Maximus reported robust financial results for the third quarter of fiscal year 2025, ended June 30, 2025. Revenue for the quarter increased 2.5% to $1.35 billion, with organic growth of 4.3%, primarily driven by the U.S. Federal Services Segment.
The company's adjusted diluted earnings per share (EPS) for Q3 FY25 was $2.16, a significant increase from $1.74 in the prior year period. Operating margin reached 12.3% and adjusted EBITDA margin was 14.7%, reflecting strong profitability.
Maximus raised its fiscal year 2025 guidance for the third consecutive time. Revenue is now projected to be between $5.375 billion and $5.475 billion, an increase of $100 million at the midpoint. Adjusted diluted EPS guidance was significantly raised by $1.00 at the midpoint to a new range of $7.35 to $7.55 per share, and the adjusted EBITDA margin improved by 130 basis points to approximately 13%.
The U.S. Federal Services Segment continued its exceptional performance, with revenue increasing 11.4% to $761.2 million and an operating margin of 18.1%, benefiting from elevated volumes in clinical programs. The full-year operating margin for this segment is now expected to be approximately 15%.
Cash used in operating activities totaled $182.7 million, resulting in a free cash flow outflow of $198.2 million, primarily due to payment delays on two large programs, which caused Days Sales Outstanding (DSO) to peak at 96 days. However, collections have improved substantially post-quarter, leading to an increase in full-year free cash flow guidance to a range of $370 million to $390 million. The net leverage ratio stood at 2.1x, at the low end of the target range.
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