Maximus (MMS) 10-Q 9 Aug 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2018	Aug. 06, 2018
Document and Entity Information
Entity Registrant Name	MAXIMUS INC
Entity Central Index Key	1,032,220
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		64,238,134

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Revenue	$ 597,855	$ 600,447	$ 1,833,790	$ 1,830,058
Cost of revenue	443,171	448,258	1,378,343	1,380,734
Gross profit	154,684	152,189	455,447	449,324
Selling, general and administrative expenses	69,588	68,308	211,706	202,302
Amortization of intangible assets	2,525	2,720	7,846	9,508
Restructuring costs	0	0	2,320	2,242
Gain on sale of a business	0	650	0	650
Operating income	82,571	81,811	233,575	235,922
Interest expense	85	458	410	2,051
Other income, net	2,249	1,306	3,928	1,986
Income before income taxes	84,735	82,659	237,093	235,857
Provision for income taxes	24,493	24,871	61,793	78,643
Net income	60,242	57,788	175,300	157,214
Income attributable to noncontrolling interests	381	870	856	1,117
Net income attributable to MAXIMUS	$ 59,861	$ 56,918	$ 174,444	$ 156,097
Basic earnings per share attributable to MAXIMUS (in dollars per share)	$ 0.91	$ 0.87	$ 2.65	$ 2.38
Diluted earnings per share attributable to MAXIMUS (in dollars per share)	0.91	0.86	2.64	2.36
Dividends paid per share (in dollars per share)	$ 0.045	$ 0.045	$ 0.135	$ 0.135
Weighted average shares outstanding:
Basic weighted average shares outstanding (in shares)	65,630	65,571	65,777	65,637
Diluted weighted average shares outstanding (in shares)	65,925	66,082	66,131	66,023

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 60,242	$ 57,788	$ 175,300	$ 157,214
Foreign currency translation adjustments	(10,459)	5,936	(7,275)	1,865
Interest rate hedge, net of income taxes of $-, $3, $- and $-, respectively	0	(4)	0	1
Comprehensive income	49,783	63,720	168,025	159,080
Comprehensive income attributable to noncontrolling interests	381	870	856	1,117
Comprehensive income attributable to MAXIMUS	$ 49,402	$ 62,850	$ 167,169	$ 157,963

CONSOLIDATED STATEMENTS OF COM4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Interest rate hedge, tax	$ 0	$ 3	$ 0	$ 0

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Current assets:
Cash and cash equivalents	$ 229,021	$ 166,252
Short-term investments	20,166	0
Accounts receivable — billed and billable, net of reserves of $3,507 and $6,843	398,751	394,338
Accounts receivable — unbilled	36,155	36,475
Income taxes receivable	5,480	4,528
Prepaid expenses and other current assets	49,703	55,649
Total current assets	739,276	657,242
Property and equipment, net	84,944	101,651
Capitalized software, net	22,379	26,748
Goodwill	400,904	402,976
Intangible assets, net	90,693	98,769
Deferred contract costs, net	14,025	16,298
Deferred compensation plan assets	33,184	28,548
Deferred income taxes	7,502	7,691
Other assets	8,152	10,739
Total assets	1,401,059	1,350,662
Current liabilities:
Accounts payable and accrued liabilities	98,486	122,083
Accrued compensation and benefits	80,049	105,667
Deferred revenue	50,739	71,722
Income taxes payable	3,595	4,703
Other liabilities	11,177	12,091
Total current liabilities	244,046	316,266
Deferred revenue, less current portion	22,601	28,182
Deferred income taxes	29,090	20,106
Deferred compensation plan liabilities, less current portion	32,354	30,707
Other liabilities	17,221	9,633
Total liabilities	345,312	404,894
Shareholders’ equity:
Common stock, no par value; 100,000 shares authorized; 64,248 and 65,137 shares issued and outstanding at June 30, 2018 and September 30, 2017, at stated amount, respectively	491,852	475,592
Accumulated other comprehensive loss	(34,894)	(27,619)
Retained earnings	594,901	492,112
Total MAXIMUS shareholders’ equity	1,051,859	940,085
Noncontrolling interests	3,888	5,683
Total equity	1,055,747	945,768
Total liabilities and equity	$ 1,401,059	$ 1,350,662

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Sep. 30, 2017
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable, current	$ 3,507	$ 6,843
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares outstanding	64,248,000	65,137,000
Common stock, shares issued	64,248,000	65,137,000

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operations:
Net income	$ 175,300	$ 157,214
Adjustments to reconcile net income to cash flows from operations:
Depreciation and amortization of property and equipment and capitalized software	39,902	43,416
Amortization of intangible assets	7,846	9,508
Deferred income taxes	8,874	8,614
Stock compensation expense	15,713	15,822
Gain on sale of a business	0	(650)
Change in assets and liabilities:
Accounts receivable — billed and billable	(6,789)	68,023
Accounts receivable — unbilled	312	(7,267)
Prepaid expenses and other current assets	5,506	5,944
Deferred contract costs	2,240	1,114
Accounts payable and accrued liabilities	(23,696)	(37,413)
Accrued compensation and benefits	(15,835)	(1,703)
Deferred revenue	(25,728)	(16,270)
Income taxes	5,913	5,370
Other assets and liabilities	(498)	375
Cash flows from operations	189,060	252,097
Cash flows from investing activities:
Purchases of property and equipment and capitalized software costs	(21,552)	(19,088)
Acquisition of part of noncontrolling interest	(157)	0
Proceeds from the sale of a business	0	1,035
Purchases of short-term investments	(19,996)	0
Other	275	485
Cash used in investing activities	(41,430)	(17,568)
Cash flows from financing activities:
Cash dividends paid to MAXIMUS shareholders	(8,801)	(8,754)
Repurchases of common stock	(61,987)	(28,858)
Tax withholding related to RSU vesting	(8,529)	(9,267)
Borrowings under credit facility	134,683	155,000
Repayment of credit facility and other long-term debt	(134,786)	(304,902)
Stock option exercises	0	370
Other	(4,058)	(1,225)
Cash used in financing activities	(83,478)	(197,636)
Effect of exchange rate changes on cash and cash equivalents	(1,383)	1,286
Net increase in cash and cash equivalents	62,769	38,179
Cash and cash equivalents, beginning of period	166,252	66,199
Cash and cash equivalents, end of period	$ 229,021	$ 104,378

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Accumulated Other Comprehensive Income/(Loss)	Retained Earnings	Noncontrolling Interest
Balance (in shares) at Sep. 30, 2016		65,223
Balance at Sep. 30, 2016	$ 753,140	$ 461,679	$ (36,169)	$ 323,571	$ 4,059
Increase (Decrease) in Shareholders' Equity
Net income	157,214			156,097	1,117
Foreign currency translation	1,865		1,865
Cash dividends	(9,451)			(8,754)	(697)
Dividends on RSUs		$ 261		(261)
Repurchases of common stock (in shares)		(558)
Repurchases of common stock	(28,858)			(28,858)
Stock compensation expense	15,822	$ 15,822
Tax withholding related to RSU vesting	(12)	$ (12)
Stock options exercised and RSUs vested (in shares)		189
Stock options exercised and RSUs vested	370	$ 370
Interest rate hedge, net of income taxes	1		1
Balance (in shares) at Jun. 30, 2017		64,854
Balance at Jun. 30, 2017	$ 890,091	$ 478,120	(34,303)	441,795	4,479
Balance (in shares) at Sep. 30, 2017	65,137	65,137
Balance at Sep. 30, 2017	$ 945,768	$ 475,592	(27,619)	492,112	5,683
Increase (Decrease) in Shareholders' Equity
Net income	175,300			174,444	856
Foreign currency translation	(7,275)		(7,275)
Cash dividends	(11,171)			(8,801)	(2,370)
Dividends on RSUs		$ 240		(240)
Repurchases of common stock (in shares)		(1,012)
Repurchases of common stock	(62,614)			(62,614)
Stock compensation expense	15,713	$ 15,713
Tax withholding related to RSU vesting	183	$ 183
Stock options exercised and RSUs vested (in shares)		123
Stock options exercised and RSUs vested	0	$ 0
Acquisition of part of noncontrolling interest	(157)	$ 124			(281)
Interest rate hedge, net of income taxes	$ 0
Balance (in shares) at Jun. 30, 2018	64,248	64,248
Balance at Jun. 30, 2018	$ 1,055,747	$ 491,852	$ (34,894)	$ 594,901	$ 3,888

Organization and Basis of Prese

Organization and Basis of Presentation	9 Months Ended
	Jun. 30, 2018
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. The results of operations for the three and nine months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2017 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. Certain financial results have been reclassified to conform with our current period presentation. 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. On an ongoing basis, we evaluate our 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 on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. These financial statements should be read in conjunction with the consolidated audited financial statements and the notes thereto at September 30, 2017 and 2016 and for each of the three years ended September 30, 2017 included in our Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on November 20, 2017 .

Segment Information

Segment Information	9 Months Ended
	Jun. 30, 2018
Segment Reporting [Abstract]
Segment Information	Segment Information The table below provides certain financial information for each of our business segments. Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2018 % (1) 2017 % (1) 2018 % (1) 2017 % (1) Revenue: Health Services $ 359,050 100 % $ 335,090 100 % $ 1,076,773 100 % $ 1,024,813 100 % U.S. Federal Services 112,226 100 % 131,589 100 % 361,536 100 % 418,257 100 % Human Services 126,579 100 % 133,768 100 % 395,481 100 % 386,988 100 % Total $ 597,855 100 % $ 600,447 100 % $ 1,833,790 100 % $ 1,830,058 100 % Gross profit: Health Services $ 97,254 27.1 % $ 83,269 24.8 % $ 286,517 26.6 % $ 247,957 24.2 % U.S. Federal Services 32,276 28.8 % 33,627 25.6 % 93,008 25.7 % 107,774 25.8 % Human Services 25,154 19.9 % 35,293 26.4 % 75,922 19.2 % 93,593 24.2 % Total $ 154,684 25.9 % $ 152,189 25.3 % $ 455,447 24.8 % $ 449,324 24.6 % Selling, general and administrative expense: Health Services $ 33,472 9.3 % $ 31,716 9.5 % $ 102,078 9.5 % $ 89,737 8.8 % U.S. Federal Services 17,399 15.5 % 17,757 13.5 % 51,587 14.3 % 56,379 13.5 % Human Services 17,685 14.0 % 18,925 14.1 % 57,009 14.4 % 55,827 14.4 % Other (4) 1,032 NM (90 ) NM 1,032 NM 359 NM Total $ 69,588 11.6 % $ 68,308 11.4 % $ 211,706 11.5 % $ 202,302 11.1 % Operating income: Health Services $ 63,782 17.8 % $ 51,553 15.4 % $ 184,439 17.1 % $ 158,220 15.4 % U.S. Federal Services 14,877 13.3 % 15,870 12.1 % 41,421 11.5 % 51,395 12.3 % Human Services 7,469 5.9 % 16,368 12.2 % 18,913 4.8 % 37,766 9.8 % Amortization of intangible assets (2,525 ) NM (2,720 ) NM (7,846 ) NM (9,508 ) NM Restructuring costs (2) — NM — NM (2,320 ) NM (2,242 ) NM Gain on sale of a business (3) — NM 650 NM — NM 650 NM Other (4) (1,032 ) NM 90 NM (1,032 ) NM (359 ) NM Total $ 82,571 13.8 % $ 81,811 13.6 % $ 233,575 12.7 % $ 235,922 12.9 % (1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.” (2) During fiscal years 2018 and 2017, we incurred costs in restructuring our United Kingdom Human Services business. See "Note 5. Supplemental disclosures" for more information. (3) In May 2016, we sold our K-12 Education business. In June 2017, we finalized the sale price and recognized a corresponding gain on sale. (4) Other costs and credits relate to selling, general and administrative expenses (SG&A) that do not relate directly to segment business activities. The majority of charges recorded in the periods above relate to two proposed disallowances by the Centers for Medicare and Medicaid Services. See "Note 5. Supplemental disclosures" for more information.

Earnings Per Share

Earnings Per Share	9 Months Ended
	Jun. 30, 2018
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) 2018 2017 2018 2017 Basic weighted average shares outstanding 65,630 65,571 65,777 65,637 Dilutive effect of employee stock options and unvested RSUs 295 511 354 386 Denominator for diluted earnings per share 65,925 66,082 66,131 66,023 All of our unvested restricted stock units (RSUs) are included in the calculations of dilution above.

Income Tax

Income Tax	9 Months Ended
	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Income Tax	Income Tax Our results for the three and nine months ended June 30, 2018 benefited from the estimated effects of the Tax Cuts and Jobs Act (the Act), which was signed on December 22, 2017 and was effective from January 1, 2018. The calculations of the effects of the Act are complicated by two factors. • Our U.S. federal income tax return for fiscal year 2017, which ended on September 30, 2017, was filed in July 2018. Certain estimates were refined between the first half of the fiscal year and the third quarter, when the U.S. federal income tax return was filed. • The Act includes a one-time “toll tax” on our undistributed and previously untaxed earnings in foreign locations. This exercise requires the gathering of detailed information previously not required to be filed with our U.S. federal tax returns; the U.S. Treasury Department will continue to provide interpretations and guidance to assist tax payers in calculating the toll tax. In addition, many U.S. states continue to issue their interpretations of the Act, which may change our estimates of our charge. The "toll" tax will be included in our U.S. federal income tax return for fiscal year 2018, which is expected to be filed in July 2019. Accordingly, the accounting for certain income tax effects of the Act is provisional. We believe that we have a reasonable basis for our estimates. Our effective income tax rate for the three and nine months ended June 30, 2018 was 28.9% and 26.1% , respectively, compared to our effective income tax rate for the three and nine months ended June 30, 2017 of 30.1% and 33.3% , respectively. The net effect of the Act reduced the effective income tax rate by approximately 8.6% and 9.3% for the three and nine months ended June 30, 2018, respectively. The Act has provided an estimated benefit of $0.09 and $0.32 of diluted earnings per share for the three and nine months ended June 30, 2018 , respectively. During the nine months ended June 30, 2018 and 2017 , we made income tax payments of $48.1 million and $65.5 million , respectively.

Supplemental disclosures

Supplemental disclosures	9 Months Ended
	Jun. 30, 2018
Supplemental Cash Flow Elements [Abstract]
Supplemental disclosures	Supplemental disclosures Under a resolution adopted in June 2018, the Board of Directors authorized the repurchase, at management's discretion, of up to an aggregate of $200 million of our common stock. This replaced a similar authorization adopted in August 2015. During the nine months ended June 30, 2018 , we repurchased approximately 1.0 million common shares at a cost of $62.6 million . During the nine months ended June 30, 2017 , we acquired 0.6 million common shares at a cost of $28.9 million . At June 30, 2018 , $197.8 million remained available for future stock repurchases. During the nine months ended June 30, 2018 , we granted 0.3 million RSUs to our employees. These awards will vest ratably over five years. During the nine months ended June 30, 2018 , we granted approximately 22,000 RSU's to members of our Board of Directors. These awards vest over one year. 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, and the life insurance investments at cash surrender value; changes in value are reported in the Consolidated Statement of Operations. At June 30, 2018 , the deferred compensation plan held $19.6 million of these investments. In July 2017, we acquired Revitalised Limited, a provider of digital health, fitness and wellbeing services in the United Kingdom. As part of the acquisition, we anticipated and recorded an additional payment to the sellers which was contingent upon certain milestones being achieved. These milestones have been reached and, accordingly, we made a payment of $1.7 million to settle our contingent consideration liability in full. This cash flow was recorded within financing operations. 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 accounts receivable balance includes both amounts invoiced and amounts that are ready to be invoiced and the funds are collectible within standard invoice terms. During the nine months ended June 30, 2017 , we undertook a restructuring of our United Kingdom Human Services operations as part of the ongoing integration of Remploy. During the nine months ended June 30, 2017 , we recorded restructuring costs of $2.2 million , principally severance expenses. During the nine months ended June 30, 2018 , we recorded additional restructuring costs of $2.3 million . As part of our work for the U.S. Federal Government and many states, we allocate costs to individual projects and segments using a methodology driven by the Federal Cost Accounting Standards. During fiscal year 2018, we updated our methodology for allocation of costs which resulted in certain costs which had been within cost of revenue now being classified as SG&A. If we had utilized the same methodology in fiscal year 2018 as we had in fiscal year 2017, we estimate that SG&A would have been lower by approximately $1.0 million and $3.5 million during the three and nine months ended June 30, 2018 , respectively. This change in methodology did not affect our operating income. Litigation On August 4, 2017, the Company and certain officers were named as defendants in a putative class action lawsuit filed in the U.S. District Court for the Eastern District of Virginia, Steamfitters Local 449 Pension Plan v. MAXIMUS . The plaintiff alleges the defendants made a variety of materially false and misleading statements, or failed to disclose material information, concerning the status of the Company’s Health Assessment Advisory Service project for the U.K. Department for Work and Pensions from the period of October 20, 2014 through February 3, 2016, and seeks damages to be proved at trial. We deny the allegations and intend to defend the matter vigorously. At this time, it is not possible to reasonably predict whether this matter will be permitted to proceed as a class or to reasonably estimate the value of the claims asserted and we are unable to estimate the potential loss or range of loss. A state Medicaid agency has been notified of two proposed disallowances by the Centers for Medicare and Medicaid Services (CMS) 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 districts under which we assisted the districts prepare and submit claims to the state Medicaid agency which, in turn, submitted claims for reimbursement to CMS. The state has asserted that its agreement with us requires us to reimburse the state for the amounts owed to CMS. However, our agreements with the school districts require them to reimburse us for such amounts, and therefore we believe the school districts are responsible for any amounts that ultimately must be refunded to CMS. We believe our exposure in this matter is limited to our fees associated with this work and that the school districts will be responsible for the remainder. We have established a reserve to cover our estimated fees earned from this engagement relating to the disallowances. We exited the federal healthcare-claiming business in 2009 and no longer provide the services at issue in this matter. No legal action has been initiated against MAXIMUS.

Debt

Debt	9 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
Debt	Debt Credit Facilities Our credit agreement provides for a revolving line of credit up to $400 million that may be used for revolving loans, swingline loans (subject to a sublimit of $5 million ), and to request letters of credit, subject to a sublimit of $50 million . The line of credit is available for general corporate purposes, including working capital, capital expenditures and acquisitions. Borrowings are permitted in currencies other than the U.S. Dollar. In September 2017, we extended the term of our credit agreement to September 2022, at which time all outstanding borrowings must be repaid. At June 30, 2018 , we had no borrowings under the credit agreement. At June 30, 2018 , we held two letters of credit under our credit agreement totaling $0.7 million . Each of these letters of credit may be called by vendors or customers in the event that we default under the terms of a contract, the probability of which we believe is remote. In addition, two letters of credit totaling $3.0 million , secured with restricted cash balances, are held with another financial institution to cover similar obligations to customers. Our credit agreement requires us to comply with certain financial covenants and other covenants including a maximum total leverage ratio and a minimum fixed charge coverage ratio. It also includes some restrictions on the payment of dividends where our debt exceeds a certain level. We were in compliance with all covenants as of June 30, 2018 and there are no restrictions on our ability to pay dividends. Derivative Arrangement In order to add stability to our interest expense and manage our exposure to interest rate movements, we may enter into derivative arrangements to fix payments on part of an outstanding loan balance. We agree to pay a fixed rate of interest to a financial institution and receive a balance equivalent to the floating rate payable. Our outstanding derivative instruments expired during fiscal year 2017. As this cash flow hedge was considered effective, the gains and losses in the fair value of this derivative instrument were reported in accumulated other comprehensive income (AOCI) in the consolidated statement of comprehensive income. Interest Payments During the nine months ended June 30, 2018 and 2017 , we made interest payments of less than $0.1 million and $1.9 million , respectively.

Recent accounting pronouncement

Recent accounting pronouncements	9 Months Ended
	Jun. 30, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Recent accounting pronouncements	Recent accounting pronouncements We are evaluating the effects of guidance issued in three significant areas of financial reporting. In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers. In addition, the FASB has issued additional updates covering technical items and changing the date of adoption. This new standard will change the manner in which we evaluate revenue recognition for all contracts with customers, although the effect of the changes on revenue recognition will vary from contract to contract. We will adopt this standard at the beginning of our 2019 fiscal year. The standard is required to be applied either retrospectively to each prior period presented (the full retrospective approach) or retrospectively with the cumulative effect of the initial application recognized at the date of initial application (the modified retrospective approach). While we previously disclosed that we anticipated using the full retrospective approach, we have further evaluated both approaches and have concluded that we will adopt the standard using the modified retrospective approach. We have established a cross-functional steering committee which includes representatives from across all our business and support segments. The steering committee is responsible for evaluating the impact of the standard on our operations including accounting, taxation, internal audit and financial systems. Our approach to analyzing these impacts includes reviewing our current accounting policies and practices to identify potential differences that will result from applying the requirements of the new standard to our existing contracts. We are in the process of evaluating the changes needed to our business processes, systems and controls in order to support revenue recognition and the related disclosures under the new standard. While we are still evaluating the changes that the new standard will have, we have identified areas where we believe the standard will have an effect; most notably, we expect that contracts where we have a contingent fee based upon achievement of a target over several months, we will see acceleration in our recognition of revenue. At this time, the most significant effect is expected to be within our Human Services Segment where we have welfare-to-work contracts which include incentive payments where participants reach employment milestones, which are typically remaining in employment for a period of three to twelve months. At present, we recognize these incentive payments only when the outcome has been achieved; under the new standard, we will recognize revenue over the period where we are servicing the participants. This will require us to make estimates of future outcome fees and the periods over which these fees will be earned. The new standard requires additional disclosures regarding our contracts with customers, including disclosure of our remaining unsatisfied performance obligations, which we are continuing to assess. The cumulative catch-up adjustment will be recorded through shareholders' equity on October 1, 2018; this total is still being quantified. In February 2016, the FASB issued ASU No. 2016-02, Leases . The new standard requires that assets and liabilities arising under leases be recognized on the balance sheet. The standard also requires additional quantitative and qualitative disclosures that provide the amount, timing and uncertainty of cash flows relating to lease arrangements. This standard is effective for annual reporting periods beginning after December 15, 2018, using a modified retrospective approach. The modified retrospective approach requires retrospective application to the earliest period presented in the respective financial statements. This approach also provides practical expedients related to leases that commenced prior to the effective date and allows the use of hindsight when evaluating lease options. In July 2018, the FASB amended the standard to give companies another option for transition. We will adopt this standard at the beginning of our 2020 fiscal year. We are currently evaluating the likely effects on our business. 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 the manner of the calculation of any resulting impairment. Under existing guidance, we would calculate goodwill for each of our reporting units by calculating the fair value of all existing assets and liabilities within that reporting unit and comparing this to the fair value of the reporting unit; to the extent that this difference is less than our existing goodwill balance related to that reporting unit, we would record an impairment. The new standard will require us to calculate goodwill based upon the difference between the fair value and reported value of a reporting unit. This standard would be effective for our 2021 fiscal year, although early adoption is permitted. The impact of the new standard will depend on the outcomes of future goodwill impairment tests. In August and November 2016, the FASB issued two ASUs pertaining to the statement of cash flows; ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments and ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . These updates will requires us to make certain changes to the presentation of our cash flows. The most notable change will be the removal of changes in restricted cash from our cash flows and the inclusion of restricted cash balances in our opening and closing reconciling balances. We will adopt these updates during the first quarter of our 2019 fiscal year on a retroactive basis. We hold cash that we believe is restricted in use in a number of locations and for a number of purposes, including collateral for letters of credit, lease agreements and corporate credit cards. Although these updates will affect our cash flows, we do not believe they will have a significant effect on our reported cash flows. With the exception of the new accounting standards discussed above, there have been no new accounting pronouncements that have significance, or potential significance, to the Company's consolidated financial statements.

Subsequent event

Subsequent event	9 Months Ended
	Jun. 30, 2018
Subsequent Events [Abstract]
Subsequent Event	Subsequent events On July 6, 2018 , our Board of Directors declared a quarterly cash dividend of $0.045 for each share of our common stock outstanding. The dividend is payable on August 31, 2018 to shareholders of record on August 15, 2018 . In August 2018, our Board of Directors announced its intention to increase quarterly dividend payments beginning in fiscal year 2019 to $0.25 for each share of common stock outstanding.

Organization and Basis of Pre17

Organization and Basis of Presentation (Policies)	9 Months Ended
	Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Accounting	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. The results of operations for the three and nine months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2017 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. Certain financial results have been reclassified to conform with our current period presentation.
Use of 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. On an ongoing basis, we evaluate our 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 on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.
New accounting pronouncements	Recent accounting pronouncements We are evaluating the effects of guidance issued in three significant areas of financial reporting. In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers. In addition, the FASB has issued additional updates covering technical items and changing the date of adoption. This new standard will change the manner in which we evaluate revenue recognition for all contracts with customers, although the effect of the changes on revenue recognition will vary from contract to contract. We will adopt this standard at the beginning of our 2019 fiscal year. The standard is required to be applied either retrospectively to each prior period presented (the full retrospective approach) or retrospectively with the cumulative effect of the initial application recognized at the date of initial application (the modified retrospective approach). While we previously disclosed that we anticipated using the full retrospective approach, we have further evaluated both approaches and have concluded that we will adopt the standard using the modified retrospective approach. We have established a cross-functional steering committee which includes representatives from across all our business and support segments. The steering committee is responsible for evaluating the impact of the standard on our operations including accounting, taxation, internal audit and financial systems. Our approach to analyzing these impacts includes reviewing our current accounting policies and practices to identify potential differences that will result from applying the requirements of the new standard to our existing contracts. We are in the process of evaluating the changes needed to our business processes, systems and controls in order to support revenue recognition and the related disclosures under the new standard. While we are still evaluating the changes that the new standard will have, we have identified areas where we believe the standard will have an effect; most notably, we expect that contracts where we have a contingent fee based upon achievement of a target over several months, we will see acceleration in our recognition of revenue. At this time, the most significant effect is expected to be within our Human Services Segment where we have welfare-to-work contracts which include incentive payments where participants reach employment milestones, which are typically remaining in employment for a period of three to twelve months. At present, we recognize these incentive payments only when the outcome has been achieved; under the new standard, we will recognize revenue over the period where we are servicing the participants. This will require us to make estimates of future outcome fees and the periods over which these fees will be earned. The new standard requires additional disclosures regarding our contracts with customers, including disclosure of our remaining unsatisfied performance obligations, which we are continuing to assess. The cumulative catch-up adjustment will be recorded through shareholders' equity on October 1, 2018; this total is still being quantified. In February 2016, the FASB issued ASU No. 2016-02, Leases . The new standard requires that assets and liabilities arising under leases be recognized on the balance sheet. The standard also requires additional quantitative and qualitative disclosures that provide the amount, timing and uncertainty of cash flows relating to lease arrangements. This standard is effective for annual reporting periods beginning after December 15, 2018, using a modified retrospective approach. The modified retrospective approach requires retrospective application to the earliest period presented in the respective financial statements. This approach also provides practical expedients related to leases that commenced prior to the effective date and allows the use of hindsight when evaluating lease options. In July 2018, the FASB amended the standard to give companies another option for transition. We will adopt this standard at the beginning of our 2020 fiscal year. We are currently evaluating the likely effects on our business. 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 the manner of the calculation of any resulting impairment. Under existing guidance, we would calculate goodwill for each of our reporting units by calculating the fair value of all existing assets and liabilities within that reporting unit and comparing this to the fair value of the reporting unit; to the extent that this difference is less than our existing goodwill balance related to that reporting unit, we would record an impairment. The new standard will require us to calculate goodwill based upon the difference between the fair value and reported value of a reporting unit. This standard would be effective for our 2021 fiscal year, although early adoption is permitted. The impact of the new standard will depend on the outcomes of future goodwill impairment tests. In August and November 2016, the FASB issued two ASUs pertaining to the statement of cash flows; ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments and ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . These updates will requires us to make certain changes to the presentation of our cash flows. The most notable change will be the removal of changes in restricted cash from our cash flows and the inclusion of restricted cash balances in our opening and closing reconciling balances. We will adopt these updates during the first quarter of our 2019 fiscal year on a retroactive basis. We hold cash that we believe is restricted in use in a number of locations and for a number of purposes, including collateral for letters of credit, lease agreements and corporate credit cards. Although these updates will affect our cash flows, we do not believe they will have a significant effect on our reported cash flows. With the exception of the new accounting standards discussed above, there have been no new accounting pronouncements that have significance, or potential significance, to the Company's consolidated financial statements.

Segment Information (Tables)

Segment Information (Tables)	9 Months Ended
	Jun. 30, 2018
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. Three Months Ended June 30, Nine Months Ended June 30, (dollars in thousands) 2018 % (1) 2017 % (1) 2018 % (1) 2017 % (1) Revenue: Health Services $ 359,050 100 % $ 335,090 100 % $ 1,076,773 100 % $ 1,024,813 100 % U.S. Federal Services 112,226 100 % 131,589 100 % 361,536 100 % 418,257 100 % Human Services 126,579 100 % 133,768 100 % 395,481 100 % 386,988 100 % Total $ 597,855 100 % $ 600,447 100 % $ 1,833,790 100 % $ 1,830,058 100 % Gross profit: Health Services $ 97,254 27.1 % $ 83,269 24.8 % $ 286,517 26.6 % $ 247,957 24.2 % U.S. Federal Services 32,276 28.8 % 33,627 25.6 % 93,008 25.7 % 107,774 25.8 % Human Services 25,154 19.9 % 35,293 26.4 % 75,922 19.2 % 93,593 24.2 % Total $ 154,684 25.9 % $ 152,189 25.3 % $ 455,447 24.8 % $ 449,324 24.6 % Selling, general and administrative expense: Health Services $ 33,472 9.3 % $ 31,716 9.5 % $ 102,078 9.5 % $ 89,737 8.8 % U.S. Federal Services 17,399 15.5 % 17,757 13.5 % 51,587 14.3 % 56,379 13.5 % Human Services 17,685 14.0 % 18,925 14.1 % 57,009 14.4 % 55,827 14.4 % Other (4) 1,032 NM (90 ) NM 1,032 NM 359 NM Total $ 69,588 11.6 % $ 68,308 11.4 % $ 211,706 11.5 % $ 202,302 11.1 % Operating income: Health Services $ 63,782 17.8 % $ 51,553 15.4 % $ 184,439 17.1 % $ 158,220 15.4 % U.S. Federal Services 14,877 13.3 % 15,870 12.1 % 41,421 11.5 % 51,395 12.3 % Human Services 7,469 5.9 % 16,368 12.2 % 18,913 4.8 % 37,766 9.8 % Amortization of intangible assets (2,525 ) NM (2,720 ) NM (7,846 ) NM (9,508 ) NM Restructuring costs (2) — NM — NM (2,320 ) NM (2,242 ) NM Gain on sale of a business (3) — NM 650 NM — NM 650 NM Other (4) (1,032 ) NM 90 NM (1,032 ) NM (359 ) NM Total $ 82,571 13.8 % $ 81,811 13.6 % $ 233,575 12.7 % $ 235,922 12.9 % (1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.” (2) During fiscal years 2018 and 2017, we incurred costs in restructuring our United Kingdom Human Services business. See "Note 5. Supplemental disclosures" for more information. (3) In May 2016, we sold our K-12 Education business. In June 2017, we finalized the sale price and recognized a corresponding gain on sale. (4) Other costs and credits relate to selling, general and administrative expenses (SG&A) that do not relate directly to segment business activities. The majority of charges recorded in the periods above relate to two proposed disallowances by the Centers for Medicare and Medicaid Services. See "Note 5. Supplemental disclosures" for more information.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	9 Months Ended
	Jun. 30, 2018
Earnings Per Share [Abstract]
Schedule of the components of basic and diluted 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) 2018 2017 2018 2017 Basic weighted average shares outstanding 65,630 65,571 65,777 65,637 Dilutive effect of employee stock options and unvested RSUs 295 511 354 386 Denominator for diluted earnings per share 65,925 66,082 66,131 66,023

Segment Information (Details)

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue:
Revenue	$ 597,855	$ 600,447	$ 1,833,790	$ 1,830,058
Revenue (as a percent)	100.00%	100.00%	100.00%	100.00%
Gross profit:
Gross profit	$ 154,684	$ 152,189	$ 455,447	$ 449,324
Gross profit (as a percent)	25.90%	25.30%	24.80%	24.60%
Selling, general and administrative expense:
Selling, general and administrative expenses	$ 69,588	$ 68,308	$ 211,706	$ 202,302
Selling, general, and administrative expense (as a percent)	11.60%	11.40%	11.50%	11.10%
Operating income:
Operating income	$ 82,571	$ 81,811	$ 233,575	$ 235,922
Operating income (as a percent)	13.80%	13.60%	12.70%	12.90%
Amortization of intangible assets	$ (2,525)	$ (2,720)	$ (7,846)	$ (9,508)
Restructuring cost	0	0	(2,320)	(2,242)
Gain on sale of a business	0	650	0	650
Segment Reconciling Items
Operating income:
Amortization of intangible assets	(2,525)	(2,720)	(7,846)	(9,508)
Restructuring cost	0	0	(2,320)	(2,242)
Gain on sale of a business	0	650	0	650
Other
Selling, general and administrative expense:
Selling, general and administrative expenses	1,032	(90)	1,032	359
Operating income:
Operating income	(1,032)	90	(1,032)	(359)
Health Services | Operating Segments
Revenue:
Revenue	$ 359,050	$ 335,090	$ 1,076,773	$ 1,024,813
Revenue (as a percent)	100.00%	100.00%	100.00%	100.00%
Gross profit:
Gross profit	$ 97,254	$ 83,269	$ 286,517	$ 247,957
Gross profit (as a percent)	27.10%	24.80%	26.60%	24.20%
Selling, general and administrative expense:
Selling, general and administrative expenses	$ 33,472	$ 31,716	$ 102,078	$ 89,737
Selling, general, and administrative expense (as a percent)	9.30%	9.50%	9.50%	8.80%
Operating income:
Operating income	$ 63,782	$ 51,553	$ 184,439	$ 158,220
Operating income (as a percent)	17.80%	15.40%	17.10%	15.40%
U.S. Federal Services | Operating Segments
Revenue:
Revenue	$ 112,226	$ 131,589	$ 361,536	$ 418,257
Revenue (as a percent)	100.00%	100.00%	100.00%	100.00%
Gross profit:
Gross profit	$ 32,276	$ 33,627	$ 93,008	$ 107,774
Gross profit (as a percent)	28.80%	25.60%	25.70%	25.80%
Selling, general and administrative expense:
Selling, general and administrative expenses	$ 17,399	$ 17,757	$ 51,587	$ 56,379
Selling, general, and administrative expense (as a percent)	15.50%	13.50%	14.30%	13.50%
Operating income:
Operating income	$ 14,877	$ 15,870	$ 41,421	$ 51,395
Operating income (as a percent)	13.30%	12.10%	11.50%	12.30%
Human Services | Operating Segments
Revenue:
Revenue	$ 126,579	$ 133,768	$ 395,481	$ 386,988
Revenue (as a percent)	100.00%	100.00%	100.00%	100.00%
Gross profit:
Gross profit	$ 25,154	$ 35,293	$ 75,922	$ 93,593
Gross profit (as a percent)	19.90%	26.40%	19.20%	24.20%
Selling, general and administrative expense:
Selling, general and administrative expenses	$ 17,685	$ 18,925	$ 57,009	$ 55,827
Selling, general, and administrative expense (as a percent)	14.00%	14.10%	14.40%	14.40%
Operating income:
Operating income	$ 7,469	$ 16,368	$ 18,913	$ 37,766
Operating income (as a percent)	5.90%	12.20%	4.80%	9.80%

Earnings Per Share (Details)

Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Earnings Per Share [Abstract]
Basic weighted average shares outstanding (in shares)	65,630	65,571	65,777	65,637
Dilutive effect of employee stock options and unvested RSUs (in shares)	295	511	354	386
Diluted weighted average shares outstanding (in shares)	65,925	66,082	66,131	66,023

Income Tax (Details)

Income Tax (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Effective income tax rate reconciliation, percent	28.90%	30.10%	26.10%	33.30%
Effect of adjustments related to the Tax Cuts And Jobs Act Of 2017, income (decrease) in the effective income tax rate	(8.60%)		(9.30%)
Tax cuts and jobs act of 2017, income tax benefits on earnings per share, diluted	$ 0.09		$ 0.32
Income taxes paid			$ 48.1	$ 65.5

Supplemental disclosures (Detai

Supplemental disclosures (Details) - USD ($) shares in Thousands	Jul. 31, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Payments for Repurchase of Equity [Abstract]
Repurchases of common stock				$ 62,614,000	$ 28,858,000
Retirement Benefits [Abstract]
Payment for contingent consideration liability, financing activities	$ 1,700,000
Selling, general and administrative expense:
Change in selling, general and administrative expenses		$ 69,588,000	$ 68,308,000	211,706,000	$ 202,302,000
Loss Contingency, Information about Litigation Matters [Abstract]
Loss contingency, maximum potential loss		31,000,000		$ 31,000,000
Restricted Stock Units (RSUs)
Employee Benefits and Share-based Compensation, Noncash [Abstract]
Granted (in shares)				300
Vesting period				5 years
Common Stock
Payments for Repurchase of Equity [Abstract]
Common shares repurchased				1,012	558
United Kingdom
Restructuring Charges [Abstract]
Restructuring charges				$ 2,300,000	$ 2,200,000
Mutual Fund
Retirement Benefits [Abstract]
Investments in mutual funds		19,600,000		19,600,000
Stock Repurchase Program, June 2018
Payments for Repurchase of Equity [Abstract]
Stock repurchase programs, authorized amount		200,000,000		$ 200,000,000
Stock Repurchase Program, June 2018 | Common Stock
Payments for Repurchase of Equity [Abstract]
Common shares repurchased				1,000
Repurchases of common stock				$ 62,600,000
Stock Repurchase Program, August 2015 | Common Stock
Payments for Repurchase of Equity [Abstract]
Common shares repurchased					600
Repurchases of common stock					$ 28,900,000
Stock Repurchase Authorized Program, June 2018
Payments for Repurchase of Equity [Abstract]
Amount remaining available for future stock repurchases		$ 197,800,000		197,800,000
Board of Directors | Restricted Stock Units (RSUs)
Employee Benefits and Share-based Compensation, Noncash [Abstract]
Granted (in shares)		22
Vesting period		1 year
Estimated Revision Had Accounting Principle Been Adopted Previous Fiscal Year
Selling, general and administrative expense:
Change in selling, general and administrative expenses		$ (1,000,000)		$ (3,500,000)

Debt (Details)

Debt (Details)	9 Months Ended
	Jun. 30, 2018USD ($)letter_of_credit	Jun. 30, 2017USD ($)
Credit Agreement Expiring 2022
Debt Instrument [Line Items]
Interest paid	$ 100,000	$ 1,900,000
Letters of Credit
Debt Instrument [Line Items]
Number of letters of credit issued | letter_of_credit	2
Outstanding borrowings	$ 700,000
Letters of Credit (Other than Revolving Credit Agreement)
Debt Instrument [Line Items]
Number of letters of credit issued | letter_of_credit	2
Outstanding borrowings	$ 3,000,000
Line of Credit | Credit Agreement Expiring 2022 | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	400,000,000
Line of Credit | Credit Agreement Expiring 2022 | Bridge Loan
Debt Instrument [Line Items]
Maximum borrowing capacity	5,000,000
Line of Credit | Credit Agreement Expiring 2022 | Letters of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 50,000,000

Subsequent event (Details)

Subsequent event (Details) - Subsequent Event - $ / shares	Aug. 31, 2018	Aug. 15, 2018	Aug. 09, 2018	Jul. 06, 2018
Subsequent Event [Line Items]
Dividend declared date				Jul. 6, 2018
Cash dividend declared (in dollars per share)				$ 0.045
Dividends payable date	Aug. 31, 2018
Dividends payable date of record		Aug. 15, 2018
Cash dividend announced (in dollars per share)			$ 0.25