Maximus, Inc. Q2 FY2024 Earnings Call

Greetings, and welcome to the Maximus Fiscal 2024 Second Quarter Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Batt, Vice President of Investor Relations and ESG for Maximus. Thank you, Ms. Batt, you may begin.

Good morning, and thanks for joining us. With me today is Bruce Caswell, President and CEO; David Mutryn, CFO; and James Francis, Vice President of Investor Relations. I'd 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. Actual events and results may differ materially as a result of risks we face, including those discussed in Item 1A of our most recent Forms 10-Q and 10-K. We encourage you to review the information contained in our recent filings with the SEC and our earnings press release. The company does not assume any obligation to revise or update these forward-looking statements to reflect subsequent events or circumstances, except as required by law. Today's presentation also contains non-GAAP financial information. Management uses this information internally to analyze results and believes it may be informative to investors, engaging the quality of our financial performance, identifying trends and providing meaningful period-to-period comparisons. For a reconciliation of the non-GAAP measures presented, please see the company's most recent Forms 10-Q and 10-K. And with that, I'll hand the call over to David.

Thanks, Jessica, and good morning. Our second quarter results were exceptionally strong, driving the second consecutive raise in our fiscal 2024 guidance. Demand remains high across our programs, which elevated volumes this quarter and, perhaps more importantly, is indicative of stability returning following the disruptive years of the pandemic. We are also acutely focused on cost management, which positively impacted this quarter and has added potential to further improve our bottom line in future periods. Turning to results, Maximus reported revenue of $1.35 billion for the second quarter of fiscal year 2024, representing 11.7% year-over-year growth or 12.6% on an organic basis. Similar to last quarter, growth was driven by expanded programs in the U.S. Federal Services segment and a combination of resumed and expanded programs in the U.S. Services segment. Adjusted operating income margin was 11.1%, and adjusted EPS was $1.57 for the quarter, compared to 7.2% and $0.81, respectively, for the prior year period. By our estimations, we set a high mark for earnings this quarter, with the strength coming from no single area, but rather across our portfolio of domestic work. A portion of the overdelivery in the quarter came from extra volumes in U.S. Services tied to Medicaid redetermination. For the U.S. Federal Services segment, revenue increased 20.1% to $702 million, driven by volume growth on expanded programs, including the VA Medical Disability Examination, or MDE, contracts. The operating income margin for U.S. Federal Services in the second quarter was 11.9%, compared to 8.2% in the prior year period. The segment margin this quarter was slightly better than expected, thanks to our MDE contracts exceeding their production goals and continued execution in an environment with high demand for assessments. For the U.S. Services segment, revenue increased 8.1% to $486 million, also all organic. A portion of the growth stemmed from resumed Medicaid redetermination activities, which weren't present last year. The U.S. Services operating income margin was 14.0% in the second quarter of this year. It's worth noting that this quarter's margin of 14.0% is likely the high watermark for the segment, at least in the near term, considering our longer-term target margin for this segment is 11% to 14%. As I mentioned earlier, part of this segment's overperformance originated from extra volumes tied to the restart of Medicaid redetermination, which has been ongoing for the last several quarters. We continue to forecast light segment margin normalization after the second quarter as the relatively limited amount of extra volumes conclude, which would mean landing closer to the middle of that 11% to 14% margin range for the latter half of the year. That said, the outlook is slightly improved for the back half as well, driven by improvements in other core areas of the business. Compared to this time last year, we are quite pleased that the segment is reflecting stabilized operations after significant disruption during the pandemic. For the outside U.S. segment, revenue decreased 7.2% year-over-year to $161 million for the quarter. Most of the decline was attributable to less revenue following completed divestitures to date, while the rest of the segment was flat on an organic basis. The segment made a small profit of $0.7 million compared to an operating loss of $3.7 million in the prior year period. Our commitment to reshape this segment is in progress, and we remain on target this fiscal year. In the meantime, recent results demonstrate reduced volatility in the employment services portion of the segment now that the pandemic is behind us, and we expect this trend to continue. Cash provided by operating activities for the second quarter of this year was $130 million, and free cash flow was $105 million. DSO finished the quarter at 62 days. Our free cash flow guidance for the rest of the year has increased due to the improved earnings forecast. We ended the second quarter with total debt of $1.22 billion, and our net debt-to-EBITDA ratio improved from 2.1x to 1.7x. As a reminder, this ratio is the debt net of allowed cash to adjusted EBITDA for the last 12 months as calculated according to our credit agreement. Our long-term target debt ratio remains 2 to 3x. However, in the current interest rate environment, our bias is toward the lower end of that range. We are now below that range and are comfortable in the near term, continuing to pay down to build capacity for future M&A while also maintaining an opportunistic share repurchase program. On that front, post-quarter end, in the month of April, we repurchased nearly $20 million worth of shares. Turning to fiscal year 2024, we are pleased to raise guidance for the second time with increases to both the top and bottom line guides. Revenue is now expected to be between $5.15 billion and $5.25 billion, which is up $75 million at the midpoint compared to the previous guidance. Adjusted operating income is estimated to be between $540 million and $560 million, an increase of over $34 million from prior guidance using the midpoint. Adjusted EPS, excluding intangibles amortization and divestiture-related charges, is now projected to be between $5.65 and $5.85 per share. Using the midpoint, this reflects a $0.40 increase from prior guidance and up $0.55 from our initial guidance in November. As a result of the improved earnings forecast, we are raising free cash flow guidance to between $330 million and $370 million for fiscal 2024. The improved outlook reflects higher expectations for both organic revenue growth and margin. At the guidance midpoint, organic growth is projected to be nearly 7%, up from 5% in prior guidance, and adjusted OI margin is 10.6%, up from 10.0% in prior guidance. Let me add some color on earnings in the back half of the year. We expect higher earnings in our fiscal third quarter compared to the fourth quarter due to a combination of factors in our U.S. Federal and U.S. Services segment. First, we are planning some investment costs in the U.S. Federal segment in the fourth quarter, which will begin driving further operational efficiency in fiscal year 2025. On a full-year basis, the Federal segment margin should be approximately 12%. Second, for the U.S. Services segment, as mentioned earlier, we expect this segment's margin to be more in the middle of the 11% to 14% target range for the back half of the year as volumes related to Medicaid redeterminations continue to moderate. Given the strong first half, the segment margin should be approximately 13% on a full-year basis. The outside U.S. segment remains on track to be slightly above breakeven for the full year, assuming status quo for the current footprint. We do expect further shaping of the segment to occur this fiscal year to deliver consistent profitability. A few other assumptions for fiscal 2024 include interest expense of approximately $77 million and intangibles amortization expense of approximately $89 million. To conclude, I would like to congratulate the entire Maximus team on executing another terrific quarter and reaffirm my comments on prior calls that the business is healthy, with the ability to build momentum from previous quarters. The domestic segments both hit the upper ends of their long-term margin targets this quarter, demonstrating the business has the earnings power that we have long signaled. Work remains on the outside U.S. segment, and we have been clear that action in the remaining half of the year is a management priority. While we have been quite successful in navigating a period of higher rebid activity, there are two contracts that have some unique circumstances that Bruce will discuss further and do not change our positive view of the business nor disrupt the momentum we have built. Finally, our balance sheet is very strong as our debt ratio now sits below our long-term target range. This provides us flexibility and capacity to execute on our capital allocation priorities. With that, I'll hand the call over to Bruce.

Thanks, David, and good morning. As David presented, we have just completed a very strong quarter. Revenue grew 12.6% on an organic basis. Adjusted EPS was $1.57, up from $0.81 for the prior year period. Adjusted operating margin continues to meet our target range of 10% to 14%, with updated guidance now implying a 10.6% margin for full fiscal year 2024. Finally, we're increasing guidance for the remainder of the fiscal year. This is a notable accomplishment for the company as a whole, following our solid first quarter. Congratulations to our program teams and our critical support functions, all of whom remained focused on quality delivery and are committed to meeting the needs of our clients. For the last several quarters, the company's top-line revenue growth has been driven by expansion on current programs. This is not new for us. Building solid customer relationships through quality delivery has reliably enabled our teams to increase volumes and expand scope, ultimately benefiting our top and bottom lines. This quarter, in particular, we continue to see increased volumes in our VES business, where, as David mentioned, MDE claims exceeded their production goals. Growing current programs, including movement into near adjacencies, is fundamental to the Maximus business model. That said, we're also keenly focused on new work wins, which underpin our long-term growth goals. In this vein, and in the context of our Maximus Forward initiative, we are making investments in our business development, capture and proposal teams, and their supporting tools to help ensure their success. Across all segments, we have made a number of key hires. These leaders come to us with years of experience and proven capabilities. More specifically, as part of a reorganization within our U.S. Federal capture and proposal teams, our leaders are now aligned to the market areas and agencies where they bring the most expertise. This alignment allows heightened focus on the customer, enabling us to build better relationships and gain a deeper understanding of our clients' needs. We are seeing early successes with some of the investments made thus far. Shortly after the quarter closed, we were awarded a few contracts that align well with our strategy. We were awarded a $70 million single-award BPA with the Department of Energy, or DOE, Office of Intelligence and Counterintelligence, providing specialized software application development, technical advisory and consulting services. Our support sits at the core of a crucial mission within the DOE enterprise at a pivotal moment for the agency. Security of our nation's critical infrastructure is an imperative, and Maximus will provide support at the nexus of DOE headquarters, the National Labs, and the broader intelligence community. Also in April, we were awarded our first task order on the OPM Customer Support Center, or CSC BPA, valued at nearly $21 million over three years, including option periods. This win launches our support for OPM's expanded mission to provide benefits enrollment services for certain Federal agencies, beginning with U.S. Postal Service employees. Under the task order, we will be building out a modern cloud-based contact center platform and delivering customer support services, delivering both staffed operations and innovative technology. The OPM CSC task order fully takes advantage of our recently announced Maximus Total Experience Management, or TXM, solution. The TXM solution supports our customer services digitally enabled strategy pillar, which aims to elevate customer experience to achieve higher levels of satisfaction, performance, and outcomes through intelligent automation and cognitive computing. TXM implements our strategy by helping federal agencies deliver trusted information and government services simply, consistently, and securely. This solution seamlessly integrates people, experience, data insights, and secure technologies into one digitally powered platform to reimagine government service delivery seamlessly across phone, text, and chat channels. While on the topic of new wins, let me turn to our award metrics and pipeline. For the second quarter of fiscal 2024, signed awards totaled $568 million of total contract value. Further, at March 31, there were $797 million worth of contracts that had been awarded but not yet signed. These awards translate into a book-to-bill of approximately 1.1x for the trailing 12-month period. Our pipeline at March 31 was $37.8 billion compared to $37.7 billion reported in the first quarter of fiscal 2024. The March 31 pipeline is comprised of approximately $1.31 billion in proposals pending, $987 million in proposals in preparation, and $35.5 billion in opportunities tracking. Of our total pipeline of sales opportunities, approximately 75% represents new work. Additionally, 56% of the $37.8 billion total pipeline is attributable to our U.S. Federal Services segment. Our pipeline figures are reported as of March 31. As a result, they do not include two important rebids that we were tracking, but on which we have greater clarity today. The first is our contact center operations contract with the Centers for Medicare and Medicaid Services, which we discussed at length last quarter. CMS has recently reported that the RFP is expected to be released on or around May 16. As a reminder, CMS is recompeting the program earlier than expected, with the expressed purpose of including a labor harmony agreement requirement. While we, and other industry stakeholders, have respectfully communicated our disagreement with this decision, we, of course, remain committed to our customer and the citizens we serve as this matter runs its course. We have, and will continue to, provide best-in-class customer service to CMS and the tens of millions of Americans we interact with each and every day, most of whom are senior citizens. Since assuming operational responsibility for the CCO contract, we have consistently met or exceeded all contractual service levels with uninterrupted operations leading to the highest independently measured customer satisfaction in the program's history, while accommodating occasional labor organizing events, which we have unequivocally respected. The second point I will make pertains to our medical disability exams contracts with the Veterans Benefit Administration, or VBA. Several of these contracts will also be up for rebid later this year. The early rebid is required because the contracts in place include a ceiling on the claims volume. As we have communicated, volumes have increased significantly since the passing of the PACT Act. Therefore, the VBA must recompete some, but not all, of the contracted regions in which we work. We remain optimistic about the outcome, given our strong relationship with the VBA, demonstrated delivery capabilities, and our ongoing investments in operations. Our ability to deliver high-quality exams at scale in a complex programmatic and operational environment positions us well to remain a committed partner to the customer and the veterans we are fortunate to serve. Returning to the success of the quarter, David shared that our adjusted operating income margin forecast is a healthy 60 basis points improvement for the full year. That's attributable in part to the strong second quarter results, where adjusted margin was 11.1%. Some of this success is driven by the Maximus Forward initiatives I've mentioned on recent earnings calls. Fundamentally, this effort is a structured evaluation of the design, processes, and resources that drive our delivery. We've taken a hard look at both client-facing programs and our corporate functions, asking tough questions, promoting innovative ideas, and making hard but necessary decisions. Example initiatives we've shared with you include the AI Agent Assist and AI training pilots presented last quarter, currently in progress and showing promising results. The hiring of our Chief Digital and Information Officer, or CDIO, was an early decision driven by Maximus Forward. Under the leadership of Derrick Pledger, the department is on its way to becoming a technology-based and data-driven organization, designed to accelerate delivery of business outcomes, enhance customer experiences, and create a technology differentiation to drive competitive advantage. Since joining, Derrick has completed a comprehensive review, covering a lot of ground in a short amount of time, and developed a plan aligned with our expanded vision for technology at Maximus. He is aligning technical solutions to enterprise strategy and business needs, including key pipeline opportunities. We are prioritizing investments in research and development activities that can provide greater operating leverage and working with our operations to develop cutting-edge technologies ahead of our customers' needs. As part of the changes implemented, Derrick has added a Chief Technology Officer to his team. Our CTO will lead our technology and innovation organization and will be vital for setting and executing our strategic technology direction. Within the CDIO organization, and also driven by the Maximus Forward program, we have recently invested in our supply chain through the acquisition of one of our critical IT suppliers, which is expected to be accretive post-integration. The group has been a long-term contributor to the success of our U.S. Services programs, bringing extensive engineering and research talent to enable greater depth, scale, and capabilities in administering large critical government programs. We are excited to bring their team in-house and leverage their capabilities across our portfolio. While the success of the Maximus Forward program is driving shareholder value, it’s also allowing us to continue investing in our people. Enhancements to our employee value proposition are driven by employee feedback and the continued effort to be market-competitive in the compensation and benefits we provide, fostering a long-term view as an employer of choice. Our driving force is to provide for the physical, mental, and financial well-being of our employees and their families. Over the past few years, our focus on our employee value proposition has led to significant enhancements to our benefits programs. Examples include increasing the employer contribution and reducing deductibles on all HSA plans, launching a PPO plan, and adding free telehealth options, all in the face of a macro backdrop of rising healthcare costs. Looking ahead at our 2025 benefits plan, we are excited to continue enhancing our offerings. The return on investments made in our people is clear when analyzing our recent independently conducted global employee engagement survey results. The KPI I find most meaningful is the employee Net Promoter Score, which measures employee loyalty to the company. Fiscal year 2024 survey results showed an overall Net Promoter Score of plus 31. This is an 11-point increase from fiscal year 2023 results and a 26-point increase from three years ago when we first asked PwC to conduct this annual survey. Maximus has created a positive employee experience by fostering a culture of listening, feedback, transparency, and accountability. I'm very grateful to everyone involved in driving such impactful change throughout our organization. As I wrap up my prepared remarks, I'd like to highlight our continued recognition as a leader in veteran employment. Maximus has once again been honored as a VETS Indexes 5 Star Employer, marking the third consecutive year we've been recognized for our commitment to veterans and military-connected individuals. This year, we were also proudly named a top veteran employer by Military.com. These accolades underscore our dedication to recruiting, hiring, retaining, developing, and supporting military personnel and their families. Our initiatives celebrate the unique skills and experiences that veterans bring to our organization, reflecting our deep-rooted respect for military service as a core part of our identity and mission in public service for nearly five decades. In closing, we continue to be pleased with our fiscal year 2024 performance thus far and remain optimistic about the company's growth through expansion in our core business along with a heightened focus on investment in new work opportunities. And with that, we'll open the line for Q&A.

Today's first question is coming from Charlie Strauzer of CJS Securities.

Just a quick question. Yes, obviously, a very robust quarter, especially in Federal. Sales and margins kind of seeing some good uplift ahead of schedule versus your prior guidance. Just when you look at that in the drivers, did you see any revenue pull forward? Maybe give us a little more color behind the drivers of that quarter?

Sure, great. This is David. So as I mentioned, there was no real single area that led to the Q2 overperformance. It was a broad strong performance across the portfolio. The VA MDE volumes in the Federal segment were certainly a component that were particularly strong in the quarter. I did allude to some benefit from extra volumes tied to the Medicaid unwind effort, which ends soon, though it remains difficult to precisely quantify that. But I would leave you with the impression that this was only some of the Q2 overdelivery. While I am on it more broadly about the topic of redeterminations and sharing what we see today, Medicaid enrollments are landing a little higher. As we expected, we are seeing continued engagement from the portions who have been redetermined and retained on the Medicaid role. So that effectively means it's back to business as usual for us for the work related to annual Medicaid renewals. The normal base of beneficiaries that existed pre-pandemic is engaging in typical fashion in the post-pandemic environment, which is good since that drives activities in our operations. Lastly, the fact that they're slightly higher population doesn't hurt either. And while I got the mic, as I reflect on the quarter, I'll offer one last thing that I'm especially proud as reflecting on the quarter for the team delivering on the financial commitments that we laid out back two years ago to the month in May of 2022 at our Investor Day. So we had said sustainable mid-single-digit organic growth, and we delivered 7% in fiscal year '23 and now guiding to near 7% this year. U.S. Services, in particular, which was in the midst of the public health emergency, we guided 11% to 14% margin. Once the redeterminations resumed, we just posted 14% in a peak quarter and guiding to the middle of that range going forward. U.S. Federal operating at the high end of their 10% to 12% guidance we gave. And then for the total company, we guided 9% to 12% adjusted OI margin. Our guidance for this year is now just above the midpoint of that. And now we're really focused on moving up further in the longer-term range that we gave of 10% to 14%. Then last week, we've also met our commitment to delever in the near term, having crossed below the 2x to 3x target. So a lot of milestones that we're proud of and much credit to the team here for delivering on these commitments.

Great. And just some housekeeping on the guidance. You talked about Q3 being stronger than Q4 in the back half. Any sense of the cadence from Q2 to Q3 that we should factor in?

Sure. Well, yes, a couple of things. I mentioned in my remarks that we have some planned investments in the fourth quarter. So first, I'll talk about Q3 to Q4 and why we guided Q3 to be higher than Q4. A component of those investments are the start of expensing on some new internal capitalized software efforts. I've shared before on prior calls that we have increased investments in technology, particularly in the Federal business, which will provide enhanced efficiency, especially in highly scaled areas of the business. So in this area, in particular, the fourth quarter is expected to be a transition period where we've been prudent in anticipating some duplicative costs. So in fiscal year '25, we expect the legacy cost to sunset, while the savings and the return on those investments would continue forward. So all that means is the fourth quarter is more of the outlier in our view that may be a bit below the core run rate, which would be manifested in the U.S. Federal Services margin. We are also forecasting some moderation in U.S. Services volume both from Q2 to Q3 and then also a little bit more from Q3 to Q4. So that's a piece of the Q2 to Q3. Looking forward from Q4, our continued efforts that Bruce mentioned in his prepared remarks, including the Maximus Forward initiative that we described, do give us confidence that there's more opportunity for continued margin improvement beyond fiscal year '24, which would mean continuing to move up in that range that I just quoted, the longer-term range of 10% to 14% adjusted OI margin. And then, of course, Outside the U.S., our continued work shaping and improving the profitability there should also support further improvement.

The next question is coming from Bert Subin of Stifel.

I’ll begin with the VA aspect. Looking back at last year, I expected the PACT Act to provide a supportive boost, and it has had an even greater impact than anticipated. Considering current inventories and the burn rate, it suggests there’s still about 1.5 to 2.5 years of excess demand. Regarding the recompete, how do you anticipate changes? One competitor mentioned that it should conclude by September. I'm interested in your thoughts on this timing. Will it pressurize your margins, or could it be a chance to gain more market share? Additionally, do you agree with the outlook that MDEs may remain strong for an extended period?

Bert, David is going to take this one, and I may add a little color commentary at the end.

Great. Yes, a few things about the pending rebid. As Bruce mentioned in his remarks, the way we view it, this is a required action by the government, which is more procedural in nature due to hitting the ceiling on those claims volume. So really the result of some good news with the volume growth. Not only do we anticipate continuing to work uninterrupted until the process is complete, but we're still making investments to increase capacity in an effort to drive high-quality and ongoing improvements to the veterans experience. The key really for us and any provider is the ability to operate at scale. This is a large program. Our experience tells us it's complex with an extensive nationwide network of clinicians. While we'll be appropriately cautious in the recompete process, as always, we do anticipate being able to maintain scale and volumes given the significant operational advantages and experience we believe we possess. Therefore, we would agree with your assertion about the volumes remaining elevated for the foreseeable future as evidenced by the inventory, as you said. We think it will take some time for that to return to normal levels. Based on the timeline for the rebid we've seen thus far, we also agree with what you said about the new contracts essentially aligning with the start of our next fiscal year, so around the September 30th timeframe. So worth pointing out, no impact on our fiscal year '24 is expected. As far as the financial details, at this point, we can't really speculate on what may or may not change as a result of those.

I would agree with that, Bert. In fact, I'd only add one thing in that David mentioned, we're making significant investments in internal use software to further streamline processes and build capacity in that business. We feel that those investments overlap well with this redetermination process. So, overall, as we exit this fiscal year and go into the next, we should be in a solid position in terms of capacity to handle the volumes in the newly completed program.

Got it. Very helpful. I guess maybe following on to that, if we think about some of the outperformances here, MDEs have definitely helped, redeterminations returning and the peak activity have helped. Can you frame for us what's your expectation for the next leg of growth? It sounds like MDEs will continue to contribute to growth and profit. Redeterminations, I guess, there's some opportunity to pick up states and in just a higher population count will keep that steady. But you're operating on the higher end of mid-single digits, almost in the high single-digit organic growth range, and your margins have been pretty strong. I'm just trying to get a feeling for your confidence for that to continue as some of those tailwinds at some point start to moderate.

Sure, Bert. I'll take that. We remain very focused on our three strategic pillars established back in May 2022. Right now, I want to highlight our technology modernization initiatives. A key focus area for us is the IRS EDOS contract, which we believe is just beginning and is still in the early stages. It's important to note that our original partner has received an award worth about $35 million, which is currently the highest one. We still consider ourselves early in this process and see great opportunities ahead. We are optimistic about our potential to be recognized as a valuable partner providing solutions to the IRS through this contract. Additionally, I’d like to look at IT modernization more broadly in the Federal environment. As I mentioned in my prepared remarks, we are pleased to have secured the BPA with the Department of Energy, which includes specialized software, application development, and technology consulting services. Our broader pipeline shows a strong influx of new work opportunities that match our technology-focused competencies, stemming from our acquisitions of Acentia in 2015 and Attain Federal in 2021. These competencies, such as digital modernization, cybersecurity, hybrid cloud and infrastructure, artificial intelligence, advanced analytics, and data management, are highly sought after. You must have your data organized to implement AI effectively, alongside low-code and no-code solutions. We continue to develop our skills in these areas. It is crucial to ensure that the customer demand aligns with our offerings. I want to reaffirm some points made on our last quarter's call regarding our confidence in the ongoing demand for longer-term IT modernization initiatives. We believe these initiatives will persist, especially among agencies that have strategically planned their procurements, many of which are already in progress. For instance, the industry is currently tracking an anticipated BPA from the Department of Energy, which is expected to have a $10 billion ceiling and enter the procurement process later this year. In summary, we see IT modernization and technology services, particularly in the competencies I mentioned, as a strong growth avenue as we move forward. We are also dedicated to combining technology with business process services to deliver large-scale programs. Increasingly, RFPs reflect a combination of cloud-based technology solutions that meet Federal certification requirements, particularly with CMMC changes, along with the necessary labor components to fulfill the mission requirements of the procuring agency. We believe that these two areas together provide a solid foundation for achieving the growth targets we've set for the business. I think David has something to add on that.

Yes. Bert, just to further address your margin question, at the risk of being repetitive, we do intend to continue to drive margin improvement up in that 10% to 14% range with a focused commitment on standardization and operational efficiency through the Maximus Forward program, along with our ongoing efforts with the outside U.S. portfolio.

Great. Just one last question for me. Can you clarify if you would still be interested in bidding on the CCO recompete and the VIFD recompete if the terms change significantly? What is your view on the timeline for that? Are there other recompetes we should be aware of, or is your profile pretty thin otherwise?

I'll go ahead and address the first piece, the CCO rebid. I don’t want to offer too many comments regarding strategy here, obviously, as it’s an active procurement process. When you really look at the context of the reprocurement and consider that, as I outlined in my prepared remarks, it's interesting, but not surprising that we're seeing continued action by the government here. I noted that there was communication posted last week suggesting an RFP date on or around May 16, and that the procurement would cover a contract for a transition period plus nine option years. It’s important to note that no further details are provided, including specifics related to the planned labor harmony agreement requirement, which we understand is the sole basis for triggering this premature rebid of a successfully performing contract. As I mentioned on the last call, the procurement of this size and complexity can typically take up to a year or more to complete, and it’s not uncommon for the process to take up to three years. There's a strong likelihood that an RFP could trigger a pre-award protest to the GAO and potentially further, given the unprecedented nature of the anticipated labor harmony requirement. It’s crucial to note here that there are significant operational impacts that would need to be accommodated and considered under resulting new contracts, including slowdown requirements to significant small business subcontractors, who may be, in our view, the least equipped to comply. So it begins to get complicated when you try to put theory into practice. I mentioned in my prepared remarks that we remain committed to continued high-quality services while the rebid matter plays out, but we do have genuine concerns regarding the impact on the ecosystem of small disadvantaged businesses that have been put together to support this program. In many communities, they are the primary employer. The theory behind the labor harmony agreement is to ensure continuity of operations. Yet, we’ve repeatedly noted our record of service continuity. Our evidence suggests that any reprocurement could increase the risk of service failure to tens of millions of seniors. So, in summary, when the RFP is released, we will evaluate it comprehensively and determine the appropriate course of action at that time, giving due consideration to all of our available options. At this point, I would prefer to avoid speculating further on the competitive environment, but I'll just note that it’s a major focus area for the business.

And Bert, on your second point, there's nothing else large on the near-term horizon to call out.

Ladies and gentlemen, this brings us to the end of the question-and-answer session. We would like to thank everyone for their participation in today's conference. You may disconnect your lines and log off the webcast at this time, and enjoy the rest of your day.