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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.

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1.b. Last Insights on DLHC

DLH Holdings Corp.'s recent performance was positively driven by robust Q3 cash flow, which fueled accelerated debt reduction. The company's strong management of operating expenses assured margin delivery. Additionally, DLH's expanded position as a digital transformation and cybersecurity leader, following a renewed contract with the National Institutes of Health, is a significant growth driver. Furthermore, the company's steady service demand and increasing adoption of remote work and technology are expected to contribute to its growth, positioning it as a favorable staffing stock despite industry woes.

1.c. Company Highlights

2. DLH Holdings: Navigating Transition Amidst a Changing Landscape

DLH Holdings reported a challenging Q3 2025, with revenue declining to $83.3 million, a 17.3% drop from the previous year. This decline was largely driven by the anticipated shift of contracts to smaller businesses and government efficiency initiatives. Consequently, EBITDA also decreased to $8.1 million, a 19% decrease year-over-year. However, the company demonstrated strong cash flow generation, producing $9.5 million in operating cash flow, enabling them to reduce debt by $9.4 million to $142.3 million. This proactive debt management puts DLH ahead of schedule on mandatory debt payments, with the company projecting a 50-55% conversion of EBITDA to debt reduction this fiscal year.

Publication Date: Aug -17

📋 Highlights
  • Revenue Decline: Q3 2025 revenue fell to $83.3M from $100.7M YoY, driven by contract transitions and government efficiency initiatives.
  • EBITDA Drop: EBITDA decreased to $8.1M from $10M YoY, reflecting lower revenue and operational adjustments.
  • Strong Cash Flow: Generated $9.5M in operating cash flow, reducing debt by $9.4M to $142.3M and exceeding debt reduction targets.
  • Debt Management: Ahead of schedule on debt payments, targeting 50-55% EBITDA conversion to debt reduction in FY2025.

Growth Headwinds and Opportunities

The company's outlook for the coming quarters is tempered by the evolving political landscape and market dynamics. While the anticipated erosion of small business set-asides is progressing as expected, the slowdown in new business opportunities due to constraints on acquisition resources has emerged as a concern. This slowdown is impacting its ability to capitalize on new projects and expand its market share. However, DLH remains optimistic, citing recent initiatives by the new administration to recall government acquisition personnel, which are expected to alleviate these resource constraints in the near future.

Leveraging Expertise in High-Growth Areas

Despite these challenges, DLH is confident in its organic growth initiatives and its ability to leverage its technological expertise in high-growth government sectors. The company is well-positioned to capitalize on the government's increasing focus on areas such as AI, cybersecurity, and systems integration. This strategic focus on emerging technologies aligns with the growing demand for specialized solutions in these critical areas, presenting a significant opportunity for DLH to drive future revenue growth.

3. NewsRoom

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Here Are 3 Staffing Stocks to Consider Despite Industry Woes

Oct -28

Source: zacks.com

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

Aug -14

Source: globenewswire.com

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DLH Holdings Corp. (DLHC) Q3 2025 Earnings Call Transcript

Aug -08

Source: seekingalpha.com

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Dlh (DLHC) Q3 Revenue Falls 17%

Aug -07

Source: fool.com

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DLH Holdings Corp. (DLHC) Meets Q3 Earnings Estimates

Aug -06

Source: zacks.com

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DLH Reports Fiscal 2025 Third Quarter Results

Aug -06

Source: globenewswire.com

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Despite Fast-paced Momentum, DLH (DLHC) Is Still a Bargain Stock

Jun -26

Source: zacks.com

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DLH (DLHC) Is Attractively Priced Despite Fast-paced Momentum

May -27

Source: zacks.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

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Viad

A-Score: 5.3/10

Value: 9.0

Growth: 4.9

Quality: 6.1

Yield: 0.0

Momentum: 6.5

Volatility: 5.3

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Kodak

A-Score: 4.5/10

Value: 7.2

Growth: 4.7

Quality: 3.8

Yield: 0.0

Momentum: 9.0

Volatility: 2.3

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DLH

A-Score: 3.8/10

Value: 8.0

Growth: 5.8

Quality: 3.9

Yield: 0.0

Momentum: 1.0

Volatility: 4.0

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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

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Spire Global

A-Score: 3.7/10

Value: 6.6

Growth: 4.6

Quality: 3.0

Yield: 0.0

Momentum: 7.0

Volatility: 1.3

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Performant Financial

A-Score: 3.4/10

Value: 4.6

Growth: 3.9

Quality: 4.5

Yield: 0.0

Momentum: 2.5

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.93$

Current Price

5.93$

Potential

-0.00%

Expected Cash-Flows