Cover Page
Cover Page - shares | 9 Months Ended | |
Jun. 30, 2020 | Aug. 03, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-12997 | |
Entity Registrant Name | Maximus, Inc. | |
Entity Incorporation, State or Country Code | VA | |
Entity Tax Identification Number | 54-1000588 | |
Entity Address, Address Line One | 1891 Metro Center Drive | |
Entity Address, City or Town | Reston | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20190 | |
City Area Code | 703 | |
Local Phone Number | 251-8500 | |
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | MMS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Reporting Company | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 61,312,619 | |
Entity Central Index Key | 0001032220 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 901,337 | $ 730,710 | $ 2,537,701 | $ 2,131,849 |
Cost of revenue | 715,734 | 556,463 | 2,023,550 | 1,628,915 |
Gross profit | 185,603 | 174,247 | 514,151 | 502,934 |
Selling, general and administrative expenses | 89,582 | 81,604 | 283,662 | 239,377 |
Amortization of intangible assets | 8,712 | 9,049 | 26,734 | 24,026 |
Operating income | 87,309 | 83,594 | 203,755 | 239,531 |
Interest expense | 616 | 420 | 1,565 | 2,614 |
Other (expense)/income, net | (671) | 556 | 621 | 3,048 |
Income before income taxes | 86,022 | 83,730 | 202,811 | 239,965 |
Provision for income taxes | 21,558 | 20,765 | 51,963 | 59,511 |
Net income | 64,464 | 62,965 | 150,848 | 180,454 |
Income/(loss) attributable to noncontrolling interests | 0 | 67 | 0 | (281) |
Net income attributable to Maximus | $ 64,464 | $ 62,898 | $ 150,848 | $ 180,735 |
Basic earnings per share (in dollars per share) | $ 1.04 | $ 0.98 | $ 2.38 | $ 2.80 |
Diluted earnings per share (in dollars per share) | 1.04 | 0.97 | 2.37 | 2.79 |
Dividends paid per share (in dollars per share) | $ 0.28 | $ 0.25 | $ 0.84 | $ 0.75 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 61,882 | 64,405 | 63,463 | 64,534 |
Diluted (in shares) | 62,102 | 64,759 | 63,666 | 64,800 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 64,464 | $ 62,965 | $ 150,848 | $ 180,454 |
Foreign currency translation adjustments | 3,432 | (1,974) | (1,304) | (4,157) |
Comprehensive income | 67,896 | 60,991 | 149,544 | 176,297 |
Comprehensive income/(loss) attributable to noncontrolling interests | 0 | 67 | 0 | (281) |
Comprehensive income attributable to Maximus | $ 67,896 | $ 60,924 | $ 149,544 | $ 176,578 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 81,548 | $ 105,565 |
Accounts receivable — billed and billable, net of reserves of $13,031 and $5,382 | 626,471 | 476,690 |
Accounts receivable — unbilled | 203,267 | 123,884 |
Income taxes receivable | 8,284 | 20,805 |
Prepaid expenses and other current assets | 59,942 | 62,481 |
Total current assets | 979,512 | 789,425 |
Property and equipment, net | 73,319 | 99,589 |
Capitalized software, net | 35,447 | 32,369 |
Operating lease right-of-use assets | 171,041 | |
Goodwill | 586,757 | 584,469 |
Intangible assets, net | 151,115 | 179,250 |
Deferred contract costs, net | 20,267 | 18,921 |
Deferred compensation plan assets | 33,834 | 32,908 |
Deferred income taxes | 3,450 | 186 |
Other assets | 8,244 | 8,615 |
Total assets | 2,062,986 | 1,745,732 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 217,831 | 177,786 |
Accrued compensation and benefits | 130,396 | 106,789 |
Deferred revenue | 48,743 | 43,344 |
Income taxes payable | 4,725 | 13,952 |
Current portion of long-term debt and other borrowings | 7,000 | 9,658 |
Operating lease liabilities | 74,878 | |
Other liabilities | 18,971 | 12,709 |
Total current liabilities | 502,544 | 364,238 |
Deferred revenue, less current portion | 30,090 | 32,341 |
Deferred income taxes | 44,532 | 46,560 |
Long-term debt, less current portion | 145,161 | 231 |
Deferred compensation plan liabilities, less current portion | 34,302 | 34,079 |
Operating lease liabilities, less current portion | 103,236 | |
Other liabilities | 8,174 | 20,082 |
Total liabilities | 868,039 | 497,531 |
Shareholders’ equity: | ||
Common stock, no par value; 100,000 shares authorized; 61,313 and 63,979 shares issued and outstanding at June 30, 2020, and September 30, 2019, at stated amount, respectively | 517,200 | 498,433 |
Accumulated other comprehensive loss | (46,684) | (45,380) |
Retained earnings | 724,431 | 794,739 |
Total Maximus shareholders' equity | 1,194,947 | 1,247,792 |
Noncontrolling interests | 0 | 409 |
Total equity | 1,194,947 | 1,248,201 |
Total liabilities and equity | $ 2,062,986 | $ 1,745,732 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable, current | $ 13,031 | $ 5,382 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 61,313,000 | 63,979,000 |
Common stock, shares issued | 61,313,000 | 63,979,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operations: | ||
Net income | $ 150,848 | $ 180,454 |
Adjustments to reconcile net income to cash flows from operations: | ||
Depreciation and amortization of property and equipment and capitalized software | 47,496 | 34,588 |
Amortization of intangible assets | 26,734 | 24,026 |
Deferred income taxes | (5,210) | 11,196 |
Stock compensation expense | 17,558 | 15,323 |
Gain on sale of a business | (1,706) | 0 |
Change in assets and liabilities net of effects of business combinations | ||
Accounts receivable — billed and billable | (147,626) | (108,131) |
Accounts receivable — unbilled | (80,267) | 46,172 |
Prepaid expenses and other current assets | 529 | (2,933) |
Deferred contract costs | (1,396) | (8,142) |
Accounts payable and accrued liabilities | 48,622 | 53,462 |
Accrued compensation and benefits | 33,647 | 9,282 |
Deferred revenue | 2,806 | 7,857 |
Income taxes | 563 | 3,139 |
Operating lease right-of-use assets and liabilities | (1,071) | 0 |
Other assets and liabilities | 4,556 | (2,582) |
Cash flows from operations | 96,083 | 263,711 |
Cash flows from investing activities: | ||
Purchases of property and equipment and capitalized software costs | (28,436) | (39,033) |
Acquisitions of businesses, net of cash acquired | (2,611) | (422,049) |
Proceeds from the sale of a business | 3,250 | 0 |
Maturities of short-term investments | 0 | 19,996 |
Other | 385 | 380 |
Cash used in investing activities | (27,412) | (440,706) |
Cash flows from financing activities: | ||
Cash dividends paid to Maximus shareholders | (52,988) | (47,936) |
Purchases of Maximus common stock | (166,959) | (46,068) |
Tax withholding related to RSU vesting | (10,614) | (8,915) |
Borrowings under credit facility and other loan agreements | 421,488 | 320,048 |
Repayment of credit facility and other long-term debt | (278,971) | (316,597) |
Other | (957) | (133) |
Cash used in financing activities | (89,001) | (99,601) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (174) | (994) |
Net decrease in cash, cash equivalents and restricted cash | (20,504) | (277,590) |
Cash, cash equivalents and restricted cash, beginning of period | 116,492 | 356,559 |
Cash, cash equivalents and restricted cash, end of period | $ 95,988 | $ 78,969 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative impact from adopting ASC Topic 606 on October 1, 2018 | Common Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Retained EarningsCumulative impact from adopting ASC Topic 606 on October 1, 2018 | Noncontrolling Interest | Noncontrolling InterestCumulative impact from adopting ASC Topic 606 on October 1, 2018 |
Balance (in shares) at Sep. 30, 2018 | 64,371 | |||||||
Balance at Sep. 30, 2018 | $ 1,086,419 | $ 33,482 | $ 487,539 | $ (36,953) | $ 633,281 | $ 32,929 | $ 2,552 | $ 553 |
Increase (Decrease) in Shareholders' Equity | ||||||||
Net income | 180,454 | 180,735 | (281) | |||||
Foreign currency translation | (4,157) | (4,157) | ||||||
Cash dividends | (50,521) | (47,936) | (2,585) | |||||
Dividends on RSUs | $ 1,225 | (1,225) | ||||||
Purchases of Maximus common stock (in shares) | (716) | |||||||
Purchases of Maximus common stock | (45,414) | $ (45,400) | (45,414) | |||||
Stock compensation expense | 15,323 | $ 15,323 | ||||||
RSUs vested (in shares) | 156 | |||||||
Acquisition of part of noncontrolling interest | (687) | $ (903) | 216 | |||||
Balance (in shares) at Jun. 30, 2019 | 63,811 | |||||||
Balance at Jun. 30, 2019 | 1,214,899 | $ 503,184 | (41,110) | 752,370 | 455 | |||
Balance (in shares) at Mar. 31, 2019 | 63,811 | |||||||
Balance at Mar. 31, 2019 | 1,167,581 | $ 498,269 | (39,136) | 705,824 | 2,624 | |||
Increase (Decrease) in Shareholders' Equity | ||||||||
Net income | 62,965 | 62,898 | 67 | |||||
Foreign currency translation | (1,974) | (1,974) | ||||||
Cash dividends | (18,405) | (15,953) | (2,452) | |||||
Dividends on RSUs | 399 | (399) | ||||||
Stock compensation expense | 5,419 | 5,419 | ||||||
Acquisition of part of noncontrolling interest | (687) | $ (903) | (216) | |||||
Balance (in shares) at Jun. 30, 2019 | 63,811 | |||||||
Balance at Jun. 30, 2019 | $ 1,214,899 | $ 503,184 | (41,110) | 752,370 | 455 | |||
Balance (in shares) at Sep. 30, 2019 | 63,979 | 63,979 | ||||||
Balance at Sep. 30, 2019 | $ 1,248,201 | $ 498,433 | (45,380) | 794,739 | 409 | |||
Increase (Decrease) in Shareholders' Equity | ||||||||
Net income | 150,848 | 150,848 | ||||||
Foreign currency translation | (1,304) | (1,304) | ||||||
Cash dividends | (53,397) | (52,988) | (409) | |||||
Dividends on RSUs | $ 1,209 | (1,209) | ||||||
Purchases of Maximus common stock (in shares) | (2,767) | |||||||
Purchases of Maximus common stock | (166,959) | $ (167,000) | (166,959) | |||||
Stock compensation expense | $ 17,558 | $ 17,558 | ||||||
RSUs vested (in shares) | 101 | |||||||
Balance (in shares) at Jun. 30, 2020 | 61,313 | 61,313 | ||||||
Balance at Jun. 30, 2020 | $ 1,194,947 | $ 517,200 | (46,684) | 724,431 | 0 | |||
Balance (in shares) at Mar. 31, 2020 | 61,313 | |||||||
Balance at Mar. 31, 2020 | 1,138,468 | $ 511,023 | (50,116) | 677,561 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Net income | 64,464 | 64,464 | ||||||
Foreign currency translation | 3,432 | 3,432 | ||||||
Cash dividends | (17,175) | (17,175) | ||||||
Dividends on RSUs | 419 | (419) | ||||||
Stock compensation expense | $ 5,758 | $ 5,758 | ||||||
Balance (in shares) at Jun. 30, 2020 | 61,313 | 61,313 | ||||||
Balance at Jun. 30, 2020 | $ 1,194,947 | $ 517,200 | $ (46,684) | $ 724,431 | $ 0 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. As permitted by these instructions, they do not include all of the information and notes required by generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended June 30, 2020, are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2019, has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated audited financial statements and the notes thereto at September 30, 2019 and 2018, and for each of the three years ended September 30, 2019, included in our Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on November 26, 2019. Estimates The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. At each reporting period end, we make estimates including those related to revenue recognition and cost estimation on certain contracts, the realizability of goodwill and amounts related to income taxes, certain accrued liabilities and contingencies and litigation. We base our estimates on historical experience and expectations of the future that we believe to be reasonable. The economic and political impacts of the COVID-19 pandemic increases uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates may be subject to greater volatility than has been the case in the past. • Our balance sheet includes goodwill valued at $586.8 million. This balance is allocated between reporting units, which are consistent with our three operating segments. Goodwill is not amortized but is tested for impairment when necessary and no less than once per year. We performed our last annual goodwill impairment test as of July 1, 2019. As of July 1, 2019, none of our reporting units showed any signs of impairment and all held a fair value estimated to be at least twice as high as their carrying value. We are in the process of performing our 2020 goodwill impairment test; at this time, we do not believe any goodwill impairment has occurred. This is based upon a number of factors, including the long-term viability of our business and the creditworthiness of our customer base. • Our balance sheet includes a number of long-lived assets, including property and equipment, capitalized software, operating lease right-of-use assets, deferred contract costs and intangible assets. These assets are depreciated or amortized over their estimated useful economic lives but are subject to impairment if events indicate that the carrying amount may not be recoverable. At this time, there are no significant balances which we believe are not recoverable. • Our balance sheet includes $829.7 million of billed, billable and unbilled accounts receivable, net of reserves. We regularly evaluate this balance for recoverability and reserve those balances where we no longer believe that collection is probable. Bad debt expense has not historically been significant to our business due to the nature of our customers. During the nine months ended June 30, 2020, we recorded bad debt expense of $8.8 million. We have reserved balances against customers who we believe are experiencing difficulties during the COVID-19 pandemic and may not be able to reimburse us for work performed. • As disclosed in "Note 4. Revenue Recognition," revenue for some of our welfare-to-work contracts in the Outside the U.S. Segment is based upon achievement of future outcomes as defined in each contract. Specifically, we are paid as individuals attain employment goals, which may take many months to achieve. Revenue is recognized on these contracts over the period of performance. Employment markets worldwide suffered a significant shock during the second quarter of the current fiscal year and many employment opportunities have been terminated or are no longer available. While we expect the volume of new program participants to increase as a result of disruption to employment markets, participants in programs prior to March 2020 have experienced reduced opportunities to reach sustained employment. This has resulted in revised estimates to our outcome fees and a reduction in our unbilled revenue balance. • Many of our contracts in the United States are cost-plus contracts, where we are reimbursed for costs that are allowable, allocable and reasonable. Due to the COVID-19 pandemic, we are incurring incremental and unusual costs, including additional sick pay and idle labor for employees who are unable to perform services due to their health issues, child care issues or physical restrictions imposed on their workplace. Although the U.S. Federal Government, which provides the majority of our cost-plus contracts, has provided regular guidance, there is some uncertainty within other contracts as to recoverable costs. Changes in financial reporting Leases Effective October 1, 2019, we adopted ASU No. 2016-02, Leases (Topic 842) . The new standard requires that assets and liabilities arising under leases be recognized on the balance sheet, except for those with an initial term of less than twelve months. We adopted this standard using a modified retrospective approach. Accordingly, we did not recast prior period financial information. Certain elections were made in adopting the standard. • We elected to use the package of practical expedients which, among other things, allows us to not reassess historical lease classification. • We do not separate lease and non-lease components for all classes of leases, which allows us to account for a lease as a single component. • We used the optional transition method, which did not require us to recast our comparative periods. • We did not use the hindsight practical expedients, which would have allowed us to use hindsight in determining the reasonably certain lease term. • We did not adjust our accounting for leases with an initial term of twelve months or less. Upon adopting Topic 842 , we recognized a lease liability of $214.5 million, reflecting the present value of the future remaining minimum lease payments. Changes to our opening balance sheet are summarized below. There was no cumulative impact to our retained earnings and the changes did not cause any material changes in our statements of operations or our statements of cash flows. The adoption of Topic 842 does not affect our compliance with our existing contracts, including our credit facility. (dollars in thousands) Balance at September 30, 2019 Adjustments due to adoption of new standard Opening balance at October 1, 2019 Assets Prepaid expenses and other current assets $ 62,481 $ (6,131) $ 56,350 Operating lease right-of-use assets — 206,314 206,314 Liabilities and shareholders' equity Accounts payable and accrued expenses 177,786 (5,250) 172,536 Operating lease liabilities — 88,276 88,276 Other current liabilities 12,709 (648) 12,061 Operating lease liabilities, net of current portion — 126,197 126,197 Other long-term liabilities 20,082 (8,392) 11,690 At the adoption of Topic 842 , the Company recognized deferred tax assets and liabilities corresponding to the operating lease liabilities and operating right-of-use assets, respectively. These balances offset each other and no net effect resulted from this change. Additional information and disclosures relating to this change are included within "Note 3. Leases." Forthcoming changes In August 2018, the Financial Accounting Standards Board (FASB) issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This accounting guidance requires customers in cloud-computing arrangements to identify and defer certain implementation costs in a manner broadly consistent with that of existing guidance on the costs to develop or obtain internal-use software. Costs capitalized under this guidance will be expensed over the term of the cloud computing arrangement. We will adopt this guidance on October 1, 2020 using a prospective approach. The effect on our financial statements will be dependent upon our adoption of future cloud-based computing initiatives. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This update introduces a new model for recognizing credit losses on financial instruments, including losses on accounts receivable. This update replaces the existing incurred loss impairment model with an expected loss model. We will adopt this guidance on October 1, 2020 and any changes will be recorded as a cumulative adjustment to retained earnings. We are currently assessing the future impact of this update on our consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment . This standard will not change the manner in which we would identify a goodwill impairment but would change any subsequent calculation of an impairment charge. We will adopt this guidance on October 1, 2020. The effect of this new standard will depend upon the outcome of future goodwill impairment tests. Other recent accounting pronouncements are not expected to have a material effect on our financial statements. |
Segment Information
Segment Information | 9 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The table below provides certain financial information for each of our business segments. We operate our business through three segments. • Our U.S. Health and Human Services Segment provides a variety of business process services such as program administration, appeals and assessments services, and related consulting work for U.S. state and local government programs. These services support a variety of programs including the Affordable Care Act (ACA), Medicaid and the Children’s Health Insurance Program (CHIP). We also serve as administrators in state-based welfare-to-work and child support programs. • Our U.S. Federal Services Segment provides business process solutions, including program administration, appeals and assessment services, as well as system and software development and maintenance services for various U.S. federal civilian programs. This segment also contains certain state-based assessments, independent medical reviews, and appeals work that is part of the segment's heritage within the Medicare Appeals portfolio and continues to be managed within this segment. • Our Outside the U.S. Segment provides business process solutions for governments and commercial clients outside the U.S., including health and disability assessments, program administration and case management for employment services and other work-support programs. We deliver services in the United Kingdom, including the Health Assessment Advisory Service (HAAS), the Work & Health Programme and Fair Start; Australia, including jobactive and the Disability Employment Service; Canada, including Health Insurance British Columbia and the Employment Program of British Columbia; Italy, Saudi Arabia, Singapore and Sweden. Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 % (1) 2019 % (1) 2020 % (1) 2019 % (1) Revenue: U.S. Health & Human Services $ 336,950 $ 291,132 $ 957,929 $ 876,082 U.S. Federal Services 450,143 292,295 1,210,105 799,018 Outside the U.S. 114,244 147,283 369,667 456,749 Total $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 Gross profit: U.S. Health & Human Services $ 93,029 27.6% $ 86,664 29.8% $ 268,073 28.0% $ 260,955 29.8% U.S. Federal Services 84,723 18.8% 66,803 22.9% 232,502 19.2% 175,484 22.0% Outside the U.S. 7,851 6.9% 20,780 14.1% 13,576 3.7% 66,495 14.6% Total $ 185,603 20.6% $ 174,247 23.8% $ 514,151 20.3% $ 502,934 23.6% Selling, general & administrative expense: U.S. Health & Human Services $ 31,996 9.5% $ 32,414 11.1% $ 102,633 10.7% $ 93,953 10.7% U.S. Federal Services 45,490 10.1% 32,896 11.3% 131,455 10.9% 90,632 11.3% Outside the U.S. 13,668 12.0% 15,791 10.7% 47,125 12.7% 52,591 11.5% Gain on sale of a business (3) (1,706) NM — NM (1,706) NM — NM Other (2) 134 NM 503 NM 4,155 NM 2,201 NM Total $ 89,582 9.9% $ 81,604 11.2% $ 283,662 11.2% $ 239,377 11.2% Operating income: U.S. Health & Human Services $ 61,033 18.1% $ 54,250 18.6% $ 165,440 17.3% $ 167,002 19.1% U.S. Federal Services 39,233 8.7% 33,907 11.6% 101,047 8.4% 84,852 10.6% Outside the U.S. (5,817) (5.1)% 4,989 3.4% (33,549) (9.1)% 13,904 3.0% Amortization of intangible assets (8,712) NM (9,049) NM (26,734) NM (24,026) NM Gain on sale of a business (3) 1,706 NM — NM 1,706 NM — NM Other (134) NM (503) NM (4,155) NM (2,201) NM Total $ 87,309 9.7% $ 83,594 11.4% $ 203,755 8.0% $ 239,531 11.2% (1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.” (2) Other selling, general and administrative expenses includes credits and costs that are not allocated to a particular segment, including the costs for actual and potential acquisitions of other businesses. (3) During fiscal year 2020, we sold Q2 Administrators LLC, a subsidiary within our U.S. Federal Services Segment, resulting in a gain. Refer to "Note 6. Acquisitions and Divestiture" for more details . Identifiable assets for the segments are shown below (in thousands): June 30, 2020 September 30, 2019 U.S. Health & Human Services $ 701,864 $ 500,641 U.S. Federal Services 992,207 795,553 Outside the U.S. 200,752 234,769 Corporate 168,163 214,769 Total $ 2,062,986 $ 1,745,732 |
Leases
Leases | 9 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases Beginning October 1, 2019, we identify contracts which are, or contain, leases where a contract allows us the right to control identified property or equipment for a period of time in return for consideration. Our leases are typically for office space or facilities, as well as some equipment leases. Where contracts include both lease and non-lease components, we do not typically separate the non-lease components in our accounting. At the inception of a lease, we recognize a liability for future minimum lease payments based upon the present value of those payments. • In identifying our future minimum lease payments, we do not include variable lease costs, such as those for maintenance or utilities. These are recorded as lease expenses in the period in which they are incurred. • In identifying future lease payments, we do not include short-term leases, identified as those with an initial term of twelve months or less. • Lease options are included within our lease liability only where it is reasonably certain that we will utilize those periods of the lease and incur the related costs. • In calculating the fair value of our lease liability, we utilize an estimate of our collateralized incremental borrowing rate. This estimate is based upon publicly-available information adjusted for company-specific, country-specific and lease-specific factors. The weighted average incremental borrowing rate utilized at June 30, 2020, is 3.8%. Over the course of a lease, the lease liability is reduced as scheduled lease payments are made and increased as the implied interest charges are added. Our right-of-use asset is based upon the lease liability at the contract inception but is adjusted over the life of the lease by lease prepayments, additional costs or lease incentives. The right-of-use asset is amortized on a straight-line basis over the lease term, offset by the interest accretion recorded on the lease liability. Lease expense is recorded within our consolidated statements of operations based upon the nature of the assets. Where assets are used to directly serve our customers, such as facilities dedicated to customer contracts, lease costs are recorded in "cost of revenue." Facilities and assets which serve management and support functions are expensed through "selling, general and administrative expenses." Costs recorded in the three and nine months ended June 30, 2020, are summarized below. (dollars in thousands) Three Months Ended June 30, 2020 Nine Months Ended June 30, 2020 Operating lease cost $ 25,905 $ 74,592 Short-term lease cost 2,548 6,111 Variable lease cost 4,106 9,395 Total operating lease costs $ 32,559 $ 90,098 Future minimum lease payments for noncancelable operating leases as of June 30, 2020 are shown below. (dollars in thousands) Office space Equipment Total For the years ended September 30, Remainder of 2020 $ 19,273 $ 2,065 $ 21,338 2021 66,814 6,974 73,788 2022 43,950 2,712 46,662 2023 27,320 119 27,439 2024 11,995 40 12,035 Thereafter 7,664 — 7,664 Total minimum lease payments $ 177,016 $ 11,910 $ 188,926 Less imputed interest (10,482) (330) (10,812) Total lease liabilities $ 166,534 $ 11,580 $ 178,114 Our weighted average remaining lease term at June 30, 2020 is 2.9 years. For the nine months ended June 30, 2020, we made cash payments of $83.7 million for amounts included in our lease liabilities. New or amended leases resulted in additional right-of-use assets of $39.9 million for the same nine month period. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition We recognize revenue as, or when, we satisfy performance obligations under a contract. The majority of our contracts have performance obligations which are satisfied over time. In most cases, we view our performance obligations as promises to transfer a series of distinct services to our customer that are substantially the same and which have the same pattern of service. We recognize revenue over the performance period as a customer receives the benefits of our services. Disaggregation of revenue In addition to our segment reporting, we disaggregate our revenues by service, contract type, customer type and geography. Our operating segments represent the manner in which our Chief Executive Officer reviews our financial results which is further discussed in "Note 2. Segment Information." By operating segment and service Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 Program administration $ 251,616 $ 212,638 $ 724,960 $ 651,343 Assessments and appeals 40,875 35,657 104,621 106,209 Workforce and children services 32,531 29,146 90,651 76,947 Other 11,928 13,691 37,697 41,583 Total U.S. Health and Human Services $ 336,950 $ 291,132 $ 957,929 $ 876,082 Program administration $ 362,973 $ 204,622 $ 949,071 $ 554,739 Technology solutions 42,101 39,994 130,172 116,870 Assessments and appeals 45,069 47,679 130,862 127,409 Total U.S. Federal Services $ 450,143 $ 292,295 $ 1,210,105 $ 799,018 Workforce and children services $ 55,046 $ 65,819 $ 146,968 $ 208,856 Assessments and appeals 42,468 62,152 167,397 192,233 Program administration 15,544 16,767 49,583 48,009 Other 1,186 2,545 5,719 7,651 Total Outside the U.S. $ 114,244 $ 147,283 $ 369,667 $ 456,749 Total revenue $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 By contract type Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 Performance-based $ 295,650 $ 260,052 $ 864,077 $ 834,531 Cost-plus 422,641 282,795 1,184,425 756,227 Fixed price 132,535 142,940 352,255 429,962 Time and materials 50,511 44,923 136,944 111,129 Total revenue $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 By customer type Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 New York State government agencies $ 79,140 $ 90,295 $ 276,585 $ 271,865 Other U.S. state government agencies 265,608 204,272 692,689 601,044 Total U.S. state government agencies 344,748 294,567 969,274 872,909 United States Federal Government agencies 429,031 276,294 1,155,773 745,195 International government agencies 107,353 136,848 345,629 425,921 Other, including local municipalities and commercial customers 20,205 23,001 67,025 87,824 Total revenue $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 By geography Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 United States of America $ 787,092 $ 583,428 $ 2,168,033 $ 1,675,101 United Kingdom 53,364 72,265 190,088 224,017 Australia 38,415 48,744 100,390 153,114 Rest of world 22,466 26,273 79,190 79,617 Total revenue $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 Contract balances Differences in timing between revenue recognition and cash collection result in contract assets and contract liabilities. We classify these assets as accounts receivable — billed and billable and unbilled receivables; the liabilities are classified as deferred revenue. In many contracts, we bill our customers on a monthly basis shortly after the month end for work performed in that month. Funds are considered collectible and are included within accounts receivable — billed and billable. Exceptions to this pattern will arise for various reasons, including those listed below. • Under cost-plus contracts, we are typically required to estimate a contract’s share of our general and administrative expenses. This share is based upon estimates of total costs which may vary over time. We typically invoice our customers at an agreed provisional billing rate which may differ from actual rates incurred. If our actual rates are higher than the provisional billing rates, an asset is recorded for this variance; if the provisional billing rates are higher than our actual rates, we record a liability. • Certain contracts include retainage balances, whereby revenue is earned but some portion of cash payments are held back by the customer for a period of time, typically to allow the customer to confirm the objective criteria laid out by the contract have been met. This balance is classified as accounts receivable - unbilled until restrictions on billing have been lifted. • In certain contracts, we may receive funds from our customers prior to performing operations. These funds are typically referred to as “set-up costs” and reflect the need for us to make investments in infrastructure prior to providing a service. This investment in infrastructure is not a performance obligation which is distinct from the service that is subsequently provided and, as a result, revenue is not recognized based upon the establishment of this infrastructure, but rather over the course of the contractual relationship. The funds are initially recorded as deferred revenue and recognized over the term of the contract. Other contracts may not include set-up fees but will provide higher fees in earlier periods of the contract. The premium on these fees is deferred. • Some of our contracts, notably our welfare-to-work and employment services contracts in the Outside the U.S. Segment, include payments for outcomes, such as job retention, which occur over several months. We are required to estimate these outcome fees ahead of their realization and recognize this estimated fee over the period of delivery. Of our revenue for the three and the nine months ended June 30, 2020, approximately $9.1 million and $49.2 million were from cash payments made to us prior to October 1, 2019, respectively. For the three and nine months ended June 30, 2019, we recognized revenue of $3.0 million and $35.0 million from payments made prior to October 1, 2018, respectively. Contract estimates We are required to use estimates in recognizing revenue from some of our contracts. As discussed in "Note 1. Organization and Basis of Presentation," the calculation of these estimates has been complicated by the COVID-19 pandemic, which has reduced our ability to use past results to estimate future performance. Some of our performance-based contract revenue is recognized based upon future outcomes defined in each contract. This is the case in many of our welfare-to-work contracts in the Outside the U.S. Segment, where we are paid as individuals attain employment goals, which may take many months to achieve. We recognize revenue on these contracts over the period of performance. Our estimates vary from contract to contract but may include estimates of the number of participants, the length of the contract and the participants reaching employment milestones. We are required to estimate these outcome fees ahead of their realization and recognize this estimated fee over the period of delivery. In almost all of the jurisdictions in which we operate, the employment markets have experienced significant changes due to the COVID-19 pandemic. For our existing program participants, many employment opportunities have been terminated or are no longer available. Our volume of new program participants is expected to increase but it is unclear as to when these populations will be in a position to seek employment in many industries which have been curtailed by the COVID-19 pandemic. In some cases, we anticipate that we may be unable to place individuals in employment in the short-term. Other performance-based contracts with future outcomes include those where we recognize an average effective rate per participant based upon the total volume of expected participants. In this instance, we are required to estimate the amount of discount applied to determine the average rate of revenue per participant. Our revised estimates of participant numbers are based upon our updated evaluation of probable future volumes. We are required to use estimates in recognizing certain revenue. Where we have changes to our estimates, these are recognized on a cumulative catch-up basis. In the three and nine months ended June 30, 2020, we reported reductions in revenue of $1.4 million and $9.1 million, respectively, from changes in estimates as of September 30, 2019. In the three and nine months ended June 30, 2019, we reported reductions in revenue of $2.3 million and $10.3 million, respectively, from changes in estimates. Deferred contract costs For many contracts, we incur significant incremental costs at the beginning of an arrangement. Typically, these costs relate to the establishment of infrastructure which we utilize to satisfy our performance obligations with the contract. We report these costs as deferred contract costs and amortize them on a straight-line basis over the shorter of the useful economic life of the asset or the anticipated term of the contract. Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 Deferred contract cost capitalization $ 2,268 $ 4,738 $ 6,263 $ 12,950 Deferred contract cost amortization 1,369 1,843 4,866 4,663 This amortization was recorded within our "cost of revenue" on our consolidated statements of operations. Remaining performance obligations At June 30, 2020, we had approximately $325 million of remaining performance obligations. We anticipate that we will recognize revenue on approximately 60% of this balance within the next 12 months. This balance excludes contracts with an original duration of twelve months or less, including contracts with a penalty-free termination for convenience clause, and any variable consideration which is allocated entirely to future performance obligations including variable transaction fees or fees tied directly to costs incurred. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The weighted average number of shares outstanding used to compute earnings per share was as follows: Three Months Ended June 30, Nine Months Ended June 30, (shares in thousands) 2020 2019 2020 2019 Basic weighted average shares outstanding 61,882 64,405 63,463 64,534 Dilutive effect of unvested RSUs 220 354 203 266 Denominator for diluted earnings per share 62,102 64,759 63,666 64,800 Our dilutive earnings per share for the three and nine months ended June 30, 2020, excludes any effect from approximately 253,000 and 250,000 unvested restricted stock units, respectively, as adding them to our calculation would have been antidilutive. There were no antidilutive awards in the three and nine months ended June 30, 2019. |
Acquisitions and Divestiture
Acquisitions and Divestiture | 9 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions and Divestiture | Acquisitions and Divestiture On November 16, 2018, we acquired General Dynamics Information Technology's citizen engagement centers business for $430.7 million. This acquisition strengthens our position in the administration of federal government programs and the business was integrated into our U.S. Federal Services Segment. We completed our allocation of the purchase price to the assets acquired and liabilities assumed in September 2019, including goodwill of $184.6 million and intangible assets of $122.3 million. On August 16, 2019, we acquired 100% of the share capital of GT Hiring Solutions (2005) Inc. (GT Hiring) for $6.2 million (8.2 million Canadian Dollars). GT Hiring provides employment services in British Columbia. We acquired GT Hiring to enhance the reach and capabilities of our Canadian employment services and, accordingly, the business has been integrated into our Outside the U.S. Segment. We are still in the process of finalizing the allocation of assets acquired and liabilities assumed. We recorded estimated goodwill and intangible assets balances of $2.8 million and $1.4 million, respectively, related to this acquisition. The goodwill represents the assembled workforce and enhanced knowledge, experience and reputation we have obtained from the acquisition and will not be deductible for tax purposes. The intangible assets represent customer relationships, which will be amortized over seven years. On February 28, 2020, we acquired 100% of the share capital of InjuryNet Australia Pty Limited (InjuryNet) for an estimated purchase price of $3.4 million (5.2 million Australian Dollars). The purchase price is subject to adjustment for a working capital true-up. InjuryNet provides workplace medical services in Australia. The business has been integrated into our Outside the U.S. Segment. We are still in the process of finalizing allocation of assets acquired and liabilities assumed. On May 1, 2020, we sold Q2 Administrators LLC, a wholly owned subsidiary, for $3.3 million, resulting in a gain of $1.7 million. We made the sale to avoid a possible or perceived conflict arising from a new contract. |
Supplemental Disclosures
Supplemental Disclosures | 9 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Disclosures | Supplemental DisclosuresUnder a resolution adopted in March 2020, the Board of Directors authorized the purchase, at management's discretion, of up to $200 million of our common stock. This supplemented a similar resolution adopted in June 2018. The share repurchase program was concluded on March 25, 2020 and will be re-evaluated once there is clarity around the impact of COVID-19. During the nine months ended June 30, 2020, we purchased approximately 2,767,000 of our common shares at a cost of $167.0 million. During the nine months ended June 30, 2019, we acquired approximately 716,000 common shares at a cost of $45.4 million. At June 30, 2020, $150.0 million remained available for future stock repurchases when the Board of Directors resumes the share repurchase program. During the nine months ended June 30, 2020, we granted 0.3 million restricted stock units to our board of directors and employees. These awards will vest ratably over one Our deferred compensation plan uses both mutual fund and life insurance investments to fund its obligations. The mutual funds are recorded at fair value, based upon quoted prices in active markets (Level 1), and the life insurance investments at cash surrender value; changes in value are reported in our consolidated statements of operations. At June 30, 2020, the deferred compensation plan held $21.7 million of the mutual fund investments. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and other amounts included within current assets and liabilities that meet the definition of a financial instrument are shown at values equivalent to fair value due to the short-term nature of these items. Our debt balances are principally from credit facilities which can be utilized and repaid as required and whose rates are based upon prevailing market conditions; accordingly, we believe the balance disclosed approximates the fair value. Our accounts receivable billed and billable balance includes both amounts invoiced and amounts that are ready to be invoiced where the funds are collectible within standard invoice terms. Our accounts receivable unbilled balance includes balances where revenue has been earned but no invoice was issued on or before June 30, 2020. Restricted cash represents funds which are held in our bank accounts but which we are precluded from using for general business needs through contractual requirements; these requirements include serving as collateral for lease, credit card or letter of credit arrangements or where we hold funds on behalf of clients. Restricted cash is included within "prepaid expenses and other assets" on our balance sheet and is included within "cash, cash equivalents and restricted cash" in our consolidated statements of cash flows. A reconciliation of these balances is shown below. Balance as of (dollars in thousands) June 30, September 30, 2019 June 30, September 30, 2018 Cash and cash equivalents $ 81,548 $ 105,565 $ 71,084 $ 349,245 Restricted cash (recorded within "other current assets") 14,440 10,927 7,885 7,314 Cash, cash equivalents and restricted cash $ 95,988 $ 116,492 $ 78,969 $ 356,559 During the nine months ended June 30, 2020 and 2019, we made interest payments of $1.2 million and $2.3 million, respectively. During the nine months ended June 30, 2020 and 2019, we made income tax payments of $55.6 million and $45.9 million, respectively. |
Litigation
Litigation | 9 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation We are subject to audits, investigations and reviews relating to compliance with the laws and regulations that govern our role as a contractor to agencies and departments of the United States Federal Government, state, local and foreign governments, and otherwise in connection with performing services in countries outside of the U.S. Adverse findings could lead to criminal, civil or administrative proceedings, and we could be faced with penalties, fines, suspension or debarment. Adverse findings could also have a material adverse effect on us because of our reliance on government contracts. We are subject to periodic audits by federal, state, local and foreign governments for taxes. We are also involved in various claims, arbitrations and lawsuits arising in the normal conduct of our business. These include but are not limited to bid protests, employment matters, contractual disputes and charges before administrative agencies. Although we can give no assurance, based upon our evaluation and taking into account the advice of legal counsel, we do not believe that the outcome of any existing matter would likely have a material adverse effect on our consolidated financial position, results of operations or cash flows. Medicaid claims The Centers for Medicare and Medicaid Services (CMS) has asserted two disallowances against a state Medicaid agency totaling approximately $31 million. From 2004 through 2009, we had a contract with the state agency in support of its school-based Medicaid claims. We entered into separate agreements with the school |
Subsequent Events
Subsequent Events | 9 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn July 3, 2020, our Board of Directors declared a quarterly cash dividend of $0.28 for each share of our common stock outstanding. The dividend is payable on August 31, 2020, to shareholders of record on August 14, 2020. Based upon the number of shares outstanding, we anticipate a cash payment of approximately $17 million. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Policies) | 9 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. As permitted by these instructions, they do not include all of the information and notes required by generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended June 30, 2020, are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2019, has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. |
Estimates | Estimates The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. At each reporting period end, we make estimates including those related to revenue recognition and cost estimation on certain contracts, the realizability of goodwill and amounts related to income taxes, certain accrued liabilities and contingencies and litigation. |
Leases | Leases Effective October 1, 2019, we adopted ASU No. 2016-02, Leases (Topic 842) . The new standard requires that assets and liabilities arising under leases be recognized on the balance sheet, except for those with an initial term of less than twelve months. We adopted this standard using a modified retrospective approach. Accordingly, we did not recast prior period financial information. Certain elections were made in adopting the standard. • We elected to use the package of practical expedients which, among other things, allows us to not reassess historical lease classification. • We do not separate lease and non-lease components for all classes of leases, which allows us to account for a lease as a single component. • We used the optional transition method, which did not require us to recast our comparative periods. • We did not use the hindsight practical expedients, which would have allowed us to use hindsight in determining the reasonably certain lease term. • We did not adjust our accounting for leases with an initial term of twelve months or less. |
Changes in financial reporting | Changes in financial reporting Leases Effective October 1, 2019, we adopted ASU No. 2016-02, Leases (Topic 842) . The new standard requires that assets and liabilities arising under leases be recognized on the balance sheet, except for those with an initial term of less than twelve months. We adopted this standard using a modified retrospective approach. Accordingly, we did not recast prior period financial information. Certain elections were made in adopting the standard. • We elected to use the package of practical expedients which, among other things, allows us to not reassess historical lease classification. • We do not separate lease and non-lease components for all classes of leases, which allows us to account for a lease as a single component. • We used the optional transition method, which did not require us to recast our comparative periods. • We did not use the hindsight practical expedients, which would have allowed us to use hindsight in determining the reasonably certain lease term. • We did not adjust our accounting for leases with an initial term of twelve months or less. Upon adopting Topic 842 , we recognized a lease liability of $214.5 million, reflecting the present value of the future remaining minimum lease payments. Changes to our opening balance sheet are summarized below. There was no cumulative impact to our retained earnings and the changes did not cause any material changes in our statements of operations or our statements of cash flows. The adoption of Topic 842 does not affect our compliance with our existing contracts, including our credit facility. (dollars in thousands) Balance at September 30, 2019 Adjustments due to adoption of new standard Opening balance at October 1, 2019 Assets Prepaid expenses and other current assets $ 62,481 $ (6,131) $ 56,350 Operating lease right-of-use assets — 206,314 206,314 Liabilities and shareholders' equity Accounts payable and accrued expenses 177,786 (5,250) 172,536 Operating lease liabilities — 88,276 88,276 Other current liabilities 12,709 (648) 12,061 Operating lease liabilities, net of current portion — 126,197 126,197 Other long-term liabilities 20,082 (8,392) 11,690 At the adoption of Topic 842 , the Company recognized deferred tax assets and liabilities corresponding to the operating lease liabilities and operating right-of-use assets, respectively. These balances offset each other and no net effect resulted from this change. Additional information and disclosures relating to this change are included within "Note 3. Leases." Forthcoming changes In August 2018, the Financial Accounting Standards Board (FASB) issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This accounting guidance requires customers in cloud-computing arrangements to identify and defer certain implementation costs in a manner broadly consistent with that of existing guidance on the costs to develop or obtain internal-use software. Costs capitalized under this guidance will be expensed over the term of the cloud computing arrangement. We will adopt this guidance on October 1, 2020 using a prospective approach. The effect on our financial statements will be dependent upon our adoption of future cloud-based computing initiatives. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This update introduces a new model for recognizing credit losses on financial instruments, including losses on accounts receivable. This update replaces the existing incurred loss impairment model with an expected loss model. We will adopt this guidance on October 1, 2020 and any changes will be recorded as a cumulative adjustment to retained earnings. We are currently assessing the future impact of this update on our consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment . This standard will not change the manner in which we would identify a goodwill impairment but would change any subsequent calculation of an impairment charge. We will adopt this guidance on October 1, 2020. The effect of this new standard will depend upon the outcome of future goodwill impairment tests. |
Organization and Basis of Pre_3
Organization and Basis of Presentation (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Adoption of Topic 842 | Changes to our opening balance sheet are summarized below. There was no cumulative impact to our retained earnings and the changes did not cause any material changes in our statements of operations or our statements of cash flows. The adoption of Topic 842 does not affect our compliance with our existing contracts, including our credit facility. (dollars in thousands) Balance at September 30, 2019 Adjustments due to adoption of new standard Opening balance at October 1, 2019 Assets Prepaid expenses and other current assets $ 62,481 $ (6,131) $ 56,350 Operating lease right-of-use assets — 206,314 206,314 Liabilities and shareholders' equity Accounts payable and accrued expenses 177,786 (5,250) 172,536 Operating lease liabilities — 88,276 88,276 Other current liabilities 12,709 (648) 12,061 Operating lease liabilities, net of current portion — 126,197 126,197 Other long-term liabilities 20,082 (8,392) 11,690 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of financial information for each of the Company's business segments | The table below provides certain financial information for each of our business segments. We operate our business through three segments. • Our U.S. Health and Human Services Segment provides a variety of business process services such as program administration, appeals and assessments services, and related consulting work for U.S. state and local government programs. These services support a variety of programs including the Affordable Care Act (ACA), Medicaid and the Children’s Health Insurance Program (CHIP). We also serve as administrators in state-based welfare-to-work and child support programs. • Our U.S. Federal Services Segment provides business process solutions, including program administration, appeals and assessment services, as well as system and software development and maintenance services for various U.S. federal civilian programs. This segment also contains certain state-based assessments, independent medical reviews, and appeals work that is part of the segment's heritage within the Medicare Appeals portfolio and continues to be managed within this segment. • Our Outside the U.S. Segment provides business process solutions for governments and commercial clients outside the U.S., including health and disability assessments, program administration and case management for employment services and other work-support programs. We deliver services in the United Kingdom, including the Health Assessment Advisory Service (HAAS), the Work & Health Programme and Fair Start; Australia, including jobactive and the Disability Employment Service; Canada, including Health Insurance British Columbia and the Employment Program of British Columbia; Italy, Saudi Arabia, Singapore and Sweden. Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 % (1) 2019 % (1) 2020 % (1) 2019 % (1) Revenue: U.S. Health & Human Services $ 336,950 $ 291,132 $ 957,929 $ 876,082 U.S. Federal Services 450,143 292,295 1,210,105 799,018 Outside the U.S. 114,244 147,283 369,667 456,749 Total $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 Gross profit: U.S. Health & Human Services $ 93,029 27.6% $ 86,664 29.8% $ 268,073 28.0% $ 260,955 29.8% U.S. Federal Services 84,723 18.8% 66,803 22.9% 232,502 19.2% 175,484 22.0% Outside the U.S. 7,851 6.9% 20,780 14.1% 13,576 3.7% 66,495 14.6% Total $ 185,603 20.6% $ 174,247 23.8% $ 514,151 20.3% $ 502,934 23.6% Selling, general & administrative expense: U.S. Health & Human Services $ 31,996 9.5% $ 32,414 11.1% $ 102,633 10.7% $ 93,953 10.7% U.S. Federal Services 45,490 10.1% 32,896 11.3% 131,455 10.9% 90,632 11.3% Outside the U.S. 13,668 12.0% 15,791 10.7% 47,125 12.7% 52,591 11.5% Gain on sale of a business (3) (1,706) NM — NM (1,706) NM — NM Other (2) 134 NM 503 NM 4,155 NM 2,201 NM Total $ 89,582 9.9% $ 81,604 11.2% $ 283,662 11.2% $ 239,377 11.2% Operating income: U.S. Health & Human Services $ 61,033 18.1% $ 54,250 18.6% $ 165,440 17.3% $ 167,002 19.1% U.S. Federal Services 39,233 8.7% 33,907 11.6% 101,047 8.4% 84,852 10.6% Outside the U.S. (5,817) (5.1)% 4,989 3.4% (33,549) (9.1)% 13,904 3.0% Amortization of intangible assets (8,712) NM (9,049) NM (26,734) NM (24,026) NM Gain on sale of a business (3) 1,706 NM — NM 1,706 NM — NM Other (134) NM (503) NM (4,155) NM (2,201) NM Total $ 87,309 9.7% $ 83,594 11.4% $ 203,755 8.0% $ 239,531 11.2% (1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.” (2) Other selling, general and administrative expenses includes credits and costs that are not allocated to a particular segment, including the costs for actual and potential acquisitions of other businesses. |
Schedule of identifiable assets by segment | Identifiable assets for the segments are shown below (in thousands): June 30, 2020 September 30, 2019 U.S. Health & Human Services $ 701,864 $ 500,641 U.S. Federal Services 992,207 795,553 Outside the U.S. 200,752 234,769 Corporate 168,163 214,769 Total $ 2,062,986 $ 1,745,732 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Lease Costs | Costs recorded in the three and nine months ended June 30, 2020, are summarized below. (dollars in thousands) Three Months Ended June 30, 2020 Nine Months Ended June 30, 2020 Operating lease cost $ 25,905 $ 74,592 Short-term lease cost 2,548 6,111 Variable lease cost 4,106 9,395 Total operating lease costs $ 32,559 $ 90,098 |
Future Minimum Lease Payments | Future minimum lease payments for noncancelable operating leases as of June 30, 2020 are shown below. (dollars in thousands) Office space Equipment Total For the years ended September 30, Remainder of 2020 $ 19,273 $ 2,065 $ 21,338 2021 66,814 6,974 73,788 2022 43,950 2,712 46,662 2023 27,320 119 27,439 2024 11,995 40 12,035 Thereafter 7,664 — 7,664 Total minimum lease payments $ 177,016 $ 11,910 $ 188,926 Less imputed interest (10,482) (330) (10,812) Total lease liabilities $ 166,534 $ 11,580 $ 178,114 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | By operating segment and service Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 Program administration $ 251,616 $ 212,638 $ 724,960 $ 651,343 Assessments and appeals 40,875 35,657 104,621 106,209 Workforce and children services 32,531 29,146 90,651 76,947 Other 11,928 13,691 37,697 41,583 Total U.S. Health and Human Services $ 336,950 $ 291,132 $ 957,929 $ 876,082 Program administration $ 362,973 $ 204,622 $ 949,071 $ 554,739 Technology solutions 42,101 39,994 130,172 116,870 Assessments and appeals 45,069 47,679 130,862 127,409 Total U.S. Federal Services $ 450,143 $ 292,295 $ 1,210,105 $ 799,018 Workforce and children services $ 55,046 $ 65,819 $ 146,968 $ 208,856 Assessments and appeals 42,468 62,152 167,397 192,233 Program administration 15,544 16,767 49,583 48,009 Other 1,186 2,545 5,719 7,651 Total Outside the U.S. $ 114,244 $ 147,283 $ 369,667 $ 456,749 Total revenue $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 By contract type Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 Performance-based $ 295,650 $ 260,052 $ 864,077 $ 834,531 Cost-plus 422,641 282,795 1,184,425 756,227 Fixed price 132,535 142,940 352,255 429,962 Time and materials 50,511 44,923 136,944 111,129 Total revenue $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 By customer type Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 New York State government agencies $ 79,140 $ 90,295 $ 276,585 $ 271,865 Other U.S. state government agencies 265,608 204,272 692,689 601,044 Total U.S. state government agencies 344,748 294,567 969,274 872,909 United States Federal Government agencies 429,031 276,294 1,155,773 745,195 International government agencies 107,353 136,848 345,629 425,921 Other, including local municipalities and commercial customers 20,205 23,001 67,025 87,824 Total revenue $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 By geography Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 United States of America $ 787,092 $ 583,428 $ 2,168,033 $ 1,675,101 United Kingdom 53,364 72,265 190,088 224,017 Australia 38,415 48,744 100,390 153,114 Rest of world 22,466 26,273 79,190 79,617 Total revenue $ 901,337 $ 730,710 $ 2,537,701 $ 2,131,849 |
Deferred Contract Cost | Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2020 2019 2020 2019 Deferred contract cost capitalization $ 2,268 $ 4,738 $ 6,263 $ 12,950 Deferred contract cost amortization 1,369 1,843 4,866 4,663 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Weighted average number of shares used to compute earnings per share | The weighted average number of shares outstanding used to compute earnings per share was as follows: Three Months Ended June 30, Nine Months Ended June 30, (shares in thousands) 2020 2019 2020 2019 Basic weighted average shares outstanding 61,882 64,405 63,463 64,534 Dilutive effect of unvested RSUs 220 354 203 266 Denominator for diluted earnings per share 62,102 64,759 63,666 64,800 |
Supplemental Disclosures (Table
Supplemental Disclosures (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash and Cash Equivalents | A reconciliation of these balances is shown below. Balance as of (dollars in thousands) June 30, September 30, 2019 June 30, September 30, 2018 Cash and cash equivalents $ 81,548 $ 105,565 $ 71,084 $ 349,245 Restricted cash (recorded within "other current assets") 14,440 10,927 7,885 7,314 Cash, cash equivalents and restricted cash $ 95,988 $ 116,492 $ 78,969 $ 356,559 |
Restrictions on Cash and Cash Equivalents | A reconciliation of these balances is shown below. Balance as of (dollars in thousands) June 30, September 30, 2019 June 30, September 30, 2018 Cash and cash equivalents $ 81,548 $ 105,565 $ 71,084 $ 349,245 Restricted cash (recorded within "other current assets") 14,440 10,927 7,885 7,314 Cash, cash equivalents and restricted cash $ 95,988 $ 116,492 $ 78,969 $ 356,559 |
Organization and Basis of Pre_4
Organization and Basis of Presentation - Narrative (Details) $ in Thousands | 9 Months Ended | ||
Jun. 30, 2020USD ($)segment | Oct. 01, 2019USD ($) | Sep. 30, 2019USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Goodwill | $ 586,757 | $ 584,469 | |
Number of operating segments | segment | 3 | ||
Billed, billable and unbilled accounts receivable | $ 829,700 | ||
Bad debt expense | 8,800 | ||
Total lease liabilities | $ 178,114 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Total lease liabilities | $ 214,500 |
Organization and Basis of Pre_5
Organization and Basis of Presentation - Changes Due to Adoption of Topic 842 (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Oct. 01, 2019 | Sep. 30, 2019 |
ASSETS | |||
Prepaid expenses and other current assets | $ 59,942 | $ 56,350 | $ 62,481 |
Operating lease right-of-use assets | 171,041 | 206,314 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
Accounts payable and accrued liabilities | 217,831 | 172,536 | 177,786 |
Operating lease liabilities | 74,878 | 88,276 | |
Other liabilities | 18,971 | 12,061 | 12,709 |
Operating lease liabilities, less current portion | 103,236 | 126,197 | |
Other liabilities | $ 8,174 | 11,690 | $ 20,082 |
Accounting Standards Update 2016-02 | |||
ASSETS | |||
Prepaid expenses and other current assets | (6,131) | ||
Operating lease right-of-use assets | 206,314 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
Accounts payable and accrued liabilities | (5,250) | ||
Operating lease liabilities | 88,276 | ||
Other liabilities | (648) | ||
Operating lease liabilities, less current portion | 126,197 | ||
Other liabilities | $ (8,392) |
Segment Information - Financial
Segment Information - Financial information by segment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | |
Financial information for each of the Company's business segments | ||||
Number of operating segments | segment | 3 | |||
Revenue: | ||||
Revenue | $ 901,337 | $ 730,710 | $ 2,537,701 | $ 2,131,849 |
Gross profit: | ||||
Gross profit | $ 185,603 | $ 174,247 | $ 514,151 | $ 502,934 |
Gross profit (as a percent) | 20.60% | 23.80% | 20.30% | 23.60% |
Selling, general & administrative expense: | ||||
Selling, general and administrative expenses | $ 89,582 | $ 81,604 | $ 283,662 | $ 239,377 |
Selling, general, and administrative expense (as a percent) | 9.90% | 11.20% | 11.20% | 11.20% |
Operating income: | ||||
Operating income | $ 87,309 | $ 83,594 | $ 203,755 | $ 239,531 |
Operating income (as a percent) | 9.70% | 11.40% | 8.00% | 11.20% |
Amortization of intangible assets | $ (8,712) | $ (9,049) | $ (26,734) | $ (24,026) |
Gain on sale of a business | 1,706 | 0 | ||
Segment Reconciling Items | ||||
Selling, general & administrative expense: | ||||
Selling, general and administrative expenses | 134 | 503 | 4,155 | 2,201 |
Operating income: | ||||
Amortization of intangible assets | (8,712) | (9,049) | (26,734) | (24,026) |
Gain on sale of a business | 1,706 | 0 | 1,706 | 0 |
Other operating income (loss) | (134) | (503) | (4,155) | (2,201) |
U.S. Health & Human Services | ||||
Revenue: | ||||
Revenue | 336,950 | 291,132 | 957,929 | 876,082 |
U.S. Health & Human Services | Operating Segments | ||||
Revenue: | ||||
Revenue | 336,950 | 291,132 | 957,929 | 876,082 |
Gross profit: | ||||
Gross profit | $ 93,029 | $ 86,664 | $ 268,073 | $ 260,955 |
Gross profit (as a percent) | 27.60% | 29.80% | 28.00% | 29.80% |
Selling, general & administrative expense: | ||||
Selling, general and administrative expenses | $ 31,996 | $ 32,414 | $ 102,633 | $ 93,953 |
Selling, general, and administrative expense (as a percent) | 9.50% | 11.10% | 10.70% | 10.70% |
Operating income: | ||||
Operating income | $ 61,033 | $ 54,250 | $ 165,440 | $ 167,002 |
Operating income (as a percent) | 18.10% | 18.60% | 17.30% | 19.10% |
U.S. Federal Services | ||||
Revenue: | ||||
Revenue | $ 450,143 | $ 292,295 | $ 1,210,105 | $ 799,018 |
U.S. Federal Services | Operating Segments | ||||
Revenue: | ||||
Revenue | 450,143 | 292,295 | 1,210,105 | 799,018 |
Gross profit: | ||||
Gross profit | $ 84,723 | $ 66,803 | $ 232,502 | $ 175,484 |
Gross profit (as a percent) | 18.80% | 22.90% | 19.20% | 22.00% |
Selling, general & administrative expense: | ||||
Selling, general and administrative expenses | $ 45,490 | $ 32,896 | $ 131,455 | $ 90,632 |
Selling, general, and administrative expense (as a percent) | 10.10% | 11.30% | 10.90% | 11.30% |
Operating income: | ||||
Operating income | $ 39,233 | $ 33,907 | $ 101,047 | $ 84,852 |
Operating income (as a percent) | 8.70% | 11.60% | 8.40% | 10.60% |
Outside the U.S. | ||||
Revenue: | ||||
Revenue | $ 114,244 | $ 147,283 | $ 369,667 | $ 456,749 |
Outside the U.S. | Operating Segments | ||||
Revenue: | ||||
Revenue | 114,244 | 147,283 | 369,667 | 456,749 |
Gross profit: | ||||
Gross profit | $ 7,851 | $ 20,780 | $ 13,576 | $ 66,495 |
Gross profit (as a percent) | 6.90% | 14.10% | 3.70% | 14.60% |
Selling, general & administrative expense: | ||||
Selling, general and administrative expenses | $ 13,668 | $ 15,791 | $ 47,125 | $ 52,591 |
Selling, general, and administrative expense (as a percent) | 12.00% | 10.70% | 12.70% | 11.50% |
Operating income: | ||||
Operating income | $ (5,817) | $ 4,989 | $ (33,549) | $ 13,904 |
Operating income (as a percent) | (5.10%) | 3.40% | (9.10%) | 3.00% |
Segment Information - Identifia
Segment Information - Identifiable assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 |
Financial information for each of the Company's business segments | ||
Assets | $ 2,062,986 | $ 1,745,732 |
Other | ||
Financial information for each of the Company's business segments | ||
Assets | 168,163 | 214,769 |
U.S. Health & Human Services | Operating Segments | ||
Financial information for each of the Company's business segments | ||
Assets | 701,864 | 500,641 |
U.S. Federal Services | Operating Segments | ||
Financial information for each of the Company's business segments | ||
Assets | 992,207 | 795,553 |
Outside the U.S. | Operating Segments | ||
Financial information for each of the Company's business segments | ||
Assets | $ 200,752 | $ 234,769 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 9 Months Ended |
Jun. 30, 2020USD ($) | |
Leases [Abstract] | |
Weighted average incremental borrowing rate | 3.80% |
Weighted average remaining lease term | 2 years 10 months 24 days |
Operating lease payments | $ 83.7 |
Operating lease liabilities arising from new or remeasured right-of-use assets | $ 39.9 |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 25,905 | $ 74,592 |
Short-term lease cost | 2,548 | 6,111 |
Variable lease cost | 4,106 | 9,395 |
Total operating lease costs | $ 32,559 | $ 90,098 |
Leases - Remaining Lease Paymen
Leases - Remaining Lease Payments (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Lessee, Lease, Description [Line Items] | |
Remainder of 2020 | $ 21,338 |
2021 | 73,788 |
2022 | 46,662 |
2023 | 27,439 |
2024 | 12,035 |
Thereafter | 7,664 |
Total minimum lease payments | 188,926 |
Less imputed interest | (10,812) |
Total lease liabilities | 178,114 |
Office space | |
Lessee, Lease, Description [Line Items] | |
Remainder of 2020 | 19,273 |
2021 | 66,814 |
2022 | 43,950 |
2023 | 27,320 |
2024 | 11,995 |
Thereafter | 7,664 |
Total minimum lease payments | 177,016 |
Less imputed interest | (10,482) |
Total lease liabilities | 166,534 |
Equipment | |
Lessee, Lease, Description [Line Items] | |
Remainder of 2020 | 2,065 |
2021 | 6,974 |
2022 | 2,712 |
2023 | 119 |
2024 | 40 |
Thereafter | 0 |
Total minimum lease payments | 11,910 |
Less imputed interest | (330) |
Total lease liabilities | $ 11,580 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 901,337 | $ 730,710 | $ 2,537,701 | $ 2,131,849 |
United States of America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 787,092 | 583,428 | 2,168,033 | 1,675,101 |
United Kingdom | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 53,364 | 72,265 | 190,088 | 224,017 |
Australia | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 38,415 | 48,744 | 100,390 | 153,114 |
Rest of world | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 22,466 | 26,273 | 79,190 | 79,617 |
Total U.S. state government agencies | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 344,748 | 294,567 | 969,274 | 872,909 |
New York State government agencies | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 79,140 | 90,295 | 276,585 | 271,865 |
Other U.S. state government agencies | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 265,608 | 204,272 | 692,689 | 601,044 |
United States Federal Government agencies | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 429,031 | 276,294 | 1,155,773 | 745,195 |
International government agencies | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 107,353 | 136,848 | 345,629 | 425,921 |
Other, including local municipalities and commercial customers | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 20,205 | 23,001 | 67,025 | 87,824 |
Performance-based | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 295,650 | 260,052 | 864,077 | 834,531 |
Cost-plus | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 422,641 | 282,795 | 1,184,425 | 756,227 |
Fixed price | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 132,535 | 142,940 | 352,255 | 429,962 |
Time and materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 50,511 | 44,923 | 136,944 | 111,129 |
U.S. Health & Human Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 336,950 | 291,132 | 957,929 | 876,082 |
U.S. Federal Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 450,143 | 292,295 | 1,210,105 | 799,018 |
Outside the U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 114,244 | 147,283 | 369,667 | 456,749 |
Program administration | U.S. Health & Human Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 251,616 | 212,638 | 724,960 | 651,343 |
Program administration | U.S. Federal Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 362,973 | 204,622 | 949,071 | 554,739 |
Program administration | Outside the U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 15,544 | 16,767 | 49,583 | 48,009 |
Technology solutions | U.S. Federal Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 42,101 | 39,994 | 130,172 | 116,870 |
Assessments and appeals | U.S. Health & Human Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 40,875 | 35,657 | 104,621 | 106,209 |
Assessments and appeals | U.S. Federal Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 45,069 | 47,679 | 130,862 | 127,409 |
Assessments and appeals | Outside the U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 42,468 | 62,152 | 167,397 | 192,233 |
Workforce and children services | U.S. Health & Human Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 32,531 | 29,146 | 90,651 | 76,947 |
Workforce and children services | Outside the U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 55,046 | 65,819 | 146,968 | 208,856 |
Other | U.S. Health & Human Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 11,928 | 13,691 | 37,697 | 41,583 |
Other | Outside the U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 1,186 | $ 2,545 | $ 5,719 | $ 7,651 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | ||||
Deferred revenue, revenue recognized | $ 9,100 | $ 3,000 | $ 49,200 | $ 35,000 |
Cumulative catch-up adjustment to revenue from change in estimates | 1,400 | 2,300 | 9,100 | 10,300 |
Deferred contract cost capitalization | 2,268,000 | 4,738 | 6,263,000 | 12,950 |
Deferred contract cost amortization | $ 1,369,000 | $ 1,843 | $ 4,866 | $ 4,663 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligation (Details) $ in Millions | Jun. 30, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, amount | $ 325 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 325 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 60.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Basic weighted average shares outstanding | 61,882,000 | 64,405,000 | 63,463,000 | 64,534,000 |
Dilutive effect of unvested RSUs | 220,000 | 354,000 | 203,000 | 266,000 |
Denominator for diluted earnings per share | 62,102,000 | 64,759,000 | 63,666,000 | 64,800,000 |
Antidilutive securities excluded from computation of earnings per share | 253,000 | 0 | 250,000 | 0 |
Acquisitions and Divestiture (D
Acquisitions and Divestiture (Details) $ in Thousands, $ in Millions, $ in Millions | May 01, 2020USD ($) | Feb. 28, 2020USD ($) | Feb. 28, 2020AUD ($) | Aug. 16, 2019USD ($) | Aug. 16, 2019CAD ($) | Nov. 16, 2018USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Sep. 30, 2019USD ($) |
Business Acquisition [Line Items] | |||||||||
Goodwill | $ 586,757 | $ 584,469 | |||||||
Gain on sale of a business | $ 1,706 | $ 0 | |||||||
Q2 Administrators LLC | |||||||||
Business Acquisition [Line Items] | |||||||||
Proceeds from sale of subsidiary | $ 3,300 | ||||||||
Gain on sale of a business | $ 1,700 | ||||||||
General Dynamics Information Technology's Citizen Engagement Centers | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash payment to acquire business | $ 430,700 | ||||||||
Goodwill | 184,600 | ||||||||
Intangible assets acquired | $ 122,300 | ||||||||
GT Hiring Solutions Inc | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash payment to acquire business | $ 6,200 | $ 8.2 | |||||||
Goodwill | 2,800 | ||||||||
Intangible assets acquired | $ 1,400 | ||||||||
Percentage of voting equity interests acquired at the acquisition date in the business combination | 100.00% | ||||||||
Useful life | 7 years | 7 years | |||||||
InjuryNet | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash payment to acquire business | $ 3,400 | $ 5.2 | |||||||
Percentage of voting equity interests acquired at the acquisition date in the business combination | 100.00% | 100.00% |
Supplemental Disclosures - Narr
Supplemental Disclosures - Narrative (Details) - USD ($) shares in Thousands | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2020 | |
Payments for Repurchase of Equity [Abstract] | |||
Repurchases of common stock | $ 166,959,000 | $ 45,414,000 | |
Investments in mutual funds | 21,700,000 | ||
Interest paid | 1,200,000 | 2,300,000 | |
Income taxes paid | $ 55,600,000 | $ 45,900,000 | |
Restricted Stock Units (RSUs) | |||
Payments for Repurchase of Equity [Abstract] | |||
Granted (in shares) | 300 | ||
Vesting period | 5 years | ||
Restricted Stock Units (RSUs) | Member of Board of Directors | |||
Payments for Repurchase of Equity [Abstract] | |||
Vesting period | 1 year | ||
Common Stock | |||
Payments for Repurchase of Equity [Abstract] | |||
Common shares repurchased (in shares) | 2,767 | 716 | |
Repurchases of common stock | $ 167,000,000 | $ 45,400,000 | |
Stock Repurchase Program, March 2020 | Common Stock | |||
Payments for Repurchase of Equity [Abstract] | |||
Stock repurchase programs, authorized amount | $ 200,000,000 | ||
Remaining authorized repurchase amount | $ 150,000,000 |
Supplemental Disclosures - Sche
Supplemental Disclosures - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 81,548 | $ 105,565 | $ 71,084 | $ 349,245 |
Restricted cash (recorded within "other current assets") | 14,440 | 10,927 | 7,885 | 7,314 |
Cash, cash equivalents and restricted cash | $ 95,988 | $ 116,492 | $ 78,969 | $ 356,559 |
Litigation (Details)
Litigation (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Feb. 29, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Loss contingency, maximum potential loss | $ 31 | |
Disallowance | $ 19 | $ 12 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ / shares in Units, $ in Millions | Jul. 03, 2020USD ($)$ / shares |
Subsequent Event [Line Items] | |
Cash dividend declared (in dollars per share) | $ / shares | $ 0.28 |
Common Stock | |
Subsequent Event [Line Items] | |
Dividends Payable | $ | $ 17 |
Uncategorized Items - mms-20200
Label | Element | Value |
Accounting Standards Update [Extensible List] | us-gaap_AccountingStandardsUpdateExtensibleList | us-gaap:AccountingStandardsUpdate201409Member |