Greetings and welcome to the MAXIMUS Fiscal 2015 third Quarter Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Lisa Miles, Senior Vice President of Investor Relations for MAXIMUS. Thank you, Ms. Miles, please go ahead.

Good morning. Thank you for joining us on today’s conference call. I would like to point out that we’ve 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 in 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 third quarter revenue of $572.3 million, a 36% increase compared to the same period last year. This increase was driven by organic and acquired growth in both of our segments. Approximately 20% of the topline growth was organic with the remainder attributable to the acquisitions of Acentia and Remploy, both of which closed in early April. Revenue in the period was unfavorably impacted by currency exchange rates of approximately $20 million or $0.02 of diluted earnings per share. On a constant currency basis, revenue would have grown 41%. For the third quarter of fiscal 2015, operating income totaled $71.1 million which was an operating margin of 12.4%. This compares to operating income of $55.2 million which was a 13.2% operating margin reported for the same period last year. In the third quarter, our effective tax rate was 40% due to a greater mix of income from our US operations. This result slipped by projects outside the US in start-up phase. We now estimate an effective tax rate for fiscal 2015 of approximately 38% to 38.5%. For the third quarter net income attributable to MAXIMUS totaled $41.7 million or $0.62 per diluted share which included approximately $0.02 of acquisition related expenses. Excluding the $0.02 of acquisition expenses, adjusted diluted earnings per share were $0.64. I will now speak to our results by segment starting with Health Services. For the third quarter of fiscal 2015, the Health Services Segment delivered another strong quarter of financial results. Through a combination of organic and acquired growth, health segment revenue grew 44% in the quarter compared to the prior year period. The majority of growth in the quarter was organic with approximately 27% coming from new work and the expansion of existing contracts. Revenue growth in this segment was…

Thank you, Rick and good morning everyone. With another great quarter of growth behind us, I’ll take the opportunity today to provide an update on some of our longer term objectives including new programs and start-ups, our most recent acquisitions and some additional color on our internal investments. As we’ve discussed in the past, we operate a portfolio of contracts many of which are tied to operating long term programs with clearly defined program life cycles. Often times, profitability may be lower in the early days and then improve as the programs mature. As part of our established risk management strategy, we place a tremendous amount of focus on closely managing our start-ups. This includes identifying and fixing issues early on because well-executed start-ups turn into mature, profitable contracts. Today, I’d like to give an update on three of these start-ups, the Health Assessment Advisory Service and Fit for Work contracts in the United Kingdom and the Jobactive contract in Australia. As Rick mentioned, the UK Health Assessment Advisory Services contract is facing some start-up challenges. This is the contract where MAXIMUS is conducting assessments for individuals seeking certain disability benefits according to the rules set out by parliament. The program faced significant obstacles prior to MAXIMUS taking over the contract in March of this year. All along, we’ve recognized it would take some time to bring meaningful improvements to the program. With five months of operations now under belt, we have keen understanding of the additional improvements we need to bring to bear and we have several initiatives that are well underway. Our performance under this program is tied to quality, timeliness and the number of assessments completed. So as a very new program, we are focused on hitting the required performance metrics. We believe that our efforts to…

Thank you, we will now be conducting a question-and-answer session. Please limit yourself to one question and one follow up question. If you wish to ask additional questions you may reenter queue. [Operator Instructions] And our first question comes from the line of Charlie Strauzer with CJS Securities. Please go ahead with your question.

Hi, good morning.

Good morning, Charlie.

Quick question on the guidance range for the remainder of this year, the $2.33 to $2.40, I think previously you'd said that that was going to be coming in towards the high end of that range. Didn't see that in today's release or in the comments, but just hoping you could expand a little bit more on that? Is it maybe just related to tax or FX or both or that kind of thing?

I was glad this year thinking with you and Rick Nadeau, our CFO, is pleased to handle that Charlie.

Yeah, thanks Charlie. Charlie, we did guide to the GAAP. We did show in the press release the amount of the M&A charge that is included in $0.02 this quarter and $0.04 overall. I really think I should point you to the currency. Currency cost is about $0.03 this quarter and if people look at what’s happened in the currency exchange rates in July, they have continued to be very unfavorable to MAXIMUS. In other words, the US dollar strengthening is compared to the Australian dollar and the Canadian dollar. You always know that start-up programs are difficult to predict the pace at which they’re going to really move to maturity. I want to make it clear. I think the upper end of the range is still our goal and it is still possible, but there are many factors that we need to consider and some of those factors such as currency are really frankly out of our control.

Is some of that also related to the higher tax rate from the higher mix from US work, too?

Yes.

Yes. Any follow up Charlie?

Next question please?

Our next question comes from the line of Brian Kinstlinger with Maxim Group. Please go ahead with your question.

Great. Thanks so much. Good morning.

Good morning, Brian.

I'm curious why you think you're having trouble recruiting on the HAAS contract. Does it have anything to do with the contract's reputation from the previous vendor? And if not, what do you think the issue is as you see it and/or the plan to fix that issue?

Brian, I think the challenge is on recruiting healthcare professionals and we recruit two types of healthcare professionals, one necessary [ph] doctors and the other ones nurses and this is across the United Kingdom. So finding the right number of those healthcare professionals as we know here in the US, there’s not a surplus of such professionals in our economy. The same condition exists in the United Kingdom. So we are looking for individuals the majority of which are gainfully employed so recruiting them is tougher than some other types of professionals. And the geographic factors also play into it. As it relates to the nature of the program the work that we do I think there individuals that are actually passionate about it and care about it very, very much and I think we’ve managed to - managed the program such that it is attractive to many, many individuals. So I think it’s really just a matter of supply and demand not so much the nature of the program itself.

Okay. And then the follow-up, I guess, then is if it's supply and demand, how long do you expect it might take to get this contract's revenue profitability and head count to the path that you had originally thought?

And that’s a good question. Our original thought was all of the fiscal ‘15 would be a ramp period. We took this over in the spring and all of fiscal ‘15 and throughout a good portion of ‘16 our original plan and this would be in ramp mode. So our plan was that this would stabilize in fiscal ‘16 and that’ still our plan. So we’re a bit behind where we wanted to be, but we have actions in place such that we think we can sing on course and get this stabilized in fiscal ‘16.

Thanks Brian. Next question please.

Thank you. Our next question comes from the line of Stephen Lynch with Wells Fargo. Please go ahead with your question.

Hey, guys, thanks for taking my question and congratulations on a good quarter. I guess the human services revenue was strong despite what sounds like was a stiff currency headwind and maybe also some earlier than expected interruption in the Jobactive contract. Can you just talk a little bit about what drove the strength in that segment?

Glad to do that Steve. Thanks for the question. Rick, can you share that?

Yes I think a good portion of that also is the acquisition of Remploy that we had in there Stephen. That acquisition occurred in the early part of April, so we got a whole quarter of revenue from that. We also had good stable operations in all of our areas. Yes, Australia you are right we got a little more start-up impact than we expected earlier on in the contract, but the rest of the operation was really good. The third [ph] program in the UK had good performance during that particular period.

Okay and then just a quick follow-up to that. Given the previous indication that Remploy would contribute or should contribute $30 million to the $35 million of revenue in Fiscal ‘15, should we look at this quarter and the strength there and then expect revenue contribution to be lower in fiscal fourth quarter? Or maybe is there some seasonality there that we need to understand?

No, I don’t think their business is seasonal in nature. I think that what we said previously it continues to be our belief. I think that that’s going to be our entity that should generate revenue over the first 12 months and we [indiscernible] of approximately $70 million.

Of course is going to impact that as point out. Currency is always a factor Steve and I mirror what Rick says. Remploy is strong out of the gate and we expect that momentum will continue.

Thanks Stephen. Next question please.

Our next question comes from the line of Allen Klee with Sidoti. Please proceed with your question.

Yes, hi. Given your comments on the tax rate being impacted by the more international business and the start-up of the domestic business, is there any way to think about if that can have an impact on our fiscal ‘16 assumptions?

Yeah, let me be clear. I guess what I intend to say is that the biggest factor driving our effective tax rate is a mix of income between international revenue - international income and the US income. US income has higher tax rate. We have highest tax rate jurisdiction in our portfolio here in the United States. So when we have more income in the US and less income in the United Kingdom which has a 20% tax rate compared to our tax rate which including state rates approaches 40%. That’s what really drives our effective tax rate. So as we stabilize and move that UK start-up program to better profitability our effective income tax rate to come back down which would be a factor [ph] many in fiscal ‘16 planning.

Okay. Thank you.

Allen you’re welcome.

Next question please.

Our next question comes from the line of Frank Sparacino with First Analysis. Please go ahead with your question.

Hi, guys. I was hoping just to shift over on the exchange side of things. And I guess two parts to my question. First is, can you just remind me what, the contract with healthcare.gov in terms of when that lapses or any noteworthy dates coming up. And then secondly, just in terms of the sales activities with some of the state-based exchanges, maybe just an update there, if you're seeing any notable movement. That's it.

Frank, good morning. I’d like to ask Bruce Caswell who is the president and here with us this morning to talk about these two points. One is the dating of the contract for CCO as well as the state-based dynamics.

Frank, just to clarify as you know, we have two contracts in support of the Federal marketplace. As a first contract as the subcontractor where we are supporting the customer contact center and the second is the eligibility fields contract, can you clarify which one you’re asking about?

I guess both would be great, Lisa.

Okay.

Okay, so Frank let me take a moment and just give you some dynamics on the state exchanges. We are very early still in the planning cycle obviously for this open enrollment period and I wanted to just clarify open enrollment begins in November, November 1, 2015 and then continues until January 31, 2016. And we think that based on what we are seeing and the conversations that we’re having with our clients that after related activities have really largely stabilized into more of a steady state run rate for us. Of course you’re going to see normal force fluctuations in the year and out of the year as states prioritize a wide range of activities in their programs. To give you a little bit more color on that. The obviously the GAO and others have predicted for many years that the penetration of the sales, if you will of new advanced premium tax rate policies will stabilize that into 2017 and 2018. And we’ve seen this we’ve commented before more states turning to us to help with some of the Medicaid related activities on their programs whether that’s new eligibility determinations or expansion populations or renewal determinations and then subsequently there are a whole series of new tax forms. We’ve spoken to this a little bit before. This last open enrollment period there was 1095-B and there’ll be even further tax forms in the next period. So there are a lot of variables in the mix that will affect volumes and you might see a change in mix related to the type of work that we do. But overall like I said, I think we are seeing things stabilize into a steady state as it relates to our [indiscernible] business. And then coming back to the contracts, the CCO contract where we provide customer contact operations as a sub-contractor for the federal facilitated marketplace does continue, but as we’ve said we did wind down an existing facility in Boise, Idaho and we continue to maintain operations in Brownsville, Texas, under that contract and then the second contract is eligibility appeals that we do for the federal facilitated marketplace and that’s a long term contract and my recollection is that’s about an eight year contract, but we’ll confirm that. Lisa will get back to you with confirmation on the exact date. Did that help?

Yes, thank you, Bruce

Okay. Next question please.

Thank you. [Operator Instructions] Our next question comes from the line of Charlie Strauzer with CJS Securities. Please go ahead with your question.

Good morning again. Just as I was going to ask before, the, if you could get us a little bit more granularity in the backlog or the pipeline, I should say, on remaining rebids for this year. Maybe a snapshot into next year's rebid activity. Thank you.

Charlie I’m glad to take a look at the rebid situation. As it relates to fiscal ‘15 rebids, overall I think it’s been a really solid year. The statistics go like this. Thus far, we’ve won more than 95% of our outstanding rebids which I think is an excellent situation. Year-to-date of the 1.2 billion that was up for rebid we’ve won or extended six of those contracts and that’s been a total contract value of about $788 million and key note would be the fact that that includes our largest rebid coming into this fiscal year and that was Jobactive in Australia as you know. We won more than our fair share there. And we lost one very small contract. At least three contracts opened for bid this year with the total contract value of $357 million and the lion share of that relates to the Texas eligibility support contract. Currently that one runs through calendar 2015 and we expect a decision on that rebid sometime very soon Charlie. That amounts to in our pipeline that’s $324 million of the $357. As it relates to fiscal ‘16, early picks of fiscal ‘16 is shaping up to be a much lighter rebid year compared to the $1.2 billion we had up for rebid in fiscal 2015 and as is our policy, we’ll give you those exact details in our November call.

That’s helpful. Thank you very much.

Okay, Charlie.

Thanks, Charlie. Next question please.

Our next question comes from the line of Brian Kinstlinger with Maxim Group. Please go ahead with your question.

Rick I'm curious, we heard about three contracts in your startup costs. But what we didn't hear about is the DOE contract with the student loans. Maybe you can just highlight the progression there towards profitability and how that contract's going.

That’s going - this is Rick. That’s going as expected, it’s moving toward profitability on the schedule that we laid out when we did the contract and the execution is going well.

Great and then you mentioned a federal contract which you couldn't give details for and I won't ask for them. But what I'm interested a little bit more in, did that come through the MAXIMUS core business and business development team or did that come through Acentia?

That came through the existing MAXIMUS work and that was additional work for an existing client that we had which obviously has a - in this particular case a quick sales cycle.

If I could squeeze one last one. The Supreme -

Go ahead.

Since the Supreme Court ruling, I'm curious if states are back to the kind of methodical slow transition towards state-based exchanges. Whereas before there was discussion on many of them thinking about their strategy towards transitioning just in case.

We’re going to have Bruce Caswell answer that one in detail, but I think clearly the compelling need for clients to panic and move in a panic mode towards state based exchanges would be overhang [ph] now past from the Supreme Court. Clearly that is now lifted and the environment’s changed meaningfully. So Bruce would you?

I think that’s Richard absolutely right. And if anything right now, states are turning their attention to what things will look like in 2017 and beyond. And as we’ve I think spoken about a little bit before. The Affordable Care Act actually has a provision in it. The 2017 State Innovation Waiver provision and from a policy perspective it’s section 1332 of the act, under that provision states can really broadly design their own state based public health benefit programs and wave a number of key elements of the Affordable Care Act such as the establishment of qualified health plans, the advanced premium tax credits, the subsidized coverage, cost sharing reductions and so forth. When they do that the funding that would otherwise gone to pay for those subsidies in the marketplace becomes available for them through pod [ph] funding and its delivered in a periodic lump sum to them. They can’t just do this without meeting some of the core provisions of the Affordable Care Act. For example, the proposed coverage that they provide has to be at least as comprehensive as what has been provided under the essential health benefits of the act and so forth. So what we’re seeing is a shift in planning and a shift in thinking for states on how they will go about potentially if you will creating an implementation on public health benefit programs on their own exchanges, under the waiver provisions, maybe even coupled also with the 1115 waivers that are available to them, but that’s a longer term thing that they’re planning for, something that wouldn’t happen until 2017. So presently we expect this next year at least to be really relatively steady state from what we’ve seen historically.

Next question please.

Thank you. [Operator Instructions] Our next question comes from Stephen Lynch with Wells Fargo. Please go ahead with your question.

Thanks, just one question. You guys mentioned that the recent acquisitions could open up broader opportunities over the next three to five years. I'm just curious, is that three to five year timeframe based on what RFPs are expected to be issued? Or is it primarily a function of the development and integration work that needs to be done in order to compete for these new contracts?

Steve, great question, I believe that three to five years is really to get RFPs on the table as opposed to setting the table for RFPs.

Thanks, Stephen. Next question please.

Our next question comes from the line of Frank Sparacino with First Analysis. Please go ahead with your questions.

Hi, guys. Just one follow-up for me and I dropped off, so I apologize if this has been addressed. But when you look at the UK contract, could you be more specific in terms of the performance? I know you've outlined three key factors here. Number of assessments is obviously, I think, pretty black and white. But in terms of how they're measuring quality and timeliness, can you just talk to that in more detail?

Sure, glad to do that Frank. Well, first off I would reiterate that the nature of this contract - it’s a highbred contract by nature, so fundamentally I look at it as a cost plus contract. However, there are performance based incentives that will create performance billing point, so revenue for us. And while there are many of them, it’s a complex contract as you would expect. The number one driver is volume and the number two driver is quality. And when you look at volume, the volume is a function I think three main areas. One is recruiting of healthcare professionals, the second is the retention of those healthcare professionals and the last one is the productivity. So as you can appreciate, we’re organized, structured and working really hard to drive all of those. And quality as well, we have special teams that are focused on the quality aspects and it relates to the timeliness of all of the cases that we manage, there is audit process that are at the quality of the work that we do, so we work hand in glove with our quality team and the client to drive quality to the minimum expected level. Is that helpful Frank?

Of course that’s helpful.

Sorry, Bruce Caswell wants to add to that.

Yeah, Frank. Just to give you a little more on the timeliness. The timeliness really relates what’s a client service and whether they’re being - the clients are being seen in timely fashion in the assessment centers and know whether folks come and have an appointment aren’t able to be seen or sent home unseen. So there are minor service levels related to those items, but Rich is absolutely correct that the two major drivers are the assessments completed and the quality of those assessments, time limits being very tertiary one. Volume is the number one thing.

Next question please.

Thank you. Our next question comes from the line of Richard Close with Canaccord Genuity. Please go ahead with your questions.

Yes, thanks for taking the questions. Congratulations. I guess my first question would be, where do you see the most opportunity right now if you think about your pipeline and maybe stuff that's brewing that's not necessarily in your pipeline. Do you see the domestic market or the international market being more fruitful?

Yeah, that’s always a great question Richard. I will say that the way we try to run the business is to always keep at a horse race between the two and I think our teams are after that. When I think about the growth opportunities, I really do think there are growth opportunities in all of our components. I think here you’ll see a shift in the demand on the healthcare side, all along we’ve said that the Affordable Care Act has gone a very long way to address the universality of healthcare and get everybody enrolled in healthcare plan. And I think we’ve managed to grow handsomely based upon that first chapter whether it’s running more to healthcare exchanges themselves or working with our clients, those that chose to advance their Medicaid programs. We do think as time goes on the two next chapters in healthcare in the US will be the quality and the cost of healthcare. And you can already see specific initiatives on the table moving in that direction. We have a number of programs more pilot in nature, I think the states are still trying to figure out what’s going to work best [ph], is it funding of services or what’s going to work with the duals or what’s going to work with the elders, but we have - as you can appreciate that we have a lot of additional work ahead of us in the US healthcare system. So I think that’s really the - those are the tailwinds the team is dealing with. In addition whether it’s Australia or the United Kingdom or other countries, they deal with the same issues. So we’re seeing a lot of attention on disabled populations and preliminary disabled population’s helping them get off welfare and stay off welfare and we’re also still trying to advance our healthcare business in those countries such as Australia where we have a very, very meaningful book of business on the human services side, but I see opportunity to further advance our healthcare business.

So that was going to be my next question, Australia and health expansion. Is there anything specific there or is this something that you're trying to germinate?

Well, I’m going to ask Bruce Caswell who just returned from Australia a short time ago to share his views on that one.

Sure, I’ll be happy to. I think the government of Australia is very much looking at how other governments around the world are serving various populations including [indiscernible] disabilities and they have major programs that they’re outlining that could change the way they handle the assessment process for individuals with disabilities for certain public benefits and ultimately even they’ve done a self-direction if you will kind of the classic idea of money follows the person, the self-direction of funding for individuals with disabilities. So it’s something we continue to take a look at. As we’ve said on number of occasions, our assessments business in general continues to grow and we continue to see demand from our clients to help with what we would refer pre-eligibility assessment determinations in the marketplace.

If I could slip one more in here, just a clarification on the comments with respect to three to five years and I guess it was with respect to the M&A. Are you is that implying that something like Acentia is not necessarily going to contribute much to growth in the coming years or just any clarification there.

The way we think about Acentia is that we do think it’s a growth opportunity. The strategic thinking on the Acentia MAXIMUS combination was that the existing book of business of Acentia which is biased towards ITO and clearly that it brings to the table not only a positive working relationship with many federal agencies that MAXIMUS [indiscernible] has not had a relationship with, but also contract vehicles necessary. So I expect that their core business will do reasonably well, but the real strategic opportunity and the really spot for the type of growth that we are striving deliver would be the combination of BPO and ITO and looking for opportunities that combine those two inside those agencies. So those are not the sort of RFPs that are on the table today and we think it’s going to take as we say two, three, maybe even up to five years to germinate those up to the RFP stage.

Okay, thank you. Congratulations.

Alright, great. Thank you very much. I think we’re going to wrap it up, but before we do end the call, I’d like to share a couple of final thoughts to kind of - to pull it together at least my perspective how I view our situation today and I would say this that fiscal ‘15 we expect will be another solid year and we expect that Q4 will be another solid quarter to bring its component piece together. I would say we’re very pleased with the integration of Acentia and Remploy, they’re going well and we’re pleased with the longer term opportunities they seem to be creating. And I’d also say investors, [ph] sure we’re tackling the startup challenges on the UK assessment contract head on and we’re making progress every day in that context. But I’d also say put it in perspective, we have several other large programs that are in the start-up phase and they’re going quite well. As Bruce mentioned the Affordable Care Act is shaping up to be steady state opportunity for that book of business and lastly I would say that we’re still on the planning cycle for fiscal ‘16. And while we all know there are headwinds and tailwinds always to consider, the most important thing from my perspective is that the macro trends continue to drive increases in the demand for our services and we remain very -