Maximus' attention turns to revenue synergies as it integrates
“The federal marketplace is also the largest marketplace in the world, and we think there is meaningful open space for us to grow into," said Maximus CEO Bruce Caswell. Courtesy of Maximus
By
Ross Wilkers
Last year's agenda for Maximus involved closing its two largest-ever acquisitions to lay more new foundations for growth in the federal business, which means this year is focused on winning revenue synergy opportunities.
Maximus’ U.S. federal services segment is best described as having been in the midst of several transitions all happening at the same time.
One was the hire of a new leader last year that is now overseeing the integrations of Maximus’ two largest-ever acquisitions in the Attain federal business and Veterans Evaluation Services Inc.
Part of what Reston, Virginia-headquartered Maximus is focusing on now is identifying and competing for revenue synergy opportunities it sees through those transactions.
During Maximus’ fiscal first quarter earnings call Thursday, CEO Bruce Caswell told investors the company is applying Attain Federal’s offerings into technology bids through the Alliant 2 contract vehicle.
Awarded in Fall 2017, Alliant 2 covers broad IT services and solutions for federal agencies. Maximus had to use its own capabilities and qualifications in pursuit of a position on that vehicle, which was a challenge given the company was one of four partners in a joint venture on Alliant 1.
“Attain brought additional technology capabilities, while Maximus offers access to desirable contract vehicles that enable us to expand the business together,” Caswell told analysts.
“The federal marketplace is also the largest marketplace in the world, and we think there is meaningful open space for us to grow into,” he added.
Regarding the VES integration, Caswell said Maximus is investing in both staffing and technology to help that business work through today’s inventory of veteran medical exams and future anticipated demand.
As Maximus Federal President Teresa Weipert told us in January, the business focuses on better outcomes for federal agencies that most often mean more than just a new technology. Process is just as important a factor in that, she said in this episode of our Project 38 podcast.
The federal segment’s first quarter revenue growth of 43.6 percent year-over-year to $581.9 million was driven primarily by the acquisitions, while the organic sales decline was 13 percent when excluding contributions from Attain Federal and VES.
Maximus also no longer has revenue from its work supporting the 2020 Census coming in as that contract wound down during the company’s 2021 fiscal year that ended Sept. 30.
COVID response work in the federal segment also fell $8 million year-over-year, but the company cautioned that some of that is transitioning to longer-term services supporting customers as many public health emergency orders wind down.
On a company-wide basis, first quarter sales climbed 22 percent from the prior year period to $1.15 billion. Maximus also lifted its full-year revenue outlook to a range of $4.5 billion-to-$4.7 billion, up from the prior guidance of $4.4 billion-to-$4.6 billion.