DLH Holdings Corp 10-Q for FY2026 Q2

DLH Holdings Corp. (DLHC)

10-Q 2026-05-06 For: 2026-03-31

Added on May 06, 2026

About this 10-Q

DLH Holdings Corp filed this 10-Q on May 6, 2026, covering the quarter ended March 31, 2026 (FY2026 Q2).

Headline figures

Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $59.27M; down 33.6% from $89.21M a year earlier
Net loss: $2.54M; compared with net income of $878K a year earlier
Diluted EPS: -$0.17; compared with $0.06 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	DLHC	Nasdaq	Capital Market



PART I FINANCIAL INFORMATION			3
ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)			3
CONSOLIDATED STATEMENTS OF OPERATIONS			3
CONSOLIDATED BALANCE SHEETS			4
CONSOLIDATED STATEMENTS OF CASH FLOWS			5
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY			6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			7
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			21
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			31
ITEM 4: CONTROLS AND PROCEDURES			31
PART II OTHER INFORMATION			32
ITEM 1: LEGAL PROCEEDINGS			32
ITEM 1A: RISK FACTORS			32
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			32
ITEM 3: DEFAULTS UPON SENIOR SECURITIES			33
ITEM 4: MINE SAFETY DISCLOSURES			33
ITEM 5: OTHER INFORMATION			33
ITEM 6: EXHIBITS			34
SIGNATURE			35


	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2026		2025		2026		2025
Revenue	$	59,265	$	89,212	$	128,158	$	179,994
Cost of operations:
Contract costs	47,490		71,594		102,885		144,365
General and administrative costs	7,530		8,238		15,291		16,305


Depreciation and amortization	4,300		4,265		8,600		8,572
Total operating costs	59,320		84,097		126,776		169,242
Income (loss) from operations	(55)		5,115		1,382		10,752
Interest expense, net	3,139		3,877		6,535		8,010
Income (loss) before provision for income taxes	(3,194)		1,238		(5,153)		2,742
Provision for income taxes (benefit)	(659)		360		(1,294)		750
Net income (loss)	$	(2,535)	$	878	$	(3,859)	$	1,992

Net income (loss) per share
Basic	$	(0.17)	$	0.06	$	(0.27)	$	0.14
Diluted	$	(0.17)	$	0.06	$	(0.27)	$	0.14
Weighted average common stock outstanding
Basic	14,493		14,386		14,493		14,386
Diluted	14,493		14,454		14,493		14,454


	March 31, 2026		September 30, 2025
	Unaudited
ASSETS
Current assets:
Cash	$	131	$	125
Accounts receivable	33,642		38,394
Other current assets	3,013		4,018
Total current assets	36,786		42,537
Goodwill	138,161		138,161
Intangible assets, net	83,638		91,865
Operating lease right-of-use assets	7,760		8,764
Deferred income taxes, net	9,310		7,947
Equipment and improvements, net	942		1,274
Other long-term assets	115		115
Total assets	$	276,712	$	290,663
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	12,445	$	19,246
Accrued payroll	7,181		12,153
Debt obligations - current, net of deferred financing costs	19,450		8,067
Operating lease liabilities - current	3,022		2,918
Other current liabilities	193		287
Total current liabilities	42,291		42,671
Long-term liabilities:
Debt obligations - long-term, net of deferred financing costs	110,511		119,966
Operating lease liabilities - long-term	12,595		14,022
Other long-term liabilities	1,045		1,046
Total long-term liabilities	124,151		135,034
Total liabilities	166,442		177,705
Shareholders' equity:
Common stock, $0.001 par value; 40,000 shares authorized; 14,493 and 14,493 shares issued and outstanding at March 31, 2026 and September 30, 2025, respectively	14		14
Additional paid-in capital	102,905		101,734
Retained earnings	7,351		11,210
Total shareholders’ equity	110,270		112,958
Total liabilities and shareholders' equity	$	276,712	$	290,663


	Six Months Ended
	March 31,
	2026		2025
Operating activities
Net income (loss)	$	(3,859)	$	1,992
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	8,600		8,572
Amortization of deferred financing costs charged to interest expense	857		880
Stock-based compensation expense	1,264		725
Deferred income taxes, net	(1,363)		1,530


Changes in operating assets and liabilities:
Accounts receivable	4,752		(1,864)
Other assets	1,958		(638)
Accounts payable and accrued liabilities	(6,801)		(7,927)
Accrued payroll	(4,972)		(402)
Other liabilities	(1,420)		97
Net cash provided by (used in) operating activities	(984)		2,965
Investing activities

Purchase of equipment and improvements	(39)		(1)
Net cash used in investing activities	(39)		(1)
Financing activities
Proceeds from revolving line of credit	112,030		117,850
Repayments of revolving line of credit	(109,408)		(116,008)

Repayments of debt obligations	(1,500)		(4,750)
Payments of deferred financing costs	—		(202)

Payments for taxes related to net share settlement of restricted stock units	(93)		—
Net cash provided by (used in) financing activities	1,029		(3,110)
Net change in cash	6		(146)
Cash - beginning of period	125		342
Cash - end of period	$	131	$	196
Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	5,276	$	7,165
Cash paid during the period for income taxes	$	724	$	508
Supplemental disclosure of non-cash activity
Common stock surrendered for the settlement of restricted stock units	$	93	$	—
Lease liability recognized to acquire a right-of-use asset	$	—	$	1,377


	Common Stock			Additional Paid-In Capital		Retained Earnings		Total Shareholders' Equity
	Shares	Amount
Balance at December 31, 2025	14,493	$	14	$	102,288	$	9,886	$	112,188

Expense related to director restricted stock units	—	—		97		—		97
Expense related to employee stock-based compensation	—	—		520		—		520


Net loss	—	—		—		(2,535)		(2,535)
Balance at March 31, 2026	14,493	$	14	$	102,905	$	7,351	$	110,270


	March 31,		September 30,
	2026		2025
Operating lease right-of-use assets	$	7,760	$	8,764

Operating lease liabilities - current	$	3,022	$	2,918
Operating lease liabilities - long-term	12,595		14,022
Total operating lease liabilities	$	15,617	$	16,940


Fiscal year ending:
2026 (remaining)	$	2,109
2027	3,591
2028	3,468
2029	3,582
2030	3,194
Thereafter	2,697
Total future lease payments	18,641
Less: imputed interest	(3,024)
Present value of future minimum lease payments	15,617
Less: current portion of operating lease liabilities	(3,022)
Long-term operating lease liabilities	$	12,595


Fiscal year ending:
2026 (remaining)	$	7,493
2027	14,694
2028	14,694
2029	13,734
2030	11,637
Thereafter	21,386
Total amortization expense	$	83,638


Intangible assets						Weighted-Average Remaining Amortization Period
Customer contracts and related customer relationships						6.1 years
Backlog						5.9 years
Trade names						6.3 years
Covenants not to compete						6.0 years
Total						6.1 years


	Performance Vesting	Service Vesting	Total
Outstanding, September 30, 2025	232,461	232,460	464,921
Granted	380,338	114,323	494,661
Vested	—	—	—
Cancelled	—	—	—
Outstanding, March 31, 2026	612,799	346,783	959,582


				(in years)
				Weighted
		Weighted		Average	(in thousands)
	(in thousands)	Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
Options outstanding, September 30, 2025	937	$	9.65	5.6	$	10
Granted	250	—		—	—
Exercised	—	—		—	—
Cancelled	(12)	11.66		—	—
Options outstanding, March 31, 2026	1,175	$	8.82	6.1	$	14
Vested and exercisable, March 31, 2026	890	$	9.56	5.0	$	14


			Payments Due Per Fiscal Year
			(Remaining)
	Total		2026		2027		2028		2029		2030		Thereafter
Debt obligations	$	132,690	$	10,690	$	22,250	$	99,750	$	—	$	—	$	—
Facility operating leases	18,641		2,109		3,591		3,468		3,582		3,194		2,697

Total contractual obligations	$	151,331	$	12,799	$	25,841	$	103,218	$	3,582	$	3,194	$	2,697


	Three Months Ended
	March 31,
Consolidated Statements of Operations:	2026				2025				Change
Revenue	$	59,265	100.0	%	$	89,212	100.0	%	$	(29,947)
Cost of operations:
Contract costs	47,490		80.1	%	71,594		80.3	%	(24,104)
General and administrative costs	7,530		12.7	%	8,238		9.2	%	(708)

Depreciation and amortization	4,300		7.3	%	4,265		4.8	%	35
Total operating costs	59,320		100.1	%	84,097		94.3	%	(24,777)
Income (loss) from operations	(55)		(0.1)	%	5,115		5.7	%	(5,170)
Interest expense, net	3,139		5.3	%	3,877		4.3	%	(738)
Income (loss) before provision for income taxes	(3,194)		(5.4)	%	1,238		1.4	%	(4,432)
Provision for income taxes (benefit)	(659)		(1.1)	%	360		0.4	%	(1,019)
Net income (loss)	$	(2,535)	(4.2)	%	$	878	1.0	%	$	(3,413)
Net income (loss) per share
Basic	$	(0.17)			$	0.06			$	(0.23)
Diluted	$	(0.17)			$	0.06			$	(0.23)


			Payments Due by Period
			Next 12		2-3		4-5		More than 5
	Total		Months		Years		Years		Years
Debt obligations	$	132,690	$	21,065	$	111,625	$	—	$	—
Facility operating leases	18,641		3,997		6,935		6,579		1,130

Total contractual obligations	$	151,331	$	25,062	$	118,560	$	6,579	$	1,130


	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2026		2025		2026		2025
Department of Health and Human Services	$	32,495	$	44,590	$	67,125	$	86,745
Department of Veterans Affairs	19,738		28,696		46,649		62,795
Department of Defense	6,830		14,711		14,056		28,066

Other	202		1,215		328		2,388
Total	$	59,265	$	89,212	$	128,158	$	179,994


	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2026		2025		2026		2025
Operating	$	810	$	765	$	1,626	$	1,611
Short-term	83		214		150		373
Variable	25		28		47		62
Sublease income (a)	(48)		(48)		(96)		(97)
Total lease costs	$	870	$	959	$	1,727	$	1,949


	March 31,
	2026		2025
Unrecognized expense for DLH employees (a)	$	3,955	$	4,567
Unrecognized expense for non-employee directors	193		309
Total unrecognized expense	$	4,148	$	4,876


	Six Months Ended
	March 31,
	2026				2025
	Revenue		Percent of total revenue		Revenue		Percent of total revenue
Department of Health and Human Services	$	67,125	52.4	%	$	86,745	48.2	%
Department of Veterans Affairs	46,649		36.3	%	62,795		34.9	%
Department of Defense	14,056		11.0	%	28,066		15.6	%
Other customers with less than 10% share of total revenue	328		0.3	%	2,388		1.3	%
Total revenue	$	128,158	100.0	%	$	179,994	100.0	%


	DLH HOLDINGS CORP.

	By:	/s/ Kathryn M. JohnBull
		Kathryn M. JohnBull
		Chief Financial Officer
		(On behalf of the Registrant and as Principal Financial and Accounting Officer)

Dated: May 06, 2026


1.	I have reviewed this quarterly report on Form 10-Q of DLH Holdings Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


/s/ Zachary C. Parker
Zachary C. Parker
Chief Executive Officer (Principal Executive Officer)


/s/ Kathryn M. JohnBull
Kathryn M. JohnBull
Chief Financial Officer (Principal Accounting Officer)


			(1)			The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

			(2)			The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.