Maximus Q3 Revenue Misses, Guides Lower on Federal Contract Headwind
MMS is trading near its 52-week low of $52.73 (9.5% above the low) on light trading volume (0.3× avg).
Summary
Maximus Q3 revenue fell 5% to $1.28B, missing estimates, while adjusted EPS of $2.22 beat. A temporary federal contract modification will cut EPS by ~$0.35/quarter starting Q4, overshadowing results.
Key Events · Earnings and Guidance · MMS
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Q3 Revenue Miss
Revenue of $1.28B fell 5% year-over-year, missing the $1.33B consensus, driven by lower disaster recovery work and declining volumes on transaction-based contracts.
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Adjusted EPS Beat
Adjusted diluted EPS of $2.22 exceeded estimates, but GAAP EPS of $1.95 was down from $1.86 a year ago.
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Federal Contract Headwind
A temporary contractual modification from a major U.S. federal customer will reduce diluted EPS by approximately $0.35 per quarter starting Q4 2026 through Q1 2027.
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Cash Flow and Liquidity
Operating cash flow was negative $179.9M for the first nine months, with DSO rising to 98 days due to administrative payment delays. Subsequent to quarter-end, $245M was collected from a major customer.
Analysis · MMS · Trade & Services
Maximus reported a 5% revenue decline to $1.28 billion, missing the $1.33 billion consensus, driven by lower disaster recovery work and declining volumes on large transaction-based contracts. Adjusted EPS of $2.22 beat estimates, but the company disclosed a temporary contractual modification from a major federal customer that will reduce diluted EPS by approximately $0.35 per quarter starting July 1, 2026. This headwind, combined with the revenue miss, drove a negative market reaction. The balance sheet shows rising leverage after a $325 million term loan increase, though subsequent cash collections of $245 million alleviate near-term liquidity concerns. The board also authorized a new $400 million buyback, signaling confidence but adding financial risk.
At the time of this filing, MMS was trading at $57.76 on NYSE in the Trade & Services sector, with a market capitalization of approximately $3B. The 52-week trading range was $52.73 to $100.00. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.