Maximus, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Business segments

Business segments

12 Months Ended

Sep. 30, 2019

As noted above, we made changes to our business segments in fiscal year 2019. Since October 1, 2018, we conducted our operations through three business segments: U.S. Health and Human Services, U.S. Federal Services and Outside the U.S.

•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 the Affordable Care Act (ACA), Medicaid and the Children’s Health Insurance Program (CHIP). We also serve as administrators in state-based welfare-to-work and child support programs.

•Our U.S. Federal Services Segment provides business process solutions, including program administration, appeals and assessments services and system and software development and maintenance services for various U.S. federal civilian programs. The 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 BPS solutions for governments and commercial clients outside the United States, 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 HAAS, 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.

Expenses which are not specifically included in the segments are included in other categories, including amortization of intangible assets, costs incurred in restructuring our U.K. business, the direct costs of acquisitions and the gain on sale of the K-12 Education business. These costs are excluded from measuring each segment's operating performance.

The results of these segments for the three years ended September 30, 2019 are shown below (in thousands).


	Year ended September 30,
	2019			2018			2017
Revenue:
U.S. Health and Human Services	$	1,176,488		$	1,213,911		$	1,220,086
U.S. Federal Services	1,111,197			478,911			545,573
Outside the U.S.	599,130			699,414			685,302
Total	$	2,886,815		$	2,392,236		$	2,450,961
Gross profit:
U.S. Health and Human Services	$	344,109		$	359,624		$	348,906
U.S. Federal Services	242,070			126,698			139,321
Outside the U.S.	85,005			108,063			123,678
Total	$	671,184		$	594,385		$	611,905
Selling, general and administrative expense:
U.S. Health and Human Services	$	123,275		$	140,990		$	144,014
U.S. Federal Services	126,128			69,312			74,345
Outside the U.S.	68,944			72,095			64,742
Other	2,676			2,844			1,492
Total	$	321,023		$	285,241		$	284,593
Operating income:
U.S. Health and Human Services	$	220,834		$	218,634		$	204,892
U.S. Federal Services	115,942			57,386			64,976
Outside the U.S.	16,061			35,968			58,936
Amortization of intangible assets	(33,054)			(10,308)			(12,208)
Restructuring costs	—			(3,353)			(2,242)
Acquisition-related expenses	(2,691)			(947)			(83)
Gain on sale of a business	—			—			650
Other	15			(1,897)			(1,409)
Total	$	317,107		$	295,483		$	313,512
Operating income as a percentage of revenue:
U.S. Health and Human Services	18.8		%	18.0		%	16.8		%
U.S. Federal Services	10.4		%	12.0		%	11.9		%
Outside the U.S.	2.7		%	5.1		%	8.6		%
Total	11.0		%	12.4		%	12.8		%
Depreciation and amortization:
U.S. Health and Human Services	$	18,466		$	20,963		$	23,374
U.S. Federal Services	16,802			8,478			11,175
Outside the U.S.	17,136			22,443			21,220
Total	$	52,404		$	51,884		$	55,769

Restructuring costs were incurred in the years ending September 30, 2018 and 2017 in our United Kingdom businesses. Acquisition-related expenses are costs of completed business combinations as well as the costs of any unsuccessful transactions. The charges above include costs for the acquisition of the citizen engagement centers business which were incurred in fiscal years 2018 and 2019. Other costs include those related to the acquisition of Revitalised Limited in fiscal year 2017.

We operate in the United States, the United Kingdom, Australia, Canada, Saudi Arabia and Singapore.

Our revenue was distributed as follows (in thousands):


	Year ended September 30,
	2019		2018		2017
United States	$	2,287,685	$	1,692,823	$	1,765,661
United Kingdom	293,695		347,026		346,342
Australia	198,795		247,850		232,434
Rest of World	106,640		104,537		106,524
Total	$	2,886,815	$	2,392,236	$	2,450,961

Identifiable assets for the segments are shown below (in thousands):


	Year Ended September 30,
	2019		2018
U.S. Health and Human Services	$	500,641	$	442,063
U.S. Federal Services	795,553		375,807
Outside the U.S.	234,769		184,872
Corporate/Other	214,769		459,258
Total	$	1,745,732	$	1,462,000

Our long-lived assets, consisting of property and equipment, capitalized software costs and deferred compensation plan assets, were distributed as follows (in thousands):


	Year Ended September 30,
	2019		2018
United States	$	134,511	$	98,340
Australia	11,950		20,545
Canada	14,681		9,504
United Kingdom	3,129		5,498
Rest of World	595		391
Total	$	164,866	$	134,278