Maximus lowered its full-year adjusted earnings and free-cash-flow guidance after the Department of Veterans Affairs temporarily paused performance incentives on its Medical Disability Exam program. Adjusted diluted EPS is now expected at $7.90 to $8.20, down from a prior midpoint of $8.40, and free cash flow is forecast at $425 million to $475 million, while revenue guidance was maintained at $5.2 billion to $5.35 billion. The VA notified all program vendors of the incentive pause effective July 1 as it works to improve its invoice review and validation process, and Maximus removed assumed VA MDE incentive contributions from its fourth-quarter forecast, reducing the full-year adjusted EPS outlook by approximately $0.35 per share. Third-quarter revenue reached $1.28 billion with adjusted EBITDA margin improving to 15.0% and adjusted EPS rising to $2.22, and cash collection improved after quarter-end with approximately $245 million received from a major federal customer. Management highlighted a $50.4 billion sales pipeline and potential growth from Medicaid, SNAP administration and AI-enabled government services, noting that AI requirements now appear in roughly 75% to 80% of new bids and citing a 3.5% operating-margin improvement across five contracts using AI tools.
Maximus IncMaximus cut full-year adjusted EPS and free cash flow guidance due to VA pausing performance incentives on its Medical Disability Exam program.
