What: Following its fourth quarter earnings report released on Thursday morning, shares of Maximus (NYSE:MMS), a provider of business process services to government health and human service agencies, traded down 22%.
So what: The likely reason for the stock's sell-off is the company's decision to significantly lower its outlook for earnings per share in fiscal 2016. Management reduced its earnings expectations from a range of $2.85 to $3.05 to a new range of $2.40 to $2.70 per share.
"The lowered earnings outlook is attributable to a slower ramp and hence a reduced contribution from the U.K. Health Assessment Advisory Service contract," reads the company's press release.
Investors may worry the company's U.K. Health Assessment Advisory Service contract won't be as meaningful of a catalyst over the long haul as management had initially anticipated.
The underlying results during the quarter actually weren't too bad -- fourth quarter revenue and earnings were $572.3 million and $0.64 per share, up from $419.9 million and $0.49 in the year-ago quarter, respectively.
Now what: Notably, Maximus CEO Richard Montoni's perspective of the U.K. Health Assessment Advisory Service is positive. Going forward, he still believes in the contract, as he explained:
While the slower-than-expected ramp-up of the U.K. Health Assessment Advisory Service contract resulted in a reduced earnings outlook for fiscal year 2016, we remain confident that we will bring about the necessary changes to put this start-up contract on a path to success, as we have done with many large start-up contracts in the past. This is a single contract in our global portfolio and the overall macro demand trends for our services remain very favorable.
Despite these assurances, investors would be wise to keep a close eye on how it develops in the coming quarter.
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