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Maximus, Doing Well and Eyeing Growth in U.K.

Maximus has announced results for FY 2013, the year ending September 30, 2013.

  • Revenue was $1,331m, up 26.8% as stated.
  • Operating income was $188.2m, a margin of 14.1%, up 200 bps.

FY 2013 revenue (and growth) by segment was:

  • Health Services $862.9m (+28.6%)
  • Human Services $468.4m (+23.6%).

FY 2013 operating income and margin by segment was:

  • Health Services $129.8m, 15%, up 300 bps
  • Human Services $58.1, 12.4% down 60 bps

On the face of it, Maximus' results tell a tale of two halves with the healthcare business substantially outperforming the human services business in revenue and profitability. Maximus puts the decline in Human Services' operating income down to a windfall which bumped up revenue and income in Q2 but which has been excluded from the full year results. Excluding this terminated contract, full year revenue grew 19% to $452.4m compared to the fiscal 2012, principally thanks to the U.K. Work Programme, the U.K, Saudi Arabia government employment services contract and the PSI acquisition.

In the Health Segment, Maximus expects some revenue attrition, coming from:

  • The initial surge of work related to ACA contracts is likely to level off and
  • The Minnesota HIX contract is currently winding down
  • The California Healthy Families CHIP program ended in fiscal 2013.

However, some other contracts are ramping up:

  • The federal eligibility appeals contract
  • Maximus is also working on enrollment as a subcontractor to General Dynamics in the federal health marketplace, operating two of the 17 customer contact centers under that contract.

Another major contract award in this period by the U.S. Department of Education, Office of Federal Student Aid is currently under protest from a competitor.

While continuing to do well in the U.S, Maximus is also eying growth in the U.K. The acquisition of Health Management Ltd  in July positions Maximus well for opportunities coming from the expansion of the DWP's work capability assessments contracts as well as primary care opportunities in the NHS market, including: physiotherapy, chiropractic, osteopathy and podiatry specialists, as well as counselling and psychology services, dental care and travel vaccinations and immunizations.

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