- The Washington Times - Monday, March 19, 2001

Companies that specialize in outsourcing health and human services, such as Maximus Inc., are expected to grow under President Bush's administration, analysts say.

The Reston company provides program management and consulting services to state and local governments throughout the United States. Maximus primarily manages welfare programs and also runs managed care enrollment systems.

In February, the company was awarded a 17-month extension to a two-year contract it held with San Diego County, Calif. The extension will run through June of 2002 and is worth an additional $7.3 million. The company has worked with the county since June 1998.

Bill Loomis, an analyst with Legg Mason Wood Walker in Baltimore, says Maximus' value will grow under the new administration, which is seeking to develop prescription drug programs for senior citizens and partially privatize Social Security.

Both President Bush and Health and Human Services Secretary Tommy Thompson have had a strong history of supporting outsourcing programs involving health and human services since they were governors of Texas and Wisconsin, he says.

"While it is difficult to say exactly how and which programs will be initiated and outsourced so early in the administration's term, we believe it is reasonable to assume that business could improve for [the company] over the next several years," Mr. Loomis says.

The stock, recently coming off a 52-week high of $37.50 on March 5, and posting a 52-week low of $18 in October, was selling at $33 Friday.

Net income and revenue figures are up for the company, as well. Revenue for the first quarter of 2001 is up 18 percent to $60.5 million, from revenues of $51.2 million for the first quarter of 2000. Net income for the company has also increased, up 13 percent to $8.7 million (40 cents per diluted share) from $7.7 million (36 cents) for the comparable quarter the year before.

Diluted shares reflect the value of options, warrants and other securities convertible into common stock.

"They are remarkably well positioned to benefit from a major trend. They are the bluest of the blue chip stocks that focus on outsourcing," Arnold Ursaner, an analyst with CJS Securities in White Plains, N.Y., says.

Both Mr. Loomis and Mr. Ursaner give the company's stock a "strong buy" rating.

Russ Beliveau, a spokesman for Maximus, says companies such as Maximus are not directly affected by changes in government on the federal level. Though Republican administrations are less likely to accept a partnership into new health and welfare programs, and Democratic administrations are less likely to enter a partnership into existing programs, companies such as Maximus have been faring well, no matter who is in office, he says.

"Democratic administrations tend to favor new programs. Their general philosophy is not as favored toward pro-private company solutions. New programs, however, result in programs like ours," Mr. Beliveau says. "Under a Democratic administration, we benefit from new programs. Under a Republican administration, we benefit from a philosophy that is pro-public-private partnerships."

"With the philosophy of the new administration, we can give support to those state and local governments who want to get the advantages inherent in public-private partnerships," Mr. Beliveau says.

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