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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2019
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from   to
 
Commission File Number: 1-12997
 
MAXIMUS, INC.
(Exact name of registrant as specified in its charter)
 
Virginia 54-1000588
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
   
1891 Metro Center Drive, Reston, Virginia
 20190
(Address of principal executive offices) (Zip Code)
 
(703) 251-8500
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valueMMSNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer 
 
Accelerated filer 
   
Non-accelerated filer 
 
Smaller reporting company 
  
Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No 
 
As of August 5, 2019, there were 63,810,845 shares of the registrant’s common stock (no par value) outstanding.




MAXIMUS, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 2019
INDEX
PART I. FINANCIAL INFORMATION  
    
Item 1. 
    
  
    
  
    
 
    
  
    
  
    
  
    
Item 2. 
    
Item 3. 
    
Item 4. 
    
PART II. OTHER INFORMATION  
    
Item 1.
Item 1A. 
Item 6. 
    
  




Throughout this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “us,” “our” and “MAXIMUS” refer to MAXIMUS, Inc. and its subsidiaries, unless the context requires otherwise.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Included in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “opportunity,” “could,” “potential,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
a failure to meet performance requirements in our contracts, which might lead to contract termination and actual or liquidated damages;
the effects of future legislative or government budgetary and spending changes;
our failure to successfully bid for and accurately price contracts to generate our desired profit;
our ability to maintain technology systems and otherwise protect confidential or protected information;
our ability to attract and retain executive officers, senior managers and other qualified personnel to execute our business;
our ability to manage capital investments and startup costs incurred before receiving related contract payments;
our ability to manage our growth, including acquired businesses;
the ability of government customers to terminate contracts on short notice, with or without cause;
our ability to maintain relationships with key government entities from whom a substantial portion of our revenue is derived;
the outcome of reviews or audits, which might result in financial penalties and impair our ability to respond to invitations for new work;
a failure to comply with laws governing our business, which might result in the Company being subject to fines, penalties, suspension, debarment and other sanctions;
the costs and outcome of litigation;
difficulties in integrating or achieving projected revenues, earnings and other benefits associated with acquired businesses;
the effects of changes in laws and regulations governing our business, including tax laws, and applicable interpretations and guidance thereunder, or changes in accounting policies, rules, methodologies and practices, and our ability to estimate the impact of such changes;
matters related to business we have disposed of or divested; and
other factors set forth in Exhibit 99.1, under the caption "Special Considerations and Risk Factors," in our Annual Report on Form 10-K for the year ended September 30, 2018, which was filed with the Securities and Exchange Commission on November 20, 2018.
Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.



PART I.  FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
 Three Months Ended June 30,Nine Months Ended June 30,
 2019 2018 2019 2018 
Revenue$730,710 $597,855 $2,131,849 $1,833,790 
Cost of revenue556,463 443,171 1,628,915 1,378,343 
Gross profit174,247 154,684 502,934 455,447 
Selling, general and administrative expenses81,604 69,588 239,377 214,026 
Amortization of intangible assets9,049 2,525 24,026 7,846 
Operating income83,594 82,571 239,531 233,575 
Interest expense420 85 2,614 410 
Other income, net556 2,249 3,048 3,928 
Income before income taxes83,730 84,735 239,965 237,093 
Provision for income taxes20,765 24,493 59,511 61,793 
Net income62,965 60,242 180,454 175,300 
Income/(loss) attributable to noncontrolling interests67 381 (281)856 
Net income attributable to MAXIMUS$62,898 $59,861 $180,735 $174,444 
Basic earnings per share attributable to MAXIMUS$0.98 $0.91 $2.80 $2.65 
Diluted earnings per share attributable to MAXIMUS$0.97 $0.91 $2.79 $2.64 
Dividends paid per share$0.25 $0.045 $0.75 $0.135 
Weighted average shares outstanding:    
Basic64,405 65,630 64,534 65,777 
Diluted64,759 65,925 64,800 66,131 

See notes to unaudited consolidated financial statements.
1


MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(Unaudited)
 Three Months Ended June 30,Nine Months Ended June 30,
 2019 2018 2019 2018 
Net income$62,965 $60,242 $180,454 $175,300 
Foreign currency translation adjustments(1,974)(10,459)(4,157)(7,275)
Comprehensive income60,991 49,783 176,297 168,025 
Comprehensive income/(loss) attributable to noncontrolling interests67 381 (281)856 
Comprehensive income attributable to MAXIMUS$60,924 $49,402 $176,578 $167,169 

See notes to unaudited consolidated financial statements.
2


MAXIMUS, Inc.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
 
 June 30,
2019
September 30,
2018
 (unaudited) 
ASSETS  
Current assets:  
Cash and cash equivalents$71,084 $349,245 
Short-term investments 20,264 
Accounts receivable — billed and billable, net of reserves of $6,560 and $4,285
525,882 357,613 
Accounts receivable — unbilled94,102 31,536 
Income taxes receivable693 5,979 
Prepaid expenses and other current assets47,617 43,995 
Total current assets739,378 808,632 
Property and equipment, net84,694 77,544 
Capitalized software, net30,761 22,429 
Goodwill583,703 399,882 
Intangible assets, net185,965 88,035 
Deferred contract costs, net22,477 14,380 
Deferred compensation plan assets33,114 34,305 
Deferred income taxes617 6,834 
Other assets10,197 9,959 
Total assets$1,690,906 $1,462,000 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable and accrued liabilities$182,551 $114,378 
Accrued compensation and benefits103,990 95,555 
Deferred revenue40,951 51,182 
Income taxes payable5,109 4,438 
Current portion of long-term debt and other borrowings3,648 136 
Other liabilities20,450 11,760 
Total current liabilities356,699 277,449 
Deferred revenue, less current portion26,435 20,394 
Deferred income taxes44,769 26,377 
Long-term debt268 374 
Deferred compensation plan liabilities, less current portion34,689 33,497 
Other liabilities13,147 17,490 
Total liabilities476,007 375,581 
Shareholders’ equity:  
Common stock, no par value; 100,000 shares authorized; 63,811 and 64,371 shares issued and outstanding at June 30, 2019, and September 30, 2018, at stated amount, respectively
503,184 487,539 
Accumulated other comprehensive loss(41,110)(36,953)
Retained earnings752,370 633,281 
Total MAXIMUS shareholders’ equity1,214,444 1,083,867 
Noncontrolling interests455 2,552 
Total equity1,214,899 1,086,419 
Total liabilities and equity$1,690,906 $1,462,000 
 
See notes to unaudited consolidated financial statements.
3


MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 Nine Months Ended June 30,
 2019 2018
(As adjusted - see Note 1) 
Cash flows from operations:  
Net income$180,454 $175,300 
Adjustments to reconcile net income to cash flows from operations:  
Depreciation and amortization of property and equipment and
capitalized software
34,588 39,902 
Amortization of intangible assets24,026 7,846 
Deferred income taxes11,196 8,874 
Stock compensation expense15,323 15,713 
Change in assets and liabilities excluding acquired assets and liabilities:  
Accounts receivable — billed and billable(108,131)(6,789)
Accounts receivable — unbilled46,172 312 
Prepaid expenses and other current assets(2,933)5,506 
Deferred contract costs(8,142)2,240 
Accounts payable and accrued liabilities53,462 (23,696)
Accrued compensation and benefits9,282 (15,835)
Deferred revenue7,857 (25,728)
Income taxes3,139 5,913 
Other assets and liabilities(2,582)(1,242)
Cash flows from operations263,711 188,316 
Cash flows from investing activities:  
Purchases of property and equipment and capitalized software costs(39,033)(21,552)
Acquisitions(422,049)(157)
Short-term investments19,996 (19,996)
Other380 1,198 
Cash used in investing activities(440,706)(40,507)
Cash flows from financing activities:  
Cash dividends paid to MAXIMUS shareholders(47,936)(8,801)
Purchases of MAXIMUS common stock(46,068)(61,987)
Tax withholding related to RSU vesting(8,915)(8,529)
Borrowings320,048 134,683 
Repayment of credit facility and other long-term debt(316,597)(134,786)
Other(133)(4,058)
Cash used in financing activities(99,601)(83,478)
Effect of exchange rate changes on cash and cash equivalents(994)(1,714)
Net (decrease)/increase in cash, cash equivalents and restricted cash(277,590)62,617 
Cash, cash equivalents and restricted cash, beginning of period356,559 179,727 
Cash, cash equivalents and restricted cash, end of period$78,969 $242,344 

See notes to unaudited consolidated financial statements.
4


MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands)
(Unaudited)
 
Common
Shares
Outstanding
Common
Stock
Accumulated
Other
Comprehensive
Income/(Loss)
Retained
Earnings
Noncontrolling
Interest
Total
Balance at March 31, 201963,811 $498,269 $(39,136)$705,824 $2,624 $1,167,581 
Net income— — — 62,898 67 62,965 
Foreign currency translation— — (1,974)— — (1,974)
Cash dividends— — — (15,953)(2,452)(18,405)
Dividends on RSUs— 399 — (399)—  
Stock compensation expense— 5,419 — — — 5,419 
Acquisition of part of noncontrolling interest— (903)— — 216 (687)
Balance at June 30, 201963,811 $503,184 $(41,110)$752,370 $455 $1,214,899 

 Common
Shares
Outstanding
Common
Stock
Accumulated
Other
Comprehensive
Income/(Loss)
Retained
Earnings
Noncontrolling
Interest
Total
Balance at September 30, 201864,371 $487,539 $(36,953)$633,281 $2,552 $1,086,419 
Cumulative impact from adopting ASC Topic 606 on October 1, 2018— — — 32,929 553 33,482 
Net income— — — 180,735 (281)180,454 
Foreign currency translation— — (4,157)— — (4,157)
Cash dividends— — — (47,936)(2,585)(50,521)
Dividends on RSUs— 1,225 — (1,225)—  
Purchases of common stock(716)— — (45,414)— (45,414)
Stock compensation expense— 15,323 — — — 15,323 
RSUs vested156 — — — —  
Acquisition of part of noncontrolling interest— (903)— — 216 (687)
Balance at June 30, 201963,811 $503,184 $(41,110)$752,370 $455 $1,214,899 











5


MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
(Amounts in thousands)
(Unaudited)

Common
Shares
Outstanding
Common
Stock
Accumulated
Other
Comprehensive
Income/(Loss)
Retained
Earnings
Noncontrolling
Interest
Total
Balance at March 31, 201865,243 $487,385 $(24,435)$599,630 $3,748 $1,066,328 
Net income— — — 59,861 381 60,242 
Foreign currency translation— — (10,459)— — (10,459)
Cash dividends— — — (2,936)(241)(3,177)
Dividends on RSUs— 78 — (78)—  
Purchases of common stock(995)— — (61,576)— (61,576)
Stock compensation expense— 4,389 — — — 4,389 
Balance at June 30, 201864,248 $491,852 $(34,894)$594,901 $3,888 $1,055,747 


 Common
Shares
Outstanding
Common
Stock
Accumulated
Other
Comprehensive
Income / (Loss)
Retained
Earnings
Noncontrolling
Interest
Total
Balance at September 30, 201765,137 $475,592 $(27,619)$492,112 $5,683 $945,768 
Net income— — — 174,444 856 175,300 
Foreign currency translation— — (7,275)— — (7,275)
Cash dividends— — — (8,801)(2,370)(11,171)
Dividends on RSUs— 240 — (240)—  
Purchases of common stock(1,012)— — (62,614)— (62,614)
Stock compensation expense— 15,713 — — — 15,713 
Tax withholding related to RSU vesting— 183 — — — 183 
RSUs vested123 — — — —  
Acquisition of part of noncontrolling interest— 124 — — (281)(157)
Balance at June 30, 201864,248 $491,852 $(34,894)$594,901 $3,888 $1,055,747 

See notes to unaudited consolidated financial statements.
6


MAXIMUS, Inc.
Notes to Unaudited Consolidated Financial Statements
For the Three and Nine Months Ended June 30, 2019 and 2018

1. Organization and Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. As permitted by these instructions, they do not include all of the information and notes required by generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended June 30, 2019, are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2018, has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements.
Certain financial results have been reclassified to conform with our current period presentation.
Our consolidated statement of cash flows for the nine months ended June 30, 2018, includes a reclassification to reflect the effect of new accounting guidance.
Our consolidated balance sheet at September 30, 2018, includes a reclassification to show a comparative balance for current and long-term debt, which were previously reported within "other liabilities."
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. On an ongoing basis, we evaluate our estimates including those related to revenue recognition and cost estimation on certain contracts, the realizability of goodwill and amounts related to income taxes, certain accrued liabilities and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.
These financial statements should be read in conjunction with the consolidated audited financial statements and the notes thereto at September 30, 2018 and 2017, and for each of the three years ended September 30, 2018, included in our Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on November 20, 2018.
Changes in financial reporting
Segments
As previously reported, effective October 1, 2018, our Chief Executive Officer reorganized our reporting segments based on the way that management intends to allocate resources, manage performance and evaluate results. This reorganization of segments responds to recent changes in the markets in which we operate, the increasing integration of health and human services programs worldwide and the evolving needs of our government clients as they aim to deliver services in a more holistic manner to their citizens. Our results for the three and nine months ended June 30, 2018, were recast to conform with these new segments. See "Note 2. Segment Information" for more details of this change.
Revenue recognition
We adopted Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) on October 1, 2018, using the modified retrospective method and, accordingly, we recognized the cumulative effect of adoption as an adjustment of $32.9 million to our opening retained earnings balance on October 1, 2018. We applied this standard only to contracts that had not been completed as of the date of adoption. For contracts that had been modified prior to October 1, 2018, we calculated the cumulative effect of Topic 606 on each contract based upon the aggregate effect of all of the modifications at that date.
7


Topic 606 applies to all of our contracts with customers and supersedes all previous standards on revenue recognition. In adopting Topic 606, we are required to follow a five-step process in order to identify and recognize revenue based upon a principle that revenue should be recognized as goods and services are transferred to customers in amounts that reflect the consideration to which we expect to be entitled for those goods and services. It did not change the actual amount of revenue being recognized for the majority of our contracts but did change the methodology by which we identified that revenue.
In the most significant change under Topic 606, we are required to estimate and recognize revenue on contracts over the period where we provide a service. This affects contracts where performance outcomes are achieved over time, most notably for welfare-to-work contracts where we are compensated for placing individuals in sustained employment. Under our former methodology of recognizing revenue, we deferred recognizing this outcome-based revenue until the outcome was achieved. Under Topic 606, we estimate our anticipated future fees and recognize them over the expected period of performance. As a result, more judgments and estimates are required within the process of recognizing revenue than were required under the former methodology.
The adoption of Topic 606 resulted in the following changes to our opening balance sheet:
(dollars in thousands)Balance at September 30, 2018Adjustments due to adoption of new standardOpening balance at October 1, 2018
Assets
Accounts receivable - unbilled$31,536 $35,414 $66,950 
Deferred income taxes6,834 (6,625)209 
Liabilities and shareholders' equity
Deferred revenue - current51,182 (11,767)39,415 
Deferred income taxes - long-term26,377 7,074 33,451 
Retained earnings633,281 32,929 666,210 
Noncontrolling interests2,552 553 3,105 
  
The table below shows the effects of the adoption of Topic 606 on our consolidated statement of operations for the three and nine months ended June 30, 2019.
 Three months ended June 30, 2019Nine months ended June 30, 2019
(dollars in thousands)Balance under previous accounting guidanceAdjustments due to adoption of new standardBalance as reportedBalance under previous accounting guidanceAdjustments due to adoption of new standardBalance as reported
Revenue$728,420 $2,290 $730,710 $2,127,792 $4,057 $2,131,849 
Income before income taxes81,440 2,290 83,730 235,908 4,057 239,965 
Provision for income taxes20,031 734 20,765 58,008 1,503 59,511 
Net income61,409 1,556 62,965 177,900 2,554 180,454 
(Loss)/income attributable to noncontrolling interests(91)158 67 (929)648 (281)
Net income attributable to MAXIMUS$61,500 $1,398 $62,898 $178,829 $1,906 $180,735 

8


The effect on our balance sheet would have been as follows:
(dollars in thousands)Balance at June 30, 2019 under previous accounting guidanceAdjustments due to adoption of new standardBalance at June 30, 2019 as reported
Assets
Accounts receivable - unbilled$56,341 $37,761 $94,102 
Deferred income taxes7,199 (6,582)617 
Liabilities and shareholders' equity
Deferred revenue - current53,032 (12,081)40,951 
Deferred income taxes - long-term37,195 7,574 44,769 
Common stock501,983 1,201 503,184 
Accumulated other comprehensive loss(40,112)(998)(41,110)
Retained earnings716,887 35,483 752,370 
Noncontrolling interests455  455 

Additional information and disclosures relating to this change are included within "Note 3. Revenue recognition."
Statement of cash flows
We adopted ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments and ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash on October 1, 2018, using the retrospective method. The most notable change relates to the treatment of balances we consider to be "restricted cash." Restricted cash represents funds which are held in our bank accounts but which we are precluded from using for general business needs through contractual requirements; these requirements include serving as collateral for lease, credit card or letter of credit arrangements or where we hold funds on behalf of clients. As we did not consider these restricted cash balances to be cash or cash equivalents, we did not previously include them within our cash flow statement except where restrictions over cash were imposed or lapsed. Beginning on October 1, 2018, we are required to include movements in cash, cash equivalents and restricted cash within our consolidated statements of cash flows.
Accordingly, we have presented our consolidated statement of cash flows using the new rules for all periods shown. Our balances for cash, cash equivalents and restricted cash are as follows:
Balance as of
(dollars in thousands)June 30,
2019
September 30, 2018June 30,
2018
September 30, 2017
Cash and cash equivalents$71,084 $349,245 $229,021 $166,252 
Restricted cash (recorded within "other current assets")7,885 7,314 13,323 13,475 
Cash, cash equivalents and restricted cash$78,969 $356,559 $242,344 $179,727 

Consolidated Statements of Changes in Shareholders' Equity
In August 2018, the United States Securities and Exchange Commission (SEC) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of shareholders' equity presented in the balance sheet must be provided in a note or separate statement. The amendments became effective on November 5, 2018, and did not have a material effect on the Company's consolidated financial statements for fiscal year 2019. We adopted these changes to the Consolidated Statements of Changes in Shareholders’ Equity during this current year.
9


2. Segment Information
The table below provides certain financial information for each of our business segments.
As noted in "Note 1. Organization and Basis of Presentation," we made changes to our business segments in fiscal year 2019. Accordingly, the comparative results shown for the three and nine months ended June 30, 2018, are presented differently from those shown in previous filings.
From October 1, 2018, we operated our business through three segments.
Our U.S. Health and Human Services Segment provides a variety of business process services such as program administration, appeals and assessments work, and related consulting work for U.S. state and local government programs. These services support a variety of programs including Medicaid, the Children’s Health Insurance Program, the Affordable Care Act and Temporary Assistance for Needy Families.
Our U.S. Federal Services Segment provides business process solutions, including program administration, appeals and assessment services, as well as system and software development and maintenance services for various U.S. federal civilian programs. This segment also contains certain state-based assessments and appeals work that is part of the segment's heritage within the Medicare Appeals portfolio and continues to be managed within this segment.
Our Outside the U.S. Segment provides business process solutions for governments and commercial clients outside the U.S., including health and disability assessments, program administration for welfare-to-work services and other related services. We support programs and deliver services in the United Kingdom, including the Health Assessment Advisory Service, the Work & Health Programme and Fair Start; Australia, including jobactive and the Disability Employment Service; Canada, including Health Insurance British Columbia and the Employment Program of British Columbia; Saudi Arabia and Singapore.

10


 Three Months Ended June 30,Nine Months Ended June 30,
(dollars in thousands)2019 % (1)2018 % (1)2019 % (1)2018 % (1)
Revenue:        
U.S. Health & Human Services$291,132 $314,477 $876,082 $924,967 
U.S. Federal Services292,295 112,226 799,018 361,536 
Outside the U.S.147,283 171,152 456,749 547,287 
Total$730,710 $597,855 $2,131,849 $1,833,790 
Gross profit:        
U.S. Health & Human Services$86,664 29.8 $101,425 32.3 $260,955 29.8 $272,242 29.4 
U.S. Federal Services66,803 22.9 32,276 28.8 175,484 22.0 93,008 25.7 
Outside the U.S.20,780 14.1 20,983 12.3 66,495 14.6 90,197 16.5 
Total$174,247 23.8 $154,684 25.9 $502,934 23.6 $455,447 24.8 
Selling, general & administrative expense:        
U.S. Health & Human Services$32,414 11.1 $34,382 10.9 $93,953 10.7 $105,803 11.4 
U.S. Federal Services32,896 11.3 17,399 15.5 90,632 11.3 51,587 14.3 
Outside the U.S.15,791 10.7 16,775 9.8 52,591 11.5 53,284 9.7 
Restructuring costs NM NM NM2,320 NM
Other 503 NM1,032 NM2,201 NM1,032 NM
Total$81,604 11.2 $69,588 11.6 $239,377 11.2 $214,026 11.7 
Operating income:        
U.S. Health & Human Services$54,250 18.6 $67,043 21.3 $167,002 19.1 $166,439 18.0 
U.S. Federal Services33,907 11.6 14,877 13.3 84,852 10.6 41,421 11.5 
Outside the U.S.4,989 3.4 4,208 2.5 13,904 3.0 36,913 6.7 
Amortization of intangible assets(9,049)NM(2,525)NM(24,026)NM(7,846)NM
Restructuring costs (2) NM NM NM(2,320)NM
Other (3)(503)NM(1,032)NM(