DLH Holdings Corp. Reports Decline in Revenue and Net Income for Third Quarter of Fiscal Year 2025

DLH Holdings Corp. reported a decline in financial performance for the third quarter and the first nine months of fiscal year 2025, as detailed in its latest 10-Q filing. For the three months ended June 30, 2025, the company generated revenue of $83.3 million, a decrease of 17.3% from $100.7 million in the same period last year. For the nine months ending June 30, 2025, revenue totaled $263.3 million, down 12.1% from $299.6 million in the prior year. The net income for the quarter was $289,000, or $0.02 per diluted share, compared to $1.1 million, or $0.08 per diluted share, in the previous year. For the nine-month period, net income was $2.3 million, or $0.16 per diluted share, down from $5.1 million, or $0.35 per diluted share, in 2024.

The decrease in revenue was primarily attributed to the conversion of certain contracts within the Department of Veterans Affairs (VA) and the Department of Defense (DoD) to small business contractors, which reduced the company's revenue volume. This decline was partially offset by contributions from new contract awards. Operating costs also decreased, with total operating costs for the quarter at $79.6 million, down from $94.9 million in the prior year, reflecting a reduction in contract costs and general administrative expenses.

In terms of strategic developments, DLH continues to focus on its core offerings in digital transformation, science research, and systems engineering for federal government clients. The company reported a backlog of approximately $555.3 million as of June 30, 2025, down from $690.3 million at the end of the previous fiscal year. This backlog includes $92.3 million in funded backlog, which is the portion of contracts that have been appropriated and allocated by customers. The company remains dependent on its relationships with major customers, including the Department of Health and Human Services, the Department of Veterans Affairs, and the Department of Defense, which collectively accounted for 98.9% of its revenue for the nine months ended June 30, 2025.

Operationally, DLH's employee headcount remained stable, with 14,386 shares of common stock outstanding as of June 30, 2025. The company has also made efforts to manage its debt, with total liabilities decreasing to $185.6 million from $204.2 million in the previous fiscal year. The company reported a decrease in interest expense, which fell to $3.5 million for the quarter, down from $4.1 million in the same period last year, primarily due to a reduction in the floating interest rate and prepayment of debt.

Looking ahead, DLH Holdings Corp. anticipates challenges due to the ongoing conversion of contracts to small business contractors and the potential impact of federal budgetary changes. The company is actively pursuing new business opportunities and remains focused on aligning its capabilities with government priorities. Management has expressed confidence in the company's ability to navigate these challenges and continue to deliver value to its federal clients.