Maximus Inc reported third-quarter fiscal 2026 revenue of $1.28 billion, in line with expectations, and adjusted earnings per share (EPS) of $2.22. The company revised its full-year adjusted EPS guidance to $7.90-$8.20, down from the prior midpoint of $8.40, citing a temporary pause in performance incentives on a major Department of Veterans Affairs (VA) contract.

The U.S. Federal Services segment recorded revenue of $721 million, reflecting a year-over-year decline driven by reduced natural disaster support and temporary clinical volume surges. Despite the revenue dip, operating income margin for this segment expanded to 18.6% from 18.1% in the prior-year period, aided by efficiency enhancements. The U.S. Services segment generated revenue of $418 million with an operating margin of 10.8%, while the Outside the U.S. segment posted revenue of $140 million and an operating profit of $1.2 million.

Guidance Revision and Incentive Pause

The primary driver for the guidance reduction is a customer-directed modification to the VA Medical Disability Exam (MDE) contract. Effective July 1, 2026, the VA paused performance incentives and disincentives for all vendors. This action removes approximately $0.35 from Maximus's fourth-quarter EPS expectation. The company assumes this pause will continue through December 31, 2026, impacting the first quarter of fiscal 2027 as well. Consequently, full-year adjusted EBITDA margin guidance is now approximately 13.7%, with Q4 implied at 13%.

Cash Flow and Balance Sheet Dynamics

Operating cash flow was impacted by administrative delays at a major federal customer, resulting in $125 million used in operating activities and free cash flow outflow of $137 million. Days Sales Outstanding (DSO) remained elevated at 98 days. However, post-quarter collections accelerated significantly, with $245 million received since June 30. Total debt stood at $1.65 billion, up from $1.55 billion in March, maintaining a net leverage ratio of 2.0 times within the target range of 2-3 times. The company repurchased 0.75 million shares for $50 million during the quarter.

Pipeline and Strategic Growth Areas

Maximus reported a total sales pipeline of $50.4 billion, with $1.35 billion in awarded but unsigned contracts, a significant increase from the previous quarter. This backlog suggests potential sequential improvements in the book-to-bill ratio. AI integration is becoming a critical differentiator, with 75-80% of new bids containing explicit AI requirements. Additionally, the defense and national security market remains a strategic focus, with an addressable market estimated at nearly $47 billion.

What the Numbers Show

A divergence exists between top-line pressure and bottom-line resilience. While Federal Services revenue declined due to non-recurring disaster support volumes, the segment's operating margin expanded by 50 basis points to 18.6%. This indicates that operational efficiencies and technology investments are successfully offsetting volume headwinds. Furthermore, the substantial post-quarter collection of $245 million against a Q3 DSO of 98 days suggests that the cash flow drag was timing-related rather than structural, supporting the company's expectation for DSO to fall below 70 days by fiscal year-end.

Maximus Inc declared a quarterly cash dividend of $0.33 per share, payable on November 30, 2026.

The Board of Directors approved the payout for shareholders of record as of November 13, 2026. The company, a provider of government services, continues its standard distribution cycle without changes to the per-share amount disclosed in the announcement.

Dividend details

The declaration follows the company's ongoing operations in business process management and technology solutions for government agencies.