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Here are 1-2 brief analogies for DLH (DLHC):

• Booz Allen Hamilton for government health and human services.
• Accenture for federal healthcare technology and programs.

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Major products and services of DLH (DLHC) include:

• Digital Transformation & Analytics: DLH provides modern information technology solutions, data analytics, cloud services, and cybersecurity to enhance government agency operations.
• Health & Human Services: DLH offers program management, scientific research support, public health solutions, and veteran support services to federal health agencies.
• Logistics & Supply Chain Management: DLH delivers comprehensive supply chain solutions, including warehousing, distribution, and material readiness, primarily for defense and civilian agencies.

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Major Customers of DLH (DLHC)

DLH Holdings Corp. (DLHC) primarily serves U.S. federal government agencies. As such, it sells primarily to other organizations (government entities) rather than directly to individuals. The major customer organizations are:

• U.S. Department of Veterans Affairs (VA): The VA is DLH's largest customer, consistently accounting for approximately two-thirds of the company's total revenue. DLH provides a wide range of services to the VA, including health research, public health preparedness, and digital transformation solutions to support veterans' healthcare and benefits programs.
• U.S. Department of Defense (DoD): DLH supports various components of the DoD with health-related services, research, and technology solutions, particularly in areas related to military readiness and veteran health initiatives.
• U.S. Department of Health and Human Services (HHS) agencies: This includes significant work with sub-agencies such as the National Institutes of Health (NIH) and the Centers for Disease Control and Prevention (CDC). DLH provides scientific research support, public health informatics, and program management services to these vital health-focused agencies.

Please note that these are U.S. federal government agencies and do not have public company symbols.

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Zachary Parker, President, CEO, and Board Director

Zachary Parker has served as DLH's President, Chief Executive Officer, and Board Director since 2010. During his tenure, he has led four strategic acquisitions, integrating Danya International, Inc. in 2016, Social & Scientific Systems, Inc. in 2019, Irving Burton Associates, LLC in 2020, and Grove Resource Solutions, Inc. in 2022, thereby expanding DLH's service portfolio. Before joining DLH, Mr. Parker held leadership positions at Northrop Grumman Corporation, where he was an Executive Director, and was President of VT Group. He also held roles at GE Government Services (later acquired by Lockheed Martin) and VSE Corporation. Northrop Grumman Mission Systems & IT, where he served as Executive Director, was acquired by Peraton in 2020, and GE Government Services was acquired by Lockheed Martin.

Kathryn JohnBull, Chief Financial Officer

Kathryn JohnBull has served as the Chief Financial Officer and Treasurer at DLH Holdings Corp. since June 25, 2012. She joined DLH during the second year of Zach Parker's leadership as CEO.

Mary Dowdall, President, Advanced Mission Services

Mary Dowdall serves as the President of Advanced Mission Services at DLH.

Diane Yarnell, President, Health IT

Diane Yarnell holds the position of President, Health IT at DLH.

Jeanine Christian, President, Public Health & Scientific Research

Jeanine Christian is the President of Public Health & Scientific Research for DLH.

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1. Reliance on Government Contracts and Funding Fluctuations

DLH's business is heavily dependent on obtaining and retaining government contracts. Key risks include continued revenue decline due to contract conversions and transitions, potential delays in new contract awards, and the loss of contracts to small business set-asides. The company also faces challenges from competitive rebidding processes upon contract expiration and broader government contract procurement risks, such as bid protests or organizational conflicts of interest. Furthermore, macroeconomic pressures and changes in client budgetary priorities can impact government spending on defense and technology, directly affecting DLH's revenue and prospects.

2. Financial Health and Debt Levels

The company's financial stability is a significant risk factor. DLH has taken on some risk with its use of debt, exhibiting a low interest cover ratio which makes its debt levels a concern. A reported 14% drop in Earnings Before Interest and Taxes (EBIT) over the last twelve months could further complicate debt management. The company recently missed both EPS and revenue expectations for Q4 FY2025, resulting in a stock price decline and investor concerns over revenue contraction and profitability challenges. Additionally, the impact of inflation and higher interest rates poses ongoing financial risks.

3. Acquisition Integration Risks

DLH has engaged in acquisitions, and the successful integration of these businesses presents inherent risks. These include the challenges of managing larger and more widespread operations post-acquisition, the inability to successfully integrate the operations of recent and future acquisitions, and difficulties in retaining employees and customers of acquired entities. Failure to achieve the anticipated benefits from acquisitions could adversely affect the company's financial operating performance and results.

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The rapid advancement and increasing adoption of Artificial Intelligence (AI) and automation technologies by federal agencies and competitors pose a significant emerging threat to DLH. As a provider of human-intensive health research, services, and solutions to the Department of Defense, Department of Veterans Affairs, and other government entities, DLH's traditional model could be disrupted.

Federal agencies are actively pursuing initiatives to integrate AI into various functions, including data analysis, predictive modeling in healthcare, logistics optimization, administrative tasks, and aspects of medical research. For instance, the Department of Veterans Affairs has specific programs focused on using AI for personalized care, fraud detection, and improving operational efficiency. Similarly, the Department of Defense is heavily investing in AI for readiness, logistics, and medical applications.

This shift means that tasks currently performed by DLH's human experts (e.g., data synthesis, report generation, case management support, program oversight, and certain research functions) could increasingly be automated or augmented by AI. This could lead to reduced demand for traditional human-centric services, the emergence of more agile, AI-first competitors who can offer more cost-effective or data-driven solutions, and a requirement for DLH to rapidly upskill its workforce and integrate advanced AI capabilities into its offerings to remain competitive. Failure to adapt could lead to loss of market share or reduced contract values.

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DLH Holdings Corp. (DLHC) primarily delivers technology-enabled health solutions and services to U.S. federal government agencies, focusing on health and human services, as well as defense and veterans' health. Their key offerings include digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, public health solutions, cybersecurity, science research and development, and systems engineering and integration.

The addressable markets for DLH's main products and services are sizable within the U.S. federal government sector:

• U.S. Federal Government Contracting Market: The total U.S. federal government contract spending was approximately $759 billion in Fiscal Year 2023. Projections indicate that federal spending on contracts is expected to reach $7.5 trillion by 2027. Annual federal obligations to the private sector are nearly $800 billion.
• U.S. Department of Health and Human Services (HHS) Market: The Department of Health and Human Services (HHS) spent $1.72 trillion in Fiscal Year 2024. For Fiscal Year 2025, HHS had $3.30 trillion distributed among its sub-components.
• U.S. Defense Market: The U.S. defense market was valued at $314 billion in 2024 and is projected to grow to $447.31 billion by 2033, with a compound annual growth rate (CAGR) of 4.01% from 2025 to 2033. Another estimate places the U.S. defense market size at $309.77 billion in 2025, with a projected CAGR of 3.58% from 2025 to 2033. The U.S. government spent $858 billion on defense in 2023.

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Expected Drivers of Future Revenue Growth for DLH (DLHC)

• Expansion in Digital Transformation and Cybersecurity Solutions: DLH is actively expanding its footprint in digital transformation and cybersecurity, areas highlighted in recent contract awards and certifications. The company has secured an NIH contract that strengthens its position as a leader in digital transformation and cybersecurity. Furthermore, achieving CMMC Level 2 certification positions DLH to compete for new Department of Defense solicitations, as CMMC 2.0 requirements are expected to appear in bids starting in November 2025. The company's expertise spans digital transformation, artificial intelligence, advanced analytics, cloud-based applications, and telehealth systems.
• Securing New Government Contracts: The company has a strong pipeline of qualified bids, with expectations of several significant contract awards in the current fiscal year, some exceeding $100 million in value. These new contract wins are crucial for offsetting potential revenue erosion from contracts converting to small business set-asides.
• Growth in VA CMOP Program: DLH recently received a sole-source Indefinite Delivery, Indefinite Quantity (IDIQ) contract for the Department of Veterans Affairs (VA) Consolidated Mail Outpatient Pharmacy (CMOP) program. This contract has a $90 million ceiling and a maximum performance period through April 2027, with initial quarterly revenue projected at approximately $28 million for four locations. This indicates a continued and stable revenue stream from a key federal client.
• Leveraging Technology and Innovation in Military Health: DLH's focus on technology and innovation, particularly in military health solutions, is a significant growth driver. The company's development of advanced systems like TRON (Telerobotic Operator Network), AutoDoc (automated documentation system), and JPSR (Joint Patient Safety Reporting) has garnered innovation awards and demonstrates its capability to provide cutting-edge solutions that enhance military readiness and healthcare delivery. This expertise positions DLH for further opportunities within the defense and health sectors.

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Capital Allocation Decisions of DLH (DLHC) (2020-2025)

Share Repurchases

• DLH did not repurchase shares during fiscal years 2022, 2023, or 2024.
• As of February 1, 2025, DLH had $101.3 million remaining under its share repurchase authorization.
• The company did not hold any treasury stock as of September 30, 2020, or September 30, 2021, indicating no significant share repurchases in those fiscal years.

Share Issuance

• The number of common shares outstanding increased from 12,404,406 as of September 30, 2020, to 14,386,468 as of May 5, 2025.
• Additional Paid-in Capital increased from $85.868 million as of September 30, 2020, to $100.995 million as of March 31, 2025 (unaudited).
• The acquisition of GRSi in December 2022 included a $7.0 million equity component.

Outbound Investments

• On October 1, 2020, DLH acquired Irving Burton Associates, LLC (IBA) for $32.0 million in cash.
• On December 8, 2022, DLH acquired Grove Resource Solutions Inc. (GRSi) for $185.0 million.
• The GRSi acquisition's purchase price included $178.0 million in cash and $7.0 million in equity.

Capital Expenditures

• In fiscal year 2021, purchases of equipment and improvements were $53,000 (in thousands).
• For the nine months ended June 30, 2022, purchases of equipment and improvements amounted to $244,000 (in thousands).
• In fiscal year 2020, significant investments were made in developing secure IT platforms, sophisticated data analytics tools and techniques, additional software development credentials, and the introduction of the Infinibyte® secure cloud computing offering.