Maximus MMS reported mixed second-quarter fiscal 2026 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same.
MMS’ adjusted earnings per share of $2.07 beat the consensus mark by 4.6% and increased 3% year over year. Revenues of $1.31 billion missed the consensus mark by 1.1% and declined 4.1% from the year-ago quarter due to lower natural disaster support work and temporary clinical volume surges in domestic segments.
However, the reported quarterly earnings beat did not impress investors, as the stock has declined 7.7% since the earnings release on May 7, reflecting poor quarterly revenue performance and weak revenue guidance for fiscal 2026.
Maximus, Inc. Price, Consensus and EPS Surprise
Maximus, Inc. price-consensus-eps-surprise-chart | Maximus, Inc. Quote
Maximus guided revenues in the range of $5.2-$5.35 billion. The midpoint of $5.275 billion for fiscal 2026 was lower than the Zacks Consensus Estimate of $5.32 billion.
Segmental Revenues of Maximus
The U.S. Federal Services segment generated revenues of $753.1 million, down 3.2% year over year due to the absence of elevated natural disaster support work. Excluding disaster-related work, the segment posted 1.5% organic growth.
The U.S. Services segment’s revenues declined 6% year over year to $415.8 million, reflecting lower clinical volumes. Outside the U.S. segment revenues decreased 3.1% year over year to $137.1 million.
MMS’ Margin Performance Improves
Operating income totaled $148.5 million compared with $153 million in the prior-year quarter. Operating margin improved 20 basis points year over year to 11.4%, while adjusted EBITDA margin expanded to 14.4% from 13.7%, driven by efficiencies enabled by automation and AI tools.
The U.S. Federal Services segment operating margin expanded to 17.6% from 15.3% a year ago, supported by technology initiatives and automation that enabled higher processing volumes without a proportional increase in labor costs.
The U.S. Services segment operating margin was 9.3%, down from 12.2% in the prior-year quarter due to a $6.9 million non-cash impairment charge related to a software asset. Excluding the charge, segment margin was 10.9%.
Maximus Accelerates AI-Led Automation Efforts
Management highlighted growing traction in AI-enabled offerings and automation initiatives. The company stated that generative and probabilistic AI solutions are automating nearly half of certain high-volume dispute resolution workflows, enabling employees to focus on more complex cases and improving operating leverage.
Maximus also noted increasing demand for its Total Experience Management platform and AI-enabled program integrity solutions aimed at fraud prevention, workflow automation and customer service modernization.
Balance Sheet & Cash Flow of MMS
Maximus exited the quarter with unrestricted cash and cash equivalents of $157 million compared with $222.4 million at fiscal 2025-end. Gross debt totaled $1.55 billion as of quarter-end.
Cash provided by operating activities was $190 million in the quarter, while free cash flow totaled $179 million. During the quarter, the company repurchased approximately 1.4 million shares for $111 million and an additional 0.6 million shares for nearly $40 million through May 1, 2026.
MMS Raises Fiscal 2026 Earnings Outlook
For fiscal 2026, MMS’ adjusted earnings per share are now expected in the range of $8.25-$8.55, up from the prior guidance of $8.05-$8.35, with the midpoint of $8.40 being above the Zacks Consensus Estimate of $8.33.
The company maintained free cash flow guidance between $450 million and $500 million and raised adjusted EBITDA margin guidance by 20 basis points to approximately 14.2%.
The tax rate is expected to range between 24.0% and 25.0% for the fiscal year 2026.
Maximus carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Earnings Snapshots
Rollins, Inc. ROL reported impressive first-quarter 2026 results. ROL’s adjusted earnings of 24 cents per share matched the consensus mark and rose 9.1% from the year-ago quarter. ROL’s total revenues of $906.4 million surpassed the consensus mark by 1.3% and increased 10.2% year over year.
Waste Connections, Inc. WCN posted impressive first-quarter 2026 results. WCN’s adjusted earnings of $1.23 per share outpaced the consensus mark by 3.4% and rose 8.9% from the year-ago quarter. WCN’s total revenues of $2.37 billion beat the consensus mark by 0.7% and increased 6.4% year over year.
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