Maximus' big watch item for 2025 is Trump 2.0

(EDITOR'S NOTE: Subsequent to this story's publication, the Centers for Medicare and Medicaid Services cancelled the recompete in its entirety. The article has since been updated.)

As it turns out, the Court of Federal Claims will not rule on Maximus’ protest involving the Centers for Medicare and Medicaid Services’ Contact Center Operations contract worth up to $6.6 billion.

In a posting to Sam.gov Tuesday, CMS said it has cancelled the recompete and that "this project will not be re-solicited at this time." Maximus centered its challenge on the solicitation’s labor harmony agreement.

During Maximus’ fourth quarter and fiscal year-end earnings call with investors Thursday, chief executive Bruce Caswell said second-phase proposals were due before the end of this month. But that appears to be a moot point now and given CMS' decision, Maximus has asked the court to dismiss the protest.

Other than CCO, the transition to a second Donald Trump administration was top of mind for analysts on the call.

“There's a lot to watch presently in terms of the new positions that are being announced, some as recently as just the last couple of days,” Caswell said. “While there will very likely be changes in priorities in the new administration at HHS, we're only recently learning about these new leadership positions and discerning, with everybody else, what that might mean.”

During the 2017 transition to “Trump 1.0,” Caswell and other GovCon CEOs said at the time that there were delays in the appointments of individuals into key positions that have direct impacts on contracting matters.

That resulted in procurement slowdowns all across government, which is inevitable in an transition but apparently was multiplied in Trump 1.0. Caswell does not see that happening at the same degree now with the transition to Trump 2.0.

“They've had a lot of time to put plans in place and get people into key positions, and I think we're seeing a lot of that already in terms of the tempo of the announcements that have been made,” Caswell said. “Whether you think about those in terms of are they strategic priorities, or not as the administration transitions, or are they just at a dollar value where (the) level of scrutiny and signoff that's going to be required, that makes it even more dependent on having key positions filled. That's an open question.”

One point of curiosity to Maximus, and all of GovCon for certain, is whatever happens out of the Department of Government Efficiency whose headline figures include Elon Musk and Vivek Ramaswamy.

Caswell highlighted two major themes to watch for from DOGE that stem from its vision and goal to reduce the number of civilian employees across government.

“You have to be prudent and ask yourself a question: As a government contractor, what could the implications be in terms of just the workforce that's needed to execute the contracts, administer and oversee the contracts in that environment?” Caswell said. “Then the next question would be, what will the priorities be of an organization like that?"

Maximus's full fiscal year revenue of $5.31 billion was 8.2% higher than those of fiscal 2023 with an organic growth rate of 8.8%. Profit of $615 million represented a 37.3% year-over-year increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), which translates to a bottom-line margin of 11.6%.

Maximus’ initial outlook for its fiscal 2025 that started Oct. 1 pegs sales in the range of $5.275 billion-to-$5.425 billion with an adjusted EBITDA margin of 11%.