WASHINGTON, DC (August 22, 2017) — U.S. Market Advisors Law Group PLLC announces that a securities class action has been filed against MAXIMUS, Inc. (“Maximus” or the “Company”) (NYSE:MMS). The class action is on behalf of investors who acquired common stock of Maximus between October 30, 2014 and February 3, 2016.
Investors with losses have until October 6, 2017 to ask the Court to appoint you as Lead Plaintiff for the class. The Lead Plaintiff is a representative for absent members of the class. Investors do not need to seek appointment as Lead Plaintiff to share in any class recovery in this action. If you are a class member and there is a recovery for the class, you can share in that recovery as an absent class member. You may retain counsel of your choice to represent you in this action. Contact USMA Law Group to discuss this action.
Maximus is an administrator providing business process management to government health and human services agencies in the United States, Australia, Canada, Saudi Arabia, and the UK. Maximus focuses on administering government-sponsored benefit programs, such as the Affordable Care Act, Medicare, Medicaid, as well as welfare-to-work and child support programs. Maximus’ primary customer base includes federal, provincial, state, county, and municipal governments.
Allegations Against Maximus
The complaint alleges that, beginning on October 30, 2014, and continuing through the Class Period, Defendants assured investors that Maximus was meeting targets concerning the HAAS contract. In part because of the purported success that Maximus was slated to achieve during fiscal 2015 in the HAAS contract, Defendants also provided the Company’s shareholders with strong financial and operational guidance for fiscal 2015.
Maximus’ HAAS contract, however, encountered problems from the start. When Maximus’ HAAS results began to underperform investors’ expectations, Defendants made a series of reassuring statements about the contract. These statements included reassurances regarding: (1) the Company’s progress in meeting assessment targets; (2) the Company’s progress in recruiting healthcare professionals; and (3) the Company’s overall outlook and prospects for the HAAS contract.
As a result, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (i) in obtaining the HAAS contract, Maximus set an unattainable target number of healthcare professionals to recruit and an unattainable target number of assessments; (ii) throughout the HAAS contract, Maximus was struggling to recruit, train and ramp-up new health care staff to perform the assessments; (iii) the inability to meet its target number of healthcare recruits and target number of assessments, meant Maximus would not earn the performance-based incentive fees from the HAAS contract; and (iv) consequently, Defendants’ statements about the Company, its financial condition, and the outlook for its business, including statements about the HAAS contract and the amount of revenue the Company expected the contract to contribute, lacked a reasonable basis when made.
On August 7, 2015 Maximus announced its results for the third quarter of 2015, including, “some start-up challenges” with the HAAS contract. On this news, Maximus’ stock price declined by $9.57 per share over two trading sessions, or 13.8 percent.
Before the market opened on November 12, 2015, Maximus released downbeat results for the fourth quarter of 2015, including news that the HAAS contract delivered an operating loss of $4 million. On this news, Maximus’ stock price declined $15.03 per share that day, or 21.9 percent.
Finally, on February 4, 2016, Maximus issued a press release announcing its earnings for the first quarter of fiscal 2016, again missing expectations and confirming its inability to meet HAAS contract assessment targets. The Company reported that its Health Services Segment operating margin fell from 15.5 percent the prior year to 9.2 percent for the first quarter of fiscal 2016. The reduced earnings were based in part on weak performance of the HAAS contract, which “tempered operating margin.”
On this news, shares of Maximus common stock dropped $5.53 per share over two trading sessions, or 10.5 percent, wiping out approximately $356 million in market capitalization.
About USMA Law Group
U.S. Market Advisors Law Group PLLC is a national law firm based in Washington, D.C. The firm represents investors worldwide in U.S. securities class action lawsuits.
David P. Abel