On May 28, 2021, we acquired all of VES for an estimated cash purchase price of $1.37 billion (the Acquisition). The final purchase price is subject to adjustment and is expected to be finalized during our fourth fiscal quarter of 2021. This business was integrated into our U.S. Federal Services Segment and is expected to increase revenue attributable to providing independent and conflict-free clinical business process outsourcing (BPO) services at scale. The Acquisition also supports our ongoing strategic priority of expansion into the U.S. Federal market and creates new opportunities to apply digital solutions to improve citizen services. We entered into a new credit agreement to fund the Acquisition. See "Note 6 - Debt" for further details. The results of operations for VES are included in the consolidated results of Maximus, Inc. starting May 28, 2021.


(in thousands)	Estimated Fair Value of Assets and Liabilities
Cash consideration paid, net of cash acquired	$	1,360,231
Estimated additional cash payments	7,494
Estimated cash consideration, net of cash acquired	$	1,367,725

Accounts receivable - billed, billable and unbilled	$	44,078
Prepaid expenses and other current assets	13,911
Property and equipment, net	9,113
Operating lease right-of-use assets	18,898
Intangible assets	664,000
Other assets	12,816
Total identifiable assets acquired	762,816
Accounts payable and accrued compensation	42,978
Operating lease liabilities	18,898
Income taxes payable	6,196
Deferred income taxes	177,626
Other long-term liabilities	6,667
Net identifiable assets acquired	510,451
Goodwill	857,274
Net assets acquired	$	1,367,725

Our evaluation of the intangible assets acquired with VES has identified three assets. The assets were valued using methods which required a number of estimates and, accordingly, they are considered Level 3 measurements within the Accounting Standard Codification No. 820 (ASC 820) fair value methodology.

•Customer relationships represent the value of the existing contractual relationships with the United States Federal Government. These were valued using the excess earnings method, which required us to utilize estimated future revenues and earnings from contracts.

•VES maintains a provider network of third-party providers that assist in the performance of their clinical services. This network was valued using the cost method, which included both the cost of recreating such a network and the profits foregone during the time which would be required to recreate the network.

•VES maintained proprietary technology which interacted with U.S. Federal Government systems, facilitated the transmission of examination data and supported the performance of the contracts. We valued the technology using a relief-from-royalty method, which required us to estimate future revenues and an arms' length royalty rate that a third-party provider might use to supply this service.

(in thousands)

Estimated Straight-Line Useful Life

Estimated Fair Value

Customer contracts and relationships

12 years

580,000

Provider network

12 years

57,000

Technology-based intangible assets

14 years

27,000

Total intangible assets

664,000

In connection with certain liabilities acquired in the VES acquisition, we have established a liability of $12.0 million for a billing dispute between VES and its customer relating to prior year billings. Our exposure is partially offset by an indemnification asset of $6.0 million. In the event that this dispute is settled for less than $6.0 million, we will return the indemnification asset to the sellers (as well as any difference between the settlement amount and $6.0 million). In the event that the settlement exceeds $6.0 million, we are entitled to utilize the indemnification asset, and if the settlement exceeds $12.0 million, pursue other recourse permitted under the purchase agreement. At this time $12.0 million remains our best estimate of this liability. In addition, we have established a tax liability of $11.8 million for uncertain tax positions within VES, partially offset by another indemnification asset of $6.7 million. Both indemnification assets are secured in third party escrow accounts and we have recourse to other funds in the event these contingencies exceed the escrow balances.

From the acquisition date of May 28, 2021 through June 30, 2021, the acquired business contributed revenue of $45.8 million and gross profit of $19.5 million. Amortization of intangible assets for the period through June 30, 2021 was $4.6 million.

On March 1, 2021, we acquired all of Attain for a cash purchase price of $419.1 million. This business was integrated into our U.S. Federal Services Segment and is expected to strengthen our position to further design, develop, and deliver more innovative, impactful solutions and drive automation of processes to improve citizen engagement and the delivery of critical federal programs, as well as expand our presence in the U.S. Federal market. We utilized borrowings on the credit facility we had in place at the time, as well as cash on our balance sheet to fund the acquisition. The results of operations for Attain are included in our results from March 1, 2021.

We are in the process of finalizing the valuation as of March 1, 2021, of all acquired assets and assumed liabilities and, accordingly, the balances below represent our best estimate and are subject to change:


(in thousands)	Estimated fair value of assets and liabilities at acquisition date as of March 31, 2021		Adjustments		Estimated fair value of assets and liabilities at acquisition date as of June 30, 2021
Cash consideration, net of cash acquired	$	419,864	$	(767)	$	419,097

Accounts receivable - billed, billable and unbilled	$	39,274	$	101	$	39,375
Prepaid expenses and other current assets	1,336		(410)		926
Property and equipment, net	703		(703)		—
Operating lease right-of-use assets	25,089		(129)		24,960
Other assets	84		(10)		74
Intangible assets	105,000		—		105,000
Total identifiable assets acquired	171,486		(1,151)		170,335
Accounts payable and other liabilities	28,301		562		28,863
Operating lease liabilities, less current portion	26,786		(385)		26,401
Net identifiable assets acquired	116,399		(1,328)		115,071
Goodwill	303,465		561		304,026
Net assets acquired	$	419,864	$	(767)	$	419,097

The intangible assets acquired represent customer relationships. We estimated this balance using the excess earnings method (which is a Level 3 measurement within the ASC 820 fair value hierarchy) and used a number of estimates, including expected future earnings from the acquired business and an appropriate expected rate of return. We have assumed a useful economic life of ten years, representing our expectation of the period over which we will receive the benefit.

The following table presents certain pro forma results for the three and nine months ended June 30, 2021 and 2020 and the twelve months ended June 30, 2021, as though the acquisitions of both VES and Attain had occurred on October 1, 2019. The twelve month information is consistent with that utilized in our debt covenant calculations. This pro forma information is presented for information purposes only and is not necessarily indicative of the results if the acquisition had taken place on that date. The pro forma results below eliminate intercompany transactions, include amortization charges for acquired intangible assets, and estimates of interest expense based upon our total estimated borrowings, eliminate pre-acquisition transaction costs and reflect corresponding changes in our provision for income taxes. Acquisition related costs incurred by Maximus, VES and Attain have been excluded in the following pro forma results. These costs were $8.8 million, $52.2 million and $0.3 million, respectively.


	Unaudited pro forma results
	Three Months Ended June 30,				Nine Months Ended June 30,				Trailing Twelve Months Ended June 30,
(in thousands, except per share amounts)	2021		2020		2021		2020		2021
Revenue	$	1,335,780	$	996,462	$	3,566,466	$	2,934,920	$	4,645,540
Cost of revenue	1,004,523		787,189		2,679,170		2,283,589		3,503,074
Gross profit	331,257		209,273		887,296		651,331		1,142,466
Selling, general, and administrative expenses	151,321		110,754		425,062		360,370		551,143
Amortization of intangible assets	21,301		25,090		63,856		75,868		88,586



Operating income	158,635		73,429		398,378		215,093		502,737
Interest expense	8,701		9,423		26,715		28,528		36,426
Other (expense)/income, net	(7,320)		(2,126)		(10,401)		(11,755)		(11,437)
Income before income taxes	142,614		61,880		361,262		174,810		454,874
Provision for income taxes	37,123		15,549		94,735		38,897		120,248
Net income	$	105,491	$	46,331	$	266,527	$	135,913	$	334,626


Basic earnings per share	$	1.70	$	0.75	$	4.30	$	2.14	$	5.40
Diluted earnings per share	$	1.69	$	0.75	$	4.28	$	2.13	$	5.37
Dividends declared per share	$	0.28	$	0.28	$	0.84	$	0.84	$	1.12
Weighted average shares outstanding:
Basic	62,064		61,882		62,028		63,463		62,001
Diluted	62,453		62,102		62,300		63,666		62,285

On February 28, 2020, we acquired 100% of the share capital of InjuryNet Australia Pty Limited (InjuryNet) for a purchase price of $4.4 million ($6.7 million Australian Dollars), which included acquisition-related contingent consideration of $2.1 million ($3.1 million Australian Dollars) based upon future earnings. InjuryNet provides workplace medical services in Australia. The business was integrated into our Outside the U.S. Segment. We have completed our assessment of all acquired assets and liabilities assumed. We recorded estimated goodwill and intangible assets of $2.6 million and $0.9 million, respectively, related to the acquisition.

On August 21, 2020, we acquired 100% of the share capital of Index Root Korea Co. Ltd (Index Root) for an estimated purchase price of $5.4 million (6.3 billion South Korean Won), which includes acquisition-related contingent consideration estimated at $0.9 million (1.1 billion South Korean Won) based upon future earnings. We acquired Index Root to expand our geographic presence to South Korea. The business was integrated into our Outside the U.S. Segment. We have completed our assessment of all acquired assets and liabilities assumed. We recorded estimated goodwill and intangible assets of $4.6 million and $1.4 million, respectively, related to the acquisition. During the second quarter of fiscal year 2021, we concluded that payment of the contingent consideration was unlikely and, accordingly, a benefit of $1.0 million was recorded within our acquisition expenses.

Changes in goodwill for the nine months ended June 30, 2021, were as follows:


(in thousands)	U.S. Services		U.S. Federal Services		Outside the U.S		Total
Balance as of September 30, 2020	$	164,472	$	381,719	$	46,938	$	593,129
Estimated effects of acquisitions	—		1,161,300		623		1,161,923
Foreign currency translation	—		—		2,743		2,743
Balance as of June 30, 2021	$	164,472	$	1,543,019	$	50,304	$	1,757,795

The following table sets forth the components of intangible assets (in thousands):


	As of June 30, 2021						As of September 30, 2020
(in thousands)	Cost		Accumulated Amortization		Intangible Assets, net		Cost		Accumulated Amortization		Intangible Assets, net
Customer contracts and relationships	$	921,023	$	112,546	$	808,477	$	235,287	$	90,302	$	144,985
VES Provider network	57,000		396		56,604		—		—		—
Technology-based intangible assets	32,400		4,994		27,406		5,631		4,723		908
Trademarks and trade names	4,516		4,516		—		4,479		4,479		—
Total	$	1,014,939	$	122,452	$	892,487	$	245,397	$	99,504	$	145,893

As of June 30, 2021, our intangible assets have a weighted average remaining life of 11.2 years, comprising 11.2 years for customer contracts and relationships, 11.9 years for the provider network and 13.7 years for technology-based intangible assets. The estimated future amortization expense for the next five years for the intangible assets held by the Company as of June 30, 2021 is shown below. As noted above, we have not yet completed our assessment of the valuation of the intangible assets acquired with VES and Attain. These future amortization expenses represent our best estimate of future costs.


(In thousands)	Estimated Future Amortization Expense
Year ended September 30, 2021, Remainder of year	$	20,518
Year ended September 30, 2022	82,025
Year ended September 30, 2023	82,009
Year ended September 30, 2024	81,885
Year ended September 30, 2025	81,678
Year ended September 30, 2026	81,551