Quarterly report [Sections 13 or 15(d)]

Business Segments

v3.26.1
Business Segments
 6 Months Ended
Mar. 31, 2026
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 (CEO), who is our Chief Operating Decision Maker (CODM), reviews our financial results. The CODM reviews segment-level revenue, gross profit, and segment operating income/(loss) on a regular basis to assess performance and manage the business. Revenue is used to evaluate growth trends and performance relative to budget, while gross profit and segment operating income/(loss) are used to assess overall profitability, business efficiency, and the effectiveness of cost-reduction initiatives. These measures also inform the CODM’s decisions regarding the allocation of resources across segments, including allocations of management bonus as well as investments in technology, personnel, and strategic transactions, such as mergers and acquisitions.
U.S. Federal Services
Our U.S. Federal Services Segment delivers solutions that help various U.S. federal government agencies better execute on their mission, including program operations and management, clinical services, and advanced technology solutions.
U.S. Services
Our U.S. Services Segment provides a variety of services, such as program operations, clinical services, employment services and advanced technology solutions and related professional services work for U.S. state and local government programs. These services support a variety of programs, including the programs under Medicaid and Children's Health Insurance Program (CHIP), the Affordable Care Act (ACA) marketplaces, and Temporary Assistance to Needy Families (TANF).
Outside the U.S.
Our Outside the U.S. Segment provides business process services and other 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 Functional Assessment Services (FAS) contract and the Restart employment program. We also provide services in Canada and the Middle East.
Table 3.1: Results of Operations by Business Segment for the Three Months Ended
  For the Three Months Ended March 31, 2026
(dollars in thousands) U.S. Federal Services % (1 ) U.S. Services % (1 ) Outside the U.S. % (1 ) Total
Revenue $ 753,143  $ 415,754  $ 137,070  $ 1,305,967 
Cost of revenue 527,698  70.1  % 315,245  75.8  % 120,760  88.1  % 963,703 
Gross profit 225,445  29.9  % 100,509  24.2  % 16,310  11.9  % 342,264 
Other segment items (2) 92,741  12.3  % 61,919  14.9  % 19,395  14.1  % 174,055 
Segment operating income/(loss) $ 132,704  17.6  % $ 38,590  9.3  % $ (3,085) (2.3) % 168,209 
Other (4) 576 
Amortization of intangible assets (20,298)
Operating income $ 148,487 
Depreciation and amortization: $ 7,300  1.0  % $ 4,161  1.0  % $ 867  0.6  % $ 12,328 
For the Three Months Ended March 31, 2025
(dollars in thousands) U.S. Federal Services % (1) U.S. Services % (1) Outside the U.S. % (1) Total
Revenue $ 777,927  $ 442,350  $ 141,509  $ 1,361,786 
Cost of revenue 575,869  74.0  % 330,580  74.7  % 116,516  82.3  % 1,022,965 
Gross profit 202,058  26.0  % 111,770  25.3  % 24,993  17.7  % 338,821 
Other segment items (2) 83,076  10.7  % 57,963  13.1  % 20,197  14.3  % 161,236 
Segment operating income $ 118,982  15.3  % $ 53,807  12.2  % $ 4,796  3.4  % 177,585 
Divestiture-related gains/(charges) (3) (1,002)
Other (4) (619)
Amortization of intangible assets (22,996)
Operating income $ 152,968 
Depreciation and amortization: $ 3,677  0.5  % $ 4,161  0.9  % $ 1,602  1.1  % $ 9,440 
Table 3.2: Results of Operations by Business Segment for the Six Months Ended
For the Six Months Ended March 31, 2026
(dollars in thousands) U.S. Federal Services % (1) U.S. Services % (1) Outside the U.S. % (1) Total
Revenue $ 1,539,744  $ 831,002  $ 280,267  $ 2,651,013 
Cost of revenue 1,099,364  71.4  % 646,099  77.7  % 244,616  87.3  % 1,990,079 
Gross profit 440,380  28.6  % 184,903  22.3  % 35,651  12.7  % 660,934 
Other segment items (2) 177,943  11.6  % 117,027  14.1  % 40,116  14.3  % 335,086 
Segment operating income $ 262,437  17.0  % $ 67,876  8.2  % $ (4,465) (1.6) % 325,848 
Divestiture-related gains/(charges) (3) 8,985 
Other (4) 462 
Amortization of intangible assets (40,598)
Operating income $ 294,697 
Depreciation and amortization: $ 14,415  0.9  % $ 8,383  1.0  % $ 2,419  0.9  % $ 25,217 
For the Six Months Ended March 31, 2025
(dollars in thousands) U.S. Federal Services % (1) U.S. Services % (1) Outside the U.S. % (1) Total
Revenue $ 1,558,582  $ 894,600  $ 311,279  $ 2,764,461 
Cost of revenue 1,183,209  75.9  % 687,826  76.9  % 253,048  81.3  % 2,124,083 
Gross profit 375,373  24.1  % 206,774  23.1  % 58,231  18.7  % 640,378 
Other segment items (2) 157,291  10.1  % 112,121  12.5  % 45,315  14.6  % 314,727 
Segment operating income $ 218,082  14.0  % $ 94,653  10.6  % $ 12,916  4.1  % 325,651 
Divestiture-related gains/(charges) (3) (39,343)
Other (4) (522)
Amortization of intangible assets (46,031)
Operating income $ 239,755 
Depreciation and amortization: $ 6,528  0.4  % $ 7,972  0.9  % $ 3,395  1.1  % $ 17,895 
(1)Percentage of respective revenue, as applicable.
(2)Other segment items are principally selling, general, and administrative expenses allocated to segments.
(3)During fiscal years 2026 and 2025, we divested businesses from our U.S. Services and Outside the U.S. Segments, respectively. See "Note 6. Divestitures" for additional information.
(4)Other expenses include credits and costs that are not allocated to a particular segment.