Annual report pursuant to Section 13 and 15(d)

Business Segments

v3.24.3
Business Segments
 12 Months Ended
Sep. 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. Our operating segments represent the manner in which our Chief Executive Officer reviews our financial results.
U.S. Federal Services
Our U.S. Federal Services Segment delivers 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 services, such as program operations, clinical services, employment services and technology solutions and related consulting work for U.S. state and local government programs. These services support a variety of programs, including the programs under ACA, Medicaid, the Children's Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF), and child support programs. In fiscal years 2020 through 2023, many programs in this segment were operating with depressed margins resulting from the pause in Medicaid redeterminations. The depressed margins resulted from reduced operating leverage in the segment as costs could not scale down at the same rate to meet lower demand due to the requirements to fulfill other obligations on these contracts. Fiscal year 2024 reflected a full period of volumes. The middle two quarters of the fiscal year experienced slightly elevated volumes from excess temporary work. This work was concluded by the last fiscal quarter with the segment’s margin appropriately aligned.
Outside the U.S.
Our Outside the U.S. Segment provides BPS and technology solutions for international governments. These services include health and disability assessments, program administration for employment services, wellbeing solutions and other job seeker-related services, digitally-enabled customer services, and advanced technologies for modernization. We support programs and deliver services in the United Kingdom, including the newly awarded Functional Assessment Services (FAS) contract, which replaced the Health Assessment Advisory Service (HAAS) contract, and the Restart employment program; and Australia, including Workforce Australia, and other employment support and job seeker services in a number of other countries.
Table 3.1: Results of Operation by Business Segment
For the Year Ended September 30,
2024 2023 2022
Amount % (1) Amount % (1) Amount % (1)
(dollars in thousands)
Revenue:
U.S. Federal Services $ 2,737,244  $ 2,403,606  $ 2,259,744 
U.S. Services 1,911,813  1,812,069  1,607,612 
Outside the U.S. 657,140  689,053  763,662 
Revenue $ 5,306,197  $ 4,904,728  $ 4,631,018 
Gross profit:
U.S. Federal Services $ 665,762  24.3  % $ 557,886  23.2  % $ 519,440  23.0  %
U.S. Services 479,787  25.1  % 377,541  20.8  % 343,004  21.3  %
Outside the U.S. 106,103  16.1  % 93,181  13.5  % 77,366  10.1  %
Gross profit $ 1,251,652  23.6  % $ 1,028,608  21.0  % $ 939,810  20.3  %
Selling, general, and administrative expenses:
U.S. Federal Services $ 332,140  12.1  % $ 308,197  12.8  % $ 284,509  12.6  %
U.S. Services 232,805  12.2  % 194,991  10.8  % 160,902  10.0  %
Outside the U.S. 98,398  15.0  % 102,311  14.8  % 92,536  12.1  %
Divestiture related charges (2) 1,018  NM 3,751  NM —  NM
Other (4) 7,222  NM 29,973  NM (3,454) NM
Selling, general, and administrative expenses $ 671,583  12.7  % $ 639,223  13.0  % $ 534,493  11.5  %
Operating income/(loss):
U.S. Federal Services $ 333,622  12.2  % $ 249,689  10.4  % $ 234,931  10.4  %
U.S. Services 246,982  12.9  % 182,550  10.1  % 182,102  11.3  %
Outside the U.S. 7,705  1.2  % (9,130) (1.3) % (15,170) (2.0) %
Amortization of intangible assets (91,570) NM (94,591) NM (90,465) NM
Divestiture related charges (2) (1,018) NM (3,751) NM —  NM
Gain on sale of land and building (3) —  NM —  NM 11,046  NM
Other (4) (7,222) NM (29,973) NM 3,454  NM
Operating income $ 488,499  9.2  % $ 294,794  6.0  % $ 325,898  7.0  %
Depreciation and amortization:
U.S. Federal Services $ 10,503  0.4  % $ 18,336  0.8  % $ 12,332  0.5  %
U.S. Services 16,079  0.8  % 22,674  1.3  % 16,528  1.0  %
Outside the U.S. 7,375  1.1  % 13,715  2.0  % 13,470  1.8  %
Depreciation and amortization $ 33,957  0.6  % $ 54,725  1.1  % $ 42,330  0.9  %
(1)Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM."
(2)During fiscal years 2024 and 2023, we sold a number of businesses in our Outside the U.S. Segment. Refer to "Note 7. Acquisitions and Divestitures" for more details.
(3)During fiscal year 2022, we sold the land and building that held our corporate headquarters, resulting in a gain on sale of $11.0 million.
(4)Other includes credits and costs that are not allocated to a particular segment. For the fiscal years 2024 and 2023, these charges include $2.9 million and $29.3 million, respectively, related to the costs of a previously disclosed cybersecurity incident. Other charges include direct costs of acquisitions. These costs are excluded from measuring each segment's operating performance.
Table 3.2: Assets by Segment
As of September 30,
2024 2023
(in thousands)
U.S. Federal Services $ 2,786,180  $ 2,716,367 
U.S. Services 692,446  780,737 
Outside the U.S. 291,608  278,289 
Corporate 361,274  210,404 
Assets $ 4,131,508  $ 3,985,797 
Our long-lived assets consist of property and equipment, capitalized software costs, operating lease right-of-use assets, and deferred compensation plan assets.
Table 3.3: Long-Lived Assets by Geography
As of September 30,
2024 2023
(in thousands)
United States $ 383,989  $ 313,830 
Outside the US 32,172  39,660 
Total $ 416,161  $ 353,490