Quarterly report pursuant to Section 13 or 15(d)

Business combinations (Tables)

v3.21.2
Business combinations (Tables)
 9 Months Ended
Jun. 30, 2021
Business Combination and Asset Acquisition [Abstract]  
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed The balances below represent our best estimate and are subject to change:
(in thousands) Estimated Fair Value of Assets and Liabilities
Cash consideration paid, net of cash acquired $ 1,360,231 
Estimated additional cash payments 7,494 
Estimated cash consideration, net of cash acquired $ 1,367,725 
Accounts receivable - billed, billable and unbilled $ 44,078 
Prepaid expenses and other current assets 13,911 
Property and equipment, net 9,113 
Operating lease right-of-use assets 18,898 
Intangible assets 664,000 
Other assets 12,816 
Total identifiable assets acquired 762,816 
Accounts payable and accrued compensation 42,978 
Operating lease liabilities 18,898 
Income taxes payable 6,196 
Deferred income taxes 177,626 
Other long-term liabilities 6,667 
Net identifiable assets acquired 510,451 
Goodwill 857,274 
Net assets acquired $ 1,367,725 
We are in the process of finalizing the valuation as of March 1, 2021, of all acquired assets and assumed liabilities and, accordingly, the balances below represent our best estimate and are subject to change:
(in thousands) Estimated fair value of assets and liabilities at acquisition date as of March 31, 2021 Adjustments Estimated fair value of assets and liabilities at acquisition date as of June 30, 2021
Cash consideration, net of cash acquired $ 419,864  $ (767) $ 419,097 
Accounts receivable - billed, billable and unbilled $ 39,274  $ 101  $ 39,375 
Prepaid expenses and other current assets 1,336  (410) 926 
Property and equipment, net 703  (703) — 
Operating lease right-of-use assets 25,089  (129) 24,960 
Other assets 84  (10) 74 
Intangible assets 105,000  —  105,000 
Total identifiable assets acquired 171,486  (1,151) 170,335 
Accounts payable and other liabilities 28,301  562  28,863 
Operating lease liabilities, less current portion 26,786  (385) 26,401 
Net identifiable assets acquired 116,399  (1,328) 115,071 
Goodwill 303,465  561  304,026 
Net assets acquired $ 419,864  $ (767) $ 419,097 
Schedule of Acquired Finite-Lived Intangible Assets by Major Class
A summary of the asset values and asset lives is as follows:
(in thousands) Estimated Straight-Line Useful Life Estimated Fair Value
Customer contracts and relationships 12 years $ 580,000 
Provider network 12 years 57,000 
Technology-based intangible assets 14 years 27,000 
Total intangible assets $ 664,000 
Schedule of Business Acquisition, Pro Forma Information The pro forma results below eliminate intercompany transactions, include amortization charges for acquired intangible assets, and estimates of interest expense based upon our total estimated borrowings, eliminate pre-acquisition transaction costs and reflect corresponding changes in our provision for income taxes. Acquisition related costs incurred by Maximus, VES and Attain have been excluded in the following pro forma results. These costs were $8.8 million, $52.2 million and $0.3 million, respectively.
Unaudited pro forma results
Three Months
Ended June 30,		 Nine Months
Ended June 30,		 Trailing Twelve Months Ended June 30,
(in thousands, except per share amounts) 2021 2020 2021 2020 2021
Revenue $ 1,335,780  $ 996,462  $ 3,566,466  $ 2,934,920  $ 4,645,540 
Cost of revenue 1,004,523  787,189  2,679,170  2,283,589  3,503,074 
Gross profit 331,257  209,273  887,296  651,331  1,142,466 
Selling, general, and administrative expenses 151,321  110,754  425,062  360,370  551,143 
Amortization of intangible assets 21,301  25,090  63,856  75,868  88,586 
Operating income 158,635  73,429  398,378  215,093  502,737 
Interest expense 8,701  9,423  26,715  28,528  36,426 
Other (expense)/income, net (7,320) (2,126) (10,401) (11,755) (11,437)
Income before income taxes 142,614  61,880  361,262  174,810  454,874 
Provision for income taxes 37,123  15,549  94,735  38,897  120,248 
Net income $ 105,491  $ 46,331  $ 266,527  $ 135,913  $ 334,626 
Basic earnings per share $ 1.70  $ 0.75  $ 4.30  $ 2.14  $ 5.40 
Diluted earnings per share $ 1.69  $ 0.75  $ 4.28  $ 2.13  $ 5.37 
Dividends declared per share $ 0.28  $ 0.28  $ 0.84  $ 0.84  $ 1.12 
Weighted average shares outstanding:
Basic 62,064  61,882  62,028  63,463  62,001 
Diluted 62,453  62,102  62,300  63,666  62,285 
Schedule of Goodwill Changes in goodwill for the nine months ended June 30, 2021, were as follows:
(in thousands) U.S. Services U.S. Federal Services Outside the U.S Total
Balance as of September 30, 2020 $ 164,472  $ 381,719  $ 46,938  $ 593,129 
Estimated effects of acquisitions —  1,161,300  623  1,161,923 
Foreign currency translation —  —  2,743  2,743 
Balance as of June 30, 2021 $ 164,472  $ 1,543,019  $ 50,304  $ 1,757,795 
Schedule of Finite-Lived Intangible Assets The following table sets forth the components of intangible assets (in thousands):
As of June 30, 2021 As of September 30, 2020
(in thousands) Cost Accumulated
Amortization		 Intangible
Assets, net		 Cost Accumulated
Amortization		 Intangible
Assets, net
Customer contracts and relationships $ 921,023  $ 112,546  $ 808,477  $ 235,287  $ 90,302  $ 144,985 
VES Provider network 57,000  396  56,604  —  —  — 
Technology-based intangible assets 32,400  4,994  27,406  5,631  4,723  908 
Trademarks and trade names 4,516  4,516  —  4,479  4,479  — 
Total $ 1,014,939  $ 122,452  $ 892,487  $ 245,397  $ 99,504  $ 145,893 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense The estimated future amortization expense for the next five years for the intangible assets held by the Company as of June 30, 2021 is shown below. As noted above, we have not yet completed our assessment of the valuation of the intangible assets acquired with VES and Attain. These future amortization expenses represent our best estimate of future costs.
(In thousands) Estimated Future Amortization Expense
Year ended September 30, 2021, Remainder of year $ 20,518 
Year ended September 30, 2022 82,025 
Year ended September 30, 2023 82,009 
Year ended September 30, 2024 81,885 
Year ended September 30, 2025 81,678 
Year ended September 30, 2026 81,551