Quarterly report pursuant to Section 13 or 15(d)

Business Segments

v3.23.2
Business Segments
 9 Months Ended
Jun. 30, 2023
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. This also includes appeals and assessments services, system and application development, IT modernization, and maintenance services. The segment also contains certain state-based assessments and appeals work that is part of the segment's heritage which continues to be managed within this segment. Under Technology Consulting Services, 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. The segment continues to expand its clinical solutions through Veterans Evaluation Services (VES), a Maximus company, which manages the clinical evaluation process for U.S. veterans and service members on behalf of the U.S. Department of Veterans Affairs.
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. Over the last three years, many programs in this segment have been operating with depressed margins resulting from the pause in Medicaid redeterminations. The depressed margins have resulted from reduced operating leverage in the segment as costs cannot scale down at the same rate to meet lower demand due to requirement to fulfill other obligations on these contracts. With the resumption of redeterminations, we expect a full period of volumes coming back into these programs and which enables our operating leverage to recover. A temporary offset to the depressed margins from paused redeterminations was the government's COVID-19 response efforts in prior fiscal years. The segment supported contact tracing, disease investigation, and vaccine distribution support services which concluded in fiscal year 2022. The segment also successfully expanded into the unemployment insurance market where longer term opportunities have materialized. As part of the broader strategy to evolve clinically and address societal macro trends such as aging populations and rising costs, the segment continues to expand its offerings in public health with new work in in-person assessments.
Outside the U.S.
Our Outside the U.S. Segment provides BPS for international governments and commercial clients, 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 U.K., including the Health Assessment Advisory Service ("HAAS") and the recently awarded replacement contract to start in 2024, Functional Assessment Services (“FAS”), and Restart; Australia, including Workforce Australia and the Disability Employment Service; Canada, including the Employment Program of British Columbia; in addition to Italy, Saudi Arabia, Singapore, South Korea, and UAE where we predominantly provide employment support and job seeker services.
Table 3: Results of Operation by Business Segment
  For the Three Months Ended For the Nine Months Ended
June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
Amount % (1) Amount % (1) Amount % (1) Amount % (1)
(dollars in thousands)
Revenue:        
U.S. Federal Services $ 583,960  $ 525,519  $ 1,786,202  $ 1,680,678 
U.S. Services 449,061  399,320  1,338,242  1,183,814 
Outside the U.S. 155,656  200,946  520,331  589,495 
Revenue $ 1,188,677  $ 1,125,785  $ 3,644,775  $ 3,453,987 
Gross profit:
U.S. Federal Services $ 156,945  26.9  % $ 124,203  23.6  % $ 402,513  22.5  % $ 365,932  21.8  %
U.S. Services 98,538  21.9  % 74,135  18.6  % 268,152  20.0  % 248,805  21.0  %
Outside the U.S. 8,881  5.7  % 11,883  5.9  % 67,049  12.9  % 52,090  8.8  %
Gross profit $ 264,364  22.2  % $ 210,221  18.7  % $ 737,714  20.2  % $ 666,827  19.3  %
Selling, general, and administrative expenses:  
U.S. Federal Services $ 82,892  14.2  % $ 69,466  13.2  % $ 229,591  12.9  % $ 203,340  12.1  %
U.S. Services 51,536  11.5  % 42,351  10.6  % 140,793  10.5  % 115,726  9.8  %
Outside the U.S. 24,122  15.5  % 23,101  11.5  % 75,936  14.6  % 68,452  11.6  %
Loss on sale of businesses (2) —  NM —  NM 883  NM —  NM
Other (3) 23,995  NM (1,944) NM 24,242  NM (16) NM
Selling, general, and administrative expenses $ 182,545  15.4  % $ 132,974  11.8  % $ 471,445  12.9  % $ 387,502  11.2  %
Operating income/(loss):  
U.S. Federal Services $ 74,053  12.7  % $ 54,737  10.4  % $ 172,922  9.7  % $ 162,592  9.7  %
U.S. Services 47,002  10.5  % 31,784  8.0  % 127,359  9.5  % 133,079  11.2  %
Outside the U.S. (15,241) (9.8) % (11,218) (5.6) % (8,887) (1.7) % (16,362) (2.8) %
Amortization of intangible assets (23,431) NM (22,690) NM (70,599) NM (67,951) NM
Loss on sale of businesses (2) —  NM —  NM (883) NM —  NM
Other (3) (23,995) NM 1,944  NM (24,242) NM 16  NM
Operating income $ 58,388  4.9  % $ 54,557  4.8  % $ 195,670  5.4  % $ 211,374  6.1  %
(1)Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM."
(2)During the second quarter of fiscal year 2023, we sold a small commercial practice in the United Kingdom and our employment operations business in Sweden, both subsidiaries within our Outside the U.S. Segment, resulting in a loss. Refer to "Note 7. Divestitures" for more details.
(3)Other includes credits and costs that are not allocated to a particular segment. In the three and nine months ended June 30, 2023, these charges include $22.1 million related to the costs of a previously disclosed cybersecurity incident. Other charges include those related to acquisitions.