Maximus Misses the Mark: Lawsuit Claims Maximus, Executives Deceived Investors

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Maximus, Inc. and three of the company’s senior executives are facing claims that they deceived the investing public with promises of success despite being aware that the company was struggling to perform on one of its key contracts. The suit seeks to cover stockholders who acquired Maximus common stock between October 30, 2014 and February 3, 2016.

According to the complaint, Maximus provides business process services to government agencies. On October 29, 2014, the UK Department for Work and Pensions allegedly awarded Maximus a new contract. The company was reportedly tasked with recruiting and training health professionals to assess disabled citizens’ eligibility for social welfare benefits. Throughout the following months, the defendants allegedly assured investors that Maximus was meeting its Health Assessment Advisory Service (HAAS) targets and was on track to be paid approximately $900 million or more (if it exceeded expectations).

On August 7, 2015, however, the company announced disappointing financial results for the third quarter of 2015, due to “some start-up challenges” with the HAAS contract, according to the suit. Maximus’ stock price reportedly fell 13.8 percent upon the release of this news. Stock prices fell another 21.9 percent when the company released “downbeat” results for the fourth quarter, the complaint says.

Maximus continued its downward spiral when on February 4, 2016, it announced its financial results for the first quarter of 2016, confirming its poor performance and missed HAAS targets. After this announcement, stock prices declined 10.5 percent, “wiping out approximately $356 million in market capitalization,” according to the suit.

The plaintiff claims the defendants knew Maximus would be unable to meet expectations but concealed this information and assured stockholders of the company’s success. As a result, the suit says Maximus investors “have suffered significant losses and damages.”