Maximus Raises Guidance on Improved Margins Despite Revenue Miss

Maximus Inc. shares gained ground after the government services provider reported adjusted earnings per share of $1.85, topping the analyst estimate of $1.82, while revenue of $1.345 billion fell slightly short of the projected $1.374 billion. The margin improvement and an increased outlook overshadowed the modest revenue shortfall, with the company lifting its fiscal 2026 EPS guidance to a range of $8.05 to $8.35, an increase of roughly $0.10 compared with prior expectations. The adjusted EBITDA margin rose approximately 30 basis points to about 14%, underlining the effectiveness of operational efficiency initiatives.

Operating margin expanded to 10.9% from 6.2% in the year-ago period, reflecting progress in cost discipline and program execution. The company maintained its free cash flow outlook of $450 million to $500 million, indicating confidence in cash generation despite the revenue variance. Analysts noted that the margin expansion and the guidance increase point to better-than-expected execution and an improved profitability trajectory for Maximus.

In another sign of confidence in the outlook, Maximus declared a quarterly dividend of $0.33 per share, consistent with a policy of returning capital to shareholders. The company also emphasized a pipeline of $59.1 billion, suggesting robust future opportunities as governments continue to modernize health and human services programs. The pipeline strength is a critical driver for longer-term growth in the public sector BPS market.

Looking ahead, Maximus faces both opportunities and challenges as it navigates an evolving regulatory landscape and rising demand for digital solutions. Investors will focus on the company's ability to sustain margin expansion and convert pipeline wins into revenue over the coming quarters. Analysts will also watch for any changes in free cash flow performance relative to the current guidance range.