Download PDF

1. Company Snapshot

1.a. Company Description

DLH Holdings Corp.provides technology-enabled business process outsourcing, program management solutions, and public health research and analytics services in the United States.The company offers defense and veterans' health solutions, including healthcare, technology, and logistics solutions to the VA, Defense Health Agency, Tele-medicine and Advanced Technology Research Center, Navy Bureau of Medicine and Surgery, and the Army Medical Research and Material Command.


It also provides a range of human services and solutions, which consists of monitoring and evaluation, electronic medical records migration, data collection and management, and nutritional and social health assessments; and IT system architecture design, migration plan, and ongoing maintenance services.In addition, the company offers public health and life sciences services, such as clinical trials, epidemiology studies, and disease prevention; and health promotion to underserved and at-risk communities through development of strategic communication campaigns, research on emerging trends, health informatics analyses, and application of best practices.It primarily serves the federal health services market.


The company was formerly known as TeamStaff, Inc.and changed its name to DLH Holdings Corp.in June 2012.


DLH Holdings Corp.was incorporated in 1969 and is headquartered in Atlanta, Georgia.

Show Full description

1.b. Last Insights on DLHC

DLH Holdings Corp.'s recent performance was positively driven by steady service demand and increasing adoption of remote work and technology. The company's Q4 2025 earnings call highlighted its resilience in the staffing industry, which has been impacted by the economic downturn in the manufacturing sector. With a strong position in the market, DLH Holdings Corp. is well-placed to benefit from emerging trends. According to Zacks, the company is one of three staffing stocks to consider despite industry woes, alongside KELYA and HSII.

1.c. Company Highlights

2. DLH Holdings' Q1 Earnings: A Mixed Bag Amidst Government Funding Uncertainty

DLH Holdings reported revenue of $68.9 million in the first quarter, a decline from $90.8 million in the prior year period, primarily due to the conversion of certain programs to small business set-aside contracts. Adjusted EBITDA was $6.5 million, down from $9.9 million in the prior year period, with an adjusted EBITDA margin of 9.5%. The company's EPS came in at -$0.09, slightly worse than the estimated -$0.07. The decline in revenue and adjusted EBITDA was largely driven by the impact of government funding uncertainty and the conversion of certain programs to small business set-aside contracts.

Publication Date: Feb -22

📋 Highlights
  • Government Funding Clarity:: Recent budget enactment reversed prior funding cuts for federal health agencies, enhancing visibility and supporting DLH's growth initiatives.
  • Revenue Decline:: Q1 revenue fell to $68.9M vs. $90.8M YoY due to small business set-aside conversions, though offset by contract expansions.
  • EBITDA Margin Improvement:: Adjusted EBITDA margin rose to 9.5% ($6.5M) sequentially, despite lower revenue and a $3.4M YoY EBITDA decline.
  • Cash Flow Progress:: Q1 free cash flow used $4.8M vs. $12.1M in 2024, driven by seasonal payroll tax timing, showing improved liquidity.
  • Debt Reduction Plan:: Targeting 50–55% EBITDA conversion to reduce debt by FY2026 year-end, maintaining covenant compliance and growth funding.

Operational Highlights

The company's defense and intelligence customers are prioritizing rapid delivery, cost efficiency, and digital modernization, which positions DLH competitively well for modernization-driven awards. As Zach Parker noted, "Defense and Intelligence customers are emphasizing rapid delivery, cost efficiency, digital modernization, and advanced technology integration... which positions DLH competitively well for modernization-driven awards." This trend is expected to drive growth in the company's core markets.

Cash Flow and Debt Reduction

DLH used approximately $4.8 million in free cash flow during the quarter, a significant improvement compared to last year's use of $12.1 million. The company remains well ahead of its mandatory term repayment schedule and in full compliance with all financial covenants, with plans to convert approximately 50% to 55% of EBITDA generated during fiscal 2026 to reduce debt by year-end.

Valuation Metrics

DLH's current valuation metrics indicate a relatively low price-to-sales ratio of 0.26 and an EV/EBITDA ratio of 8.31. The company's return on invested capital (ROIC) is 3.01%, while its return on equity (ROE) is -0.95%. The net debt-to-EBITDA ratio stands at 5.32, indicating a significant debt burden. The free cash flow yield is 35.93%, which may be attractive to income investors.

Outlook

The recently enacted budget provides increased funding capacity and improved visibility for DLH's clients, which is expected to have a positive impact on the company's growth initiatives. With improved clarity and stability, DLH is well-positioned to capitalize on opportunities in its core markets, particularly in the defense and intelligence sectors. As the company continues to execute on its commitment to deleveraging its balance sheet, investors will be watching for signs of growth and margin expansion.

3. NewsRoom

Card image cap

DLH Q1 Earnings Call Highlights

Feb -12

Source: defenseworld.net

Card image cap

DLH Holdings Corp. (DLHC) Q1 2026 Earnings Call Transcript

Feb -10

Source: seekingalpha.com

Card image cap

DLH Holdings Corp. (DLHC) Reports Q1 Loss, Lags Revenue Estimates

Feb -09

Source: zacks.com

Card image cap

DLH Reports Fiscal 2026 First Quarter Results

Feb -09

Source: globenewswire.com

Card image cap

DLH to Announce Fiscal 2026 First Quarter Financial Results

Feb -02

Source: globenewswire.com

Card image cap

DLH Holdings Corp. (DLHC) Q4 2025 Earnings Call Transcript

Dec -11

Source: seekingalpha.com

Card image cap

Here Are 3 Staffing Stocks to Consider Despite Industry Woes

Oct -28

Source: zacks.com

Card image cap

NIH Contract Expands DLH's Position as a Digital Transformation and Cybersecurity Leader

Aug -14

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.44%)

6. Segments

Department of Health and Human Services

Expected Growth: 7.5%

The 7.5% growth in the Department of Health and Human Services segment of DLH Holdings Corp. is driven by increasing demand for healthcare services, government funding for health initiatives, and the company's strategic acquisitions and partnerships. Additionally, the growing need for health IT solutions, consulting services, and logistics support also contributes to this growth.

Department of Veterans Affairs

Expected Growth: 7.2%

DLH Holdings Corp.'s 7.2% growth in the Department of Veterans Affairs segment is driven by increasing demand for healthcare services, expansion of existing contracts, and strategic acquisitions. Additionally, the company's focus on technology-enabled solutions and its ability to provide specialized services to veterans have contributed to its growth.

Department of Defense

Expected Growth: 7.8%

The 7.8% growth in the Department of Defense segment of DLH Holdings Corp. is driven by increasing demand for healthcare and logistics services, expansion of existing contracts, and new business wins. Additionally, the company's strategic acquisitions and investments in digital transformation have enhanced its capabilities, positioning it for continued growth in the federal healthcare and defense markets.

Other

Expected Growth: 7.0%

DLH Holdings Corp.'s 7.0% growth is driven by increasing demand for its healthcare and logistics services, strategic acquisitions, and expansion into new markets. The company's focus on technology-enabled solutions and cost savings initiatives also contribute to its growth. Additionally, the growing need for healthcare services and government contracts support the company's revenue growth.

Department of Homeland Security

Expected Growth: 7.6%

The 7.6% growth in the Department of Homeland Security segment of DLH Holdings Corp. is driven by increasing demand for cybersecurity and IT services, expansion of existing contracts, and new business wins. Additionally, the company's strategic investments in digital transformation and analytics capabilities have enhanced its competitive position, contributing to the segment's growth.

7. Detailed Products

Health and Human Services

Provides professional services and solutions to federal and commercial customers in the health and human services market.

Logistics and Technical Services

Offers logistics, technical, and consulting services to the federal government and commercial customers.

Cyber and Intelligence Solutions

Delivers cybersecurity, intelligence, and counterintelligence solutions to the federal government and commercial customers.

Engineering and Analytics

Provides engineering, analytics, and digital solutions to the federal government and commercial customers.

8. DLH Holdings Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

DLH Holdings Corp. operates in a niche market, providing professional services to the federal government. While there are some substitutes available, they are limited, and the company's expertise and reputation provide a competitive advantage.

Bargaining Power Of Customers

The federal government is a significant customer for DLH Holdings Corp., and its bargaining power is limited. The company's contracts are typically long-term, and the government's needs are often specialized, reducing its bargaining power.

Bargaining Power Of Suppliers

DLH Holdings Corp. is not heavily reliant on suppliers, and its suppliers do not have significant bargaining power. The company's services are highly specialized, and it has a diverse supplier base.

Threat Of New Entrants

The barriers to entry in DLH Holdings Corp.'s market are relatively high, and new entrants would need significant expertise and resources to compete effectively. The company's reputation and relationships with the federal government also provide a competitive advantage.

Intensity Of Rivalry

The market for professional services to the federal government is competitive, but DLH Holdings Corp. has a strong reputation and a diversified portfolio of services, which helps to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 65.17%
Debt Cost 4.76%
Equity Weight 34.83%
Equity Cost 10.29%
WACC 6.69%
Leverage 187.14%

11. Quality Control: DLH Holdings Corp. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Viad

A-Score: 4.5/10

Value: 8.9

Growth: 4.9

Quality: 5.8

Yield: 0.0

Momentum: 5.5

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
Performant Financial

A-Score: 3.9/10

Value: 4.6

Growth: 3.8

Quality: 4.5

Yield: 0.0

Momentum: 9.0

Volatility: 1.3

1-Year Total Return ->

View Full Report
Stock-Card
Odyssey Marine Exploration

A-Score: 3.8/10

Value: 6.0

Growth: 5.2

Quality: 6.1

Yield: 0.0

Momentum: 5.0

Volatility: 0.3

1-Year Total Return ->

View Full Report
Stock-Card
DLH

A-Score: 3.8/10

Value: 7.3

Growth: 4.8

Quality: 3.4

Yield: 0.0

Momentum: 2.5

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
Kodak

A-Score: 3.7/10

Value: 6.4

Growth: 3.8

Quality: 4.3

Yield: 0.0

Momentum: 6.0

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
Spire Global

A-Score: 3.3/10

Value: 4.3

Growth: 4.4

Quality: 7.9

Yield: 0.0

Momentum: 2.0

Volatility: 1.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.87$

Current Price

5.87$

Potential

-0.00%

Expected Cash-Flows