Maximus feels pinched as COVID work ends, but executives tout new opportunities ahead

Maximus’ revenue soared at the height of the COVID-19 pandemic. This was due to high demand for contact center, billing and clinical support services.

However, in the company’s most recent earnings call with investors on Thursday, management reiterated its expectation that those sales would decline as all government agencies hold back spending.

Maximus’ third-quarter revenue declined 9% year-over-year to $1.12 billion, while COVID-related work was down $413 million.

Its COVID-responsive earnings were offset by organic growth and acquisitions, particularly the U.S. Federal segment, a company official told analysts.

Maximus is preparing for when the public health emergency ends later this fall and how it will affect people with Medicaid coverage in the state. It will end, but there are moves to address this at the interstate and federal levels.

This expands the work Maximus is doing and could potentially create long-term opportunities, company executives said.

Heading into 2023, the company hopes to overcome COVID-induced job losses and grow in other areas.

Maximus’ addressable market size is $150 billion, with “technology services and clinical and health services accounting for a significant portion of that number,” CEO Bruce Caswell told analysts.

Part of Maximus’ growth strategy ties its technology solutions business to the modernization of legacy systems for its customers. One example includes winning his $60 million contract to serve as the lead integrator for the Army Logistics Modernization Program.

The company is beginning to focus on work driven by the recently passed Pact Act to expand benefits for veterans exposed to burns and other toxins. Maximus expects more work from Veterans Enterprise Services Business acquired last year.

“By increasing our current employment and making certain investments to maintain our current employee base, we will demonstrate our ability to perform in an urgent manner so that veterans can be seen as soon as they apply.” said Caswell.

He said he expects the ramp to go up about 90 days after President Biden’s expected signature of the bill.

Maximus’ team is in talks with VA leaders to prepare for the expected surge by the end of the year.

Some of the health effects do not appear for years, so this should be a long-term opportunity. An estimated 3.5 million veterans can now apply for new benefits.

Overall adoption remains a challenge for Maximus and other companies, especially clinical and technical professionals.

“It helps us to continue to offer people more flexibility, but at the same time many companies recognize that this is best done in teams that physically work together.

Caswell said he has spoken to colleagues who share his thoughts.

“It will inevitably adjust over time,” he said. Maximus feels pinched as COVID work ends, but executives tout new opportunities ahead

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