The quarter was essentially in line, not a meaningful beat. Adjusted diluted EPS was $2.22 versus the published consensus of approximately $2.21, while revenue of $1.279 billion was described as consistent with expectations.
| Metric | Q3 FY26 | Q3 FY25 / Expectation |
|---|---|---|
| Revenue | $1.279B | $1.348B prior year (Financial Statements) |
| Adjusted diluted EPS | $2.22 | $2.16 prior year; ~$2.21 consensus |
| Adjusted EBITDA | $192.3M | $198.3M prior year |
| Adjusted EBITDA margin | 15.0% | 14.7% prior year |
| Operating cash flow | $(125.0)M | $(182.7)M prior year |
| Free cash flow | $(137.0)M | $(198.2)M prior year |
Profitability held up better than the headline revenue decline suggests. Revenue fell from a prior-year quarter inflated by disaster-response and temporary clinical volumes, but adjusted EBITDA margin improved to 15.0% from 14.7%, and U.S. Federal Services margin rose to 18.6% from 18.1% (Segment results — U.S. Federal Services). That is a solid operational delivery, but the market was already expecting a broadly stable quarter rather than a major upside surprise.
The important new information is the guidance cut. Maximus now expects FY26 adjusted EPS of $7.90–$8.20 and adjusted EBITDA margin of approximately 13.7%, citing a temporary customer-directed modification on a major federal contract effective July 1 through December 31, 2026 (FY26 Guidance Reconciliation; U.S. Federal Services). The prior published range was approximately $8.25–$8.55, so the new outlook sits roughly $0.35 below the old midpoint and removes the central earnings upside case.
The pressure is concentrated in federal profitability, while international operations weakened sharply. Full-year U.S. Federal Services margin is now expected at 16.5%–17.0%, and Outside the U.S. produced only a 0.9% quarterly margin versus 4.0% a year earlier; management still expects that segment merely to break even for FY26 (Segment results — Outside the U.S.). U.S. Services improved to a 10.8% quarterly margin, but that progress does not offset the federal contract modification and international deterioration.
Cash conversion remains the main execution risk. Operating cash flow was negative $125 million and free cash flow negative $137 million in the quarter, with receivables rising to $1.382 billion from $898 million at September 30, 2025 (Cash Flow statement; Balance Sheet). Management points to accelerated July collections and expects year-end DSO below 70 days, but until that cash arrives, leverage has risen to 2.0x from 1.8x at March 31 while gross debt reached $1.65 billion (Liquidity and Capital Resources). Net read: a narrowly better quarter than expected, more than offset by lower earnings expectations and still-unproven cash collection timing.
Read the original 8-K on SEC EDGAR ↗