DLH Holdings Corp. Reports 33.6% Revenue Decline and $2.5 Million Net Loss in Q2 Fiscal 2026

DLH Holdings Corp. reported a significant decline in financial performance for the second quarter of fiscal 2026, with revenues totaling $59.3 million, down 33.6% from $89.2 million in the same period last year. For the six months ending March 31, 2026, revenue also decreased by 28.8% to $128.2 million compared to $180.0 million in the prior year. The company attributed this decline primarily to the conversion of certain contracts to small business contractors, which impacted overall revenue generation.

The company's operating costs for the three months ended March 31, 2026, were $59.3 million, a decrease of 29.4% from $84.1 million in the previous year. Contract costs, which include direct labor and associated expenses, fell by $24.1 million, reflecting the reduced revenue volume. General and administrative costs also decreased by $0.7 million, although they increased as a percentage of revenue from 9.2% to 12.7%. DLH reported a net loss of $2.5 million for the quarter, compared to a net income of $878,000 in the same period last year, resulting in a loss per share of $0.17.

In terms of operational developments, DLH's backlog decreased to approximately $442.4 million as of March 31, 2026, down from $514.3 million at the end of the previous fiscal year. The funded backlog also declined, indicating a reduction in contracts that have been appropriated and allocated for payment. The company continues to focus on its major customers, including the Department of Health and Human Services, which accounted for 52.4% of total revenue in the first half of fiscal 2026.

Looking ahead, DLH Holdings Corp. remains cautious about the federal budget outlook, which continues to be uncertain. The company is closely monitoring legislative and contracting developments to adapt its strategies accordingly. Despite the challenges, DLH believes it is well-positioned to pursue new business opportunities within its addressable market, particularly in areas aligned with government priorities such as health and national security. The company is also focused on scaling its operations to align with current contract volumes and improving its cost structure to enhance profitability in the future.