Annual report pursuant to Section 13 and 15(d)

Business segments

v3.20.2
Business segments
 12 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Business segments Business segments
We conduct our operations through three business segments: U.S. Services, U.S. Federal Services, and Outside the U.S.
•Our U.S. 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, the Children’s Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF), and child support programs. In fiscal year 2020, the segment further executed on its clinical evolution strategy by expanding its clinical offerings in public health with new work in contact tracing, disease investigation, and COVID-19 response efforts. We also successfully expanded into the unemployment insurance market as Maximus supported 14 states in their unemployment insurance programs. We changed the name of our U.S. Health and Human Services to U.S. Services to recognize the evolution our service offerings into new markets and clients.
•Our U.S. Federal Services Segment provides program administration, appeals and assessments services and technology solutions, including 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. In fiscal year 2020, the segment expanded its clinical offerings in public health with new work supporting the Federal Government's COVID-19 response efforts. This included expanded work with the Centers for Disease Control and Prevention (CDC) for their helpline, an outbound customer support center for the Office of the Assistant Secretary for Health to notify individuals throughout the U.S. of their COVID-19 test result and IRS Wage and Investment Division response efforts to general inquiries regarding the Coronavirus Aid Relief & Economic Security (CARES) Act and Economic Impact Payment Service Plan.
•Our Outside the U.S. Segment provides business process services (BPS) solutions for governments and commercial clients in geographies beyond the U.S., including health and disability assessments, program administration for employment services and other job seeker-related services. We support programs and deliver services in the United Kingdom (U.K.), including the Health Assessment Advisory Service (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; Italy, Saudi Arabia, Singapore, South Korea and Sweden.
Expenses that 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 Q2 Administrators, LLC. These costs are excluded from measuring each segment's operating performance.
The results of these segments for the three years ended September 30, 2020, are shown below.
  Year ended September 30,
(in thousands) 2020 2019 2018
Revenue:      
U.S. Services 1,329,274  $ 1,176,488  $ 1,213,911 
U.S. Federal Services 1,633,337  1,111,197  478,911 
Outside the U.S. 498,926  599,130  699,414 
Total $ 3,461,537  $ 2,886,815  $ 2,392,236 
Gross profit:      
U.S. Services $ 360,272  $ 344,109  $ 359,624 
U.S. Federal Services 318,925  242,070  126,698 
Outside the U.S. 31,805  85,005  108,063 
Total $ 711,002  $ 671,184  $ 594,385 
Selling, general and administrative expense:      
U.S. Services $ 132,489  $ 123,275  $ 140,990 
U.S. Federal Services 186,023  126,128  69,312 
Outside the U.S. 65,938  68,944  72,095 
Gain on sale of a business (1) (1,718) —  — 
Other (2) 4,358  2,676  2,844 
Total $ 387,090  $ 321,023  $ 285,241 
Operating income:      
U.S. Services $ 227,783  $ 220,834  $ 218,634 
U.S. Federal Services 132,902  115,942  57,386 
Outside the U.S. (34,133) 16,061  35,968 
Amortization of intangible assets (35,634) (33,054) (10,308)
Restructuring costs (3) —  —  (3,353)
Acquisition-related expenses (4) (4,621) (2,691) (947)
Gain on sale of a business (1) 1,718  —  — 
Other 263  15  (1,897)
Total $ 288,278  $ 317,107  $ 295,483 
Depreciation and amortization:      
U.S. Services $ 20,951  $ 18,466  $ 20,963 
U.S. Federal Services 25,153  16,802  8,478 
Outside the U.S. 18,423  17,136  22,443 
Total $ 64,527  $ 52,404  $ 51,884 

(1)    During fiscal year 2020, we sold Q2 Administrators LLC, a subsidiary within our U.S. Federal Services Segment, resulting in a gain. Refer to "Note 6. Business combinations and disposals" for more details.
(2)    Other selling, general and administrative expenses includes credits and costs that are not allocated to a particular segment.
(3)    Restructuring costs incurred in the year ending September 30, 2018, were related to our United Kingdom businesses.
(4)    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 that were incurred in fiscal years 2018 and 2019.
We operate in the United States, Australia, Canada, Italy, Saudi Arabia, Singapore, South Korea, Sweden, and the United Kingdom.
Our revenue was distributed as follows:
  Year ended September 30,
(in thousands) 2020 2019 2018
United States $ 2,962,610  $ 2,287,685  $ 1,692,823 
United Kingdom 246,335  293,695  347,026 
Australia 147,156  198,795  247,850 
Rest of World 105,436  106,640  104,537 
Total $ 3,461,537  $ 2,886,815  $ 2,392,236 
Identifiable assets for the segments are shown below:
  Year ended September 30,
(in thousands) 2020 2019
U.S. Services $ 702,728  $ 500,641 
U.S. Federal Services 937,477  795,553 
Outside the U.S. 224,532  234,769 
Corporate/Other 159,965  214,769 
Total $ 2,024,702  $ 1,745,732 
Our long-lived assets, consisting of property and equipment, capitalized software costs, operating lease right-of-use assets and deferred compensation plan assets were distributed as follows:
  Year ended September 30,
 (in thousands) 2020 2019
United States $ 255,346  $ 134,511 
Australia 30,183  11,950 
Canada 24,522  14,681 
United Kingdom 7,610  3,129 
Rest of World 1,071  595 
Total $ 318,732  $ 164,866