What changed in this filing

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Item 1. Business

2024-12-04 compared with 2023-12-06 · 39 added, 29 removed, 134 unchanged (34% of the section changed)

1 unchanged sentence

DLH Holdings Corp.

("DLH") delivers improved health and cyber readiness solutions for federal government customers through digital transformation, science research and development, and systems engineering and integration.

("DLH") delivers improved health and readiness solutions for federal government customers through digital transformation and cyber security, science research and development, and systems engineering and integration.

We bring a unique combination of government sector experience, proven methodology, and unwavering commitment to solve the complex problems faced by civilian and military customers alike, doing so by leveraging multiple capabilities, including cyber technology, artificial intelligence, advanced analytics, cloud-based applications, and telehealth systems.

DLH is a holding company operating through a number of operating subsidiaries.

In December 2022, we acquired Grove Resource Solutions, LLC, which provides research and development, systems engineering and integration, and digital transformations solutions to federal agencies, notably the National Institutes of Health ("NIH"), U.S.

Navy and U.S.

Marine Corps.

Competitive Advantages

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We have invested in leading credentials and capabilities that we expect will deliver value to our customers.

These investments include development of secure Information Technology ("IT") platforms;

These investments include the development of secure Information Technology ("IT") platforms;

sophisticated data analytic tools and techniques;

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Solutions and Services

We primarily focus on improved deployment of large-scale health and defense initiatives for multiple agencies within the federal government, including the Department of Health and Human Services ("HHS"), the Department of Veterans Affairs ("VA"), Department of Defense ("DoD"), Department of Homeland Security ("DHS"), and many of their sub-agencies.

We deliver services primarily through prime contracts awarded by the federal government through competitive bidding processes.

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IT modernization and cyber security maturity are priority initiatives throughout our customer set.

Our customers, including numerous institutes and centers within the NIH, the Defense Health Agency ("DHA"), Tele-medicine and Advanced Technology Research Center ("TATRC"), and US Navy Naval Information Warfare Center ("NIWC"), rely on our information technology support to enable their vital missions.

Our customers, including numerous institutes and centers within the National Institutes of Health ("NIH"), the Defense Health Agency ("DHA"), Telemedicine and Advanced Technology Research Center ("TATRC"), and US Navy Naval Information Warfare Center ("NIWC"), rely on our information technology support to enable their vital missions.

We work with these customers to reduce risk and build resilience to cyber and physical threats to the federal government’s infrastructure, providing the full spectrum of cyber capabilities, cryptographic and true cyber engineering, Certified Information Security Officer ("CISO") / Information System Security Officer ("ISSO") support, risk management frameworks, Continuity of Operations ("COOP") / Disaster Recovery, and enterprise infrastructure and cloud governance focused on designing and implementing zero trust architecture.

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We advance scientific knowledge and understanding through our extensive research portfolio and domain expertise.

We primarily provide large-scale data analytics, testing and evaluation, clinical trials research services, and epidemiology studies to support multiple operating divisions within HHS, including NIH and the Center for Disease Control and Prevention ("CDC"), as well as the Military Health System.

Our employees support innovative, cutting-edge research on emerging trends, health informatics analyses, and application of best practices including mobile, social, and interactive media.

Our employees support innovative, cutting-edge research on emerging trends, health informatics analyses, and the application of best practices including mobile, social, and interactive media.

We leverage evidence-based methods and web technology to drive health equity to our most vulnerable populations through public engagement.

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DLH delivers IT operational resilience and efficiency in parallel with technology innovation integration, via hybrid and multi-cloud solutions, leveraging integrated services, process automation, advanced tool stacks, and mature quality processes.

Our employees engineer, implement, and operate solutions that demonstrate measurable results to satisfy our customer’s management requirements, thus helping customers to confidently deploy secure platforms and technologies that reduce operational costs.

employees engineer, implement, and operate solutions that demonstrate measurable results to satisfy our customer’s management requirements, thus helping customers to confidently deploy secure platforms and technologies that reduce operational costs.

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

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Department of Defense 64,128 16.2 % 70,325 18.7 %

Department of Homeland Security 919 0.2 % 126,576 32.0 %

Customers with less than 10% share of total revenue 7,320 1.9 % 5,374 1.4 %

$ 395,937 100.0 % $ 375,872 100.0 %

We remain dependent upon the continuation of our relationships with our major customers as a significant portion of our revenue is concentrated in each of them.

Our results of operations, cash flows and financial condition would be materially adversely affected if we were unable to continue our relationship with any of these customers, if we were to lose any of our material contracts, or if the amount of services we provide to them is materially reduced.

Major Contracts

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A major contract is defined as a contract or set of contracts from which we derive at least 10% of our revenues.

The revenue attributable to the VA was derived from 16 separate contracts covering the Company's performance of pharmacy and logistics services in support of the VA's Consolidated Mail Outpatient Pharmacy ("CMOP") program.

• Nine contracts for pharmacy services, which represent approximately $79.6 million and $70.4 million of revenues for the years ended September 30, 2023 and 2022, respectively, are currently operating under a bridge contract through December 31, 2023.

• Seven contracts for logistics services represent approximately $59.2 million and $55.7 million of revenues for the years ended September 30, 2023 and 2022, respectively, are currently operating under a bridge contract through December 31, 2023.

The VA has issued a request for proposal for healthcare logistics and pharmacy services for each CMOP location.

The revenue attributable to the VA was derived from separate task orders covering the Company's performance of pharmacy and logistics services at various regional locations, in support of the VA's Consolidated Mail Outpatient Pharmacy ("CMOP") program.

• CMOP pharmacy and logistic services represent approximately $139.9 million and $138.8 million of revenues for the years ended September 30, 2024 and 2023, respectively

• After the close of fiscal 2024, we received new tasks orders to continue providing services to seven CMOP locations.

The new task orders were issued under the contract awarded in April 2024 and have varying durations of up to four months.

At the conclusion of these task orders, the customer may extend these task orders or award new task orders if they have not yet awarded the new contracts.

As previously reported, the VA issued separate requests for proposals for healthcare pharmacy and logistic services for each of its eight CMOP locations.

Each of these procurements is being evaluated separately and may be subject to differing timelines for award.

The procurements were set-aside for a service-disabled veteran owned small business (“SDVOSB”) as the prime contractor.

DLH maintains relationships with SDVOSB partners.

Should the new contracts for performance of these services be awarded to a partner of DLH, the Company expects to continue to perform a significant amount of the contract’s volume of business as a subcontractor.

Should the VA conclude that an award to an SDVOSB prime contractor is not in the best interest of the government, they may reissue a solicitation in an unrestricted competition.

DLH believes that its service excellence over many years on the program would provide an advantage in any competition.

At September 30, 2023, our backlog was approximately $704.8 million, of which $169.9 million was funded backlog.

At September 30, 2022 our backlog was $482.5 million, of which $98.9 million was funded backlog.

During the quarter ended March 31, 2024, the VA began the process of evaluating these and subsequently made an award decision for the Chelmsford CMOP Staffing Services location to an SDVOSB unrelated to DLH.

In support of DLH’s continuing performance as the prime contractor during the ongoing acquisition evaluation, the VA awarded us a sole-source IDIQ contract effective May 1, 2024.

The IDIQ has a ceiling value of $200.0 million and a maximum period of performance through April 30, 2025, with the potential for orders placed within that period to extend performance through October 2025.

During the quarter ended June 30, 2024, the VA issued amendments to the requests for proposals for the seven remaining CMOP locations.

The amendments required a current or potentially new bidder to respond to the solicitations' changes with a compliant proposal.

As with all proposal opportunities, DLH evaluated the revised CMOP requests for proposal for suitability of terms and conditions.

As a result, we elected to not pursue certain of the opportunities.

Proposals were due for four of the seven locations during the quarter ended September 30, 2024.

The remaining three locations have not yet had their proposal due dates assigned.

While the acquisition process is being conducted, DLH continues to operate as the prime contractor for all seven CMOP locations that it currently manages.

DLH intends to provide additional updates to the progression of these solicitations as a part of its regular quarterly and annual filings.

The Company's contract with HHS in support of its Head Start program generated $40.4 million and $36.0 million of revenues for the years ended September 30, 2024 and 2023, respectively.

This contract has a period of performance through April 2025.

On September 30, 2024, our backlog was approximately $690.3 million, of which $155.1 million was funded backlog.

On September 30, 2023 our backlog was $704.8 million, of which $169.9 million was funded backlog.

We define backlog as our estimate of remaining future revenue from existing signed contracts, assuming the exercise of all options relating to such contracts and including executed task orders issued under Indefinite Quantity/Indefinite Delivery ("IDIQ") contracts or if the contract is a single award IDIQ contract.

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Competitive Landscape

Competitive solicitations and long business development cycles are characteristics of the government and defense industry in which we operate.

For major program competition, the business acquisition cycle typically ranges from 18 to 36 months.

Competitive solicitations and long business development cycles are characteristics of the government contracting industry in which we operate.

For major program competitions, the business acquisition cycle typically ranges from 18 to 36 months.

Companies may pursue work either as prime contractor or partner with other companies in a subcontractor role.

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Our competitors include operating units within:

Deloitte, Booz Allen Hamilton Holding Corp., CACI International, Inc., BAE Systems, ICF International, Inc., Leidos Holdings, Inc., Mantech International Corp., Aglient Technologies Inc., MAXIMUS, Inc., UnitedHealth Group, Inc.

operating under Optum, and Westat, Inc.

Accenture Federal Services LLC, BAE Systems plc, Booz Allen Hamilton Holding Corp., CACI International, Inc., Deloitte, ECS Federal, LLC, The Emmes Company, LLC, General Dynamics Information Technology, Inc., Guidehouse, IBM Federal, ICF International, Inc., Information Management Services, Inc., Leidos Holdings, Inc., LMI Consulting, LLC, ManTech International Corp., NexGen Data Systems Inc., Peraton, Inc., PPD Inc., Scientific Research Corp, Rho, Inc., RTI International, SAIC Inc., The Informatics Applications Group Inc.

(TIAG), UnitedHealth Group, Inc.

and Westat, Inc.

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

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government's fiscal year ends on September 30 each year.

It is not uncommon for U.S.

government agencies to award extra tasks or complete other contract actions within this timeframe leading up to the fiscal year end in order to avoid losses of unexpended fiscal year funds.

While not certain, it is not uncommon for U.S.

government agencies to award extra tasks or complete other contract actions in the weeks before the end of its fiscal year in order to avoid the loss of unexpended fiscal year funds.

Our business is affected by numerous laws and regulations relating to the award, administration and performance of U.S.

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Our employees are critical to our success and are the reason we continue to execute at a high level.

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

We believe our continued focus on making employee engagement and development is a key component of delivering high quality services to our customers.

As of September 30, 2024, we employed approximately 2,800 employees performing throughout the U.S.

38 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