Key Highlights

  • Fiscal third-quarter revenue was $1.28 billion, down from $1.35 billion.
  • Diluted EPS was $1.95 versus $1.86 a year earlier.
  • Free cash flow was an outflow of $137 million.
  • The company repurchased about 0.75 million shares for $50.4 million.

Maximus, Inc. (NYSE:MMS), a government services outsourcer, is a constituent of the S&P MidCap 400. Its latest quarter offered a mixed picture: earnings per share rose even as revenue declined and cash flow was negative in the period. Management also updated its full-year outlook to reflect what it called a temporary customer-directed contract modification. With the fiscal year ending September 30, the focus may soon shift to full-year results and the first outlook for fiscal 2027.

Latest Company Context

On August 6, 2026, Maximus reported fiscal third-quarter results for the quarter ended June 30. Revenue was $1.28 billion, down from $1.35 billion a year earlier. Diluted EPS was $1.95 versus $1.86, and adjusted diluted EPS was $2.22 versus $2.16. Operating margin was 12.6% versus 12.3%, and adjusted EBITDA margin was 15.0% versus 14.7%.

Cash used in operations was $125 million and free cash flow was an outflow of $137 million. Cash stood at $57 million against gross debt of $1.65 billion, and days sales outstanding were 98. The company repurchased about 0.75 million shares for $50.4 million in the quarter, with its refreshed $400 million authorisation fully available at June 30, and declared a $0.33 quarterly dividend.

Key Business and Index Drivers

Management guidance for fiscal 2026 is revenue of $5.2 billion to $5.35 billion, reiterated, with results expected toward the lower end; adjusted diluted EPS of $7.90 to $8.20; free cash flow of $425 million to $475 million; and adjusted EBITDA margin of about 13.7%. These are company expectations, not outcomes.

By segment, U.S. Federal Services revenue was $721 million (versus $761 million) at an 18.6% margin, though the full-year margin is now expected at 16.5% to 17.0% because of the contract modification. U.S. Services revenue was $418 million at a 10.8% margin, and Outside the U.S. revenue was $140 million at a 0.9% margin, with break-even expected for the year. As an S&P MidCap 400 member, Maximus's results may also influence how it compares with peers in benchmark and passive-fund contexts.

What Investors Should Watch

Investors may watch whether free cash flow converts as guided. With a third-quarter outflow, reaching the $425 million to $475 million range implies a notably stronger fourth quarter, which could depend on collections and working capital. Days sales outstanding and the timing of the contract modification's effect are related items.

The fiscal fourth-quarter and full-year report, expected after the September 30 year-end, is likely to bring the first guidance for fiscal 2027. Investors may also watch the pace of share repurchases under the $400 million authorisation, leverage relative to $1.65 billion of gross debt, and any developments in federal contracting and state programmes that affect volumes. The Outside the U.S. segment's progress toward break-even is another measurable item.

Higher EPS on Lower Revenue, With Cash Flow the Counterweight

Maximus raised EPS on lower revenue but used cash in the quarter. Full-year results and the first fiscal 2027 outlook are the next information points.