Quarterly report pursuant to Section 13 or 15(d)

Business Segments

v3.24.2.u1
Business Segments
 9 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Business Segments BUSINESS SEGMENTS
We conduct our operations through three business segments: U.S. Federal Services, U.S. Services, and Outside the U.S.
U.S. Federal Services
Our U.S. Federal Services Segment delivers end-to-end solutions that help various U.S. federal government agencies better deliver on their mission, including program operations and management, clinical services, and technology solutions. The segment also includes system and application development, Information Technology ("IT") modernization, and maintenance services. Clinical services comprises appeals and assessments services, which includes managing the evaluation process for U.S. veterans and service members on behalf of the U.S. Department of Veterans Affairs ("VA") and certain state-based assessments and appeals work that is part of the segment's heritage. Under Technology Consulting Services ("TCS"), the segment executes on its digital strategy to deliver technology solutions that advance agency missions, including the challenge to modernize, provide better customer experience, and drive process efficiencies.
U.S. Services
Our U.S. Services Segment provides a variety of business process services ("BPS"), such as program administration, assessments, and related consulting work for U.S. state and local government programs. These services support a variety of programs, including the Affordable Care Act ("ACA"), Medicaid, the Children's Health Insurance Program ("CHIP"), Temporary Assistance to Needy Families ("TANF"), and child support programs. Previously, this segment suffered from reduced operating leverage resulting from the pause in Medicaid redeterminations during the COVID-19 pandemic, which resumed in fiscal year 2023.
Outside the U.S.
Our Outside the U.S. Segment provides BPS for international governments, transforming the lives of people around the world. Helping people find employment, access vital support, and remain healthy, these services include health and disability assessments, program administration for employment services, wellbeing solutions, and other job seeker-related services. We support programs and deliver services in the United Kingdom, including the Health Assessment Advisory Service and the recently awarded replacement contract scheduled to start in the fourth quarter of fiscal year 2024, Functional Assessment Services, and Restart; and Australia, including Workforce Australia, and other employment support and job seeker services in a number of other countries.
Table 3: Results of Operation by Business Segment
  For the Three Months Ended For the Nine Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Amount % (1) Amount % (1) Amount % (1) Amount % (1)
(dollars in thousands)
Revenue:        
U.S. Federal Services $ 683,347  $ 583,960  $ 2,062,127  $ 1,786,202 
U.S. Services 472,298  449,061  1,448,258  1,338,242 
Outside the U.S. 159,284  155,656  479,942  520,331 
Revenue $ 1,314,929  $ 1,188,677  $ 3,990,327  $ 3,644,775 
Gross profit:
U.S. Federal Services $ 186,075  27.2  % $ 156,945  26.9  % $ 506,074  24.5  % $ 402,513  22.5  %
U.S. Services 121,012  25.6  % 98,538  21.9  % 369,497  25.5  % 268,152  20.0  %
Outside the U.S. 25,227  15.8  % 8,881  5.7  % 74,386  15.5  % 67,049  12.9  %
Gross profit $ 332,314  25.3  % $ 264,364  22.2  % $ 949,957  23.8  % $ 737,714  20.2  %
Selling, general, and administrative expenses:  
U.S. Federal Services $ 79,949  11.7  % $ 82,892  14.2  % $ 247,671  12.0  % $ 229,591  12.9  %
U.S. Services 59,531  12.6  % 51,536  11.5  % 174,032  12.0  % 140,793  10.5  %
Outside the U.S. 26,647  16.7  % 24,122  15.5  % 75,249  15.7  % 75,936  14.6  %
Divestiture-related charges (2) —  NM —  NM 1,018  NM 883  NM
Other (3) 906  NM 23,995  NM 6,712  NM 24,242  NM
Selling, general, and administrative expenses $ 167,033  12.7  % $ 182,545  15.4  % $ 504,682  12.6  % $ 471,445  12.9  %
Operating income/(loss):  
U.S. Federal Services $ 106,126  15.5  % $ 74,053  12.7  % $ 258,403  12.5  % $ 172,922  9.7  %
U.S. Services 61,481  13.0  % 47,002  10.5  % 195,465  13.5  % 127,359  9.5  %
Outside the U.S. (1,420) (0.9) % (15,241) (9.8) % (863) (0.2) % (8,887) (1.7) %
Amortization of intangible assets (23,542) NM (23,431) NM (68,532) NM (70,599) NM
Divestiture-related charges (2) —  NM —  NM (1,018) NM (883) NM
Other (3) (906) NM (23,995) NM (6,712) NM (24,242) NM
Operating income $ 141,739  10.8  % $ 58,388  4.9  % $ 376,743  9.4  % $ 195,670  5.4  %
(1)Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM."
(2)We have sold businesses in both fiscal years 2023 and 2024. Refer to "Note 7. Acquisitions and Divestitures" for more details.
(3)Other expenses includes credits and costs that are not allocated to a particular segment. In the three and nine months ended June 30, 2024, these charges include $0.3 million and $3.3 million related to the costs of a previously disclosed cybersecurity incident, respectively, compared to $22.1 million for the three and nine months ended June 30, 2023. Other charges include expenses incurred as part of our acquisitions, as well as potential acquisitions which have not been or may not be completed.