What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-12-06 compared with 2020-12-07 · 37 added, 38 removed, 146 unchanged (34% of the section changed)

5 unchanged sentences

In recent years we have successfully completed acquisitions to increase future organic growth, diversify our customer base, and to expand into adjacent markets.

On September 30, 2020, we acquired Irving Burton Associates, LLC ("IBA") and in June 2019 we acquired Social & Scientific Systems, Inc.

On September 30, 2020, we acquired Irving Burton Associates, LLC ("IBA") and on June 7, 2019, we acquired Social & Scientific Systems, Inc.

Our business offerings are aligned to three market focus areas within the federal health services market space.

3 unchanged sentences

Defense and Veterans’ Health Solutions:

DLH provides critical healthcare, technology, and logistics solutions to the VA, Defense Health Agency ("DHA"), Tele-medicine and Advanced Technology Research Center ("TATRC"), Navy Bureau of Medicine and Surgery, and Army Medical Research and Material Command ("MRDC").

DLH provides critical healthcare, technology, and logistics solutions to the VA, Defense Health Agency ("DHA"), Tele-medicine and Advanced Technology Research Center ("TATRC"), Navy Bureau of Medicine and Surgery, and the Army Medical Research and Material Command ("MRDC").

We specialize in supporting our customers' evolving needs by rapidly deploying resources and solutions.

The VA is responsible for delivering medical, educational, financing and other life event services to an estimated 20.3 million veterans.

There are over 9 million veterans enrolled in the VA health care program which provides services that include the distribution of prescription drugs from the network of regional processing centers.

We are at the forefront of ensuring that

veterans receive their out-patient prescriptions on time, each day, through the VA CMOP pharmacy program which has been recognized for service excellence, earning the JD Powers evaluation of mail order pharmacies for each of the past nine years.

There are over 9 million veterans enrolled in the VA health care program which provides services that include the

distribution of prescription drugs from the network of regional processing centers.

We are at the forefront of ensuring that veterans receive their out-patient prescriptions on time, each day, through the VA CMOP pharmacy program which has been recognized for service excellence, earning the JD Powers evaluation of mail order pharmacies multiple times over recent years.

Further, we have supported the VA's efforts to broaden its abilities to reach veterans and their families through telemedicine technology and practices.

7 unchanged sentences

We support our customers by providing a wide range of services and solutions to HHS, the Department of Homeland Security ("DHS"), and the Department of State ("State").

Our range of services support the critical missions of these agencies and their respective operating divisions, to include the Office of Head Start ("OHS"), Administration for Children and Families ("ACF") and the United States Agency of International Development ("USAID").

Our range of services support the critical missions of these agencies and their respective operating divisions, to include the Office of Head Start ("OHS"), Administration for Children and Families ("ACF"), the Federal Emergency Management Agency ("FEMA"), and the United States Agency of International Development ("USAID").

In this market, we combine subject matter expertise with our experience in information technology and analytics to provide large-scale program monitoring and evaluation;

3 unchanged sentences

Additionally, we also provide large-scale data analytics as well as enterprise-level IT system architecture design, migration planning, and ongoing management of system implementation and capacity building using experienced subject matter experts and project management resources.

FEMA is charged with supporting the nation before, during and after disasters.

They execute their mission by building a culture of preparedness and readying the nation for catastrophic disasters.

FEMA supports state and local government in their response to disasters by coordinating the federal government's response to the local jurisdiction and deploying resources to the areas of need.

During the COVID-19 pandemic, we have supported FEMA's efforts by rapidly deploying specialty resources to support resource constrained health-care providers.

Public Health and Life Sciences:

1 unchanged sentence

In support of this mission, we provide services to multiple operating divisions within HHS, including National Institutes of Health ("NIH"), the Center for Disease Control and Prevention ("CDC"), and Centers for Medicare and Medicaid Services ("CMS").

Many of these agencies are engaged to combat the COVID-19 pandemic in a variety of capacities.

Many of these agencies are engaged to combat the COVID-19 pandemic in a variety of capacities and we have partnered with our customers to deliver solutions that allow the nation and its people to combat the pandemic and sustain operations and services.

Our services include clinical trials, epidemiology studies, advancing disease prevention methods and health promotion to underserved and at-risk communities.

2 unchanged sentences

Projects often involve highly specialized expertise and research methodologies.

The following table summarizes the revenues by market for the year ended September 30, 2020 and 2019, respectively:

(in thousands)

The following table summarizes the revenues by market for the years ended September 30, 2021 and 2020, respectively:

September 30,

Revenue Percent of total revenue Revenue Percent of total revenue

(Amounts in thousands) Revenue Percent of total revenue Revenue Percent of total revenue

Defense/VA $ 141,435 57 % $ 101,656 49 %

2 unchanged sentences

Total Revenue $ 246,094 100 % $ 209,185 100 %

Irving Burton Associates, LLC Acquisition

On September 30, 2020, the Company acquired Irving Burton Associates, LLC ("IBA"), a leading provider of innovative healthcare research, services and solutions to the federal government.

IBA specializes in artificial intelligence, IT and program management support, application modernization, and digital transformation.

IBA expands our ability to provide complementary services across multiple government markets including the Defense Health Agency ("DHA"), and the United States Army Medical Research and Development Command ("MRDC").

Further, IBA holds a top secret facility clearance and roughly half of their approximately 115 employees hold a security clearance.

Their unique set of capabilities, certifications and skill sets are expected to expand our reach into the military healthcare community.

Capabilities and certifications

2 unchanged sentences

We are actively pursuing additional credentials that will support our customer's needs in providing a secure cloud computing environment.

Our Infinibyte ® Cloud solution has achieved FedRamp ready status, further enhancing our ability to demonstrate our technical expertise and offer our customers a secure cloud environment.

Our Infinibyte® Cloud solution has achieved FedRAMP In Process status and received agency authorization.

It is currently under review by the General Services Administration ("GSA") review for being listed on the public market place, further enhancing our ability to demonstrate our technical expertise and offer our customers a secure cloud environment.

We have invested in agile software development credentials for our technical staff, and have achieved Capability Maturity Model Integration ("CMMI") level 3.

6 unchanged sentences

• specialized credentials and licenses held by a substantial component of our employee base;

• prime contractor position in contracts representing 92% of our revenue;

• primarily performing from the prime contractor position in contracts;

• strong past performance record, as evidenced by our VA customer scoring the highest in overall satisfaction in the J.D.

Power National Pharmacy Study over the past nine years;

Power National Pharmacy Study multiple times in recent years;

• targeted expansion in critical national priority markets with Federal budget stability to include public health and epidemiological support related to COVID-19.

2 unchanged sentences

Our revenue is distributed to time and materials contracts (75%), cost reimbursable contracts (20%) and the remaining are firm fixed price contracts (5%).

We also provide services under Indefinite Duration, Indefinite Quantity ("IDIQ") and government wide acquisition contracts, such as General Services Administration (GSA) schedule contracts.

We also provide services under Indefinite Duration, Indefinite Quantity ("IDIQ") and government wide acquisition contracts, such as GSA schedule contracts.

The Company currently holds multiple GSA schedule contracts, under which we provide services that constitute a significant percentage of our total revenue.

2 unchanged sentences

A major customer is defined as a customer from whom we derive at least 10% of our revenues.

Our two largest customers are the VA and HHS.

The following table summarizes the revenues by customer for the year ended September 30, 2020 and 2019, respectively:

(in thousands)

The following table summarizes the revenues by customer for the years ended September 30, 2021 and 2020, respectively:

September 30,

Revenue Percent of total revenue Revenue Percent of total revenue

(Amounts in thousands) Revenue Percent of total revenue Revenue Percent of total revenue

Department of Veterans Affairs $ 110,078 45 % $ 100,204 48 %

Department of Health and Human Services 91,543 37 % 95,026 45 %

Department of Defense 30,930 13 % 1,303 1 %

Customers with less than 10% share of total revenue 13,543 5 % 12,652 6 %

2 unchanged sentences

The revenue attributable to the VA customers was derived from 16 separate contracts for our performance of pharmacy and logistics services in support of the VA’s consolidated mail outpatient pharmacy program.

Nine contracts for pharmacy services, which represent approximately $56.5 million and $52.5 million for the years ended September 30, 2020 and 2019, are currently operating under a bridge contract through October 2021.

Nine contracts for pharmacy services, which represent approximately $62.8 million and $56.5 million of revenues for the years ended September 30, 2021 and 2020, are currently operating under a bridge contract through October 2022.

As previously reported, a single renewal request for proposal (“RFP”) had been issued for the nine (9) pharmacy contracts that required the prime contractor be a service-disabled veteran owned small business (“SDVOSB”), which would have precluded us from bidding on the RFP as a prime contractor.

3 unchanged sentences

Due to the time required to conduct a procurement process, we expect these contracts to be further extended.

The remaining seven contracts for logistics services, which represent approximately $43.7 million and $39.4 million for the years ended September 30, 2020 and 2019, have been extended to June 2021.

A renewal RFP for the seven logistics contracts has been issued and provides for evaluation and award of the contract based on the classification of the bidder.

The RFP initially included award preference for a SDVOSB prime contractor.

The government has since removed that preference thereby making the procurement a full and open acquisition, which allows for us to be evaluated as the prime contractor.

Our contract with HHS in support of the Head Start program generated $32.4 million and $37.6 million revenue for the years ended September 30, 2020 and 2019, respectively.

We were recently awarded a new contract to continue our long standing relationship with the Office of Head Start.

This contract is on a time and materials basis and consists of a base period and four option periods through April 2025.

The remaining seven contracts for logistics services represent approximately $47.2 million and $43.7 million of revenues for the years ended September 30, 2021 and 2020.

In April 2021, we were awarded a follow-on contract to provide medical logistics to the VA's CMOP program.

The contract award was protested and subsequently canceled during the third quarter of fiscal year 2021.

The contract award was canceled in accordance with procurement requirements to allow the government sufficient time to address administrative concerns raised in the protest about the procurement process.

Once the government completes this process, we expect to be awarded a new contract.

In the interim, the existing contract has been extended through November 2022.

Our contract with HHS in support of the Head Start program generated $28.2 million and $32.4 million of revenue for the years ended September 30, 2021 and 2020, respectively.

This contract has a period of performance through April 2025.

Backlog represents total estimated contract value of predominantly multi-year government contracts and will vary depending upon the timing of new/renewal contract awards.

2 unchanged sentences

While no assurances can be given that existing contracts will result in earned revenue in any future period, or at all, our major customers have historically exercised their contractual renewal options.

At September 30, 2020, our total backlog was approximately $688.4 million compared to $414.1 million as of September 30, 2019, reflecting current year activity as well as the impact of the IBA acquisition.

At September 30, 2021, our total backlog was approximately $651.5 million compared to $688.4 million as of September 30, 2020.

Backlog value is quantified from management's judgment and assumptions about the volume of services based on past volume trends and current planning developed with customers.

16 unchanged sentences

Booz Allen Hamilton Holding Corp., CACI International, Inc., ICF International, Inc., Leidos Holdings, Inc., Mantech International Corp., MAXIMUS, Inc., UnitedHealth Group, Inc.

operating under Optum, VSE Corporation, and Westat, Inc.

operating under Optum, RTI International, and Westat, Inc.

We compete with these companies by leveraging our differentiating suite of tools and uniquely integrating people and processes resulting in highly competitive proposals and a solid track record of past performance.

32 unchanged sentences

We believe our continued focus on making employee engagement a top priority will help us provide high quality insights and information to our clients.

To facilitate talent attraction and retention, we strive to make DLH a diverse, inclusive and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits and health and wellness programs, and by programs that build connections between our employees and their communities.

At DLH, we are committed to the health, safety and wellness of our employees.

We are committed to the health, safety and wellness of our employees.

We provide our employees and their families with flexible and convenient health and wellness programs, including competitive benefits arrangement to address healthcare needs, including health insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and family care resources.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations.

This includes having our employees work from home when possible and implementing additional safety measures for employees continuing critical on-site work.

This includes having our employees work from home when possible, implementing additional safety measures for employees continuing critical on-site work, and supporting our employees to receive the COVID-19 vaccination within appropriate medical and religious bounds.

In addition, we are monitoring potential impacts and will implement new protocols, when needed, related to the vaccination requirements imposed by the Executive Order on Ensuring Adequate Safety Protocols for Federal Contractors signed by President Biden on September 9, 2021.

We provide competitive compensation programs to help meet the needs of our employees.

In addition to salaries, these programs include annual bonuses, stock awards, and participation in a 401(k) Plan.

We have used targeted equity-based grants with performance-based vesting conditions to facilitate retention of personnel.

We have used targeted equity-based grants with performance-based vesting conditions to facilitate retention of key personnel.

We also invest in talent development initiatives, to include industry-leading learning management, professional credentialing, and applicant tracking systems.

14 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business