derived on transactional volume on contracts; • the levels of revenue earned and profitability of fixed-price and performance-based contracts; • expenses related to certain contracts which may be incurred in periods prior to revenue being recognized; • increasing rates of inflation, which may increase our costs of labor and other goods and services; • the commencement, completion, or termination of contracts during any particular quarter; • the schedules of government agencies for awarding contracts; • government budgetary delays or shortfalls; • the timing of change orders being signed; • the terms of awarded contracts; and • potential acquisitions.
Factors that may cause our cash flows and results of operations to vary from quarter to quarter include: • the commencement, completion, or termination of contracts; • caseloads and other factors where revenue is derived on transactional volume on contracts; • the levels of revenue earned and profitability of fixed-price and performance-based contracts; • expenses related to certain contracts which may be incurred in periods prior to revenue being recognized; • increasing rates of inflation, which may increase our costs of labor and other goods and services; • the schedules of government agencies for awarding contracts; • government budgetary delays or shortfalls; • the timing of change orders being signed; • delays in payments from customers for a variety of reasons, including updating payment systems and timing for contract updates; • the terms of awarded contracts; and • potential acquisitions.
For performance-based contracts, we receive our fee on a per-transaction basis or upon meeting specified milestones. These contracts include workforce services contracts in which we receive a payment for performing an independent medical examination or placing a participant in sustained employment for a specified time period. For fixed-price contracts, we receive our fee based on services provided.
These contracts include contracts in which we receive a payment for performing an independent medical examination or placing a participant in sustained employment for a specified time period. For fixed-price contracts, we receive our fee based on services provided.
A successful union organizing effort at one or more of our locations could substantially increase our costs and result in our inability to successfully recompete for existing business. Outside the United States, we currently operate outsourced programs with unionized employees in the U.K., and in the past we have operated programs with unionized employees in Canada.
A successful union organizing effort at one or more of our locations could substantially increase our costs and result in our inability to successfully recompete for existing business. Outside the United States, we currently operate outsourced programs with unionized employees in the U.K. and Canada. We experienced opposition from unions in Canada, which objected to the outsourcing of government programs.
In fiscal year 2024, approximately 50% of our total revenue was derived from the U.S. federal government, and approximately 37% of our total revenue was derived from contracts with state and local government agencies.
In fiscal year 2025, approximately 55% of our total revenue was derived from the U.S. federal government, and approximately 33% of our total revenue was derived from contracts with state and local government agencies.
These relationships enable us to provide informal input and advice to government entities and agencies prior to the development of an RFP and our capabilities to support government objectives. We also engage marketing consultants and other third-party consultants to establish and maintain relationships with elected officials and appointed members of government agencies.
These relationships enable us to provide informal feedback and advice to government entities and agencies prior to the development of competitive procurement requirements, and our capabilities to support government objectives. We also engage third-party consultants and coalitions to establish and maintain relationships with elected officials and appointed members of government agencies.
Although it is difficult to track all the reasons for changes in our contracts, we believe that this contract erosion has typically affected approximately 7% to 10% of our business annually, with the erosion largely being replaced by new or expanded work elsewhere. 17 Table of Contents Our business could be adversely affected by future legislative or government budgetary and spending changes.
Although it is difficult to track all the reasons for changes in our contracts, we believe that this contract erosion has typically affected approximately 7% to 10% of our business annually, with the erosion largely being replaced by new or expanded work elsewhere.
All IDIQs, including GWACs, are regulated by the FAR, which sets forth rules and regulations that must be followed by federal agencies and providers of goods and services to the government in the procurement process. For instance, in 2018, Maximus Federal was named a recipient of the U.S. General Services Administration's (GSA) Alliant 2 GWAC.
All IDIQs, including GWACs, are regulated by the FAR, which sets forth rules and regulations that must be followed by federal agencies and providers of goods and services to the government in the procurement process. This includes competing for the award of task orders pursuant to GWACs. For instance, in 2018, Maximus was named a recipient of the U.S.
If the U.S. federal government does not grant a necessary consent or waiver, the state or local agency will be unable to outsource that function to a private entity, such as us.
If the U.S. federal government does not grant a necessary consent or waiver, the state or local agency will be unable to outsource that function to a private entity, such as us. This situation could eliminate or reduce the value of an existing contract.
We are subject to the risks of doing business internationally. For the year ended September 30, 2024, 12% of our revenue was driven from jurisdictions outside the U.S.
We are subject to the risks of doing business internationally. For the year ended September 30, 2025, 11% of our revenue was driven from jurisdictions outside the United States.
The market for our services depends largely on domestic and international legislative programs and the budgetary capability to support programs, including the continuance of existing programs. Many of our contracts are not fully funded at inception and rely upon future appropriations of funds. Accordingly, a failure to receive additional anticipated funding may result in early termination of a contract.
The market for our services depends largely on domestic and international legislative programs and the budgetary capability to support programs, including the continuance of existing programs. Many of our contracts are not fully funded at inception and rely upon future appropriations of funds.
In connection with our acquisitions, we may be required to take write-downs, write-offs, restructuring, impairment, or other charges that could negatively affect our business, assets, liabilities, prospects, outlook, financial condition, and results of operations.
We have faced, and continue to face, indemnification claims and liabilities, including those from alleged breaches of representations and warranties. In connection with our acquisitions, we may be required to take write-downs, write-offs, restructuring, impairment, or other charges that could negatively affect our business, assets, liabilities, prospects, outlook, financial condition, and results of operations.
Risks Pertaining to Our Client Relationships We obtain most of our business through competitive bidding in response to government RFPs. We may not be awarded contracts through this process at the same level in the future as in the past, and contracts we are awarded may not be profitable. Substantially all of our customers are government agencies.
We may not be awarded contracts through this process at the same level in the future as in the past, and contracts we are awarded may not be profitable. Substantially all of our customers are government agencies.
We may be precluded from bidding and performing certain work due to other work we currently perform. Various laws and regulations prohibit companies from performing work for government agencies that might be viewed as an actual or apparent conflict of interest. These laws limit our ability to pursue and perform certain types of work.
Various laws and regulations prohibit companies from performing work for government agencies that might be viewed as an actual or apparent conflict of interest. These laws limit our ability to pursue and perform certain types of work. For example, some of our businesses assist government agencies in developing RFPs for various government programs.
We may encounter start-up challenges, new compliance requirements, unforeseen costs, and other risks as we enter new markets, including managing our ramp-up, recruiting and retaining appropriately experienced and qualified employees, managing customer expectations, and appropriately budgeting and pricing new work.
In seeking these opportunities, we may encounter start-up challenges, new compliance requirements, unforeseen costs, and other risks as we enter new markets, including identifying appropriate opportunities, differentiating ourselves from competitors, managing our ramp-up, recruiting and retaining appropriately experienced and qualified employees, managing customer expectations, and appropriately budgeting and pricing new work. There are inherent risks in our expansion goals.
If our estimates prove to be inaccurate, we may not achieve the level of profit we expected, or we may incur a net loss on a contract. Our growth initiatives could adversely affect our profitability.
If our estimates prove to be inaccurate, we may not achieve the level of profit we expected, or we may incur a net loss on a contract. 18 Table of Contents Our growth initiatives could adversely affect our profitability. Our strategic plan seeks to expand our existing business and identify new organic growth opportunities.
In addition, under government procurement regulations and practices, a negative determination from a government audit could result in a contractor being fined, debarred, and/or suspended from being able to bid on, or be awarded new government contracts for a period of time. Within our U.S.
In addition, under government procurement regulations and practices, a negative determination from a government audit could result in a contractor being fined, debarred, and/or suspended from being able to bid on, or be awarded new government contracts for a period of time. 15 Table of Contents We obtain most of our business through competitive bidding in response to government Requests For Proposals (RFP).
In these situations, we are required to expend significant sums of money before receiving related contract payments. In addition, payments due to us from government agencies may be delayed due to billing cycles or as a result of failures by the government to approve governmental budgets in a timely manner.
In addition, payments due to us from government agencies may be delayed due to administrative delays, billing cycles, or as a result of failures by the government to approve governmental budgets in a timely manner.
Our success requires that we attract, develop, motivate, and retain: • experienced and innovative executive officers globally; • senior managers who have successfully managed or designed government services programs; and • information technology professionals who have designed or implemented complex information technology projects within and outside the U.S.
The additional operational staff also creates a concurrent demand for increased administrative personnel. Our success requires that we attract, develop, motivate, and retain: • experienced and innovative executive officers; • senior managers who have successfully managed or designed government services programs; and • IT professionals who have designed or implemented complex IT projects within and outside the United States.
Additionally, if our internal networks were compromised, we could suffer the loss of proprietary, trade secret, or confidential technical and financial data. That could make us less competitive in the marketplace and adversely affect our existing business, future opportunities, and financial condition.
Additionally, if our internal networks were compromised, we could suffer the loss of proprietary, trade secret, or confidential technical and financial data.
In addition, litigation and other legal claims are subject to inherent uncertainties, and management's view of these matters may change in the future. Those uncertainties include, but are not limited to, costs of litigation, unpredictable court or jury decisions, and the differing laws and attitudes regarding damage awards among the states and countries in which we operate.
Those uncertainties include, but are not limited to, costs of litigation, unpredictable court or jury decisions, and the differing laws and attitudes regarding damage awards among the states and countries in which we operate. We may be precluded from bidding and performing certain work due to other work we currently perform.
Even if unsuccessful, such organizing efforts could be disruptive to our business operations and can result in adverse publicity. The potential for adverse media coverage may have a negative effect on the willingness of government agencies to outsource or cause them to seek contract terms that could impact us adversely.
The potential for adverse media coverage may have a negative effect on the willingness of government agencies to outsource or cause them to seek contract terms that could impact us adversely, which has happened in the past and could happen again in the future.
This situation could eliminate or reduce the value of an existing contract. 18 Table of Contents We rely on key contracts with state, local, and federal governments for a significant portion of our revenue. A substantial reduction in those contracts would materially adversely affect our operating results.
Risks Pertaining to Our Client Relationships We rely on key contracts with state, local, and federal governments for a significant portion of our revenue. A substantial reduction in those contracts would materially adversely affect our operating results.
These investments may not be recovered if we are unsuccessful in our entrance into these markets. We face competition from a variety of organizations, many of which have substantially greater financial resources than we do; we may be unable to compete successfully with these organizations.
We face competition from a variety of organizations, many of which have substantially greater financial resources than we do; we may be unable to compete successfully with these organizations. We face competition from a number of different organizations depending upon the market and geographic location in which we are competing.
In addition, we may be unable to compete for the limited number of large contracts because we may not be able to meet a Request For Proposal's (RFP) requirement to obtain and post a large performance bond.
In addition, we may be unable to compete for the limited number of large contracts because we may not be able to meet an RFP requirement to obtain and post a large performance bond. In some cases, competitors may choose to take greater risks or lower profit margins in order to enter a market or build market share.
If the carrying value of our assets, including goodwill, exceeds their fair value, we may be required to take write-offs, write-downs, restructuring, impairment, or other charges that could negatively affect business, assets, liabilities, prospects, outlook, financial condition, and results of operations. 20 Table of Contents Risks Pertaining to Legal Compliance We are subject to review and audit by governments at their sole discretion and, if any improprieties are found, we may be required to refund revenue we have received or forego anticipated revenue, which could have a material adverse impact on our revenue and our ability to bid in response to RFPs.
Risks Pertaining to Legal Compliance We are subject to review and audit by governments at their sole discretion and, if any improprieties are found, we may be required to refund revenue we have received or forego anticipated revenue, which could have a material adverse impact on our revenue and our ability to bid in response to RFPs.
Federal business, our ability to participate in many competitive bids in response to government RFPs is dependent on our Government-Wide Acquisition Contracts (GWACs), the most commonly used process by which agencies of the federal government purchase goods and services. Eligibility to remain on a GWAC changes over time.
Within our U.S. federal business, our ability to participate in many competitive bids in response to government RFPs is dependent on us maintaining our status as a contractor on, and/or winning new Government-Wide Acquisition Contracts (GWACs). GWACs are an important process by which agencies of the federal government purchase goods and services.
Government entities have in the past terminated and may, in the future, terminate their contracts with us earlier than we expect, which may result in revenue shortfalls and unrecovered costs. Many of our government contracts contain base periods of one or more years, as well as option periods covering more than half of the contract's potential duration.
Government entities have in the past and may in the future conclude their contracts with us earlier than we expect, or they could terminate their contracts with us earlier than we expect, which may result in revenue shortfalls and unrecovered costs.
If we are unable to adapt to changing eligibility requirements for strategic GWAC competitions, we would risk losing access to related contracts and awards. 19 Table of Contents Risks Related to our Acquisitions We may experience difficulties in integrating our operations with those of acquired businesses and realizing the expected benefits of these acquisitions.
Risks Related to our Acquisitions We may experience difficulties in integrating our operations with those of acquired businesses and realizing the expected benefits of these acquisitions.
If we do not win certain recompetes, this may adversely affect our revenues and profitability, potentially resulting in impairment of goodwill and other intangible assets.
Even where we are an incumbent, our ability to secure continued work or work at similar margins may be affected by competitive rebids or contract changes and cancellations. If we do not win certain recompetes, this may adversely affect our revenues and profitability, potentially resulting in impairment of goodwill and other intangible assets.
If any of our current significant contracts or significant contracts we enter into in the future were terminated or our work under those contracts was decreased, our revenues and net income could significantly decline. Additional potential impacts of the loss of a significant contract or contracts might include impairment charges over tangible assets and intangible assets, including our goodwill balance.
Furthermore, approximately one-fifth of our revenue came from contracts with a single federal agency. If any of our current significant contracts or significant contracts we enter into in the future were terminated or our work under those contracts was decreased, our revenues and net income could significantly decline.
We experienced opposition from unions in Canada, which objected to the outsourcing of government programs. Our unionized workers outside the United States could declare a strike or could bargain in a manner that could adversely affect our performance and financial results.
Our unionized workers outside the United States could declare a strike or could bargain in a manner that could adversely affect our performance and financial results. 24 Table of Contents General Risk Factors A number of factors may cause our cash flows and results of operations to vary from quarter to quarter.
In addition, many of our contracts include clauses that allow clients to unilaterally modify or terminate contracts with little or no recompense. Changes in state or federal government initiatives or in the level of government spending due to budgetary or deficit considerations may have a significant impact on our future financial performance.
Changes in state or federal government initiatives or in the level of government spending due to budgetary or deficit considerations may have a significant impact on our future financial performance. In recent quarters, the U.S. federal government has placed a significant focus on efficiency, including with respect to contracting with private companies.
These may include lawsuits and claims related to contracts, subcontracts, securities compliance, employment and wage claims, and compliance with Medicaid and Medicare regulations, as well as laws governing student loans and child support enforcement. Adverse judgments or settlements in some or all of these legal disputes may result in significant monetary damages or injunctive relief.
From time to time, we are subject to a variety of lawsuits and other claims. These may include lawsuits and claims related to contracts, subcontracts, securities compliance, employment and wage claims, and compliance with Medicaid and Medicare regulations, laws governing student loans and child support enforcement, and other matters.
We must also assemble and submit a large volume of information within an RFP's rigid timetable. Our ability to respond successfully to RFPs will greatly impact our business. There is no assurance that we will continue to obtain contracts in response to government RFPs, and our proposals may not result in profitable contracts.
We must also assemble and submit a large volume of information that must comply with the RFP's rigid requirements and relatively short timetable. Our ability to successfully respond to RFPs could greatly impact our business.
At September 30, 2024, our effective interest rate was 5.52%, compared to 5.97% at September 30, 2023. Our credit facilities are subject to variable rates that expose us to interest rate risk. When interest rates increase, our debt service obligations on the variable rate indebtedness increase even though the amount borrowed remains the same.
When interest rates increase, our debt service obligations on the variable rate indebtedness increase even though the amount borrowed remains the same.
We may also incur impairment costs on assets related to these contracts. If we fail to accurately estimate the factors upon which we base our contract pricing, we may generate less profit than expected or incur losses on those contracts. During fiscal year 2024, we derived approximately 55% of our revenue from performance-based contracts and 13% from fixed-price contracts.
The resulting reputational damage may also affect our ability to compete for and win work elsewhere. If we fail to accurately estimate the factors upon which we base our contract pricing, we may generate less profit than expected or incur losses on those contracts.
Many of these companies are international in scope, larger than us, and have greater financial resources, name recognition, and larger technical staff. Substantial resources could enable certain competitors to initiate severe price cuts or take other measures in an effort to gain market share.
Merger and acquisition activity is widespread in our industry and could result in the emergence of companies which are better able to compete against us. Substantial resources could enable certain competitors to initiate severe price cuts or take other measures in an effort to gain market share.
Government agencies do not have to exercise these option periods, and they may elect not to exercise them for budgetary, performance, or any other reason. Our contracts also typically contain provisions permitting a government customer to terminate the contract on short notice, with or without cause.
Many of our government contracts contain base periods of one or more years, as well as option periods covering more than half of the contract's potential duration. Government agencies do not have to exercise these option periods, and they may elect not to exercise them for budgetary, performance, or any other reason.
Approximately half of our long-term debt is held at variable interest rates. Interest rates in the United States are currently close to their highest levels for over a decade. Higher interest rates have a detrimental effect on our profits and cash flows, as well as reducing the amount of cash we have available for servicing of debt or other transactions.
Approximately half of our long-term debt is held at variable interest rates. Although interest rates in the United States have declined from recent highs, they remain close to their highest levels in over a decade.
Alliant 2 is an unrestricted, IDIQ, multi-vendor award with a contract ceiling of $50 billion.
General Services Administration's (GSA) Alliant 2 GWAC. Alliant 2 is an unrestricted, multi-vendor IDIQ award with a contract ceiling of $50 billion. Later, we competed for and won a contract that was awarded as a task order under the Alliant 2 GWAC.
In addition, competitors may protest contracts awarded to us through the RFP process that may cause the award to be delayed, overturned, or require the customer to reinitiate the RFP process. Even where we are an incumbent, our ability to secure continued work or work at similar margins may be affected by competitive rebids or contract changes and cancellations.
In addition, competitors may protest contracts awarded to us through the RFP process that may cause the award to be delayed, cancelled, or require the customer to reinitiate the RFP process. Any loss or delay of start-up and funding of work under protested contract awards may adversely affect our revenues and profitability.
If we are unable to manage the risks of operating in these new markets, our reputation and profitability could be adversely affected. We may incur significant costs before receiving related contract payments, which could result in an increased use of cash and risk of impairment charges.
Even if our efforts are successful, growth initiatives may divert management's focus from our core business, and we may be unable to realize the levels of profitability we anticipated. If we are unable to manage the risks of operating in these new markets, our reputation and profitability could be adversely affected.
New or expanded AI laws could raise compliance costs and pose unpredictable risks, potentially affecting our operations and results. Our systems and networks are and have been subject to cybersecurity breaches.
New or expanded AI laws could raise compliance costs and pose unpredictable risks, potentially affecting our operations and results. We may not be successful in our AI initiatives, which could adversely affect our business, reputation, and/or financial results. AI presents new risks and challenges that may affect our business.
We may or may not be able to recover all the costs incurred during the start-up phase of a terminated contract. The unexpected termination of significant contracts could result in significant revenue shortfalls. If revenue shortfalls occur and are not offset by corresponding reductions in expenses, our business could be adversely affected.
If revenue declines occur and are not offset by corresponding reductions in expenses, our business could be adversely affected.
To market our services to government customers, we are often required to respond to government RFPs, which may result in contract awards on a competitive basis. To do so effectively, we must accurately estimate our cost structure for providing the required services, the time required to establish operations, and likely terms of the proposals submitted by competitors.
To do so effectively, we must accurately estimate our cost structure for providing the required services, the time required to establish operations, and attempt to submit a proposal that is more advantageous for the client than our competitors' proposals.
To the extent that a project does not perform as anticipated, these deferred costs may not be considered recoverable, resulting in an impairment charge. 15 Table of Contents We may also make broad investments in resources, such as technology or personnel, to address new or adjacent markets.
We may also make broad investments in resources, such as technology or personnel, to address new or adjacent markets. These investments may not be recovered if we are unsuccessful in our entrance into these markets. When making these investments we assume that we will be able to recover these costs through future revenues or anticipated cost savings.
As contracts reach re-procurement milestones, we may have the ability to adjust our pricing to current and/or future expected market conditions. Our indebtedness could adversely affect our business and our ability to meet our obligations. At September 30, 2024, we owed $1.1 billion under our credit facilities.
Our indebtedness could adversely affect our business and our ability to meet our obligations. At September 30, 2025, we owed $1.3 billion under our credit facilities. At September 30, 2025, our effective interest rate was 5.37%, compared to 5.52% at September 30, 2024. Our credit facilities are subject to variable rates that expose us to interest rate risk.
If we are unsuccessful and not awarded GWAC contracts, this would have a negative impact on future opportunities. A GWAC is a pre-competed, multiple-award, indefinite-delivery, indefinite-quantity (IDIQ) contract that agencies can use to buy total IT solutions.
Eligibility to remain on a GWAC changes over time. If we are unsuccessful in maintaining eligibility or are not awarded GWACs, this would have a negative impact on our future opportunities. A GWAC is a procurement instrument intended for use by multiple U.S. federal government agencies.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Technology Committee, comprised of four board members possessing relevant background and experience, assists the Board of Directors in its oversight role with respect to strategy and risk management for our information systems, information technology, or IT, and IT security, including cybersecurity. 26 Table of Contents The Technology Committee is briefed at least quarterly, on the quality and effectiveness of our cybersecurity practices and policies, information security program and infrastructure, and data governance and security program, along with key initiatives in this area.
Biggest changeOur Technology Committee, comprised of four board members possessing relevant background and experience, assists the Board of Directors in its oversight role with respect to strategy and risk management for our information systems, IT, and cybersecurity. 28 Table of Contents The Technology Committee is briefed at least quarterly, on the quality and effectiveness of our cybersecurity practices and policies, information security program, and data governance and security program, along with key initiatives in these areas.
We have recorded expenses in connection with the investigation and remediation activities related to this incident; further details are included in "Note 15. Commitments and Contingencies" in Item 8 of this Annual Report on Form 10-K. To date, we are not aware of any other cybersecurity incidents that have had a material effect on our business.
We recorded expenses in connection with the investigation and remediation activities related to this incident; further details are included in "Note 15. Commitments and Contingencies" in Item 8 of this Annual Report on Form 10-K. To date, we are not aware of any other cybersecurity incidents that have had a material effect on our business.
High-risk vendors are re-evaluated annually while moderate-risk vendors are evaluated every three years. Ongoing monitoring is in place for all high, moderate, and low risk vendors using an external service that rates the cybersecurity posture of corporate entities using a scored analysis of cyber threats.
High-risk vendors are re-evaluated annually while moderate-risk vendors are evaluated every three years. Ongoing monitoring is in place for all high and moderate risk vendors using an external service that rates the cybersecurity posture of corporate entities using a scored analysis of cyber threats.
The Technology Committee also assesses the cybersecurity risk management strategy. This assessment includes reviews of the results of audits, testing, and metrics, including reports of third-party reviewers.
The Technology Committee also periodically assesses the cybersecurity risk management strategy. This assessment includes reviews of the results of audits, testing, and metrics, including reports of third-party reviewers.
Our CISO has over thirty years of business and technical experience in information risk, risk management, and regulatory compliance, including twelve years in a CISO role. Our information security team manages risks by establishing policies and procedures that manage information system access appropriately.
Our CISO has over thirty years of business and technical experience in information risk, risk management, and regulatory compliance, including thirteen years in a CISO role. Our information security team manages risks by establishing policies and procedures that manage information system access appropriately.
For high- and moderate-risk vendors, an assessment is completed that includes reviewing external audits and certifications (e.g., SOC 2 Type 2 audit, ISO27001 and associated Statement of Applicability, FedRAMP authorization). As needed, an industry-standard questionnaire is completed by the vendor and the results assessed by ISO in an effort to ascertain information security maturity and overall posture.
For high- and moderate-risk vendors, an assessment is completed that includes reviewing external audits and certifications (e.g., SOC 2 Type 2 audit, ISO27001 and associated Statement of Applicability, or FedRAMP). As needed, an industry-standard questionnaire is completed by the vendor and the results assessed by ISO in an effort to ascertain the vendor's information security maturity and overall posture.
Typical activities for our information security team include system monitoring, new hire and annual training, testing and evaluation, including "phishing" exercises, and publication of tips and best practices. The results of this testing are communicated company-wide, including to the Technology Committee of the Board of Directors.
Typical activities for our information security team include system monitoring, new hire and annual training, testing and evaluation, including "phishing" exercises, and publication of tips and best practices. The results of this testing are communicated to corporate leadership, including to the Technology Committee of the Board of Directors.
Our CISO reports to the Technology Committee as requested, but no less than quarterly. 27 Table of Contents
Our CISO reports to the Technology Committee as requested, but no less than quarterly. 29 Table of Contents
There can be no guarantee that such efforts will be sufficient to protect the company's information systems, information, and other assets from significant harm and that future cybersecurity incidents will not have a material adverse effect on the company or its results of operations or financial condition or cause reputational or other harm to the company.
There can be no guarantee that such efforts will be sufficient to protect our information systems, information, and other assets from significant harm and that future cybersecurity incidents will not have a material adverse effect on our results of operations or financial condition or cause reputational or other harm to us.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties As of September 30, 2024, we leased approximately 141 offices in the U.S., totaling approximately 3.0 million square feet. In seven countries outside the U.S., we leased approximately 321 offices, totaling approximately 0.6 million square feet. The lease terms vary from month-to-month to ten-year leases and are generally entered into at market rates.
Biggest changeItem 2. Properties As of September 30, 2025, we leased approximately 130 offices in the U.S., totaling approximately 2.4 million square feet. In five countries outside the U.S., we leased approximately 102 offices, totaling approximately 0.3 million square feet. The lease terms vary from month-to-month to ten-year leases and are generally entered into at market rates.
Item 3. Legal Proceedings Refer to our disclosures included in " Note 15. Commitments and Contingencies " included in Item 8 of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 28 Table of Contents PART II
Item 3. Legal Proceedings Refer to our disclosures included in " Note 15. Commitments and Contingencies " included in Item 8 of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 30 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCommon Stock Repurchase Activity During the Three Months Ended September 30, 2024 Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of the Publicly Announced Plans (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans (in thousands) July 1, 2024 - July 31, 2024 250,194 $ 84.78 250,194 $ 172,643 August 1, 2024 - August 31, 2024 — — — $ 172,643 September 1, 2024 - September 30, 2024 14,316 84.83 14,316 $ 171,429 264,510 $ 84.78 264,510 (1) In June 2024, the Board of Directors authorized an increase to our existing stock purchase program whereby we may purchase, at management's discretion, up to $200.0 million of our common stock.
Biggest changeCommon Stock Repurchase Activity During the Three Months Ended September 30, 2025 Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of the Publicly Announced Plans (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans (in thousands) July 1, 2025 - July 31, 2025 — $ — — $ 65,839 August 1, 2025 - August 31, 2025 375,898 84.05 375,898 $ 34,246 September 1, 2025 - September 30, 2025 1,345,241 88.64 1,345,241 $ 280,764 1,721,139 $ 87.64 1,721,139 (1) In September 2025, the Board of Directors authorized an increase to our existing stock purchase program whereby we may purchase, at management's discretion, up to $400 million of our common stock.
In addition, we compared the cumulative total shareholder return of a peer group to our common stock's performance. This peer group is based upon the companies with similar revenue by end market. This peer group is comprised of Booz Allen Hamilton Holding Corp., CACI International Inc., Conduent, Inc., ICF International, Inc., Leidos, Inc., and Science Applications International Corporation (SAIC).
In addition, we compared the cumulative total shareholder return of a peer group to our common stock's performance. This peer group is based upon the companies with similar revenue by end market. This peer group is comprised of Booz Allen Hamilton Holding Corporation, CACI International Inc., Conduent, Inc., ICF International, Inc., Leidos, Inc., and Science Applications International Corporation (SAIC).
This graph assumes the investment of $100 on September 30, 2019, in our common stock, the S&P MidCap 400 Value Index, the S&P 400 Commercial and Professional Index, and our peer group, weighted by market capitalization, and assumes dividends are reinvested. 29 Table of Contents Notes: • The lines represent index levels derived from compounded daily returns that include all dividends. • The indexes are reweighted daily, using the market capitalization on the previous trading day. • If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used. • The index level for all series was set to $100.00 on September 30, 2019.
This graph assumes the investment of $100 on September 30, 2020, in our common stock, the S&P MidCap 400 Value Index, the S&P 400 Commercial and Professional Index, and our peer group, weighted by market capitalization, and assumes dividends are reinvested. 31 Table of Contents Notes: • The lines represent index levels derived from compounded daily returns that include all dividends. • The indexes are reweighted daily, using the market capitalization on the previous trading day. • If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used. • The index level for all series was set to $100.00 on September 30, 2020.
The number of holders of record is not representative of the number of beneficial owners due to the fact that many shares are held by depositories, brokers, or nominees. We estimate there are approximately 170,000 beneficial owners of our common stock.
The number of holders of record is not representative of the number of beneficial owners due to the fact that many shares are held by depositories, brokers, or nominees. We estimate there are approximately 151,000 beneficial owners of our common stock.
Issuer Purchases of Equity Securities The following table sets forth the information required regarding purchases of common stock that we made during the three months ended September 30, 2024.
Issuer Purchases of Equity Securities The following table sets forth the information required regarding purchases of common stock that we made during the three months ended September 30, 2025.
Stock Performance Graph The following graph compares the cumulative total shareholder return on our common stock for the five-year period from September 30, 2019, to September 30, 2024, with the cumulative total returns for the S&P MidCap 400 Value Index, which is utilized in outstanding market-based equity awards issued by Maximus.
Stock Performance Graph The following graph compares the cumulative total shareholder return on our common stock for the five-year period from September 30, 2020, to September 30, 2025, with the cumulative total returns for the S&P MidCap 400 Value Index, which is utilized in outstanding market-based equity awards issued by Maximus.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange, or NYSE, under the symbol "MMS." Holders of Record As of October 22, 2024, there were 31 holders of record of our outstanding common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange, or NYSE, under the symbol "MMS." Holders of Record As of October 20, 2025, there were 30 holders of record of our outstanding common stock.
Dividend Policy During the first fiscal quarter of 2025, we declared a quarterly dividend of $0.30 per share of Maximus common stock. Our quarterly dividends during fiscal years 2024, 2023, and 2022 were $0.30, $0.28, and $0.28 per share, respectively. We intend to continue paying regular cash dividends, although there is no assurance of this.
Dividend Policy During the first fiscal quarter of fiscal year 2026, we declared a quarterly dividend of $0.30 per share of Maximus common stock. Our quarterly dividends during fiscal years 2025, 2024, and 2023 were $0.30, $0.30, and $0.28 per share, respectively. We intend to continue paying regular cash dividends, although there can be no assurance.
Added
This authorization superseded similar resolutions for purchases up to $200 million of our common stock in June 2024 and December 2024.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFinancial Statements and Supplementary Data 46 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 46 Consolidated Statements of Operations 48 Consolidated Statements of Comprehensive Income 49 Consolidated Balance Sheets 50 Consolidated Statements of Cash Flows 51 Consolidated Statements of Changes in Shareholders' Equity 52 Notes to the Consolidated Financial Statements 53 1. Organization 53 2.
Biggest changeFinancial Statements and Supplementary Data 48 Report of Independent Registered Public Accounting Fir m (PCAOB ID: 185) 48 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 50 Consolidated Statements of Operations 51 Consolidated Statements of Comprehensive Income 52 Consolidated Balance Sheets 53 Consolidated Statements of Cash Flows 54 Consolidated Statements of Changes in Shareholders' Equity 55 Notes to the Consolidated Financial Statements 56 1.
Item 6. [Reserved] 30 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Business Overview 31 Financial Overview 31 Results of Operations 32 Backlog 37 Liquidity and Capital Resources 37 Critical Accounting Policies and Estimates 42 Non-GAAP and Other Measures 43 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 45 Item 8.
Item 6. [Reserved] 32 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 33 Business Overview 33 Financial Overview 33 Results of Operations 34 Backlog 39 Liquidity and Capital Resources 39 Critical Accounting Policies and Estimates 44 Non-GAAP and Other Measures 45 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 47 Item 8.
Cash and Cash Equivalents and Restricted Cash 75 2 Table of Contents Table of Contents to 2024 Form 10-K (continued) 14. Other Balance Sheet Components 75 15. Commitments and Contingencies 77 16. Employee Benefit Plans and Deferred Compensation 79 17. Subsequent Events 79
Cash and Cash Equivalents and Restricted Cash 77 2 Table of Contents Table of Contents to 2025 Form 10-K (continued) 14. Other Items 77 15. Commitments and Contingencies 79 16. Employee Benefit Plans and Deferred Compensation 80 17. Subsequent Event 80
Significant Accounting Policies 53 3. Business Segments 59 4. Revenue Recognition 61 5. Earnings Per Share 63 6. Debt and Derivatives 64 7. Acquisitions and Divestitures 66 8. Goodwill and Intangibles 67 9. Fair Value Measurements 68 10. Leases 70 11. Income Taxes 71 12. Equity 74 13.
Organization 56 2. Significant Accounting Policies 56 3. Business Segments 62 4. Revenue Recognition 64 5. Earnings Per Share 66 6. Debt and Derivatives 67 7. Acquisitions and Divestitures 69 8. Goodwill and Intangible Asset s 70 9. Fair Value Measurements 71 10. Leases 73 11. Income Taxes 73 12. Equity 76 13.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe have included a table showing our reconciliation of these income measures to their corresponding GAAP measures. 43 Table of Contents Table MD&A 14: Non-GAAP Adjusted Results - Operating Income, Adjusted EBITDA, Net Income, and Diluted Earnings per Share For the Year Ended September 30, 2024 2023 (dollars in thousands, except per share data) Operating income $ 488,499 $ 294,794 Add back: Amortization of intangible assets 91,570 94,591 Add back: Divestiture-related charges 1,018 3,751 Adjusted operating income excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) $ 581,087 $ 393,136 Adjusted operating income margin excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) 11.0 % 8.0 % Add back: Depreciation and amortization of property, equipment, and capitalized software 33,957 54,725 Adjusted EBITDA (Non-GAAP) $ 615,044 $ 447,861 Adjusted EBITDA margin (Non-GAAP) 11.6 % 9.1 % Net income $ 306,914 $ 161,792 Add back: Amortization of intangible assets, net of tax 67,481 69,714 Add back: Divestiture-related charges 1,018 3,751 Adjusted net income excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) $ 375,413 $ 235,257 Diluted earnings per share $ 4.99 $ 2.63 Add back: Effect of amortization of intangible assets on diluted earnings per share 1.10 1.14 Add back: Effect of divestiture-related charges on diluted earnings per share 0.02 0.06 Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) $ 6.11 $ 3.83 In order to sustain our net cash provided by operating activities, we regularly refresh our fixed assets and technology.
Biggest changeWe have included a table showing our reconciliation of these income measures to their corresponding GAAP measures. 45 Table of Contents Table MD&A 14: Non-GAAP Adjusted Results - Operating Income, Adjusted EBITDA, Net Income, and Diluted Earnings per Share For the Year Ended September 30, 2025 2024 (dollars in thousands, except per share data) Operating income $ 528,289 $ 488,499 Add back: Amortization of intangible assets 92,047 91,570 Add back: Divestiture-related charges 39,549 1,018 Add back: Depreciation and amortization of property, equipment, and capitalized software 41,669 33,957 Adjusted EBITDA (Non-GAAP) $ 701,554 $ 615,044 Adjusted EBITDA margin (Non-GAAP) 12.9 % 11.6 % Net income $ 319,034 $ 306,914 Add back: Amortization of intangible assets, net of tax 67,839 67,481 Add back: Divestiture-related charges 39,549 1,018 Adjusted net income excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) $ 426,422 $ 375,413 Diluted earnings per share $ 5.51 $ 4.99 Add back: Effect of amortization of intangible assets on diluted earnings per share 1.17 1.10 Add back: Effect of divestiture-related charges on diluted earnings per share 0.68 0.02 Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) $ 7.36 $ 6.11 In order to sustain our cash flows from operations, we regularly refresh our fixed assets and technology.
This ratio also determines both our interest rate and the charge we pay on the unused component of our revolving credit facility, with the charge increasing as the leverage ratio increases. • Our Consolidated Net Interest Coverage Ratio means, for any twelve-month period, the ratio of our Consolidated EBITDA against our Consolidated Net Interest Expense as defined by the Credit Agreement.
This ratio also determines both our interest rate and the charge we pay on the unused component of our revolving credit facility, with the charge increasing as the Consolidated Net Total Leverage Ratio increases. • Our Consolidated Net Interest Coverage Ratio means, for any twelve-month period, the ratio of our Consolidated EBITDA against our Consolidated Net Interest Expense, as defined by the Credit Agreement.
The longevity of these contracts assists management in predicting revenue, operating income, and cash flows for the purposes of business planning. Our standard forecasting process includes analyzing new work pipelines and submitted responses to requests for proposals (RFPs) when predicting future revenue, operating income, and cash flows.
The longevity of these contracts assists management in predicting revenue, operating income, and cash flows for the purposes of business planning. Our standard forecasting process includes analyzing new work pipelines and submitted responses to requests for proposals when predicting future revenue, operating income, and cash flows.
Financial Statements and Supplementary Data. The discussion below contains management's comments on our business strategy and outlook, and such discussions contain forward-looking statements. These forward-looking statements reflect the expectations, beliefs, plans, and objectives of management about future financial performance and assumptions underlying management's judgment concerning the matters discussed, and accordingly involve estimates, assumptions, judgments, and uncertainties.
The discussion below contains management's comments on our business strategy and outlook, and such discussions contain forward-looking statements. These forward-looking statements reflect the expectations, beliefs, plans, and objectives of management about future financial performance and assumptions underlying management's judgment concerning the matters discussed, and accordingly involve estimates, assumptions, judgments, and uncertainties.
Leases" to the Consolidated Financial Statements for information regarding our leases, including obligations by fiscal year. 41 Table of Contents Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and judgments that affect the amounts reported.
Leases" to the Consolidated Financial Statements for information regarding our leases, including obligations by fiscal year. 43 Table of Contents Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and judgments that affect the amounts reported.
Business Overview For an overview of our business, including our business segments and discussion of the services we provide, see Item 1. Business of this Annual Report on Form 10-K. Financial Overview A number of factors have affected our fiscal year 2024 results, the most significant of which we have listed below.
Business Overview For an overview of our business, including our business segments and discussion of the services we provide, see Item 1. Business of this Annual Report on Form 10-K. Financial Overview A number of factors have affected our fiscal year 2025 results, the most significant of which we have listed below.
Table MD&A 10: Debt Balances and Interest Rates as of September 30, 2024 September 30, 2024 Carrying value Effective cash interest rate Interest rate basis (dollars in thousands) Term Loan A - Hedged through May 2026 $ 500,000 3.81 % Fixed rate of 2.31% plus margin.
Table MD&A 10: Debt Balances and Interest Rates as of September 30, 2025 September 30, 2025 Carrying value Effective cash interest rate Interest rate basis (dollars in thousands) Term Loan A - Hedged through May 2026 $ 500,000 3.81 % Fixed rate of 2.31% plus margin.
Where we have acquisitions that provide services to more than one segment or where the acquisition provides benefits across all of our segments, we use judgment to allocate the goodwill balance based on the relative value we anticipate that each segment will realize. 42 Table of Contents • Goodwill is not amortized but is subject to impairment testing on an annual basis, or more frequently if impairment indicators arise.
Where we have acquisitions that provide services to more than one segment or where the acquisition provides benefits across all of our segments, we use judgment to allocate the goodwill balance based on the relative value we anticipate that each segment will realize. • Goodwill is not amortized but is subject to impairment testing on an annual basis, or more frequently if impairment indicators arise.
To calculate organic growth, we compare current fiscal year results, excluding transactions from acquisitions or disposals, to our prior fiscal year results. Our recent acquisitions have resulted in significant intangible assets, which are amortized over their estimated useful lives.
To calculate organic growth, we compare current fiscal year results, excluding transactions from acquisitions or disposals, to our prior fiscal year results. Our previous acquisitions have resulted in significant intangible assets, which are amortized over their estimated useful lives.
In recent years, we have made a number of acquisitions. We believe users of our financial statements wish to evaluate the performance of our operations, excluding changes that have arisen due to businesses acquired or disposed of.
In recent years, we have made a number of acquisitions and divestitures. We believe users of our financial statements wish to evaluate the performance of our operations, excluding changes that have arisen due to businesses acquired or disposed of.
Accordingly, we provide DSO, which we calculate by dividing billed and unbilled receivable balances at the end of each quarter by revenue per day for the period. Revenue per day for a quarter is determined by dividing total revenue by 91 days. 44 Table of Contents
Accordingly, we provide DSO, which we calculate by dividing billed and unbilled receivable balances at the end of each quarter by revenue per day for the quarter. Revenue per day for a quarter is determined by dividing total revenue by 91 days. 46 Table of Contents
(the "Credit Agreement"). At September 30, 2024, we owed $1.15 billion under the Credit Agreement, with access to an additional $750.0 million through a revolving credit facility. Mandatory repayments are required under this agreement through May 2031, when the agreement ends, and must be renegotiated or the funds repaid.
(the "Credit Agreement"). At September 30, 2025, we owed $1.35 billion under the Credit Agreement, with access to an additional $750.0 million through a revolving credit facility. Mandatory repayments are required under this agreement through May 2031, when the agreement ends, and must be renegotiated or the funds repaid.
Risk Factors" and in "Special Note Regarding Forward-Looking Statements." A discussion of our results of operations, backlog, and liquidity and capital resources for fiscal year 2023, including comparisons to fiscal year 2022, can be found in last year's Annual Report on Form 10-K.
Risk Factors" and in "Special Note Regarding Forward-Looking Statements." A discussion of our results of operations, backlog, and liquidity and capital resources for fiscal year September 30, 2024, including comparisons to fiscal year 2023, can be found in last year's Annual Report on Form 10-K.
We have included the following table showing our debt balances as of September 30, 2024, and their effective interest rates.
We have included the following table showing our debt balances as of September 30, 2025, and their effective interest rates.
In preparing our discussion and analysis of these results, we focused on the comparison between fiscal years 2024 and 2023.
In preparing our discussion and analysis of these results, we focused on the comparison between fiscal years 2025 and 2024.
These non-GAAP measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies. In fiscal year 2024, 12% of our revenue was generated outside the U.S.
These non-GAAP measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies. In fiscal year 2025, 11% of our revenue was generated outside the U.S.
There are two financial covenants, both defined in the Credit Agreement. • Our Consolidated Net Total Leverage Ratio means, for any twelve-month period, the ratio of our Funded Debt, offset by up to $150 million (which was $75 million under our previous agreement) of unrestricted cash (Consolidated Total Leverage), against our Consolidated EBITDA (as defined by the Credit Agreement).
There are two financial covenants, both defined in the Credit Agreement: • Our Consolidated Net Total Leverage Ratio means, for any twelve-month period, the ratio of our Funded Debt (as defined by the Credit Agreement), offset by up to $150 million of unrestricted cash (Consolidated Net Total Leverage), against our Consolidated EBITDA (as defined by the Credit Agreement).
We believe we have access to sufficient funds to manage through a potential shutdown of the U.S. federal government. See "Note 8. Debt and Derivatives" to the Consolidated Financial Statements for a more detailed discussion of our debt financing arrangements. 37 Table of Contents The below table summarizes our change in cash, cash equivalents, and restricted cash.
We believe we have access to sufficient funds to manage through another shutdown of the U.S. federal government. See "Note 6. Debt and Derivatives" to the Consolidated Financial Statements for a more detailed discussion of our debt financing arrangements. 39 Table of Contents The below table summarizes our change in cash, cash equivalents, and restricted cash.
Services Segment Our U.S. Services Segment provides a variety of BPS, such as program operations, clinical services, employment services, and technology solutions and related consulting work for U.S. state and local government programs.
Services Segment provides a variety of services, such as program operations, clinical services, employment services and technology solutions and related professional services work for U.S. state and local government programs.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together with the Company's audited consolidated financial statements and the related notes thereto for the fiscal years ended September 30, 2024, 2023, and 2022, included in Item 8.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together with our audited consolidated financial statements and the related notes thereto for the fiscal years ended September 30, 2025, 2024, and 2023, included in Item 8. Financial Statements and Supplementary Data.
We have provided a reconciliation of net cash provided by operating activities to free cash flow in "Liquidity and Capital Resources." To sustain our operations, our principal source of financing comes from receiving payments from our customers. We believe that users of our financial statements wish to evaluate our efficiency in converting revenue into cash receipts.
We have provided a reconciliation of cash flows from operations to free cash flow in "Liquidity and Capital Resources." To sustain our operations, our principal source of financing comes from receiving payments from our customers. We believe that users of our financial statements want to evaluate our efficiency in converting revenue into cash receipts.
The identification of our reporting units requires judgment based on the manner in which our business is operated and the services performed. Our reporting units are consistent with our segments.
Goodwill is recorded at the reporting unit level. The identification of our reporting units requires judgment based on the manner in which our business is operated and the services performed. Our reporting units are consistent with our segments.
Liquidity and Capital Resources Our primary sources of liquidity are cash on hand, cash from operations, and availability under our revolving credit facilities. As of September 30, 2024, we had $183.1 million in cash and cash equivalents.
Liquidity and Capital Resources Our primary sources of liquidity are cash on hand, cash from operations, and availability under our revolving credit facilities. As of September 30, 2025, we had $222.4 million in cash and cash equivalents.
Accordingly, it is not possible to estimate the potential tax obligations if we were to remit all of our funds from foreign locations to the United States. 38 Table of Contents Free Cash Flow (Non-GAAP) Table MD&A 9: Free Cash Flow (Non-GAAP) For the Year Ended September 30, 2024 2023 (in thousands) Net cash provided by operating activities $ 515,258 $ 314,340 Purchases of property and equipment and capitalized software (114,190) (90,695) Free cash flow (Non-GAAP) $ 401,068 $ 223,645 Material Cash Requirements from Contractual Obligations Credit Facilities Our principal debt agreement is with JPMorgan Chase Bank N.A.
Accordingly, it is not possible to estimate the potential tax obligations if we were to remit all of our funds from foreign locations to the United States. 40 Table of Contents Free Cash Flow (Non-GAAP) Table MD&A 9: Free Cash Flow (Non-GAAP) For the Year Ended September 30, 2025 2024 (in thousands) Net cash provided by operating activities $ 429,372 $ 515,258 Purchases of property and equipment and capitalized software (63,213) (114,190) Free cash flow (Non-GAAP) $ 366,159 $ 401,068 Material Cash Requirements from Contractual Obligations Credit Facilities Our principal debt agreement is with JPMorgan Chase Bank N.A.
The presentation of non-GAAP numbers is not meant to be considered in isolation, nor as an alternative to revenue growth, net cash provided by operating activities, operating income, net income, or earnings per share as measures of performance or liquidity.
The presentation of these measures is meant to complement, but not replace, other financial measures in this document. The presentation of non-GAAP numbers is not meant to be considered in isolation, nor as an alternative to revenue growth, net cash provided by operating activities, operating income, net income, or earnings per share as measures of performance or liquidity.
We believe that users of our financial statements wish to understand the cash flows that directly correspond with our operations and the investments we must make in those operations using a methodology that combines net cash provided by operating activities and capital expenditures. We provide free cash flow to complement our consolidated statements of cash flows.
We believe that users of our financial statements want to understand the cash flows that directly correspond with our operations and the investments we must make in those operations using a methodology that combines operating cash flows and capital expenditures. We provide free cash flow to complement our statement of cash flows.
Failure to meet these requirements would result in a need to renegotiate the agreement or a requirement to repay our outstanding debt in full.
Failure to meet these requirements would result in a need to renegotiate the agreement, seek a waiver, or require us to repay our outstanding debt in full.
This valuation will also involve identifying the useful economic life of this asset. Our estimates of these fair values and useful economic lives are based upon assumptions we believe to be reasonable and, where appropriate, include assistance from third-party appraisal firms.
This valuation will also involve identifying the useful economic life of this asset. Our estimates of these fair values and useful economic lives are based upon assumptions we believe to be reasonable and, where appropriate, include assistance from third-party appraisal firms. • The excess purchase price over the identified net assets is considered to be goodwill.
We also believe that it is difficult to predict future revenue solely based on analysis of backlog. The actual timing of revenue from projects included in backlog will vary. We also may experience periods in which there is a greater concentration of rebids, resulting in a comparatively reduced backlog balance until subsequent award or extension on those contracts.
The actual timing of revenue from projects included in backlog will vary. We also may experience periods in which there is a greater concentration of rebids, resulting in a comparatively reduced backlog balance until subsequent award or extension on those contracts.
Business Combinations and Goodwill Our balance sheet as of September 30, 2024, includes $1.78 billion of goodwill and $630.6 million of net intangible assets.
Business Combinations and Goodwill Our balance sheet as of September 30, 2025, includes $1.78 billion of goodwill and $538.3 million of net intangible assets.
We believe users of our financial statements wish to understand the performance of the business by using a methodology that excludes the amortization of our intangible assets. During fiscal year 2023, we have also incurred losses on sales of businesses and taken an impairment charge on a business sold in early fiscal year 2024.
We believe users of our financial statements wish to understand the performance of the business by using a methodology that excludes the amortization of our intangible assets. During fiscal years 2025 and 2024, we also incurred losses on sales of businesses.
We do not believe that these covenants represent a significant restriction in our ability to operate our business or to pay our dividends. 40 Table of Contents Table MD&A 11: Reconciliation of Net Income to Consolidated EBITDA as defined by our Credit Agreement For the Year Ended September 30, 2024 2023 (in thousands) Net income $ 306,914 $ 161,792 Adjustments: Interest expense 82,440 84,138 Other expense, net (450) 363 Provision for income taxes 99,595 48,501 Amortization of intangibles 91,570 94,591 Stock compensation expense 35,349 29,522 Acquisition-related expenses 3,218 575 Loss on sale of businesses 1,018 883 Depreciation and amortization of property, equipment, and capitalized software 33,957 54,725 Pro forma and other adjustments permitted by our Credit Agreement 72,172 69,892 Consolidated EBITDA (as defined by our Credit Agreement) $ 725,783 $ 544,982 Table MD&A 12: Consolidated Net Total Leverage Ratio For the Year Ended September 30, 2024 2023 (in thousands, except ratio data) Funded Debt (as defined by our Credit Agreement) $ 1,145,819 $ 1,257,529 Cash and cash equivalents up to $150 million 150,000 65,405 Consolidated Net Total Leverage (as defined by our Credit Agreement) $ 995,819 $ 1,192,124 Consolidated Net Total Leverage Ratio (as defined by our Credit Agreement) 1.37 2.19 Table MD&A 13: Consolidated Net Interest Coverage Ratio For the Year Ended September 30, 2024 2023 (in thousands, except ratio data) Consolidated EBITDA (as defined by our Credit Agreement) $ 725,783 $ 544,982 Interest expense 82,440 84,138 Components of other income/expense, net allowed in ratio calculation 2,533 2,684 Consolidated Net Interest Expense (as defined by our Credit Agreement) $ 84,973 $ 86,822 Consolidated Net Interest Coverage Ratio (as defined by our Credit Agreement) 8.54 6.28 Leases As of September 30, 2024, we reported current and long-term operating lease liabilities of $47.7 million and $97.2 million, respectively.
We do not believe that these covenants represent a significant restriction on our ability to operate our business or to pay our dividends. 42 Table of Contents Table MD&A 11: Reconciliation of Net Income to Consolidated EBITDA as defined by our Credit Agreement For the Year Ended September 30, 2025 2024 (in thousands) Net income $ 319,034 $ 306,914 Adjustments: Interest expense 84,080 82,440 Other (income)/expense, net (640) (450) Provision for income taxes 125,815 99,595 Amortization of intangibles 92,047 91,570 Stock compensation expense 41,182 35,349 Acquisition-related expenses 427 3,218 Loss on sale of businesses 39,549 1,018 Depreciation and amortization of property, equipment, and capitalized software 41,669 33,957 Pro forma and other adjustments permitted by our Credit Agreement 50,832 72,172 Consolidated EBITDA (as defined by our Credit Agreement) $ 793,995 $ 725,783 Table MD&A 12: Consolidated Net Total Leverage Ratio For the Year Ended September 30, 2025 2024 (in thousands, except ratio data) Funded Debt (as defined by our Credit Agreement) $ 1,346,875 $ 1,145,819 Cash and cash equivalents up to $150 million 150,000 150,000 Consolidated Net Total Leverage (as defined by our Credit Agreement) $ 1,196,875 $ 995,819 Consolidated Net Total Leverage Ratio (as defined by our Credit Agreement) 1.51 1.37 Table MD&A 13: Consolidated Net Interest Coverage Ratio For the Year Ended September 30, 2025 2024 (in thousands, except ratio data) Consolidated EBITDA (as defined by our Credit Agreement) $ 793,995 $ 725,783 Interest expense 84,080 82,440 Components of other income/expense, net allowed in ratio calculation 1,748 2,533 Consolidated Net Interest Expense (as defined by our Credit Agreement) $ 85,828 $ 84,973 Consolidated Net Interest Coverage Ratio (as defined by our Credit Agreement) 9.25 8.54 Leases As of September 30, 2025, we reported current and long-term operating lease liabilities of $38.6 million and $71.3 million, respectively.
Table MD&A 8: Net Change in Cash and Cash Equivalents and Restricted Cash For the Year Ended September 30, 2024 2023 (in thousands) Cash flows: Net cash provided by operating activities $ 515,258 $ 314,340 Net cash used in investing activities (129,104) (80,963) Net cash used in financing activities (275,646) (250,798) Effect of foreign exchange rates on cash and cash equivalents and restricted cash 3,164 2,717 Net change in cash and cash equivalents and restricted cash $ 113,672 $ (14,704) Net Cash Provided By Operating Activities Net cash provided by operating activities increased by $200.9 million in fiscal year 2024 compared to fiscal year 2023.
Table MD&A 8: Net Change in Cash and Cash Equivalents and Restricted Cash For the Year Ended September 30, 2025 2024 (in thousands) Cash flows: Net cash provided by operating activities $ 429,372 $ 515,258 Net cash used in investing activities (60,261) (129,104) Net cash used in financing activities (343,877) (275,646) Effect of foreign exchange rates on cash and cash equivalents and restricted cash (538) 3,164 Net change in cash and cash equivalents and restricted cash $ 24,696 $ 113,672 Net Cash Provided By Operating Activities Net cash provided by operating activities decreased by $85.9 million in fiscal year 2025 compared to fiscal year 2024.
Table MD&A 1: Consolidated Results of Operations For the Year Ended September 30, 2024 2023 (dollars in thousands, except per share data) Revenue $ 5,306,197 $ 4,904,728 Cost of revenue 4,054,545 3,876,120 Gross profit 1,251,652 1,028,608 Gross profit percentage 23.6 % 21.0 % Selling, general, and administrative expenses 671,583 639,223 Selling, general, and administrative expenses as a percentage of revenue 12.7 % 13.0 % Amortization of intangible assets 91,570 94,591 Operating income 488,499 294,794 Operating margin 9.2 % 6.0 % Interest expense 82,440 84,138 Other (income)/expense, net (450) 363 Income before income taxes 406,509 210,293 Provision for income taxes 99,595 48,501 Effective tax rate 24.5 % 23.1 % Net income $ 306,914 $ 161,792 Earnings per share: Basic $ 5.03 $ 2.65 Diluted $ 4.99 $ 2.63 Our business segments have different factors driving revenue fluctuations and profitability.
Table MD&A 1: Consolidated Results of Operations For the Year Ended September 30, 2025 2024 (dollars in thousands, except per share data) Revenue $ 5,431,276 $ 5,306,197 Cost of revenue 4,097,833 4,054,545 Gross profit 1,333,443 1,251,652 Gross profit percentage 24.6 % 23.6 % Selling, general, and administrative expenses 713,107 671,583 Selling, general, and administrative expenses as a percentage of revenue 13.1 % 12.7 % Amortization of intangible assets 92,047 91,570 Operating income 528,289 488,499 Operating margin 9.7 % 9.2 % Interest expense 84,080 82,440 Other (income)/expense, net (640) (450) Income before income taxes 444,849 406,509 Provision for income taxes 125,815 99,595 Effective tax rate 28.3 % 24.5 % Net income $ 319,034 $ 306,914 Earnings per share: Basic $ 5.56 $ 5.03 Diluted $ 5.51 $ 4.99 Our business segments have different factors driving revenue fluctuations and profitability.
Federal Services Segment - Financial Results For the Year Ended September 30, 2024 2023 (dollars in thousands) Revenue $ 2,737,244 $ 2,403,606 Cost of revenue 2,071,482 1,845,720 Gross profit 665,762 557,886 Selling, general, and administrative expenses 332,140 308,197 Operating income 333,622 249,689 Gross profit percentage 24.3 % 23.2 % Operating margin percentage 12.2 % 10.4 % Our revenue and cost of revenue for the year ended September 30, 2024, increased 13.9% and 12.2%, respectively, compared to fiscal year 2023.
Federal Services Segment - Financial Results For the Year Ended September 30, 2025 2024 (dollars in thousands) Revenue $ 3,067,691 $ 2,737,244 Cost of revenue 2,256,928 2,071,482 Gross profit 810,763 665,762 Selling, general, and administrative expenses 341,608 332,140 Operating income 469,155 333,622 Gross profit percentage 26.4 % 24.3 % Operating margin percentage 15.3 % 12.2 % Our revenue and cost of revenue for the fiscal year ended September 30, 2025, increased 12.1% and 9.0%, respectively, compared to the fiscal year ended September 30, 2024.
We have not attempted to calculate our potential liability from any transfer of these funds, as any such transaction might include tax planning strategies that we have not fully explored.
As a result, we do not record U.S. deferred income taxes on any funds held in foreign jurisdictions. We have not attempted to calculate our potential liability from any transfer of these funds, as any such transaction might include tax planning strategies that we have not fully explored.
Segment - Financial Results For the Year Ended September 30, 2024 2023 (dollars in thousands) Revenue $ 657,140 $ 689,053 Cost of revenue 551,037 595,872 Gross profit 106,103 93,181 Selling, general, and administrative expenses 98,398 102,311 Operating income/(loss) 7,705 (9,130) Gross profit percentage 16.1 % 13.5 % Operating margin percentage 1.2 % (1.3) % Table MD&A 6: Outside the U.S.
Segment - Financial Results For the Year Ended September 30, 2025 2024 (dollars in thousands) Revenue $ 599,894 $ 657,140 Cost of revenue 488,196 551,037 Gross profit 111,698 106,103 Selling, general, and administrative expenses 89,307 98,398 Operating income 22,391 7,705 Gross profit percentage 18.6 % 16.1 % Operating margin percentage 3.7 % 1.2 % Table MD&A 6: Outside the U.S.
(1) Term Loan A - Unhedged 141,875 6.10 % Term SOFR reset monthly plus margin. (1) Term Loan B - Hedged through September 2026 75,000 5.72 % Fixed rate of 3.72% plus margin. (1) Term Loan B - Hedged through September 2025 75,000 6.09 % Fixed rate of 4.09% plus margin.
(1) Term Loan A - Unhedged 353,125 5.66 % Term SOFR reset monthly plus margin. (1) Term Loan B - Hedged through September 2026 75,000 5.72 % Fixed Rate of 3.72% plus 2% margin. Term Loan B - Hedged through September 2027 75,000 5.62 % Fixed Rate of 3.62% plus 2% margin.
We believe that providing supplemental measures that exclude the impact of the items detailed below is useful to investors in evaluating our core operations and results in relation to past periods.
We believe that providing supplemental measures that exclude the impact of the items detailed below is useful to investors in evaluating our core operations and results in relation to past periods. Accordingly, we have calculated our net income and diluted earnings per share, excluding the effect of the amortization of intangible assets and divestiture-related charges.
Table MD&A 2: Changes in Revenue, Cost of Revenue, and Gross Profit for the Year Ended September 30, 2024 Revenue Cost of Revenue Gross Profit Dollars % Change Dollars % Change Dollars % Change (dollars in thousands) Fiscal year 2023 $ 4,904,728 $ 3,876,120 $ 1,028,608 Organic growth 432,381 8.8 % 214,257 5.5 % 218,124 21.2 % Disposal of businesses (42,373) (0.9) % (45,539) (1.2) % 3,166 0.3 % Currency effect compared to the prior period 11,461 0.2 % 9,707 0.3 % 1,754 0.2 % Fiscal year 2024 $ 5,306,197 8.2 % $ 4,054,545 4.6 % $ 1,251,652 21.7 % 32 Table of Contents Selling, general, and administrative (SG&A) expenses Our SG&A expenses consist of indirect costs related to general management, marketing, and administration.
Table MD&A 2: Changes in Revenue, Cost of Revenue, and Gross Profit for the Year Ended September 30, 2025 Revenue Cost of Revenue Gross Profit Dollars % Change Dollars % Change Dollars % Change (dollars in thousands) Fiscal year 2024 $ 5,306,197 $ 4,054,545 $ 1,251,652 Organic growth 208,961 3.9 % 119,480 2.9 % 89,481 7.1 % Disposal of businesses (95,186) (1.8) % (86,059) (2.1) % (9,127) (0.7) % Currency effect compared to the prior period 11,304 0.2 % 9,867 0.2 % 1,437 0.1 % Fiscal year 2025 $ 5,431,276 2.4 % $ 4,097,833 1.1 % $ 1,333,443 6.5 % 34 Table of Contents Selling, general, and administrative (SG&A) expenses Our SG&A expenses consist of indirect costs related to general management, marketing, and administration.
Reductions in backlog come from fulfilling contracts or the early termination of contracts, which our experience shows to be a rare occurrence. The backlog associated with our performance-based contracts is an estimate based upon management's experience of caseloads and similar transaction volume, which is subject to revision based upon the latest information available.
The backlog associated with our performance-based contracts is an estimate based upon management's experience of caseloads and similar transaction volume, which is subject to revision based upon the latest information available. Additionally, backlog estimates may be affected by foreign currency fluctuations.
Additionally, backlog estimates may be affected by foreign currency fluctuations. For further discussion of the risks related to our backlog, see "Risk Factors" in Item 1A of this Annual Report, notably "We may not be able to realize the full value of our backlog." We believe that comparisons of backlog period-to-period are difficult.
For further discussion of the risks related to our backlog, see "Risk Factors" in Item 1A of this Annual Report on Form 10-K, notably "We may not be able to realize the full value of our backlog." We believe that it is difficult to predict with certainty future revenue solely based on an analysis of backlog or period-to-period comparisons.
Federal Services Segment Our U.S. Federal Services Segment delivers solutions that help various U.S. federal government agencies better deliver on their mission, including program operations and management, clinical services, and technology solutions. The segment also includes system and application development, Information Technology (IT) modernization, and maintenance services.
Federal Services Segment delivers solutions that help various U.S. federal government agencies better execute on their mission, including program operations and management, clinical services, and advanced technology solutions. Table MD&A 3: U.S.
Services Segment - Financial Results For the Year Ended September 30, 2024 2023 (dollars in thousands) Revenue $ 1,911,813 $ 1,812,069 Cost of revenue 1,432,026 1,434,528 Gross profit 479,787 377,541 Selling, general, and administrative expenses 232,805 194,991 Operating income 246,982 182,550 Gross profit percentage 25.1 % 20.8 % Operating margin percentage 12.9 % 10.1 % Our revenue for the year ended September 30, 2024, increased 5.5% and cost of revenue slightly declined compared to fiscal year 2023.
Services Segment - Financial Results For the Year Ended September 30, 2025 2024 (dollars in thousands) Revenue $ 1,763,691 $ 1,911,813 Cost of revenue 1,352,709 1,432,026 Gross profit 410,982 479,787 Selling, general, and administrative expenses 239,718 232,805 Operating income 171,264 246,982 Gross profit percentage 23.3 % 25.1 % Operating margin percentage 9.7 % 12.9 % Our revenue and cost of revenue for the year ended September 30, 2025, decreased 7.7% and 5.5%, respectively.
Our effective cash interest rate reflects the drivers of our cash interest payments as of September 30, 2024, which can change based upon the reset of the rates.
Our effective cash interest rate reflects the drivers of our cash interest payments as of September 30, 2025, which can change based upon the reset of the rates. Including the amortization of the upfront payments, our effective interest rate as of September 30, 2025 was 5.37%. 41 Table of Contents The Credit Agreement contains a number of covenants.
Adjusted EBITDA is also a useful measure of performance that focuses on the cash generating capacity of the business as it excludes the non-cash expenses of depreciation, amortization and divestiture-related charges, and makes for easier comparisons between the operating performance of companies with different capital structures by excluding interest expense and therefore, the impacts of financing costs.
In addition, Adjusted EBITDA, as calculated by us, is also a useful measure of performance that focuses on the cash generating capacity of the business as it excludes the non-cash expenses of depreciation and amortization of property, equipment, and capitalized software, amortization of intangible assets, and divestiture-related charges.
The amount of reserves required may change in future periods due to new developments or changes in approach to a matter, such as a change in settlement strategy. We are also subject to audits by our government clients on many of our contracts based upon measures such as costs incurred or transactions processed.
We are also subject to audits by our government clients on many of our contracts based upon measures such as costs incurred or transactions processed. These audits may take place several years after a contract has been completed.
Impairment testing is performed at the reporting unit level. This process requires judgment in assessing the fair value of these reporting units. We performed the annual impairment test using the qualitative assessment as of July 1, 2024, and concluded it was not more likely than not that the fair value of the reporting units was less than the carrying amounts.
We performed the annual impairment test using the qualitative assessment as of July 1, 2025, and concluded it was not more likely than not that the fair value of the reporting units was less than the carrying amounts. 44 Table of Contents Contingencies From time to time, we are involved in legal proceedings, including contract and employment claims, in the ordinary course of business.
We have summarized below the components of our two financial ratio calculations, including the components of Consolidated EBITDA as defined by the Credit Agreement, which are included within our financial statements. At September 30, 2024, we were in compliance with all applicable covenants of our Credit Agreement.
As a result, Consolidated EBITDA as defined by the Credit Agreement may not be comparable to EBITDA or related or similarly titled measures presented by other companies. We have summarized below the components of our two financial ratio calculations, including the components of Consolidated EBITDA as defined by the Credit Agreement which are included within our financial statements.
We have mitigated our risk by fixing interest rates on $650 million of our debt and our near-term capital allocation plan continues to prioritize reducing our debt using our free cash flow. At our current debt balances, a 100 basis point change in SOFR would result in an increased annual interest expense of $5.0 million.
Our effective interest rate was 5.37% at September 30, 2025, compared to 5.52% at September 30, 2024. We have mitigated our risk by fixing interest rates on approximately half of our debt and our near-term capital allocation plan continues to prioritize reducing our debt using our free cash flow.
These services support a variety of programs, including the programs under ACA, Medicaid, the Children's Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF), and child support programs. In fiscal years 2020 through 2023, many programs in this segment were operating with depressed margins resulting from the pause in Medicaid redeterminations.
These services support a variety of programs, including the programs under Medicaid and Children's Health Insurance Program (CHIP), the Affordable Care Act (ACA) marketplaces, Temporary Assistance to Needy Families (TANF), and child support programs. Table MD&A 4: U.S.
Segment Our Outside the U.S. Segment provides BPS and technology solutions for international governments. These services include health and disability assessments, program administration for employment services, wellbeing solutions and other job seeker-related services, digitally-enabled customer services, and advanced technologies for modernization.
These services include health and disability assessments, program administration for employment services, wellbeing solutions and other job seeker-related services, digitally-enabled customer services, and advanced technologies for modernization. We support programs and deliver services in the United Kingdom, including the Functional Assessment Services (FAS) contract and the Restart employment program. We also provide services in Canada and the Middle East.
These audits may take place several years after a contract has been completed. We maintain reserves where we believe a loss is probable and are able to estimate any potential liability that is updated as audits are completed.
We maintain reserves where we believe a loss is probable and are able to estimate any potential liability that is updated as audits are completed. Non-GAAP and Other Measures We utilize non-GAAP measures where we believe it will assist users of our financial statements in understanding our business.
Contingencies From time to time, we are involved in legal proceedings, including contract and employment claims, in the ordinary course of business. We assess the likelihood of any adverse judgments or outcomes to these contingencies, as well as potential ranges of probable losses, and establish reserves accordingly.
We assess the likelihood of any adverse judgments or outcomes to these contingencies, as well as potential ranges of probable losses, and establish reserves accordingly. The amount of reserves required may change in future periods due to new developments or changes in approach to a matter, such as a change in settlement strategy.
Segment - Changes in Revenue, Cost of Revenue and Gross Profit Revenue Cost of Revenue Gross Profit Amount % Change Amount % Change Amount % Change (dollars in thousands) Balance for fiscal year 2023 $ 689,053 $ 595,872 $ 93,181 Organic effect (1,001) (0.1) % (9,003) (1.5) % 8,002 8.6 % Disposal of businesses (42,373) (6.1) % (45,539) (7.6) % 3,166 3.4 % Currency effect compared to the prior period 11,461 1.7 % 9,707 1.6 % 1,754 1.9 % Balance for fiscal year 2024 $ 657,140 (4.6) % $ 551,037 (7.5) % $ 106,103 13.9 % The Outside the U.S.
Segment - Changes in Revenue, Cost of Revenue and Gross Profit Revenue Cost of Revenue Gross Profit Amount % Change Amount % Change Amount % Change (dollars in thousands) Balance for fiscal year 2024 $ 657,140 $ 551,037 $ 106,103 Organic effect 26,636 4.1 % 13,351 2.4 % 13,285 12.5 % Disposal of businesses (95,186) (14.5) % (86,059) (15.6) % (9,127) (8.6) % Currency effect compared to the prior period 11,304 1.7 % 9,867 1.8 % 1,437 1.4 % Balance for fiscal year 2025 $ 599,894 (8.7) % $ 488,196 (11.4) % $ 111,698 5.3 % We have divested a number of businesses from this segment across fiscal years 2024 and 2025.
Services 3,867 4,851 Outside the U.S. 2,014 2,089 Backlog $ 16,167 $ 20,740 At September 30, 2024, the average weighted remaining life of the contracts in our backlog was approximately 6.33 years, including option periods. Increases in backlog result from the award of new contracts and the extension or renewal of existing contracts.
Table MD&A 7: Backlog by Segment As of September 30, 2025 2024 (in millions) U.S. Federal Services $ 9,780 $ 10,286 U.S. Services 3,916 3,867 Outside the U.S. 1,631 2,014 Backlog $ 15,327 $ 16,167 At September 30, 2025, the average weighted remaining life of the contracts in our backlog was approximately 5.0 years, including option periods.
This may result in volatility within revenue as changes in estimates of future performance impact the revenue recognized in any period. 36 Table of Contents Backlog Backlog represents estimated future revenue from: • existing signed contracts; • contracts that have been awarded but not yet signed; and • unexercised priced contract options.
Segment in fiscal year 2026 to range between 3% to 5%. 38 Table of Contents Backlog Backlog represents estimated future revenue from: • existing signed contracts; • contracts that have been awarded but not yet signed; and • unexercised priced contract options. As of September 30, 2025, we estimate that we had approximately $15.3 billion in backlog.
When we are unable to remit funds back without incurring a penalty, we will consider these funds indefinitely reinvested until such time as these restrictions are changed. As a result, we do not record U.S. deferred income taxes on any funds held in foreign jurisdictions.
We will continue to explore opportunities to remit additional funds, taking into consideration the working capital requirements and relevant tax rules in each jurisdiction. When we are unable to remit funds back without incurring a penalty, we will consider these funds indefinitely reinvested until such time as these restrictions are changed.
(1) Term Loan B - Unhedged 348,750 6.60 % Term SOFR reset monthly plus margin. (1) Debt held by international subsidiaries 5,194 6.28 % Floating rate, reset quarterly. Debt Principal $ 1,145,819 (1) Applicable margin ranges between 1% and 2%, based on our leverage ratio.
Term Loan B - Unhedged 343,750 6.16 % Term SOFR reset monthly plus 2% margin. Debt Principal $ 1,346,875 (1) The applicable margin for Term Loan A ranges from 1% to 2%, depending on our leverage ratio as determined based on our most recently filed financial statements. As of September 30, 2025, the applicable margin was 1.5%.
Excluding the effect of our Receivables Purchase Agreement, our DSO would have been 65 days at both September 30, 2024 and 2023. Net Cash Used In Investing Activities We continue to make significant investments in our capital base, most notably in upgrading technology on our Federal MDE contracts; we anticipate this capital spend will decline in fiscal year 2025.
Net Cash Used In Investing Activities Our investing cash outflows were $60.3 million in fiscal year 2025, declining from $129.1 million in the prior fiscal year. • We have been making significant investments in our capital base in fiscal years 2024 and 2025, including upgrading technology in our federal medical disability examinations (MDE) contracts.
Accordingly, we have calculated our operating income, Adjusted EBITDA, net income, and diluted earnings per share, excluding the effect of the amortization of intangible assets and divestiture-related charges. As noted above, Adjusted EBITDA is calculated in a different manner from Consolidated EBITDA, as defined by our Credit Agreement.
We believe that these non-GAAP measures assist investors in making comparisons between the operating performance of companies with different capital structures by excluding interest expense and therefore, the impacts of financing costs. As disclosed above, Adjusted EBITDA is calculated in a different manner from Consolidated EBITDA, as defined by our Credit Agreement.
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More detail on these changes is presented below within our "Results of Operations" section. • We experienced significant organic growth within our United States businesses. This growth was driven by volume growth on our core programs, a return to full volumes on programs tied to Medicaid-related activities, such as redeterminations, and incremental work on Medicaid-related activities that provided surplus volumes.
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More detail on these changes is presented below within our "Results of Operations" section. • Our business has grown organically, mostly from the expansion of our U.S. Federal Services Segment. • During the first quarter of fiscal year 2025, we sold our businesses in Australia and Korea. This sale resulted in a loss and increased our full-year tax rate.
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This growth is reflected in our improved profitability and operating cash flows. • Our results in fiscal year 2023 included significant costs related to the investigation and remediation of a cybersecurity incident. Although we continue to incur costs to resolve this matter, the level of costs in fiscal year 2024 was significantly lower. • Our Outside the U.S.
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However, this sale, and similar sales made in fiscal year 2024, have streamlined our international businesses and resulted in improved results in our Outside the U.S.
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Segment has tempered losses through divestitures of businesses and a rebalancing of its portfolio.
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Segment. • Our operating cash flows remain strong and our overall leverage is relatively low, allowing us to make significant purchases of our own common stock. 33 Table of Contents Results of Operations The following table sets forth, for the fiscal years indicated, information derived from our statements of operations.
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It has also received a benefit in fiscal year 2024 from the strength of the British Pound. • Our interest costs have declined slightly despite fluctuating interest rates through a combination of reduced principal and our use of interest rate swaps. 31 Table of Contents Results of Operations The following table sets forth, for the fiscal years indicated, information derived from our statements of operations.
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Our SG&A expenses for fiscal year 2025 include a charge of $39.5 million related to the sale of certain of our businesses in our Outside the U.S. Segment. These charges included accumulated foreign currency losses incurred over two decades of operations, as well as indemnifications provided to the buyer. Absent this charge, SG&A was broadly consistent with fiscal year 2024.
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Our SG&A expenses have expanded through our growth, as well as investments made in our workforce and infrastructure. In addition, our SG&A includes charges which are not directly connected to our day-to-day operations.
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Interest expense Our interest expense is principally driven by our debt facility in the United States. During fiscal year 2025, delays in payments from customers resulted in additional borrowings under our revolving credit facility, resulting in higher borrowings than in the prior year. This additional cost was partially offset by lower interest rates.
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Our costs for the year ended September 30, 2024 and 2023, include charges of $2.9 million and $29.3 million, respectively, for the investigation and remediation costs of a previously disclosed cybersecurity incident.
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At our current debt balances, a 100 basis point increase in the Secured Overnight Financing Rate (SOFR) would result in an increased annual interest expense of $7.0 million. Income taxes Our effective income tax rate for the fiscal years ended September 30, 2025 and 2024, was 28.3% and 24.5%, respectively.
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As previously disclosed, the Company believes that the personal information of a significant number of individuals was accessed by an unauthorized third party by exploiting a zero-day vulnerability in a file transfer application used by the Company for internal and external file sharing purposes.
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Our fiscal year 2025 tax rate was negatively affected by the disposal of our businesses in Australia and Korea. For fiscal year 2026, we expect the effective tax rate to be between 25.0% and 26.0%. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed in the United States.
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We have provided notices to individuals whose personal information, including social security numbers, protected health information, and/or other personal information, may have been included in the impacted files. Interest expense Interest expense for fiscal year 2024 and 2023 decreased from $84.1 million to $82.4 million.
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We do not believe the OBBBA will have a significant effect on our fiscal year 2026 tax rate but we anticipate that it could have a favorable cash flow impact in fiscal year 2026. 35 Table of Contents U.S. Federal Services Segment Our U.S.
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Our exposure to increasing interest rates in the United States was mitigated by a reduction in our debt balance and by maintaining interest rate swap agreements on approximately 50% of our gross debt. Our effective interest rate was 5.52% at September 30, 2024, compared to 5.97% at September 30, 2023, and 4.69% at September 30, 2022.
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All movement was organic. Our revenue growth was driven by our clinical programs, including medical assessments, as well as from support provided to the Federal Emergency Management Agency (FEMA). We have long-standing arrangements with FEMA to provide short-term assistance for natural disasters, the extent and timing of which are difficult to predict.
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Income taxes Our effective income tax rate for the year ended September 30, 2024 and 2023, was 24.5% and 23.1%, respectively. Our tax rate in fiscal year 2023 received the benefit of higher tax credits. For fiscal year 2025, we expect the effective tax rate to be between 24.5% and 25.5%. 33 Table of Contents U.S.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA rise in interest rates would increase our interest expense, and a reduction in interest rates would decrease our interest expense. We mitigate this risk through interest rate swaps. At September 30, 2024, $650.0 million of our debt-carrying value was hedged with fixed interest rate swaps.
Biggest changeOur principal debt agreement incurs interest based upon a fixed rate, applicable spread, and a market rate. The market rate is based on SOFR. A rise in interest rates would increase our interest expense, and a reduction in interest rates would decrease our interest expense. We mitigate this risk through interest rate swaps.
Our counterparty has investment-grade credit ratings; accordingly, we anticipate that the counterparty will be able to fully satisfy their obligations under the contracts. Our agreement outlines the conditions upon which we or the counterparty are required to post collateral. As of September 30, 2024, we had no collateral posted with our counterparty related to the derivatives. 45 Table of Contents
Our counterparty has investment-grade credit ratings; accordingly, we anticipate that the counterparty will be able to fully satisfy their obligations under the contracts. Our agreement outlines the conditions upon which we or the counterparty are required to post collateral. As of September 30, 2025, we had no collateral posted with our counterparty related to the derivatives. 47 Table of Contents
A 100 basis point change in interest rates would have the following impact of net income: Table 7A.2: Exposure to Interest Rate Risk As of September 30, 2024 2023 (in thousands) 100 basis point increase impact on net income $ (4,958) $ (6,075) 100 basis point decrease impact on net income $ 4,958 $ 6,075 Counterparty Risk We are exposed to credit losses in the event of nonperformance by the counterparties to our derivative instrument.
Including the effect of our interest rate swaps, a hypothetical 100 basis point change in interest rates would have the following impact on our net income: Table 7A.2: Exposure to Interest Rate Risk As of September 30, 2025 2024 (in thousands) 100 basis point increase impact on net income $ (6,969) $ (4,958) 100 basis point decrease impact on net income $ 6,969 $ 4,958 Counterparty Risk We are exposed to credit losses in the event of nonperformance by the counterparties to our derivative instrument.
Table 7A.1: Exposure to Currency Risk As of September 30, 2024 2023 (in thousands) Change in comprehensive income attributable to Maximus $ 25,252 $ 21,036 Change in net monetary assets $ 9,922 $ 9,171 Change in cash and cash equivalents $ 5,610 $ 3,113 Where possible, we mitigate our foreign currency risks.
Table 7A.1: Exposure to Currency Risk As of September 30, 2025 2024 (in thousands) Change in comprehensive income attributable to Maximus $ 26,681 $ 25,252 Change in net monetary assets $ 13,293 $ 9,922 Change in cash and cash equivalents $ 4,959 $ 5,610 Where practical, we mitigate our foreign currency risks.
Foreign Currency Risk As of September 30, 2024, we held net assets denominated in currencies other than the U.S. Dollar of $252.5 million. Of this balance, we had net monetary assets of $99.2 million and cash and cash equivalents of $56.1 million.
Foreign Currency Risk As of September 30, 2025, we held net assets denominated in currencies other than the U.S. Dollar of $266.8 million. Of this balance, we had net monetary assets of $132.9 million and cash and cash equivalents of $49.6 million.
We based the following sensitivity calculation on the SOFR rate of 4.6% in accordance with the most recent measurement date specified in our Credit Agreement.
At September 30, 2025, $650.0 million of our debt-carrying value was hedged with fixed interest rate swaps. We based the following sensitivity calculation on the SOFR rate of 4.2% in accordance with the most recent measurement date specified in our Credit Agreement.
Our operations typically incur costs and cash outflows in the same currency as their revenue. We identify surplus funds in foreign locations and place them in entities with the U.S. Dollar as their functional currency. Interest Rate Risk Our principal exposure to interest rates relates to our debt.
Our operations typically incur costs and cash outflows in the same currency as their revenue. Interest Rate Risk Our principal exposure to interest rates relates to our debt. At September 30, 2025, we owed a gross balance of $1.35 billion associated with debt in the United States and in foreign locations.
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At September 30, 2024, we owed a gross balance of $1.15 billion associated with debt in the United States and in foreign locations. Our principal debt agreement incurs interest based upon a fixed rate, applicable spread, and a market rate. The market rate is based on SOFR.

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