COVID-19 drives Maximus to halt financial guidance
By
Ross Wilkers
Maximus is temporarily suspending its financial guidance to investors because of the coronavirus pandemic and what it is doing to the economy. How soon will other public GovCon firms follow suit?
Publicly-traded companies are not required to give any forecasts of what they expect regarding revenue and earnings, but a majority of them do in order to gain trust and attention from investors.
The coronavirus pandemic and the global economic slowdown as a result are changing everything for companies across many sectors.
Maximus said Wednesday it is suspending financial guidance for its current fiscal year and will give more details on its next earnings call with investors in May. The company expects negative impacts to income and cash flow for the current fiscal 2020.
This disclosure means Maximus is the first publicly-held government services company to make such an announcement about not believing it can gauge the future in terms of financial performance. Whether more will follow or not is an open question given both the economic volatility and uncertainty as to how the government will operate during the pandemic.
But Maximus is far from the only company to pull back on giving any guidance. In nearly every similar statement, companies are describing how the pandemic is putting stress on the financial system in terms of access to capital and causing some dysfunction in the credit markets.
Reston, Virginia-based Maximus said it has access to a $400 million revolving credit facility and “adequate cash reserves” to navigate the pandemic. The ongoing stock repurchase program has ended and will be re-evaluated once more clarity emerges regarding the situation.
Employees are being systematically moved to work from home as well. Many work with government clients for whom telework is a "new model," Maximus said.
“The company is implementing this effort amidst constraints and shortages in the IT equipment supply chain that many companies are facing due to unprecedented demand. Equipment such as laptops and headsets are necessary tools for customer service representatives to conduct business at home,” Maximus said in its statement.
But at least some of the work for customers will go on given how some agencies decide what programs are “essential services,” particularly in health care and other benefit programs. Maximus said it is working with government clients on operational contingencies and modifications, plus other protocols to keep those programs going.
“We are also helping states and federal clients during this urgent time to expand COVID-19 related information phone lines, and in the United Kingdom, we are working with the government to support the need for additional clinicians who wish to volunteer on behalf of the National Health Service,” Maximus CEO Bruce Caswell said.
Shares in Maximus were down nearly 3 percent as of 3:00 p.m. Eastern time.
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