Bruce Caswell: Sure. As we’ve been saying, the midpoint of our FY ’24 guidance implies a 9.8% margin, but we do have confidence in our ability to get to the 10% to 14% over time. So our three to five year strategy laid out the achievement of that with attention and focus in some very specific areas. So I want to highlight three of those areas, if I can. Two of the pillars of our strategy are technology modernization and future of health and the work associated with those tend to have higher margins generally. So as we get more of that work in the pipeline and convert that to backlog, that will naturally help us achieve our targets. And I would just say our pipeline — I feel that our pipeline is well weighted in those areas.
The second point would be that we’ve had some internal programs that we’re focusing on that are really focused on ensuring that the company is set up for success over the longer term in the execution of the strategy, and that includes improving efficiencies. I mentioned — I mentioned during my prepared remarks, the program Maximus Forward and how that’s a balance of really rethinking and driving greater efficiencies in the business, but also making investments in our future. And those are important initiatives that we’ll continue to execute on and that we would expect to see the benefit from as we roll through FY ’24, but really more in FY ’25. Then finally, we’re continuing our efforts to properly shape and size it Outside the US portfolio in that segment’s business.
And we would expect that through our further actions there, we’d see an improvement in total company margins. So number of those things really taken together provide us the confidence that we can move into that range as we mentioned.
Bert Subin: Okay. Got it. That helps. And maybe just a clarification before I — before my follow-up. David, on the prepared remarks, you said you expect margins to build sequentially through the year. So I guess you’re highlighting the fact that there are, I guess, better tailwinds in the second half even relative to that peak performance on redeterminations in the first half?
David Mutryn: Yeah. And I’m glad you asked because that’s a good thing to highlight that despite the fact that redeterminations are expected to contribute a little more in the first half than the second half, we see the rest of the portfolio more than overcoming that. And therefore, we do see sequential margin improvement in total over the course of the year.
Bert Subin: Okay. Got it. And just for my follow-up, maybe, I guess, focusing on the other side on sales, your recompete profile is pretty low this year, and you have those — several of those notable tailwinds that you highlighted between the VA, Medicaid and other new work. As you think about the potential to get from mid to high single digits this year, what would have to happen for that to play out? Is that just a function of new awards materializing faster EDOS task orders coming out? Are there specific items that you’d be watching that gets you to maybe above or below the 5% range when it’s all said and done?
Bruce Caswell: Sure. Bert, it’s Bruce. I’ll take that. You’re headed in the right direction with your assumptions, your intuition on that. I mean as you said, what’s really underpinning the growth as it presently stands is really strong performance in the VA Medical Disability Exam area as well as redeterminations. And certainly, further surges in volume and activity in those areas could contribute meaningfully to a growth rate higher than the current mid-single digits that we’re seeing. At the same time, we’re now kind of in the back half of the redetermination window, and that activity will come to an end in kind of the, I’d say, the May, maybe June time frame of 2024. So the likelihood that significant states would at this point, say, well, we need additional health and so forth is diminishing.
That said, since the last time we were together on a call, I’m pleased that work in that area has picked up, and in fact, one of our state clients, our current state clients really asked for a great deal of more assistance, and that’s reflected in the numbers that we’ve talked about today. So the underpinning, as you said, is exactly those in kind of those two areas. But I would highlight two others. You talked about pipeline. We’re seeing a nice growth in clinical work in our US Services business as well as a solid pipeline of states that are progressing towards, what are called Modular Medicaid Management Information Systems, or MMIS systems. And that movement towards modularity continues, and in particular, one of the solution areas that we’re focused on is Medicaid provider credentialing and enrollment.
We provide those services to a number of states presently. There’s a healthy pipeline for that type of work. And so we’re going to continue to prosecute that, and we would think that further awards and conversion to backlog there could be beneficial to the growth of the company this year and certainly into next year. And then secondly is really — you touched on the federal IT modernization area and more specifically, pipeline opportunities related to cloud enablement, cybersecurity, systems management needs and so forth across federal agencies. EDOS is a good example. We’re pleased to see initial task order flow coming through EDOS and we feel like we’re very well positioned for that work. I should note that we don’t contemplate significant contribution presently from EDOS task orders in this fiscal year.
