Lisa Miles – Senior Vice President-Investor Relations Rick Nadeau – Chief Financial Officer Rich Montoni – Chief Executive Officer Bruce Caswell – President.

Charlie Strauzer – CJS Securities Richard Close – Avondale Partners Brian Kinstlinger – Maxim Group Frank Sparacino – First Analysis Allen Klee – Sidoti and Company.

Greetings and welcome to the MAXIMUS Fiscal 2015 First Quarter Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now turn the conference over to Ms.

Lisa Miles, Senior Vice President of Investor Relations. Thank you, Ms. Miles, you may now begin..

Good morning. Thank you for joining us on today’s conference call. I would like to point out that we posted a presentation on our website under the Investor Relations page to assist you in following along with today’s call. With me today is Chief Executive Officer, Rich Montoni; President, Bruce Caswell; and Chief Financial Officer, Rick Nadeau.

Before we begin, I would like to remind everyone that a number of statements being made today will be forward-looking in nature. Please remember that such statements are only predictions and actual events and results may differ materially as a result of risks we face including those discussed in exhibit 99.1 of our SEC filings.

We encourage you to review the summary of these risks and our most recent 10-K filed with the SEC. The company does not assume any obligation to revise or update these forward-looking statements to reflect subsequent events or circumstances. Today’s presentation may contain non-GAAP financial information.

Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period to period comparisons.

For reconciliation of non-GAAP measures presented in this document, please view the company’s most recent quarterly earnings press release. And with that, I’ll turn the call over to Rick..

Thanks, Lisa. This morning MAXIMUS reported first quarter revenue of $467.0 million and 15% increase compared to the same period last year. All growth in the quarter was organic and both segments delivered top line increases driven by new work and expansion on existing contracts.

Revenue was unfavorably impacted by currency exchange rates predominantly, but not exclusively in the Human Services Segment. On a constant currency basis, total company revenue would have grown 16% over the prior year. For the first quarter of 2015, operating income totaled $65.2 million and the company delivered an operating margin of 14%.

Our tax rate in the first quarter was lower than expected at 36%. This was due to the extension of the Work Opportunity Tax Credit at the end of December with retroactive application to the beginning of calendar year 2014. For the first quarter, net income attributable to MAXIMUS totaled $41.9 million, or $0.63 per diluted share.

First quarter diluted EPS increased 29%, compared to $0.49 reported for the same period last year. The first quarter of fiscal 2015 benefited from $2.4 million of incremental revenue and profit in the Human Services Segment that was previously expected to occur later in this fiscal year and provided an uplift of approximately $0.03 per share.

In addition, a lower tax rate provided approximately another $0.01 of earnings. Overall, another solid growth quarter. Let’s jump into results by segment starting with Health Services. The Health Services segment delivered strong operational and financial results and performed largely in line with our expectations.

Revenue in the first quarter grew 18% to $351.7 million, compared to the same period last year, fueled by organic growth resulting from new work and the expansion of existing contracts. As a reminder, the segment’s fiscal Q1 benefits from seasonality tied to the open enrollment period under the Affordable Care Act.

This year’s open enrollment began on November 1 and runs through February 15. Thus far call volumes have largely been in line with our client service plans. Our health insurance exchange operations are at peak staffing levels during open enrollment to support the increased volume of calls from consumers, who are shopping for health insurance.

Therefore investor should expect the Health Services Segment to be seasonally stronger in the first quarter of our fiscal year. Health Services segment operating income in the first quarter of fiscal 2015 grew 21% to $50.4 million, compared to the same period last year.

For the first quarter of fiscal 2015, operating margins for the Health Segment were 14.3% and higher compared to the same period last year. The segment’s operating margin benefited from some expected, accretive change orders.

These change orders helped to offset the expected start-up of certain new health contracts, as well as the anticipated volume decreases in our Medicare appeals business, that resulted from changes to the Recovery Audit program also known as RAC.

As a reminder, coming into this fiscal year, we had already assumed significantly lower volumes in our appeals business, as a result of these changes, all in all another solid quarter from the Health Services Segment. Let’s turn our attention to financial results for Human Services.

The Human Services Segment was adversely impacted by changes in currency, most notably due to the weakening of the Australian dollar. The impact in the first quarter was approximately $5.0 million unfavorable to revenue, on a constant currency basis.

The Canadian dollar and the British pound continued to significantly weaken throughout the month of January. Accordingly, we expect the segment will continue to be affected by currency exchange rates. For the first fiscal quarter, revenue for the Human Services Segment increased 7% to $115.4 million, compared to last year.

However, on a constant basis, the segment’s revenue would have increased 12%. Revenue growth in the quarter was driven by the Company’s international operations, including the recent reallocation of work in Australia. First quarter operating income for the Human Services Segment increased to $15.5 million compared to last year.

The Segment’s operating margin increased to 13.4% for the first quarter of fiscal 2015. The segment benefited from approximately $2.4 million in revenue and income that was previously expected to occur later in this fiscal year.

Excluding this, we estimate that operating margin would have been approximately 11% for the first quarter of fiscal 2015 which is typical for this segment. Moving onto cash flow and balance sheet items. Cash flow in the fiscal first quarter was strong, driven by increased earnings and good receivables collections.

As expected, DSOs improved on a sequential basis to 58 days in the quarter. We expect DSOs to increase to a more normalized level during the year, mostly due to some of the new contracts coming on line, most notably the two new health contracts in the United Kingdom.

For the first quarter of fiscal 2015, cash provided by operating activities, totaled $56.6 million and free cash flow was $42.5 million. As a reminder, free cash flow is defined as cash provided from operating activities, less purchases of property and equipment, and capitalized software.

During the quarter, we purchased shares of MAXIMUS common stock under our Board authorized program. In Q1, we repurchased approximately 753,000 shares for a total of $32.6 million. At December 31, 2014 we had $104.6 million available for share repurchases under the current program. As a reminder, our buyback program is opportunistic in nature.

At December 31, we had $149.2 million in cash and cash equivalents of which approximately 30% were held outside the United States. The strength of our balance sheet provides us with a great deal of flexibility in deploying capital and we are focused on sensible deployment of cash.

In addition to buybacks and dividends, we continue to manage a strategic acquisition program. At any given time, we often have a number of opportunities in the pipeline. We run a rigorous due diligence process and we are highly selective. But M&A continues to be an active and large component of our cash deployment and growth strategies.

And lastly guidance, as noted in this morning’s press release, we are reiterating our fiscal 2015 revenue and earnings guidance. We still expect revenue in fiscal 2015 to range between $1.9 billion and $2.0 billion and earnings per diluted share to range between $2.25 and $2.40, despite ongoing weakness in currency exchange rates outside the U.S.

As I mentioned earlier, the Canadian dollar and the British pound continued to significantly weaken throughout the month of January. So looking at our guidance, the currency exchange rates at January 31 would indicate the tempering of revenue of approximately $45 million and operating income of approximately $4.5 million or $0.05 per diluted share.

This compares to the exchange rates that were assumed when we completed our forecasting in October. We are also maintaining our cash flow guidance for fiscal 2015. We still expect cash provided by operating activities to be in the range of $165 million to $190 million. And we expect free cash flow to be in the range of $100 million to $125 million.

Thanks for joining us this morning, and now I’ll turn the call over to Rich..

manage benefit programs more efficiently and effectively, to address rising caseloads and implement performance-based metrics to achieve the outcomes that matter. In summary, we’ve set the table for solid growth in 2015 and beyond and remain most excited about our future prospects. And with that, let’s open it up for questions.

Operator?.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from Charlie Strauzer of CJS Securities. Please go ahead..

Hi, good morning..

Good morning Charlie..

Rich - or maybe Rick just from what you did, if you can expand little bit more on the impact on currency.

Obviously, there was an offset in the quarter and probably an offset there going to be offset going forward there if you guys kind of stay where it is, can you explain what the quarter and come up with positive offsets to that?.

Charlie, I would be glad to talk about that and you’re right, Rick did talk in his prepared remarks about the currency impact, the adverse currency impact in the quarter and the expected impact for the year.

And in terms of offsetting that and as you know there are always puts and takes in the portfolio, but we were fortunate in this quarter that the amount of work we’re doing relative to the Affordable Care Act is a bit stronger than we had expected. You may recall that we expected this year to be down versus the prior year.

We had estimated the amount of the down graph would be in the territory of $50 million to $100 million of less work this fiscal year. It’s actually coming in better than we had expected. So that’s the good news that offsets the currency aspects and allows us to maintain our current guidance on a go forward basis..

Great and then just one follow-up question..

Sure. .

If you look at the UK work program, I believe you are going to starting to approach your kind of your bonus payments for performance.

And are you on track to kind of hit those goals and it reminds us again and is that a lump sum payment or that is spread out more evenly over time?.

That program is a mix of a fixed payment, of front-end fixed payments and we amortize the front-end payments over a period of time. And then the contract I view is largely pay-for-performance and recurring pay point, so it performs month-to-month. I don’t have the impression that there is a big payment due at any time in the future.

I think it’s just a steady stream program..

Great, thank you very much..

You bet..

Next question please..

Thank you. The next question is from Richard Close of Avondale Partners. Please go ahead..

Yes, Richard, I get your opinion on state Medicaid expansion, there’s been a lot of, I guess, anticipation in terms of states expanding Medicaid Tennessee voted yesterday not to, I guess, in one of their committees.

So thoughts on - does that impact MAXIMUS at all, going forward?.

Good morning, Richard, and I think it’s a great question. And the concept of Medicaid expansion has been one as you know that’s been wondered about I’ll say for several years running. And it’s - we see sporadic actions or inactions and you do mention Tennessee.

I’m going to ask Bruce Caswell, who is here with us today, to share with us his thoughts on this one..

Sure, Richard, and good morning. You’re right. There’s been a lot of movement from a waiver perspective. With the Republican states there are currently 27 states in the District of Colombia that have expanded Medicaid and probably seven to nine Republican states that are looking at expansion alternatives.

Notably while Tennessee had put forward a plan to CMS for a waiver that would have provided to that expansion.

Indiana has actually received that waiver ahead of Tennessee that is interesting from two dimension, being the Indiana waiver for the first time allows the state to have kind of a personal responsibility component and that is like a recipient co-payment, or premium cost sharing for individuals below a 100% of the federal property level, which was not something that CMS historically was willing to grant.

Secondly, it allow that the benefits can be denied for individuals like dental and vision benefits. So wrap-around benefits not, core Medicaid benefit is the beneficiary themselves, falls behind in their share of the payments.

So a lot of folks are looking more toward Indiana model as an example of something that could be replicated successfully in other republican states. We continue to keep an eye on it and I think we’ve said for sometime that Medicaid expansion is a long-term trend, something that will play out over the course of probably the next four to five years.

Just as the initial implementation of the Medicaid program took many years before there was full adoption..

Now I would add to that Richard that - certainly MAXIMUS has benefited from the Medicaid expansion that’s occurred to date and certainly we should benefit from any incremental, additional expansion in those states where we serve as enrollment broker or chip administrator, and I think that’s 20 at this point in time.

Correct Bruce?.

Yes that’s right. And in fact Rich to your point, there was some recently released data that suggests in states that have expanded Medicaid, the Medicaid roles have increased by about 25.5% and for those that haven’t, there has still been a woodwork effect of about 7% increase in Medicaid.

Does that help Richard?.

Next questions please..

Thank you our next question is from Brian Kinstlinger of Maxim Group. Please go ahead..

Hi, good morning guys..

Good morning Brian. .

How are you? So the - I guess I’m curious how many states the number [indiscernible] you’re not going to say this, specific states are you in discussions with about transitioning to state-based exchanges given the Supreme Court case.

And I’m curious are they more democrat led states given the government’s opposition and then with a lesson you've learned in the past how quickly can in state today move from a federal exchange to develop, install and be ready for enrollments on a state-based exchange?.

I’m going to hand this over to Bruce in a minute, but I think it’s a three part question Brian..

So I will only ask a follow-up..

Many states are we in discussion with and Bruce will probably talking about how many are we monitoring. And secondly, are they more democratic and then thirdly the lessons learned how quickly modestly being a transition..

That’s right..

Okay thank you..

Great question, so kind of first of all as you know there are 34 states in the federal market place.

Presently they would be affected by the King, Burwell decision and it’s notable that, they are depending on which estimates you look at up the five million individuals that are currently receiving subsidies in those marketplaces that would be affected in those states.

And in addition to that the thinking is that if those subsidies were removed, obviously there would be an increase in premiums. RAND Corporation in fact estimates that premiums would increase in the individual markets up to 47%.

That effect of the loan could destabilize the remainder of folks and drive up to another million folks out of the marketplace. And so there is a lot of stake here, you’re right. Consequently, we’re looking at all the states that obviously would have to do something and choose to do something.

I believe it is in fact the case that nine of those states that are in the 34 have actually passed legislation that would prohibit them from presently establishing a state-based exchange. So barring some new legislation, that would open the door that would leave the remaining 25 or so as potential transition state.

When you look at those, there are 11 states that have actually weighed in affirmatively on the Supreme Court case asking The Court to sustain the payment of subsidies in the federal marketplace. So you would think that they would be friendly toward the concept of setting up the state-based exchange.

And that brings me to the last part of your question which is how hard it is and how long would it take? There are probably - well, there are couple of elements in that very quickly. The first thing is that the mechanics for granting federal money to a state to setup an exchange expired in November of 2014.

And that was the actual establishment grant funding window closed. So that would have to be reopened in someway. Secondly, you could see a scenario under which the federal government would work to extend the technology platform to the states and the states would correspondingly have to setup their own customer contact centers.

So some type of cloud based or service based technology platform would probably be the most expeditious way to make the technology available. However, there are other states out there, Maryland being an example, that have transferred technology from more successful states like Connecticut that would may look to more of a consortium model.

So I would think in the end, you could see a blending of approaches with an emphasis by the administration to try to expedite that. But the reality being with the court decision in June and the way the law is currently written, states have to pass an important certification date six and a half months prior to going live.

So it would make a very challenging for this next open enrollment period to get a state-based exchange in place.

Does that helps?.

Hey, super, helpful..

Brain, I want to add one footnote to that. There is an article in The Washington Post this morning that was interesting in this context and it was really about a republican led plan that’s being baked up in the event that the outcome of this Supreme Court case is adverse.

And so it’s interesting to monitor, the key point they won that, the key points they won, it’s very, very dynamic and we should expect other alternatives to pop up, but at the end of the day, we do believe that there is going to have to be some form of supported healthcare program out there..

Thank you..

Next question please..

Thank you. [Operator Instruction] And the next question is from Frank Sparacino of First Analysis. Please go ahead..

Hi guys. I'm curious on - if you look at the UK and all the work that you’re doing there, obviously, you have lots of clinical expertise may be more so here in the U.S. So, I'm just curious when you look at the U.S.

marketplace and some other thing that you do in the UK one part of you, those services are very relevant here and just curious on some of the potential opportunities here or even outside the UK on a more global basis?.

Good morning, Frank. I think that’s a great question and I think it has - it does have significant strategic relevance.

We have maintained for quite sometime, a view that as governments are more pinged from a fiscal perspective and as the number of - let’s say applicants or the member of individuals because of increasing populations and the demographics within those populations.

We think more people are looking for their government for help, but the intersection of those dynamics really will spark and motivate governments to have more eligibility hurdles. And that will increase the demand for what we do. One of those subsets is one of the services is what we do in appeals and assessments.

And we do see in the UK, that’s what’s happening is that there is an increased need to do quality appeal and assessment work, most of the work we do over there is in the assessment category. Here in the U.S. we do a lot of appeals work and we do sense that there’ll be an increased demand for assessments and our appeals, I think, in Australia.

We should expect that to happen and I do think here in the U.S. as well other programs case and point will be social security and workforce compensation. The other dynamic is that we’re seeing increased discussions as it relates to the disabled, including mental type situations as well.

So the industry is moving very much in that direction and I think it’s going to provide increased opportunities for MAXIMUS. Next question, please..

Thank you. The next question is from Allen Klee of Sidoti & Company. Please go ahead..

Hello, thank you for taking the call.

Could you just speak a little to the work you’ve been doing to prepare for the Health Assessments Advisory Services contract and how that’s going?.

We’d be glad to do that, Allen.

Bruce, do you want to tackle that one?.

Sure. Allen, good morning; yes, I would just say that as Rich mentioned in his notes, we continue to work on ramping up for that contract. It has a takeover date or deadline of March 1. The teams are working across the number of work streams as you can imagine in conjunction with our client. And we feel very much that it’s going as expected.

And Rich also noted that it remains obviously very politically sensitive program and topic in the United Kingdom. We expect continued media coverage in that area and importantly as we spread throughout. We are not the company that determines the outcome of an assessment.

We effectively help to prepare that assessment for final government based adjudicator to make that determination [Audio Dip] by policy..

Thank you..

You’re welcome. Next question please..

Thank you. Yes, the next question is from Richard Close of Avondale Partners. Please go ahead..

Great, I was wondering if you could give us an update on our Australia, any type of competition landscapes there with the JSA.

And then I guess just put context around the cautiously optimistic there, make us feel maybe a little bit more comfortable where the opportunities in Australia for you guys?.

I’d be glad to do that. But I think about the Australian opportunity, the rebid opportunity, we are a very significant provider under our existing contract as you know. It’s a large contract for MAXIMUS.

I highly respect the procurement process that Australia has set up and follows rigorously, meaning that they follow their protocols very, very tightly.

They tend to award on performance and not price and naturally as you would expect, MAXIMUS pays an awful lot of attention to its performance metrics and continues to be evaluated as a top provider in that country. And I think that will go an awful long way towards the probability that we will continue to be a key provider in the rebid result.

We expect to hear this - the result to the spring. And I would really emphasize this is not an all or none situation while it’s lower edge, its - they will make the award region by region, area by area. So I think it’s highly unlikely Richard that a key provider like MAXIMUS is going to have a material loss in this situation.

And I’d like to think we have more upside than downside..

Okay. And a follow-up question just on the FX impact for this year.

For modeling purposes should we be looking at human as call it a mid to upper single-digit grower in the remaining quarters of this year?.

Yes, I think so. And as you’d see the currency in Canada and in Australia are down more than 10% as compared to October at the beginning of our year. I guess I think your assumption on the growth rates would make sense. Next question please..

Thank you. [Operator Instructions] Your next question is from Brian Kinstlinger of The Maxim Group. Please go ahead..

Great, thanks so much.

My follow-up first one is, I’m curious what you’re hearing on the moratorium of inpatient stage for RACs and how and when appeal volumes might be impacted in your opinion?.

Bruce..

Sure. Hi, Brian great question. And as I believe the moratorium on auditing those inpatient stage based on the two midnight rule ends in March of this year. And we for sometime said that there is kind of a time lag or delay if you will between when the RACs can go out and start mining those claims again and what the look back that’s created.

And ultimately, when we see those as appeals, I think we’ve characterized that historically as probably a five-month or six-month delay. One other element to this is the extension of the current RAC contracts, I believe through the end of this calendar year.

So we’ve tried to be very prudent in our forecasting of the volumes and as you know, the Medicare appeal volumes are notoriously difficult to forecast. And so we’ve really baked those volume effects into our full year guidance presently..

Great, and then can you maybe give us a little bit more detail on the pipeline? Is it very the way you internationally, U.S.

maybe certain countries and I think still a number of large opportunities that we’ve been spoiled to see that you win so many of?.

My takeaway on the pipeline is that it remains very robust and I’m very pleased with the mix. What’s in our pipeline and by that I mean two dimensions; one is how much is new work versus how much is rebid. I’m very pleased with a very significant portion of that represents new work.

And I’m also pleased that [indiscernible] is across all of our business, not just domestic, not just international, but all of our businesses help in human services alike..

Thank you. Our next question is from - I’m sorry, our final question is form Frank Sparacino of First Analysis. Please go ahead..

Rich, I just want to go back to your early; you made a comment around ACA coming in better than expected and I was wondering if you could be more specific as to where that upside is coming from? And then also related to that, what happens with the Texas call center? Yes, I’m not sure how things sort of play out after open enrollment here events, but any idea as to when maybe the next kind of procurement cycle comes up?.

I’ll take the later one in terms of the Texas call center and then I’m going to - in terms of why we can give you some qualitative color on why OE2 seems to be stronger than we had expected. So on the Texas call center, this is in Brownsville.

One key point is, it really is an outstanding call center, has great capabilities, and has done a good job and has received the number of extensions. In the normal course, we would fluctuate the resources in these call centers to map them to the fluctuating demand, the seasonal demand related to the Affordable care Act. We did that last year.

We’ve done that this year. And as we move forward, I would expect that we continue to do that. We are working diligently with the client to bind alternative uses for that call center and it may just continue to be available for the work, the primary mission today in terms of supporting the Affordable Care Act.

Bruce?.

Sure and Frank I will add to your other question by a little more color on the volumes. I just - first of all I want to practice this by saying its very much early days, right.

We’re really only about a quarter end of things and we - as Rich noted in his remarks not yet seen the potential impact of the 1095-A forms that are being set out and so forth, so as an important kind of top note to that.

But the effects are effectively driven by within the federal call center environment, obviously a decrease with the wind down of the Boise customer contract center, but year-over-year, we are - we’ve ramped up now to more of a steady state level, our eligibility appeals support contract at the Federal level.

So you see the two kind of offsetting each other with a bit of positive gain. And then also you may have noted in the press that California was much more aggressive in preparing for this year’s open enrollment period and rather than relying just entirely on the state employees that it supported the program last year.

They reached out to the vendor community, so whereas last year in California, we provided just basically training for those state employees. This year we’ve actually got operational folks doing a work related to the eligibility in enrollment process.

So year-over-year that would be an increase for us, but again I would just note that it’s still very much early days..

Next question please?.

Thank you. Our next question is from Richard Close of Avondale Partners. Please go ahead..

Great, just a quick question here on guidance. First of all, if you could talk a little bit about the seasonality thought process and seasonality in terms of the remaining quarters, just remind us there, so we’re not caught off guard.

And then maybe if you can discuss a little bit more about start-up expenses and the slingshot that you talked about in the past and how we should think about that? I think you stated that you had some benefits in this quarter that offset some of the start-up expenses, and just how we should think about that in the remainder of fiscal 2015?.

Okay, let me try you. Rick Nadeau is going to take the one on the quarterly piece and I’ll chime it on the slingshot piece..

So we did provide some specific quarterly earnings guidance on the last call, so let me reiterate that color and then add a little bit to it. We expect that the Q2 margins will be lower than the first quarter.

We have startups that are hitting in the health segment as you referred to and some of those are non-recurring, further Q1 benefited from incremental profit that won't repeat in later quarter.

In Q3, margins are expected to be higher than in Q2 and that will be as a result of lower startup costs, and you’ll start in that third quarter to get a full contribution from the new Health Assessment Advisory Services contract, HAAS, in the United Kingdom.

And as I mentioned on the last call, we have presently assumed that Q4 margins will be tempered as a result of the startup of the new contract in Australia. So that's what you're looking for..

Yes. That's great..

And I'll jump into the slingshot. And in the slingshot discussions, we've had in the past, are not focused on - the startups do have a ramification to the quarterly - the quarters in our fiscal 2015 as Rick has discussed.

The slingshot discussions we've provided have been on full fiscal years and to remind folks on the call, we have three contracts that are relevant here and we'll talk about the impact of these three contracts from a slingshot perspective. Two of the contracts were in startup mode in fiscal 2014 and generated an aggregate loss of $0.04 in fiscal 2014.

We estimate those in the startup of HAAS will actually contribute profit of $0.08 a share. So going from a loss of $0.04 to profit of $0.08 in fiscal 2015 versus 2014 creates a slingshot effect year-over-year of a positive $0.12. And then we think those three contracts will generate $0.34 earnings per share in fiscal 2016.

So hence, we have a slingshot - favorable slingshot impact of $0.26 fiscal 2016 over 2015 relative to those three contracts..

Great, thank you..

Okay, you’re welcome. Next question please..

Thank you. That was our final question. Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation..