What changed in DLH Holdings Corp.'s 2023 10-K compared to 2022?

Across the narrative sections we track, DLH Holdings Corp. (DLHC) added 236 paragraphs, removed 246, and edited 174 between the 2022 and 2023 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+80/−91), Item 1A. Risk Factors (+97/−87), Item 1. Business (+47/−57).

Did DLH Holdings Corp. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 97 new/edited paragraphs and 87 removed paragraphs versus the 2022 10-K.

What changed in DLH Holdings Corp.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 80 new/edited paragraphs and 91 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this DLHC 10-K diff come from?

The source filings are DLH Holdings Corp.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in DLH Holdings Corp.'s 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of DLH Holdings Corp.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+236 added−246 removedSource: 10-K (2023-12-06) vs 10-K (2022-12-05)

Top changes in DLH Holdings Corp.'s 2023 10-K

236 paragraphs added · 246 removed · 174 edited across 6 sections

Item 7. Management's Discussion & Analysis+80 / −91 · 54 edited
Item 1A. Risk Factors+97 / −87 · 77 edited
Item 1. Business+47 / −57 · 32 edited
Item 7A. Quantitative and Qualitative Disclosures About Market Risk+5 / −4 · 4 edited
Item 5. Market for Registrant's Common Equity+4 / −4 · 4 edited

Item 1. Business

Business — how the company describes what it does

32 edited+15 added−25 removed18 unchanged

2022 filing

2023 filing

Biggest changeCompetitive Advantages We believe we are advantageously positioned within our markets by a number of features including, but not limited to: • specialized credentials and licenses held by a substantial component of our employee base; • primarily performing as the prime contractor; • strong past performance record across our government contracts; and • targeted expansion in critical national priority markets with Federal budget stability to include public health and epidemiological support related to COVID-19 3 We continue to invest in credentials that drive excellence in our support to current clients and create differentiation as we compete in this space.

Biggest changeCompetitive Advantages We believe we are advantageously positioned within our markets through a number of features including, but not limited to: • highly credentialed workforce; • predominantly performing as the prime contractor; • strong past performance record across our government contracts; and • strong bipartisan support for our key contracts. 3 We have invested in leading credentials and capabilities that we expect will deliver value to our customers.

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. We believe that our proprietary tools and processes, including e-PRAT ® and SPOT-m ® , along with our Infinibyte ® cloud-based management system differentiate us from our competitors.

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. We believe that our proprietary tools and processes, including e-PRAT ® and SPOT-m ® , along with our Infinibyte ® cloud-based management system differentiate us from our competitors.

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

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

In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including DLH. The information on our website is not incorporated by reference into and is not part of this Annual Report on Form 10-K.

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 an unrestricted competition.

As a market influencer and emerging leader, DLH strives to shape and enhance the sustainability and readiness posture of those we serve, delivering value to our customers, stakeholders, and shareholders.

As a market influencer and emerging leader, DLH strives to shape and enhance the sustainability and readiness posture of those we serve, delivering value to our customers and stakeholders.

As any employer is, we are subject to federal and state statutes and regulations governing their standards of business conduct with the government, including that government contracts typically contain provisions permitting government clients to terminate contracts without cause with limited notice or compensation.

As any employer is, we are subject to federal and state statutes and regulations governing their standards of business conduct with the government, including that government contracts typically contain provisions permitting government customers to terminate contracts without cause with limited notice or compensation.

DLH stands on strong values including: • Integrity and Trust - We establish relationships throughout our organization and with clients and partners that are built on a foundation of mutual trust and respect, which exemplifies the way DLH does business.

DLH stands on strong values including: • Integrity and Trust - We establish relationships throughout our organization and with customers and partners that are built on a foundation of mutual trust and respect, which exemplifies the way DLH does business.

Our recent and future success in this competitive landscape hinges on our ability to continue to uniquely integrate people, processes and technology tools to deliver best value solutions for our targeted clients (both government and industry partners).

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

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

Employee Safety and Health 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 arrangements to address healthcare needs, including health insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and family care resources.

We define funded backlog as the portion of backlog for which funding is appropriated and allocated to the contract by the customer and authorized for payment by the customer, once specified work is completed. Funded backlog does not include the full contract value as Congress often appropriates funding for contracts on a yearly or quarterly basis.

We believe our continued focus on making employee engagement a top priority will help us provide high quality insights and information to our clients. As of September 30, 2022, we employed over 2,400 employees performing in over 30 locations throughout the U.S. and one location overseas. Management believes that it has good relations with its employees.

We believe our continued focus on making employee engagement a top priority will help us provide high quality insights and information to our customers. As of September 30, 2023, we employed approximately 3,200 employees performing throughout the U.S. and one location overseas. Management believes that it has good relations with its employees.

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.

At September 30, 2022 our backlog was $482.5 million, of which $98.9 million was funded backlog. 5 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.

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. 5 • Nine contracts for pharmacy services, which represent approximately $70.4 million and $62.8 million of revenues for the years ended September 30, 2022 and 2021, respectively, are currently operating under a bridge contract through October 2023. • Seven contracts for logistics services represent approximately $55.7 million and $47.2 million of revenues for the years ended September 30, 2022 and 2021, respectively, are currently operating under a bridge contract through November 2023.

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.

We deliver our services through development of strategic communication campaigns, research on emerging trends, health informatics analyses, and 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. Projects often involve highly specialized expertise and research methodologies.

Our employees support innovative, cutting-edge research on emerging trends, health informatics analyses, and 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. Projects often involve highly specialized expertise and transformative R&D support services.

The following table summarizes the revenues by customer for the years ended September 30, 2023 and 2022, respectively (in thousands): 2023 2022 Revenue Percent of total revenue Revenue Percent of total revenue Department of Health and Human Services $ 161,311 42.9 % $ 102,201 25.9 % Department of Veterans Affairs 138,862 37.0 % 126,106 31.9 % Department of Defense 70,325 18.7 % 33,612 8.5 % Department of Homeland Security 919 0.2 % 126,576 32.0 % Customers with less than 10% share of total revenue 4,455 1.2 % 6,678 1.7 % Revenue $ 375,872 100.0 % $ 395,173 100.0 % Major Contracts We operate primarily through prime contracts awarded by the government through competitive bidding processes.

Our telephone number is (770) 554-3545. Our website is www.dlhcorp.com. The website contains information about our company and operations. Links to the Investor Relations section of our website, copies of our filings with the U.S.

Company Website and Information Our corporate headquarters are located at 3565 Piedmont Road NE, Building 3 Suite 700, Atlanta, Georgia 30305. Our telephone number is (770) 554-3545. Our website is www.dlhcorp.com. The website contains information about our company and operations. Links to the Investor Relations section of our website, copies of our filings with the U.S.

Vision and Values 7 DLH's vision is to be the most trusted provider of technology-enabled healthcare and public health services, medical logistics, and readiness enhancement services to Military Service Members, Veterans, children and families, and other at-risk and underserved communities.

Vision and Values DLH’s vision is to be the most trusted provider of technology solutions and readiness enhancement services to Federal civilian and military agencies. Through our work, DLH supports Military Service Members, Veterans, children and families, and other at-risk and underserved communities.

We have a diverse mix of contract vehicles with various agencies of the United States Government, which supports our overall corporate growth strategy. Our revenue is distributed to time and materials contracts (78%), cost reimbursable contracts (12%) and the remaining are firm fixed price contracts (10%).

We deliver services primarily through prime contracts awarded by the federal government through competitive bidding processes. We have a diverse mix of contract vehicles with various agencies of the federal government, which supports our overall corporate growth strategy. Our revenue is distributed to time and materials contracts (56%), firm fixed price contracts (22%), and cost reimbursable contracts (22%).

We leverage the value of our diversity into every aspect of our business. • Agility - As we grow, we continue to evolve in a manner that maintains our flexibility and agility. This allows us to anticipate and respond to ever-changing government service requirements while delivering maximum value to clients and shareholders.

We leverage the value of our diversity into every aspect of our business. • Agility - As we grow, we continue to evolve in a manner that maintains our flexibility and agility.

These investments include development of secure IT platforms, sophisticated data analytic tools and techniques, and implementation of a lean six sigma environment. We are actively pursuing additional credentials that will support our customer's needs in providing a secure cloud computing environment.

These investments include development of secure Information Technology ("IT") platforms; sophisticated data analytic tools and techniques; and implementation process improvement and quality assurance programs and techniques. We are actively pursuing additional credentials that will support our customers' ever evolving missions.

We partner and compete with several large and small-business companies in pursuit of acquiring new business. 6 Our competitors include operating units within, among others: 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, RTI International, and Westat, Inc.

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.

In addition to salaries, these programs may include bonus and participation in a 401(k) Plan. We have used targeted equity-based grants with performance and service based vesting conditions to facilitate attracting and retaining key personnel. We also invest in talent development initiatives including industry-leading learning management, professional credentialing, and applicant tracking systems.

We provide competitive compensation programs to compete and reward our talented employees. In addition to base compensation, additional compensatory benefits may include bonus programs and participation in a 401(k) Plan. We have used targeted equity-based grants with performance and service based vesting conditions to facilitate attracting and retaining key personnel.

At September 30, 2021 our backlog was $651.5 million, of which $191.0 million was funded backlog.

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

We have a diverse mix of contract vehicles with various agencies of the United State government, which supports our overall corporate growth strategy. Our Federal contract schedules are renewed on a recurring basis for multi-year periods.

We have a diverse mix of contract vehicles with various agencies of the U.S. government, which supports our overall corporate growth strategy. A major contract is defined as a contract or set of contracts from which we derive at least 10% of our revenues.

These will further enhance our highly qualified employee base and augment our efforts to infuse top talent into our operations through world-class recruiting and talent management tools. Employee Safety and Health We are committed to the health, safety and wellness of our employees.

We also invest in talent development initiatives including industry-leading learning management solutions, professional credentialing, and licensures. These benefits will further enhance our talented employee base and augment our efforts to infuse proven best practices into our operations through world-class talent acquisition and talent management tools.

Pursuant to its customary acquisition process, the VA has indicated its intention to pursue renewal of these contracts with a service-disabled veteran owned small business ("SDVOSB") as the prime contractor. DLH maintains relationships with SDVOSB partners.

The VA has issued a request for proposal for healthcare logistics and pharmacy services for each CMOP location. The procurements were set-aside for a service-disabled veteran owned small business ("SDVOSB") as the prime contractor. DLH maintains relationships with SDVOSB partners.

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

Our enterprise lifecycle logistics support services encompass military systems deployed worldwide, as well as scientific and IT systems and peripherals for Federal civilian agencies. Major Customers Our revenues are from agencies of the U.S. Federal government. A major customer is defined as a customer from whom we derive at least 10% of our revenues.

Talent Acquisition, Development, and Retention We seek to attract and retain the best people by providing them with opportunities to grow, build skills, and be appreciated for their contributions as they work to serve our clients. We provide competitive compensation programs to help meet the needs of our employees.

We continually review and adapt our recruiting, hiring, and training efforts to respond to market imperatives and the needs of our customers. We seek to attract and cultivate high performing talent by providing opportunities for career growth, skills development, and recognition for their contributions as they work to serve our customers.

Those competing as prime contractors normally expend substantially more resources than those in subcontractor roles.

Those competing as prime contractors normally expend substantially more resources than those in subcontractor roles. We predominantly are the prime contractor on our contracts with federal government customers and compete with several large and small-business companies in pursuit of acquiring new business.

The solution has received a FedRAMP Moderate authorization and is one of the few platform-as-a-service solutions listed on the FedRAMP marketplace, 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.

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. 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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ITEM 1. BUSINESS Overview and Background DLH Holdings Corp. ("DLH"), founded in 1969 as a New Jersey Corporation, is a holding company whose direct 100%-owned operating subsidiaries include DLH Solutions, Inc. ("DLH Solutions"), Social & Scientific Systems, Inc. ("S3"), Irving Burton Associates, LLC ("IBA"), and Danya International LLC ("Danya").

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ITEM 1. BUSINESS Overview and Background 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.

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DLH is a provider of technology-enabled business process outsourcing, program management solutions, and public health research and analytics. We bring a unique combination of government sector experience, proven methodology, and unwavering commitment to public health to improve the lives of millions.

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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.

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We combine our expertise and technical capabilities to build upon our strong record of delivering improved health and readiness solutions for federal programs through research, development, and innovative care processes including technology-enabled solutions, public health research, advance analytics, and other services.

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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.

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The Company's expertise in public health, performance evaluation, and health operations solve the complex problems faced by civilian and military customers alike, leveraging digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, and more.

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We provide the following services and solutions, which are aligned with the long-term needs of our customers: • Digital Transformation and Cyber Security; • Science Research and Development; and • Systems Engineering and Integration Digital Transformation and Cyber Security We provide critical digital transformation and cyber security solutions across the federal civilian and cyber defense communities, leveraging advanced technology to modernize obsolete systems, protect sensitive information, manage large datasets, and enhance operational efficiency.

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Our following services and solutions are aligned with the long-term needs of our customers: • Defense and Veteran Health Solutions; • Human Services and Solutions; • Public Health and Life Sciences; and • Infinibyte® Cloud Services We operate primarily through prime contracts awarded by the government through competitive bidding processes.

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Our suite of tools includes artificial intelligence and machine learning, cloud enablement, cybersecurity ecosystem, big data analytics, and modeling and simulation. IT modernization and cyber security maturity are priority initiatives throughout our customer set.

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We also provide services under Indefinite Duration, Indefinite Quantity ("IDIQ") and government wide acquisition contracts, such as General Services Administration ("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. These Federal contract schedules are renewed on a recurring basis for multi-year periods.

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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.

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Defense and Veteran Health Solutions We provide 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"). Our professionals specialize in supporting our customers' evolving needs by rapidly deploying resources, solutions, and services.

Added

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 support our customers' missions by providing leading technology-enabled solutions and services encompassing new capabilities at the forefront of technology to include artificial intelligence, machine learning, health informatics, and robotics. We are at the forefront of ensuring that veterans receive their out-patient prescriptions on time, each day, through our award winning VA Consolidated Mail Order Pharmacy ("CMOP") program.

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Science Research and Development 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.

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Further, we support our customer's efforts to broaden its abilities to reach veterans and their families through telemedicine technology and practices. Human Services and Solutions We support our customers by providing a wide range of services and solutions to HHS, DHS, and Department of State ("State").

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Our decades of experience designing, conducting, and analyzing studies for our diverse customer base, and our full-service clinical research solutions are designed for each customer’s specific research development program. Our employees provide expert knowledge and experience that supports our customers’ missions.

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Our professionals provide a range of support services critical to the customers' missions 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").

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System Engineering and Integration Our employees specialize in delivering engineering solutions that support our customers' evolving needs by rapidly deploying resources, solutions, and services.

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In this market, we combine subject matter expertise with our experience in information technology and analytics to provide large-scale program monitoring and evaluation; electronic medical records migration; data collection and management; and nutritional and social health assessments.

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This includes specialized engineering expertise, encompassing areas of pharmaceutical delivery logistics, fire protection engineering, biomedical equipment, and technology engineering on behalf of the VA, NIWC, HHS and other federal customers. 4 We utilize automation to accelerate infrastructure innovation and help customers define a lifecycle for automation assets, as well as set standards for version control, testing, and release processes that proved a robust foundation for their customers.

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

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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.

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Public Health and Life Sciences We provide services to multiple operating divisions within HHS, including the National Institutes of Health ("NIH"), the Center for Disease Control and Prevention ("CDC"), and the Centers for Medicare and Medicaid Services ("CMS").

Added

In some cases, we seek to partner with other companies on new business pursuits to improve our competitive positioning with the customer.

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We have partnered with our customers to deliver solutions to combat the COVID-19 pandemic that allow the nation and its people to combat the pandemic and sustain operations and services. 4 Our professionals provide services include clinical trials, epidemiology studies, advancing disease prevention methods and health promotion to underserved and at-risk communities.

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This allows us to anticipate and respond to ever-changing government service requirements while delivering maximum value to customers and shareholders. 7 Talent Acquisition, Development, and Retention Our success depends in large part on our ability to attract talent to meet the needs of our customers.

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Infinibyte® Cloud Service We built Infinibyte ® Cloud as a platform-as-a-service cloud service offering, specially architected and engineered to meet federal information security and compliance requirements. It delivers a computing and storage platform to U.S. government agencies, enabling them to develop, run, and manage applications in a FedRAMP compliant environment.

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To ensure we have the talent to meet the needs of our customers, we employ broad recruiting and outreach efforts to enable us to attract an inclusive pool of highly qualified candidates. As demand for talent is highly competitive, we continue to invest in our employees through a variety of benefits and overall program enhancements.

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FedRAMP is the government's rigorous security compliance certification which provides a standardized approach to security assessment, authorization, and continuous monitoring for cloud service providers and prescribes the security requirements and processes cloud service providers must follow in order for the U.S. government to use their service.

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We believe that these qualifications will further enhance our value propositions for current programs, as well as future business we pursue. In addition, we continue to build upon our heritage of excellent customer satisfaction in support of key federal programs. We have achieved Joint Commission certification for the safety and quality of our healthcare services delivery against national standards.

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These nationally recognized best practices certifications demonstrate our commitment to continuous improvement and performance excellence that is critical to our organic growth objectives. We continue to invest in credentials that drive excellence in our support to current clients and create differentiation as we compete in this space.

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These investments include development of secure IT platforms, sophisticated data analytic tools and techniques, and implementation of a lean six sigma environment. We continue to actively pursue additional credentials that will support our customers' needs in providing a secure cloud computing environment. Major Customers The majority of our revenues are from agencies of the United States Federal government.

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The government has neither indicated nor announced its future procurement strategy with respect to these contracts. Due to the time required to conduct a procurement process, we expect these contracts to be further extended.

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Our contract with HHS in support of the Head Start program generated $34.2 million and $28.2 million of revenue for the years ended September 30, 2022 and 2021, respectively. This contract has a period of performance through April 2025.

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As previously reported, we were awarded two short-term task orders under a FEMA contract to provide support for states seeking temporary medical staffing support and COVID-19 related community testing, vaccination and therapy. Those contracts generated $125.8 million of revenue for the fiscal year ended September 30, 2022.

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The contract to support COVID-19 related community testing, vaccination and therapy ended on December 31, 2021. The contract to provide temporary medical staffing support completed on March 20, 2022. Backlog At September 30, 2022, our backlog was approximately $482.5 million, of which $98.9 million was funded backlog.

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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.

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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. Company Website and Information Our corporate headquarters are located at 3565 Piedmont Road NE, Building 3 Suite 700, Atlanta, Georgia 30305.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

77 edited+20 added−10 removed115 unchanged

2022 filing

2023 filing

Biggest changeThe extent to which the coronavirus pandemic and recovery activity impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic, including our ability to fully perform on our contracts as a result of government actions or reduction in personnel due to the federal vaccine mandate which requires all federal contractors to be vaccinated; the impact of the pandemic on economic activity and actions taken in response; the effect on our clients and client demand for our services and solutions; our ability to sell and provide our services and solutions, including as a result of travel restrictions and people working from home (as described below in the Management Discussion & Analysis, this has resulted in certain delays in our provision of services and postponements of project work requiring travel) and any closures of our and our clients’ offices and facilities, particularly at our pharmacy distribution centers.

Biggest changeThe extent to which the coronavirus pandemic and recovery activity further impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and which may continue to be taken in response to the pandemic, including our ability to fully perform on our contracts as a result of government actions; the impact of the pandemic on economic activity and actions taken in response; the effect on our customers and customer demand for our services and solutions; our ability to sell and provide our services and solutions; and any closures of our and our customers’ offices and facilities, particularly at our pharmacy distribution centers.

Moreover, the terms upon which we will be able to obtain additional equity capital may be adversely affected, since the holders of these securities can be expected to exercise them at a time when we would, in all likelihood, be able to obtain any needed capital on terms more favorable to us than the exercise terms provided by those securities.

We may be unable to achieve desired levels of revenue growth due to circumstances that are beyond our control, as already expressed regarding competition, government budgets, and the procurement process in general.

We may be unable to achieve the desired levels of revenue growth due to circumstances that are beyond our control, as already expressed regarding competition, government budgets, and the procurement process in general.

Further, as a government contractor subject to the types of regulatory schemes described above, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which private sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows and financial condition.

Further, as a government contractor subject to the types of regulatory schemes described above, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which private 20 sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows and financial condition.

These matters might include proxy contests, tender offers, mergers or other purchases of common stock that could give our stockholders the opportunity to realize a premium over the then-prevailing market price for shares of our common stock. 18 In addition, persons associated with Wynnefield Capital, Inc. currently serve on our Board of Directors.

These matters might include proxy contests, tender offers, mergers or other purchases of common stock that could give our stockholders the opportunity to realize a premium over the then-prevailing market price for shares of our common stock. In addition, persons associated with Wynnefield Capital, Inc. currently serve on our Board of Directors.

In the competitive environment in which we operate as a government contractor, the lack of pricing leverage and ability to renegotiate long-term, multi-year contracts, could reduce our profits, disrupt our business, or otherwise materially adversely affect our results of operations. Our profits and revenues could suffer if we are involved in legal proceedings, investigations, and disputes.

In the competitive environment in which we operate as a government contractor, the lack of pricing leverage and ability to renegotiate long-term, multi-year contracts, could reduce our profits, disrupt our business, or otherwise materially adversely affect our results of operations. 19 Our profits and revenues could suffer if we are involved in legal proceedings, investigations, and disputes.

We expect that much of the opportunities we will seek in the foreseeable future will be awarded through competitive bidding. Furthermore, budgetary pressures and developments in the procurement process have caused many government customers to increasingly purchase goods and services through IDIQ contracts, GSA schedule contracts and other government-wide acquisition contracts.

We expect that many of the opportunities we will seek in the foreseeable future will be awarded through competitive bidding. Furthermore, budgetary pressures and developments in the procurement process have caused many government customers to increasingly purchase goods and services through IDIQ contracts, GSA schedule contracts and other government-wide acquisition contracts.

Loss for any reason of the services of our key personnel could materially affect our operations. 19 We may not be fully covered by the insurance we procure and our business could be adversely impacted if we were not able to renew all of our insurance plans.

Loss for any reason of the services of our key personnel could materially affect our operations. We may not be fully covered by the insurance we procure and our business could be adversely impacted if we were not able to renew all of our insurance plans.

Although we employ internal and external risk management procedures in an attempt to manage our claims incidence and estimate claims expenses and structure our benefit contracts to provide as much cost stability as reasonably possible given the self-funded nature of our plans, we may not be able to prevent increases in claim activity, accurately estimate our claims expenses or pass the cost of such increases on to our clients.

The loss, theft or improper disclosure of that information could subject us to sanctions under these laws, breach of contract claims, lawsuits from affected individuals, negative press articles and a loss of confidence from our government clients, all of which could adversely affect our existing business, future opportunities and financial condition.

The loss, theft or improper disclosure of that information could subject us to sanctions under these laws, breach of contract claims, lawsuits from affected individuals, negative press articles and a loss of confidence from our government customers, all of which could adversely affect our existing business, future opportunities and financial condition.

Since our ability to incorporate such increases into our fees to our clients is constrained by contractual arrangements with our clients, a delay could occur before such increases could be reflected in our fees, which may reduce our profit margin. As a result, such increases could have a material adverse effect on our financial condition, results of operations and liquidity.

Since our ability to incorporate such increases into our fees to our customers is constrained by contractual arrangements with our customers, a delay could occur before such increases could be reflected in our fees, which may reduce our profit margin. As a result, such increases could have a material adverse effect on our financial condition, results of operations and liquidity.

RISK FACTORS 8 As provided for under the Private Securities Litigation Reform Act of 1995 ("1995 Reform Act"), we wish to caution shareholders and investors that the following important factors, among others discussed throughout this Annual Report on Form 10-K for the fiscal year ended September 30, 2022, have affected, and in some cases could affect, our actual results of operations and cause our results to differ materially from those anticipated in forward looking statements made herein.

RISK FACTORS As provided for under the Private Securities Litigation Reform Act of 1995 ("1995 Reform Act"), we wish to caution shareholders and investors that the following important factors, among others discussed throughout this Annual Report on Form 10-K for the fiscal year ended September 30, 2023, have affected, and in some cases could affect, our actual results of operations and cause our results to differ materially from those anticipated in forward looking statements made herein.

These contracts, some of which are awarded to multiple contractors, have increased competition and pricing pressure, requiring that we make sustained post-award efforts to realize revenue under each such contract. Many of our competitors are larger and have greater resources than we do, larger client bases and greater brand recognition.

Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain. If we or our employees lose or are unable to obtain necessary security clearances, we may not be able to win new business and our existing clients could terminate their contracts with us or decide not to renew them.

Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain. If we or our employees lose or are unable to obtain necessary security clearances, we may not be able to win new business and our existing customers could terminate their contracts with us or decide not to renew them.

Our business may suffer if we or our employees are unable to obtain and maintain the necessary security clearances or other qualifications required to perform services for our clients. Many federal government contracts require us to have security clearances and employ personnel with specified levels of education, work experience and security clearances.

Our business may suffer if we or our employees are unable to obtain and maintain the necessary security clearances or other qualifications required to perform services for our customers. Many federal government contracts require us to have security clearances and employ personnel with specified levels of education, work experience and security clearances.

At present, we derive 99% of our revenue from agencies of the Federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors. In addition, substantially all accounts receivable, including unbilled accounts receivable, are from agencies of the U.S. Government as of September 30, 2022 and 2021.

The loss, theft or improper disclosure of that information could subject the Company to sanctions under the relevant laws, lawsuits from affected individuals, negative press articles and a loss of confidence from our government clients, all of which could adversely affect our existing business, future opportunities and financial condition.

The loss, theft or improper disclosure of that information could subject the Company to sanctions under the relevant laws, lawsuits from affected individuals, negative press articles and a loss of confidence from our government customers, all of which could adversely affect our existing business, future opportunities and financial condition.

Our success to date has resulted in part from the significant contributions of our executive officers. Our executive officers are expected to continue to make important contributions to our success. As of September 30, 2022, certain of our officers are under employment contracts. However, we do not maintain "key personnel" life insurance on any of our executive officers.

Our success to date has resulted in part from the significant contributions of our executive officers. Our executive officers are expected to continue to make important contributions to our success. As of September 30, 2023, certain of our officers are under employment contracts. However, we do not maintain "key personnel" life insurance on any of our executive officers.

Government contract bid process is highly competitive, complex and sometimes lengthy, and is subject to protest and implementation delays. The markets in which we operate are highly competitive. Further, many of our contracts and task orders with the Federal government are awarded through a competitive bidding process, which is complex and sometimes lengthy.

Further, the U.S. Government contract bid process is highly competitive, complex and sometimes lengthy, and is subject to protest and implementation delays. The markets in which we operate are highly competitive. Further, many of our contracts and task orders with the Federal government are awarded through a competitive bidding process, which is complex and sometimes lengthy.

Our revenue and operating results could differ materially and adversely from those anticipated if any such prime contractor or teammate chooses to offer directly to the client services of the type that we provide or if they team with other companies to provide those services.

Our revenue and operating results could differ materially and adversely from those anticipated if any such prime contractor or teammate chooses to offer directly to the customer services of the type that we provide or if they team with other companies to provide those services.

We are highly dependent on the proper functioning of our information systems in operating our business. Critical information systems used in daily operations match employee resources and client assignments and track regulatory credentialing. They also perform payroll, billing and accounts receivable functions.

We are highly dependent on the proper functioning of our information systems in operating our business. Critical information systems used in daily operations match employee resources and customer assignments and track regulatory credentialing. They also perform payroll, billing and accounts receivable functions.

Our competitors, individually or through relationships with third parties, may be able to provide clients with different or greater capabilities or benefits than we can provide. If we are unsuccessful in competing with these other companies, our revenues and margins may materially decline.

Our competitors, individually or through relationships with third parties, may be able to provide customers with different or greater capabilities or benefits than we can provide. If we are unsuccessful in competing with these other companies, our revenues and margins may materially decline.

While we have multiple back up plans for these types of contingencies, our information systems are vulnerable to fire, storm, flood, power loss, telecommunication outages, physical break-ins, cyber-attack, ransomware, and similar events.

While we have multiple back up plans for these types of contingencies, our information systems are vulnerable to fire, storms, flood, power loss, telecommunication outages, physical break-ins, cyber-attack, ransomware, and similar events.

If our systems or networks were compromised by a security breach, we could be adversely affected by losing confidential or protected information of program participants and clients, and we could suffer reputational damage and a loss of confidence from prospective and existing clients.

If our systems or networks were compromised by a security breach, we could be adversely affected by losing confidential or protected information of program participants and customers, and we could suffer reputational damage and a loss of confidence from prospective and existing customers.

We may enter into future teaming ventures with other companies, which carry risk in regards to maintaining strong, trusted working relationships in order to successfully fulfill contract obligations.

We may enter into future teaming ventures with other companies, which carry risk in regard to maintaining strong, trusted working relationships in order to successfully fulfill contract obligations.

Our earnings and margins may vary based on the mix of our contracts and programs. At September 30, 2022, our backlog includes cost reimbursable, time-and-materials, and firm-fixed-price contracts.

Our earnings and margins may vary based on the mix of our contracts and programs. At September 30, 2023, our backlog includes cost reimbursable, time-and-materials, and firm-fixed-price contracts.

We are dependent upon the continuation of our relationships with the VA and HHS as a significant portion of our revenue is concentrated in a small number of contracts with these customers.

We are dependent upon the continuation of our relationships with the VA and HHS as a significant portion of our revenue is concentrated in contracts with these customers.

Moreover, if we are unable to attract and retain qualified personnel, the quality of our services may decline and, as a result, we could lose clients.

Moreover, if we are unable to attract and retain qualified personnel, the quality of our services may decline and, as a result, we could lose customers.

Many of our operations rely heavily upon technology systems and networks to receive, input, maintain and communicate participant and client data pertaining to the programs we manage.

Many of our operations rely heavily upon technology systems and networks to receive, input, maintain and communicate participant and customer data pertaining to the programs we manage.

These laws and regulations create compliance risk and affect how we do business with our federal agency clients, and may impose added costs on our business.

These laws and regulations create compliance risk and affect how we do business with our federal agency customers and may impose added costs on our business.

To restrict competition pursuant to this rule, the contracting officer must reasonably expect that at least two of these businesses, which are capable of delivering the services, will submit offers and that the award can be made at a fair and reasonable price that offers the best value to the United States.

In other situations, contract terms provide for billing upon achievement of specified project milestones. As a result, in these situations, we are required to expend significant sums of money before receiving related contract payments.

In other situations, contract terms provide for billing upon achievement of specified project milestones. In these situations, we are required to expend significant sums of money before receiving related contract payments.

Future write-offs of goodwill may have the effect of decreasing our earnings or increasing our losses. We have obtained growth through acquisitions of other companies and businesses. Under existing accounting standards, we are required to periodically review goodwill for possible impairment.

We have a substantial amount of goodwill on our balance sheet. Future write-offs of goodwill may have the effect of decreasing our earnings or increasing our losses. We have obtained growth through acquisitions of other companies and businesses. Under existing accounting standards, we are required to periodically review goodwill for possible impairment.

If we are not able to timely comply with the requirements set forth in the Sarbanes-Oxley Act of 2002, we might be subject to sanctions or investigation by regulatory authorities. Any such action could materially adversely affect our business and our stock price. 20 ITEM 1B. UNRESOLVED STAFF COMMENTS There are no unresolved staff comments.

The cost of attracting qualified personnel and providing them with attractive benefits packages may be higher than we anticipate and, as a result, if we are unable to pass these costs on to our clients, our profitability could decline.

Competition for qualified employees is intense and the cost of attracting qualified personnel and providing them with attractive benefits packages may be higher than we anticipate and, as a result, if we are unable to pass these costs on to our customers, our profitability could decline.

As of September 30, 2022, our executive officers, directors and largest shareholder (Wynnefield Capital, Inc. and its affiliates) own approximately 45% of our outstanding common stock. Within this amount, Wynnefield Capital, Inc. and its affiliates own approximately 30% of our outstanding common stock.

As of September 30, 2023, our executive officers, directors and largest shareholder (Wynnefield Capital, Inc. and its affiliates) own approximately 44% of our outstanding common stock. Within this amount, Wynnefield Capital, Inc. and its affiliates own approximately 26% of our outstanding common stock.

This compliance requires management's annual review and evaluation of our internal control systems. This process has caused us to engage outside advisory services and has resulted in additional accounting and legal expenses. We may encounter problems or delays in completing these reviews and evaluation and the implementation of improvements.

This process has caused us to engage outside advisory services and has resulted in additional accounting and legal expenses. We may encounter problems or delays in completing these reviews and evaluation and the implementation of improvements.

These integration difficulties include the integration of personnel with disparate business backgrounds, the transition to new information systems, coordination of geographically dispersed organizations, loss of key employees of acquired companies, and reconciliation of different corporate cultures. For these or other reasons, we may be unable to retain key customers of acquired companies.

Our earnings and margins may vary depending on the relative mix of contract types, the costs incurred in their performance, the achievement of other performance objectives and the stage of performance at which the right to receive fees, particularly under incentive and award fee contracts, is finally determined. 13 Our employees, or those of our teaming partners, may engage in misconduct or other improper activities which could harm our business.

The government may in the future reform its procurement practices or adopt new contracting rules and regulations, including cost accounting standards, that could be costly to satisfy or that could impair our ability to obtain new contracts or change the basis upon which it reimburses our compensation and other expenses or otherwise limit such reimbursements.

In the event the budgets or budgetary priorities of the U.S. Government entities with which we do business are delayed, decreased or underfunded, our consolidated revenues and results of operations could be materially and adversely affected. We may experience disruption of existing programs, delays in contract awards, and other actions, including partial or complete contract terminations.

If the government terminates a contract for default, we may be unable to recover even those amounts and instead may be liable for excess costs incurred by the government in procuring undelivered items and services from another source. Depending on the value of a contract, such termination could cause our actual results to differ materially and adversely from those anticipated.

The effect of these set-aside provisions may limit our ability to compete for prime contractor positions on programs that we have targeted for growth and to maintain our prime contractor position as current contracts are subject to renewal. 9 Loss of our GSA schedule contracts or other contracting vehicles could impair our ability to win new business and perform under existing contracts.

We rely heavily on our ability to attract and retain qualified professionals and other personnel who possess the skills, experience, and licenses necessary in order to provide our solutions for our assignments. Our business is materially dependent upon the continued availability of such qualified personnel. Our inability to secure qualified personnel would have a material adverse effect on our business.

If we are unable to attract qualified personnel, our business may be negatively affected. We rely heavily on our ability to attract and retain qualified employees and other personnel who possess the skills, experience, and licenses necessary in order to provide our solutions for our assignments. Our business is materially dependent upon the continued availability of such qualified personnel.

For example, we generate revenue from IDIQ contracts, which do not require the government to purchase a pre-determined amount of goods or services under the contract.

The maximum contract value specified under a government contract or task order awarded to us is not necessarily indicative of the revenue that we will realize under that contract. For example, we generate revenue from IDIQ contracts, which do not require the government to purchase a pre-determined amount of goods or services under the contract.

These actions, if required, may be costly or unavailable on terms acceptable to us. 15 Risks Relating to Acquisitions We may have difficulty identifying and executing acquisitions on favorable terms and therefore may grow at slower than anticipated rates. One of our potential paths to growth is to selectively pursue acquisitions.

We may have difficulty identifying and executing other acquisitions on favorable terms and therefore may grow at slower than anticipated rates. One of our potential paths to growth is to selectively pursue acquisitions.

Moreover, any acquired business may not generate the revenue or net income we expected or produce the efficiencies or cost-savings we anticipated. Any of these outcomes could cause our actual results to differ materially and adversely from those anticipated. We have a substantial amount of goodwill on our balance sheet.

For these or other reasons, we may be unable to retain key customers of acquired companies. Moreover, any acquired business may not generate the revenue or net income we expected or produce the efficiencies or cost-savings we anticipated. Any of these outcomes could cause our actual results to differ materially and adversely from those anticipated.

As a result of employee misconduct, we could face fines and penalties, loss of security clearance and suspension or debarment from contracting with the federal government, which could materially and adversely affect our business, results of operations, financial condition, cash flows, and liquidity. 13 If we are unable to attract qualified personnel, our business may be negatively affected.

Precautions to prevent and detect this activity may not be effective in controlling such risks or losses. As a result of employee misconduct, we could face fines and penalties, loss of security clearance and suspension or debarment from contracting with the federal government, which could materially and adversely affect our business, results of operations, financial condition, cash flows, and liquidity.

VA programs, which accounted for approximately 32% and 45% of Company revenue for the years ended September 30, 2022 and 2021, respectively, were exempt from the spending caps established under Federal government sequestration targets enacted in 2013. The government is currently operating under a continuing resolution (CR) which expires December 16, 2022.

VA programs, which accounted for approximately 36.9% and 31.9% of Company revenue for the years ended September 30, 2023 and 2022, respectively, were exempt from the spending caps established under Federal government sequestration targets enacted in 2013.

Earnings, if any, may be retained and used to finance the development and expansion of our business. 17 We may issue preferred stock with rights senior to our common stock, which may adversely impact the voting and other rights of the holders of our common stock.

We may issue preferred stock with rights senior to our common stock, which may adversely impact the voting and other rights of the holders of our common stock.

Depending upon the value of the matters affected, an OCI issue that precludes our participation in or performance of a program or contract could cause our actual results to differ materially and adversely from those anticipated. 12 We may not receive the full amounts authorized under the contracts included in our backlog, which could reduce our revenue in future periods below the levels anticipated.

We are exposed to increased costs and risks associated with complying with increasing and new regulation of corporate governance and disclosure standards. Since the implementation of the Sarbanes-Oxley Act of 2002, we spend a significant amount of management's time and resources (both internal and external) to comply with changing laws, regulations and standards relating to corporate governance and public disclosures.

Since the implementation of the Sarbanes-Oxley Act of 2002, we spend a significant amount of management's time and resources (both internal and external) to comply with changing laws, regulations and standards relating to corporate governance and public disclosures. This compliance requires management's annual review and evaluation of our internal control systems.

Our results of operations, cash flows and financial condition would be materially adversely affected if we were unable to continue our relationship with either of these customers, if we were to lose any of our material current contracts, or if the amount of services we provide to them is materially reduced. 9 The U.S. government may prefer veteran-owned, minority-owned, women-owned and small disadvantaged businesses; therefore, we may have fewer opportunities to bid for or could lose a portion of our existing work to small businesses.

In the event that we are required to write down the value of any assets under these pronouncements, it may materially and adversely affect our earnings.

In the event that we are required to write down the value of any assets under these pronouncements, it may materially and adversely affect our earnings. See the more detailed discussion appearing as part of our Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 herein.

See the more detailed discussion appearing as part of our Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 herein. 16 Risks Relating to Our Outstanding Indebtedness We have incurred debt in connection with acquisitions and we must make the scheduled principal and interest payments on the facility and maintain compliance with other debt covenants.

Risks Relating to Our Outstanding Indebtedness We have incurred debt in connection with acquisitions and we must make the scheduled principal and interest payments on the facility and maintain compliance with other debt covenants.

We believe that the credit risk associated with our receivables is limited due to the creditworthiness of these customers.

We expect that Federal government contracts will continue to be our primary source of revenue for the foreseeable future. We believe that the credit risk associated with our receivables is limited due to the creditworthiness of these customers.

In addition, the New Jersey Business Corporation Act contains provisions that, under certain conditions, prohibit business combinations with 10% shareholders and any New Jersey corporation for a period of five years from the time of acquisition of shares by the 10% shareholder.

Among other things, these provisions: • require certain supermajority votes; and • establish certain advance notice procedures for nomination of candidates for election as directors and for shareholders' proposals to be considered at shareholders' meetings. 18 In addition, the New Jersey Business Corporation Act contains provisions that, under certain conditions, prohibit business combinations with 10% shareholders and any New Jersey corporation for a period of five years from the time of acquisition of shares by the 10% shareholder.

Furthermore, the significant increase in remote working of our employees may exacerbate certain risks to our business, including an increased demand for information technology resources and the increased risk of malicious technology-related events, such as cyberattacks and phishing attacks. Customers may also slow down decision making, delay planned work or seek to terminate existing agreements.

Furthermore, the significant increase in remote working of our employees may exacerbate certain risks to our business, including an increased demand for information technology resources and the increased risk of malicious technology-related events, such as cyberattacks and phishing attacks. Government agencies are our primary customers and the long-term impact of increased government spending in response to COVID-19 remains uncertain.

Therefore, holders of our common stock may not receive any dividends on their investment in us.

Therefore, holders of our common stock may not receive any dividends on their investment in us. Earnings, if any, may be retained and used to finance the development and expansion of our business.

Government programs are subject to annual congressional budget authorization and appropriation processes. For many programs, Congress appropriates funds on a fiscal year basis even though the program performance period may extend over several years. Consequently, programs are often partially funded initially and additional funds are committed only as Congress makes further appropriations.

Future legislative or government budgetary and spending changes could negatively impact our business. U.S. Government programs are subject to annual congressional budget authorization and appropriation processes. For many programs, Congress appropriates funds on a fiscal year basis even though the program performance period may extend over several years.

Government contracts and our compliance with applicable laws and regulations, including submission of invoices to our customers, are subject to audit by the government. The scope of any such audits could span multiple fiscal years. These agencies review our performance on contracts, pricing practices, cost structure and compliance with applicable laws, regulations and standards.

The scope of any such audits could span multiple fiscal years. These agencies review our performance on contracts, pricing practices, cost structure and compliance with applicable laws, regulations and standards. They also evaluate the adequacy of internal controls over our business systems, including our purchasing, accounting, estimating, earned value management, and government property systems.

Additionally, the government may face restrictions from new legislation, regulations or government union pressures, on the nature and amount of services the government may obtain from private contractors. Any reduction in the government’s use of private contractors to provide federal services could cause our actual results to differ materially and adversely from those anticipated. Our performance on our U.S.

Any reduction in the government’s use of private contractors to provide federal services could cause our actual results to differ materially and adversely from those anticipated. Our performance on our U.S. Government contracts and our compliance with applicable laws and regulations, including submission of invoices to our customers, are subject to audit by the government.

Any of these events could materially adversely affect our business, financial condition, results of operations and the market price of our common stock. We depend on contracts with the Federal government for virtually all of our revenue and our business could be seriously harmed if the Federal government decreased or ceased doing business with us.

Risks Relating to Our Business and the Industry in which we Compete We depend on contracts with the Federal government for virtually all of our revenue and our business could be seriously harmed if the Federal government decreased or ceased doing business with us.

Unfunded backlog represents the sum of the unappropriated contract value on executed contracts and unexercised option years that is expected to be recognized into revenue. The maximum contract value specified under a government contract or task order awarded to us is not necessarily indicative of the revenue that we will realize under that contract.

Funded backlog represents contract value that has been appropriated by a customer and is expected to be recognized into revenue. Unfunded backlog represents the sum of the unappropriated contract value on executed contracts and unexercised option years that is expected to be recognized into revenue.

We depend on the collection of our receivables to generate cash flow, provide working capital, pay debt and continue our business operations.

The federal government’s appropriation process and other factors may delay the collection of our receivables, and our business may be adversely affected if we cannot collect our receivables in a timely manner. We depend on the collection of our receivables to generate cash flow, provide working capital, pay debt and continue our business operations.

Further, congressional seats may change during election years, and the balance of spending priorities may change along with them. In recent years, we have seen frequent debates regarding the scope of funding of our customers, thereby leading to budgetary uncertainty for our Federal customers. Changes in federal government budgetary priorities could directly affect our financial performance.

Changes in federal government budgetary priorities or actions taken to address government budget deficits, the national debt, and/or prevailing economic conditions, could directly affect our financial performance . Further, congressional seats may change during election years, and the balance of spending priorities may change along with them.

We continuously review our operations in an attempt to identify programs potentially at risk from CRs so that we can consider appropriate contingency plans. 10 The markets in which we operate are highly competitive, and many of the companies we compete against have substantial resources. Further, the U.S.

We continuously review our operations in an attempt to identify programs potentially at risk from CRs so that we can consider appropriate contingency plans.

Loss of our GSA schedule contracts or other contracting vehicles could impair our ability to win new business and perform under existing contracts. We currently hold multiple GSA schedule contracts, including a Federal supply schedule contract for professional and allied healthcare services and the logistics worldwide services contract.

We currently hold multiple GSA schedule contracts, including a Federal supply schedule contract for professional and allied healthcare services and the logistics worldwide services contract. If we were to lose one or more of these contracts or other contracting vehicles, we could lose a significant revenue source and our operating results and financial condition could be materially and adversely affected.

Such violations could include intentional disregard for Federal government procurement regulations, engaging in unauthorized activities, seeking reimbursement for improper expenses, or falsifying time records. Employee misconduct could also involve the improper use of our clients' sensitive or classified information and result in a serious harm to our reputation.

We are exposed to risk from misconduct or fraud by our employees, or employees of our teaming partners. Such violations could include intentional disregard for Federal government procurement regulations, engaging in unauthorized activities, seeking reimbursement for improper expenses, or falsifying time records.

They also evaluate the adequacy of internal controls over our business systems, including our purchasing, accounting, estimating, earned value management, and government property systems. Any costs found to be improperly allocated or assigned to contracts will not be reimbursed, and any such costs already reimbursed must be refunded and certain penalties may be imposed.

Any costs found to be improperly allocated or assigned to contracts will not be reimbursed, and any such costs already reimbursed must be refunded and certain penalties may be imposed.

Risks Relating to Our Business and the Industry in which we Compete Our results of operations could in the future be materially adversely impacted by global, macroeconomic events, such as the coronavirus pandemic (COVID-19), and the response to contain it. The coronavirus (COVID-19) pandemic and the mitigation efforts to control its spread have created significant volatility, uncertainty and economic disruption.

Our results of operations could in the future be materially adversely impacted by global, macroeconomic events, such health epidemics, pandemics and other outbreaks, and the response to contain it. We face various risks related to health epidemics, pandemics, and similar outbreaks, including the coronavirus (COVID-19) pandemic.

Certain contracts also contain organizational conflict of interest (OCI) clauses that limit our ability to compete for or perform certain other contracts.

Depending on the value of a contract, such termination could cause our actual results to differ materially and adversely from those anticipated. 12 Certain contracts also contain organizational conflict of interest (OCI) clauses that limit our ability to compete for or perform certain other contracts.

Our total backlog consists of funded and unfunded amounts and may include estimates and assumptions about matters that cannot be determined with certainty at the time the backlog is calculated. Funded backlog represents contract value that has been appropriated by a customer and is expected to be recognized into revenue.

We may not receive the full amounts authorized under the contracts included in our backlog, which could reduce our revenue in future periods below the levels anticipated. Our total backlog consists of funded and unfunded amounts and may include estimates and assumptions about matters that cannot be determined with certainty at the time the backlog is calculated.

On September 30, 2020, we entered into an amended and restated credit agreement with First National Bank of Pennsylvania and certain other lenders (the “Credit Agreement”).

Following our acquisition of Grove Resource Solution, LLC ("GRSi") in December 2022, we amended and restated our credit agreement with First National Bank of Pennsylvania and certain other lenders (the “Credit Agreement”) and incurred additional indebtedness.

While we have appropriate policies in effect to deter illegal activities and promote proper conduct, it is not always possible to deter employee misconduct. Precautions to prevent and detect this activity may not be effective in controlling such risks or losses.

Employee misconduct could also involve the improper use of our customers' sensitive or classified information and result in a serious harm to our reputation. While we have appropriate policies in effect to deter illegal activities and promote proper conduct, it is not always possible to deter employee misconduct.

Such an event would likely have a material adverse effect on our business, financial condition and results of operations. In addition, a transition away from the London Interbank Offering Rate (“LIBOR”) as a benchmark for establishing the applicable interest rate may affect the cost of servicing our debt under the Credit Agreement.

Such an event would likely have a material adverse effect on our business, financial condition and results of operations.

Consistent with guidance from the SEC, our consolidated financial statements reflect our estimates of the tax effects of the current tax laws and regulation. The federal government’s appropriation process and other factors may delay the collection of our receivables, and our business may be adversely affected if we cannot collect our receivables in a timely manner.

Consistent with guidance from the SEC, our consolidated financial statements reflect our estimates of the tax effects of the current tax laws and regulations. We are exposed to increased costs and risks associated with complying with increasing and new regulation of corporate governance and disclosure standards.

Removed

Government agencies are our primary customers and the long-term impact of increased government spending in response to COVID-19 remains uncertain.

Added

The U.S. government may prefer veteran-owned, minority-owned, women-owned and small disadvantaged businesses; therefore, we may have fewer opportunities to bid for or could lose a portion of our existing work to small businesses.

Removed

The duration and spread of the pandemic still may cause reduced demand for certain services we provide, particularly if its results in a recessionary economic environment or the spending priorities of the U.S. government shift in ways adverse to our business focus.

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Item 2. Properties

Properties — owned and leased real estate

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2022 filing

2023 filing

Biggest changeITEM 2. PROPERTIES We do not own any real estate or other properties. As of September 30, 2022, we operate five locations in the United States and one location in Kampala, Uganda; occupying a total of approximately 118 thousand square feet.

Biggest changeITEM 2. PROPERTIES We do not own any real estate or other properties. As of September 30, 2023, we operate eight locations in the U.S. and one location in Kampala, Uganda: occupying a total of approximately 99.3 thousand square feet.

The Company's corporate headquarters is located at 3565 Piedmont Road NE, Building 3 Suite 700, Atlanta, Georgia 30305, and we presently maintain a National Capital Region office in Silver Spring, Maryland. All of our offices are in reasonably modern and well-maintained buildings and we believe that our facilities are adequate for present operations and the foreseeable future.

The Company's corporate headquarters is located at 3565 Piedmont Road NE, Building 3 Suite 700, Atlanta, Georgia 30305, and we presently maintain a National Capital Region office in Bethesda, Maryland. All of our offices are in reasonably modern and well-maintained buildings and we believe that our facilities are adequate for present operations and the foreseeable future.

For the fiscal year ended September 30, 2022, our total lease expense was approximately $3.5 million . See Note 5. Leases in Part II of this Annual Report on Form 10-K for additional information.

For the fiscal year ended September 30, 2023, our total lease expense was approximately $4.0 million . See Note 6 . Leases in Part II of this Annual Report on Form 10-K for additional information. 21

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed2 unchanged

2022 filing

2023 filing

Biggest changeThe number of stockholders of record is not representative of the number of beneficial stockholders due to the fact that many shares are held by depositories, brokers, or nominees. We estimate there are approximately 750 beneficial owners of our common stock. Dividends We have not declared or paid any cash dividends on its common stock since inception.

Biggest changeThe number of stockholders of record is not representative of the number of beneficial stockholders due to the fact that many shares are held by depositories, brokers, or nominees. Dividends We have not declared or paid any cash dividends on its common stock since inception.

The table set forth below discloses outstanding and available awards under our equity compensation plans as of September 30, 2022. All grants of equity securities made to executive officers and directors are presently made under the 2016 Omnibus Equity Incentive Plan (the “2016 Plan”).

The table set forth below discloses outstanding and available awards under our equity compensation plans as of September 30, 2023. All grants of equity securities made to executive officers and directors are presently made under the 2016 Omnibus Equity Incentive Plan (the “2016 Plan”).

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Principal Market Our common stock is currently traded on The Nasdaq Capital Market under the symbol "DLHC." Equity Holders As of September 30, 2022, the number of shareholders of our common stock of record was approximately 74 persons.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Principal Market Our common stock is currently traded on The Nasdaq Capital Market under the symbol "DLHC." Equity Holders As of September 30, 2023, the number of shareholders of our common stock of record was approximately 88 persons.

Equity Compensation Plan Information Plan Category (a) Number of Securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted Average exercise price of outstanding options, warrants and rights (or fair value at date of grant) (c) Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a)) Equity Compensation Plans Approved by Security Holders: Employee stock options 2,391,500 $ 7.05 1,409,367 ITEM 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

54 edited+26 added−37 removed14 unchanged

2022 filing

2023 filing

Biggest changeThe following table summarizes revenues by our markets for the years ended September 30, 2022 and 2021, respectively (in thousands): 23 2022 2021 Revenue Percent of total revenue Revenue Percent of total revenue Human Services and Solutions $ 165,970 42.0 % $ 37,260 15.1 % Defense and Veteran Health Solutions 159,719 40.4 % 141,435 57.0 % Public Health and Life Sciences 69,484 17.6 % 67,399 27.9 % Total revenue $ 395,173 100.0 % $ 246,094 100.0 % Forward Looking Business Trends: Our mission is to expand our position as a trusted provider of technology-enabled healthcare and public health services, medical logistics, and readiness enhancement services to active duty personnel, veterans, and civilian populations and communities.

Biggest changeThe following table summarizes the revenues by customer for the years ended September 30, 2023 and 2022, respectively (in thousands): 2023 2022 Revenue Percent of total revenue Revenue Percent of total revenue Department of Health and Human Services $ 161,311 42.9 % $ 102,201 25.9 % Department of Veterans Affairs 138,862 37.0 % 126,106 31.9 % Department of Defense 70,325 18.7 % 33,612 8.5 % Department of Homeland Security 919 0.2 % 126,576 32.0 % Customers with less than 10% share of total revenue 4,455 1.2 % 6,678 1.7 % Revenue $ 375,872 100.0 % $ 395,173 100.0 % The following table summarizes revenues by our markets for the years ended September 30, 2023 and 2022, respectively (in thousands): 2023 2022 Revenue Percent of total revenue Revenue Percent of total revenue Defense and Veteran Health Solutions $ 209,187 55.7 % $ 159,719 40.4 % Human Services and Solutions 110,068 29.3 % 165,970 42.0 % Public Health and Life Sciences 56,617 15.0 % 69,484 17.6 % Revenue $ 375,872 100.0 % $ 395,173 100.0 % 24 Forward Looking Business Trends: Our mission is to expand our position as a trusted provider of technology-enabled healthcare and public health services, medical logistics, and readiness enhancement services to active duty personnel, veterans, and civilian populations and communities.

This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized. The Company has fully utilized its net operating loss carryforwards. Stock-based Equity Compensation The Company uses the fair value-based method for stock-based equity compensation.

This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has fully utilized its net operating loss carryforwards. Stock-based Equity Compensation The Company uses the fair value-based method for stock-based equity compensation.

For the year ended September 30, 2022 net income for the FEMA task orders is derived by subtracting from the revenue attributable to the tasks orders of $125.8 million the following amounts associated with such task orders: contract costs of $112.1 million, general & administrative costs of $1.2 million, and provision for income taxes of $3.2 million.

For the fiscal year ended September 30, 2022, net income for the FEMA task orders is derived by subtracting from the revenue attributable to the tasks orders of $125.8 million the following amounts associated with such task orders: contract costs of $112.1 million, general & administrative costs of $1.2 million, and provision for income taxes of $3.2 million.

When control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. For services contracts, we satisfy our performance obligations as services are rendered. We use cost-based input and time-based output methods to measure progress.

When control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. For service contracts, we satisfy our performance obligations as services are rendered. We use cost-based input and time-based output methods to measure progress.

Refer to Note 4 of the accompanying notes to our consolidated financial statements contained elsewhere in this Annual Report on Form 10-K for discussion relative to the Company's revenue recognition in accordance with ASC-606. Long-lived Assets Our long-lived assets include equipment and improvements, right-of-use assets, intangible assets, and goodwill.

Refer to Note 5 of the accompanying notes to our consolidated financial statements contained elsewhere in this Annual Report on Form 10-K for discussion relative to the Company's revenue recognition in accordance with ASC-606. Long-lived Assets Our long-lived assets include equipment and improvements, right-of-use assets, intangible assets, and goodwill.

Similarly, for the year ended September 30, 2022 operating income for the FEMA task orders is derived by subtracting from the revenue attributable to the tasks orders of $125.8 million the following amounts associated with such task orders: contract costs $112.1 million and general & administrative costs of $1.2 million.

Operating income for the FEMA task orders for the fiscal year ended September 30, 2022, is derived by subtracting from the revenue attributable to the tasks orders of $125.8 million the following amounts associated with such task orders: contract costs $112.1 million and general & administrative costs of $1.2 million.

While Congress has not completed the final appropriation bills for the government’s 2023 fiscal year, the Company continues to believe that its key programs benefit from bipartisan support and does not expect a material impact on its current business base from budget negotiations.

While Congress has not completed the final appropriation bills for the government’s 2024 fiscal year, the Company continues to believe that its key programs benefit from bipartisan support and does not expect a material impact on its current business base from budget negotiations.

Options issued are designated as either an incentive stock or a non-statutory stock option. No option may be granted with a term of more than 10 years from the date of grant. Option awards may depend on achievement of certain performance measures determined by the Compensation Committee of our Board. Shares issued upon option exercise are newly issued common shares.

Options issued are designated as either an incentive stock or a non-statutory stock option. No option may be granted with a term of more than P10Y from the date of grant. Option awards may depend on the achievement of certain performance measures determined by the Compensation Committee of our Board. Shares issued upon option exercise are newly issued common shares.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 22 Forward Looking and Cautionary Statements You should read the following discussion in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K for the year ended September 30, 2022.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking and Cautionary Statements You should read the following discussion in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K for the year ended September 30, 2023.

The Company continues to review its long-lived assets for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. Equipment and improvements are stated at cost.

The VA is continuing to expand this program because of its ability to leverage VA providers and provide better services to veterans. Department of Health and Human Services The FY 2023 budget request proposes $127.3 billion in discretionary budget authority for HHS and $1.7 trillion in mandatory funding for the department.

The VA is continuing to expand this program because of its ability to leverage VA providers and provide better services to veterans. Department of Health and Human Services The FY 2024 budget request proposes $144.3 billion in discretionary budget authority for HHS and $1.7 trillion in mandatory funding for the department.

Our right-of-use assets include long-term leases for facilities and equipment and are amortized over their respective lease terms. Intangible assets are originally recorded at fair value and amortized on a straight-line basis over their assessed useful lives. The assessed useful lives of the assets are 10 years.

Our right-of-use assets include long-term leases for facilities and equipment and are amortized over their respective lease terms. 33 Intangible assets are originally recorded at fair value and amortized on a straight-line basis over their assessed useful lives. The assessed useful lives of the assets are P10Y.

Depreciation and amortization are provided using the straight-line method over the estimated useful asset lives (3 to 7 years) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Costs incurred to place the asset in service are capitalized and costs incurred after implementation are expensed.

Depreciation and amortization are provided using the straight-line method over the estimated useful asset lives (P3Y to P7Y) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Costs incurred to place the asset in service are capitalized and costs incurred after implementation are expensed.

This credit facility provides us with access of up to $25.0 million, subject to certain conditions including eligible accounts receivable. As of September 30, 2022, we had unused borrowing capacity of $23.0 million. The Company's present operating liabilities are largely predictable and consist of vendor and payroll related obligations.

This credit facility provides us with access of up to $70.0 million, subject to certain conditions including eligible accounts receivable. As of September 30, 2023, we had unused borrowing capacity of $32.0 million. The Company's present operating liabilities are largely predictable and consist of vendor and payroll related obligations.

Significant estimates include valuation of goodwill and intangible assets, stock-based compensation, and measurement of loss development on workers' compensation claims. In addition, the Company estimates overhead charges and allocates such charges throughout the year. Actual results could differ from those estimates. 30 Revenue Recognition We recognize revenue over time when there is a continuous transfer of control to our customer.

Significant estimates include valuation of goodwill and intangible assets, and stock-based compensation. In addition, the Company estimates overhead charges and allocates such charges throughout the year. Actual results could differ from those estimates. Revenue Recognition We recognize revenue over time when there is a continuous transfer of control to our customer.

This includes $12.2 billion for the Office of Head Start, principally to expand eligibility for participation in the program. Department of Defense The Military Health System ("MHS") is one of the largest health care systems, serving over 9 million beneficiaries.

This includes $13.1 billion for the Office of Head Start, principally to expand eligibility for participation in the program. 25 Department of Defense The Military Health System ("MHS") is one of the largest health care systems, serving over 9.5 million beneficiaries.

Goodwill The Company continues to review its goodwill for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. At September 30, 2022, we performed an internal goodwill impairment evaluation.

The budget also requests $45 million for telehealth, which is $9 million above FY 2022 enacted, to promote health services with telehealth technologies. The budget also provides for investment in programs that improve the health and well-being of young children and their families.

The budget also requests $45.0 million for telehealth, which is an increase of $7.0 million above FY 2023 enacted, to promote health services with telehealth technologies. The budget also provides for investment in programs that improve the health and well-being of young children and their families.

Our primary focus within the defense agency markets include military service members' and veterans' requirements for telehealth services, behavioral healthcare, medication therapy management, process management, clinical systems support, and healthcare delivery. Our primary focus within the civilian agency markets includes healthcare and social programs delivery and readiness.

Our primary focus within the defense agency markets includes cyber security, military service members' and veterans' requirements for telehealth services, behavioral healthcare, medication therapy management, process management, clinical systems support, and healthcare delivery. Our primary focus within the civilian agency markets includes digital transformation, IT modernization, healthcare and social programs delivery and readiness.

The Company accessed funds from the secured revolving line of credit during the year, but has no outstanding balance at September 30, 2022. The secured term loan and secured revolving line of credit are secured by liens on substantially all of the assets of the Company.

The Company accessed funds from the secured revolving line of credit during the year, but had $9.5 million outstanding balance at September 30, 2023. The secured term loan and secured revolving line of credit are secured by liens on substantially all of the assets of the Company.

Specifically, the investment in public health infrastructure involves improving the nation’s readiness for future pandemics and other biological threats, expanding access to vaccines and healthcare, and defeating diseases and epidemics such as, but not limited to, the opioid and HIV/AIDs epidemics.

The budget proposes $63 billion in discretionary and mandatory resources for NIH, an increase of $16 billion above FY 2022 enacted, to address the opioid crisis and ending HIV crises, make new investments in pandemic preparedness and nutrition research, and drive biomedical innovations.

The budget proposes $48.6 million in discretionary and mandatory resources for NIH, an increase of $920.0 million above FY 2023 enacted, to address the opioid crisis and ending HIV crises, make new investments in pandemic preparedness and nutrition research, and drive biomedical innovations.

If the appropriations bills are not timely enacted, government agencies operate under a continuing resolution ("CR"), which may negatively impact our business due to delays in new program starts, delays in contract award decisions, and other factors. On September 30, 2022, the President signed a CR providing funds to the federal government through December 16, 2022.

The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and business. Our actual results could differ materially from the results contemplated by these forward-looking statements.

We performed a qualitative assessment of factors to determine whether it was necessary to perform the goodwill impairment test. Based on the results of the work performed, the Company has concluded that no impairment loss was warranted at September 30, 2022, as no change in business conditions occurred which would have a material adverse effect on the valuation of goodwill.

Based on the results of the work performed, the Company has concluded that no impairment loss was warranted at September 30, 2023, as no change in business conditions occurred which would have a material adverse effect on the valuation of goodwill.

The 2023 budget request for the VA's research enterprise is $916 million, an increase of $34 million from the 2022 budget, excluding mandatory funding. In addition, the 2023 budget estimates $4.8 billion will be spent on telehealth treatment in 2023, an increase of $622 million from the 2022 current estimate.

The FY 2024 budget request for the VA's research enterprise is $938.0 million, an increase of $22.0 million from the FY 2023 budget, excluding mandatory funding. In addition, the FY 2024 budget estimates $4.9 billion will be spent on telehealth treatment in FY 2024, an increase of $78.0 million from the FY 2023 estimate.

A summary of the change in cash is presented below for the years ended September 30, 2022 and 2021 (in thousands): 2022 2021 Net cash provided by operating activities $ 1,243 $ 45,665 Net cash used in investing activities (872) (44) Net cash used in by financing activities (24,194) (22,927) Net change in cash $ (23,823) $ 22,694 Sources of Cash As of September 30, 2022, our immediate sources of liquidity include cash of approximately $0.2 million, accounts receivable, and access to our secured revolving line of credit.

We expect to continue to use the operating cash flow to pay outstanding debt. 31 A summary of the change in cash is presented below for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 Net cash provided by operating activities $ 31,033 $ 1,243 Net cash used in investing activities (181,197) (872) Net cash provided by (used in) financing activities 150,151 (24,194) Net change in cash $ (13) $ (23,823) Sources of Cash As of September 30, 2023, our immediate sources of liquidity include cash of approximately $0.2 million, accounts receivable, and access to our secured revolving line of credit.

The increase in revenue is due primarily to the two task orders awarded under a FEMA contract to support Alaska with its response to COVID-19. The revenue contribution from those task orders was $125.8 million.

The decrease in revenue is due primarily to the completion of two task orders awarded under a FEMA contract to support Alaska with its response to COVID-19. The revenue contribution from those task orders in fiscal year 2022 was $125.8 million. Included in fiscal 2023 revenue is $107.0 million contributed from GRSi subsequent to the acquisition.

These costs are generally comprised of direct labor and associated fringe benefit costs, subcontract cost, other direct costs, and the related management and infrastructure costs.

Cost of Operations Contract costs primarily include the costs associated with providing services to our customers. These costs are generally comprised of direct labor and associated fringe benefit costs, subcontract cost, other direct costs, and the related management and infrastructure costs.

We used less than $0.9 million and $0.1 million of cash in investing activities during fiscal years 2022 and 2021, respectively. The cash utilized was predominantly due to capital expenditures in fiscal year 2022 and 2021. Cash used in financing activities during the fiscal years ended September 30, 2022 and 2021 was approximately $24.2 million and $22.9 million, respectively.

The cash utilized was predominantly due to the acquisition of GRSi and capital expenditures in fiscal years 2023 and 2022, respectively. Cash used provided by financing activities during the fiscal year ended September 30, 2023 was approximately $150.2 million and cash used in financing activities during the fiscal year ended September 30, 2022 was $24.2 million, respectively.

Revenue for our firm-fixed-price contracts is recognized over time using a straight-line measure of progress or using the percentage-of-completion method whereby progress toward completion is based on a comparison of actual costs incurred to total estimated costs to be incurred over the contract term. Contract costs are expensed as incurred. Estimated losses are recognized when identified.

Revenue for our firm-fixed-price contracts is recognized over time using a straight-line measure of progress. Contract costs are expensed as incurred. Estimated losses are recognized when identified.

Department of Veterans Affairs The VA is requesting a total of $301.4 billion for FY 2023, an increase of $30.7 billion above the FY 2022 request. It includes $139.1 billion in discretionary funding, an increase of $21.9 billion, and $161.3 billion in mandatory funding, an increase of $8.6 billion from FY 2022 enacted.

Department of Veterans Affairs The VA is requesting a total of $325.1 billion for FY 2024, an increase of $16.6 billion above the FY 2023 enacted level. It includes $142.8 billion in discretionary funding, an increase of $3.0 billion, and $182.3 billion in mandatory funding, an increase of $13.6 billion from FY 2023 enacted.

It is anticipated that COVID-19 costs will decrease in FY 2023, driving a reduction in the budget request for DHP In Direct Care and Private Sector Care. 25 Industry consolidation among federal government contractors: There has been active consolidation and a strong increase in merger and acquisition activity among federal government contractors over the past few years that we expect to continue, fueled by public companies leveraging strong balance sheets.

Industry consolidation among federal government contractors: There has been active consolidation and a strong increase in merger and acquisition activity among federal government contractors over the past few years that we expect to continue, fueled by public companies leveraging strong balance sheets.

For additional information on risk factors that could impact our results, please refer to “Risk Factors” in Part I, Item 1A of this Form 10-K. 24 Federal budget outlook for fiscal year 2023: The President’s budget proposal for fiscal year ("FY") 2023 outlines many initiatives that include investments to rebuild our country’s physical infrastructure, strengthen supply chains, combat inflation, expand economic opportunity, respond to the changing climate, sustain and strengthen national defense, and bolster America's public health infrastructure.

Federal budget outlook for fiscal year 2024 : The President’s budget proposal for fiscal year ("FY") 2024 outlines many initiatives that include investments to rebuild our country’s physical infrastructure, strengthen supply chains, combat inflation, expand economic opportunity, respond to the changing climate, sustain and strengthen national defense, and bolster America's public health infrastructure.

The interest rate spread ranges from 2.5% to 4.5% depending on the funded indebtedness to adjusted EBITDA ratio. (a) Represents the principal amounts payable on our secured term loan, which is secured by liens on substantially all of the assets of the Company.

The remaining outstanding balance of our secured term loan is subject to interest rate fluctuations. (a) Represents the principal amounts payable on our secured term loan, which is secured by liens on substantially all of the assets of the Company.

For the year ended September 30, 2022, depreciation and amortization costs were approximately $1.1 million and $6.6 million, respectively, as compared to approximately $1.5 million and $6.6 million for the prior fiscal year, an aggregate decrease of $0.5 million. Interest Expense Interest expense includes items such as, interest expense and amortization of deferred financing costs on debt obligations.

Interest Expense Interest expense includes items such as interest expense and amortization of deferred financing costs on debt obligations. For the year ended September 30, 2023, interest expense was $16.3 million compared to interest expense, net of $2.2 million in the prior year, an increase of approximately $14.1 million over the prior year period.

Contractual Obligations as of September 30, 2022 Payments Due By Period Next 12 2-3 4-5 More than 5 (Amounts in thousands) Total Months Years Years Years Debt obligations $ 22,000 $ — $ 22,000 $ — $ — Facility operating leases 23,407 3,216 6,099 5,579 8,513 Equipment operating lease 135 83 52 — — Total contractual obligations $ 45,542 $ 3,299 $ 28,151 $ 5,579 $ 8,513 Critical Accounting Policies and Estimates Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The provisions of the secured term loan and secured revolving line of credit, including financial covenants, are fully described in Note 8 to the consolidated financial statements. 32 Contractual Obligations as of September 30, 2023 Payments Due By Period Next 12 2-3 4-5 More than 5 (Amounts in thousands) Total Months Years Years Years Debt obligations $ 179,359 $ 8,313 $ 38,000 $ 133,046 $ — Facility operating leases 23,489 3,501 7,962 5,668 6,358 Equipment operating lease 50 50 — — — Contractual obligations $ 202,898 $ 11,864 $ 45,962 $ 138,714 $ 6,358 Critical Accounting Policies and Estimates Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Notwithstanding this evaluation, factors including non-renewal of a major contract or other substantial changes in business conditions could have a material adverse effect on the valuation of goodwill in future periods and the resulting charge could be material to future periods’ results of operations. 31 Provision for Income Taxes The Company accounts for income taxes in accordance with the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse.

Provision for Income Taxes The Company accounts for income taxes in accordance with the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse.

The principal of the secured term loan is payable in quarterly installments with the remaining balance due on September 30, 2025. On September 30, 2019, we executed a floating-to-fixed interest rate swap, with First National Bank ("FNB") as counter party.

On September 30, 2019, we executed a floating-to-fixed interest rate swap with First National Bank ("FNB") as counter party. The notional amount in the floating-to-fixed interest rate swap on September 30, 2023 is $16.2 million and matures in 2024 and the fixed rate of 1.61%.

However, the effect of set-aside provisions may limit our ability to compete for prime contractor positions on programs that we recompete or that we have targeted for growth. In these cases, the Company may elect to join a team with an eligible contractor as prime for specific pursuits that align with our core markets and corporate growth strategy.

The Company believes that its past performance in this market and track record of success provide a competitive advantage. However, the effect of set-aside provisions may limit our ability to compete for prime contractor positions on programs that we recompete or that we have targeted for growth.

General and administrative costs are for those employees not directly providing services to our customers, including but not limited to executive management, bid and proposal, accounting, and human resources.

General and administrative costs are for employees and third parties not directly providing services to our customers, including but not limited to executive management, bid and proposal, accounting, and human resources. These costs increased as compared to the prior fiscal year by $7.1 million to approximately $37.8 million primarily due to the acquisition of GRSi.

We believe that our current investment and financing obligations are adequately covered by cash generated from profitable operations and that planned operating cash flow should be sufficient to support our operations for twelve months from the date of issuance of these consolidated financial statements. 29 Credit Facilities A summary of our credit facilities as of September 30, 2022 is as follows (in millions): Lender Arrangement Loan Balance Interest * Maturity Date First National Bank of Pennsylvania Secured term loan (a) $ 22.0 LIBOR* + 2.5% 09/30/25 First National Bank of Pennsylvania Secured revolving line of credit (b) $ — LIBOR* + 2.5% 09/30/25 *LIBOR rate as of September 30, 2022 was 2.52%.

Definitions of these additional non-GAAP measures are set forth in the footnotes to the reconciliation table below. These non-GAAP measures of our performance are used by management to conduct and evaluate its business during its regular review of operating results for the periods presented.

These non-GAAP measures of performance are used by management to conduct and evaluate its business during its review of operating results for the periods presented. Management and the Company's Board utilize these non-GAAP measures to make decisions about the use of the Company's resources, analyze performance between periods, develop internal projections and measure management performance.

Results of Operations Fiscal Year Ended September 30, 2022 as Compared to Fiscal Year Ended September 30, 2021 The following table summarizes, for the years indicated, consolidated statements of operations data expressed (in thousands except for per share amounts, and as percentages of revenue): Year Ended September 30, 2022 2021 Change Revenue $ 395,173 100.0 % $ 246,094 100.0 % $ 149,079 Cost of operations Contract costs 322,886 81.7 % 194,614 79.1 % 128,272 General and administrative costs 30,730 7.8 % 25,054 10.2 % 5,676 Corporate development costs 614 0.2 % 1,088 0.4 % (474) Depreciation and amortization 7,665 1.9 % 8,115 3.3 % (450) Total operating costs 361,895 91.6 % 228,871 93.0 % 133,024 Income from operations 33,278 8.4 % 17,223 7.0 % 16,055 Interest expense 2,215 0.6 % 3,784 1.6 % (1,569) Income before provision for income taxes 31,063 7.8 % 13,439 5.4 % 17,624 Provision for income taxes 7,775 2.0 % 3,294 1.3 % 4,481 Net income $ 23,288 5.8 % $ 10,145 4.1 % $ 13,143 Net income per share - basic $ 1.82 $ 0.81 $ 1.01 Net income per share - diluted $ 1.64 $ 0.75 $ 0.89 Revenue For the year ended September 30, 2022 revenue was $395.2 million, an increase of $149.1 million or 60.6% over the prior year period.

In these cases, the Company may elect to join a team with an eligible contractor as prime for specific pursuits that align with our core markets and corporate growth strategy. 26 Results of Operations Fiscal Year Ended September 30, 2023 as Compared to Fiscal Year Ended September 30, 2022 The following table summarizes, for the years indicated, consolidated statements of operations data expressed (in thousands except for per share amounts, and as percentages of revenue): Year Ended September 30, 2023 2022 Change Revenue $ 375,872 100.0 % $ 395,173 100.0 % $ (19,301) Cost of operations Contract costs 296,016 78.8 % 322,886 81.8 % (26,870) General and administrative costs 37,795 10.1 % 30,730 7.8 % 7,065 Impairment loss of long-lived asset 7,673 2.0 % — — % 7,673 Corporate development costs 1,735 0.5 % 614 0.1 % 1,121 Depreciation and amortization 15,562 4.1 % 7,665 1.9 % 7,897 Total operating costs 358,781 95.5 % 361,895 91.6 % (3,114) Income from operations 17,091 4.5 % 33,278 8.4 % (16,187) Interest expense 16,271 4.3 % 2,215 0.6 % 14,056 Income before provision for income tax (benefit) expense 820 0.2 % 31,063 7.8 % (30,243) Provision for income tax (benefit) expense (641) (0.2) % 7,775 2.0 % (8,416) Net income $ 1,461 0.4 % $ 23,288 5.8 % $ (21,827) Net income per share - basic $ 0.11 $ 1.82 $ (1.71) Net income per share - diluted $ 0.10 $ 1.64 $ (1.54) Revenue For the year ended September 30, 2023 revenue was $375.9 million, a decrease of $19.3 million or 4.9% over the prior year period.

Cash flows from operations totaled approximately $1.2 million and $45.7 million for the years ended September 30, 2022 and 2021, respectively. The decrease in cash from operations was principally a result of performance of the deferred contract obligations on the FEMA task orders, for which an advance payment was received at the end of fiscal 2021.

Cash flows from operations totaled approximately $31.0 million and $1.2 million for the years ended September 30, 2023 and 2022, respectively. The increase in cash from operations was principally a result of a decrease in accounts receivable. We used $181.2 million and $0.9 million of cash in investing activities during fiscal years 2023 and 2022, respectively.

Management and our Board utilize these non-GAAP measures to make decisions about the use of our resources, analyze performance between periods, develop internal projections and measure 27 management's performance. We believe that these non-GAAP measures are useful to investors in evaluating our ongoing operating and financial results and understanding how such results compare with our historical performance.

We believe that these non-GAAP measures are useful to investors in evaluating the Company's ongoing operating and financial results and understanding how such results compare with the Company's historical performance. These supplemental performance measurements may vary from and may not be comparable to similarly titled measures by other companies in our industry.

The activity in each fiscal year was primarily early repayment of principal on our secured term loan. During the year ended September 30, 2022 and 2021, the Company repaid approximately $24.8 million and $23.3 million of secured term loan principal, respectively. We expect to continue to use operating cash flow to pay outstanding debt.

The cash provided by financial activities during the fiscal year ended September 30, 2023, was primarily due to the debt incurred to finance the acquisition of GRSi during the fiscal year. The activity in the fiscal year ended September 30, 2022 was primarily due to the early repayment of principal on our secured term loan.

EBITDA for the remaining contract portfolio is calculated by subtracting the EBITDA attributable to the FEMA task orders from the Company’s total EBITDA. Liquidity and Capital Management For the year ended September 30, 2022, the Company generated operating income of approximately $33.3 million and net income of approximately $23.3 million.

(g) Tax effect is the impact the tax expense per the tax provision Liquidity and Capital Management The Company generated operating income of approximately $17.1 million and $33.3 million for the years ended September 30, 2023 and 2022, respectively and net income of approximately $1.5 million and $23.3 million for the years ended September 30, 2023 and 2022 respectively.

The notional amount in the floating-to-fixed interest rate swap as of September 30, 2022 is $16.2 million and matures in 2024. The remaining outstanding balance of our secured term loan is subject to interest rate fluctuations. (b) The secured revolving line of credit has a ceiling of up to $25.0 million and a maturity date of September 30, 2025.

The principal of the secured term loan is payable in quarterly installments with the remaining balance due on December 8, 2027. (b) The secured revolving line of credit has a ceiling of up to $70.0 million and a maturity date of December 8, 2027.

The FY 2023 UMB request for the Defense Health Program ("DHP") is $36.9 billion, a decrease of $0.4 billion from FY 2022 enacted.

The FY 2024 UMB request for the Defense Health Program ("DHP") is $58.7 billion, an increase of 0.5% from FY 2023 enacted. It is anticipated that COVID-19 costs will decrease in FY 2024, driving a reduction in the budget request for DHP In Direct Care and Private Sector Care.

We derive 99% of our revenue from agencies of the Federal government, providing services to several agencies including the Department of Veterans Affairs, Department of Health and Human Services, Department of Defense, and Department of Homeland Security.

We deliver improved health and cyber readiness solutions for federal government customers through digital transformation, science research and development, and systems engineering and integration. We derive 99% of our revenue from agencies of the Federal government, providing services to several agencies including the HHS, VA, DoD, and DHS.

For the year ended September 30, 2022, interest expense was $2.2 million compared to interest expense, net of $3.8 million in the prior year, a decrease of approximately $1.6 million over the prior year period. The decrease in interest expense was primarily due to the decreased balance on our secured term loan.

The increase in interest expense was primarily due to the increase in long-term debt associated with the acquisition of GRSi during the fiscal year. Provision for Income Taxes Provision for Income taxes for the fiscal year ended September 30, 2023 was a reduction of tax by $0.6 million, a decrease of approximately $8.4 million from the prior fiscal year.

Provision for Income Taxes Provision for Income taxes for the fiscal year ended September 30, 2022 was $7.8 million, an increase of approximately $4.5 million from the prior fiscal year. The effective tax rate was 24.8% and 24.5% for the fiscal years ending September 30, 2022 and 2021 respectively.

The effective tax rate was a negative 72.2% for the fiscal year ending September 30, 2023 and 24.8% for the fiscal year ending September 30, 2022. Non-GAAP Financial Measures for Fiscal 2023 and 2022 The Company is presenting certain non-GAAP measures regarding its financial performance for the fiscal years ended September 30, 2023 and 2022.

Removed

Business Overview: We are a provider of technology-enabled business process outsourcing and program management solutions, and public health research and analytics; primarily focused to improve and better deploy large-scale federal health and human service initiatives.

Added

In December 2022, we acquired Grove Resource Solutions, LLC ("GRSi"), 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.

Removed

The following table summarizes the revenues by customer for the years ended September 30, 2022 and 2021, respectively (in thousands): 2022 2021 Revenue Percent of total revenue Revenue Percent of total revenue Department of Homeland Security $ 126,576 32.0 % $ 2,485 1.0 % Department of Veterans Affairs 126,106 31.9 % 110,078 44.7 % Department of Health and Human Services 102,201 25.9 % 91,543 37.2 % Department of Defense 33,612 8.5 % 30,930 12.6 % Customers with less than 10% share of total revenue 6,678 1.7 % 11,058 4.5 % Total revenue $ 395,173 100.0 % $ 246,094 100.0 % See “Item 1A – Risk Factors - A significant portion of our revenue is concentrated in a small number of contracts and we could be seriously harmed if we were unable to continue providing services under, or unsuccessful in our recompete efforts on, these contracts." for a discussion of concentration risk within our VA and HHS portfolio of contracts The Company is a full-service provider of technology-enabled health and human services, providing solutions to three market focus areas: Defense and Veteran Health Solutions, Human Solutions and Services, and Public Health and Life Sciences.

Added

On November 16, 2023, the President signed a CR providing funds to the federal government through January 19, 2024 for several agencies and through February 2, 2024 for the remaining.

Removed

We deliver domain-specific expertise, industry best-practices and innovations to customers across these markets leveraging seven core competencies: secure data analytics, clinical trials and laboratory services, case management, performance evaluation, system modernization, operational logistics and readiness, and strategic digital communications.

Added

For the year ended September 30, 2023, the contract costs decreased as compared to the prior fiscal year by $26.9 million to approximately $296.0 million primarily due to completion of the FEMA task orders, offset by the contribution from the acquisition of GRSi.

Removed

The Company manages its operations from its principal executive offices in Atlanta, Georgia, and we have a complementary headquarters office in Silver Spring, Maryland. We employ over 2,400 skilled employees working in more than 30 locations throughout the United States and one location overseas.

Added

Impairment loss of long-lived assets is a loss associated with a reduction of the fair value of an asset during the fourth quarter of fiscal 2023, DLH reduced its leased office space requirement by consolidating underutilized premises as part of a facility rationalization effort, to accurately reflect the operational needs of the business.

Removed

In recent years we have successfully completed acquisitions to increase future organic growth, diversify our customer base, and to expand into adjacent markets. On June 7, 2019 we acquired Social & Scientific Systems, Inc. ("S3") and on September 30, 2020, we acquired Irving Burton Associates, LLC ("IBA").

Added

As a result, the Company has determined that its Right of Use Assets experienced a reduction in fair value below its associated carrying value of $7.7 million. Corporate development costs are incremental due diligence costs, such as legal and accounting fees.

Removed

COVID-19 impact We are exposed to and impacted by macroeconomic factors and U.S. government policies. Current general economic conditions continue to be impacted by the COVID-19 pandemic, which resulted in both market size contractions due to economic slowdowns and government restrictions on movement during the height of the pandemic.

Added

Fiscal year 2023 and 2022 costs were associated with the acquisition of GRSi. 27 For the year ended September 30, 2023, depreciation and amortization costs were approximately $0.8 million and $14.8 million, respectively, as compared to approximately $1.1 million and $6.6 million, respectively for the prior fiscal year, an aggregate increase of $7.9 million which is primary due to the acquisition of GRSi during the fiscal year.

Removed

While the rollout of vaccines has positively correlated to an improvement in macroeconomic indicators, the lifting of various public health constraints, and a reduction of many restrictions on economic activity, there continues to be significant uncertainty as to the effects of the pandemic on the economy, which may impact our results of operations or cash flows in future periods.

Added

The measures presented are Adjusted Revenue, Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted Earnings Per Share ("EPS"), Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”), EBITDA Margin on Revenue, Adjusted EBITDA, and Adjusted EBITDA Margin on Adjusted Revenue.

Removed

We have seen continued demand for the services we provide under our current contract portfolio as the services we provide are largely deemed essential.

Added

In calculating these measures, we have added the corporate development costs associated with completing the GRSi acquisition to our results for fiscal year 2023 and 2022, removed the impairment loss on certain real estate assets, and removed the contribution from the FEMA task orders from the results for fiscal year 2022.

Removed

Although we have also been successful in winning new contracts tied to the need to support public health initiatives in response to the pandemic, as the public health situation improves, there may be fewer such opportunities in the future.

Added

These resulting measures present our financial performance compared to results delivered in the prior year period. Definitions of these additional non-GAAP measures are set forth below. We have prepared these additional non-GAAP measures to eliminate the impact of items that we do not consider indicative of ongoing operating performance due to their inherently unusual or extraordinary nature.

Removed

General uncertainty related to the pandemic, the long-term efficacy of vaccines and the spread of new variants, may nonetheless cause reduced demand for certain services we provide, particularly if it results in a recessionary economic environment or the spending priorities of the U.S. government shift in ways adverse to our business focus.

Added

Adjusted Revenue, Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted EPS, EBITDA, Adjusted EBITDA, EBITDA Margin on Revenue, and Adjusted EBITDA Margin on Adjusted Revenue are not recognized measurements under accounting principles generally accepted in the United States, or GAAP, and when analyzing our performance investors should (i) evaluate each adjustment in our reconciliation to the nearest GAAP financial measures and (ii) use the aforementioned non-GAAP measures in addition to, and not as an alternative to, revenue, operating income, net income or diluted EPS, as measures of operating results, each as defined under GAAP.

Removed

Our ability to continue to operate without any significant negative impacts will in part depend on our continued ability to protect our employees. We have endeavored to follow recommended actions of government and health authorities to protect our employees and have been able to broadly maintain our operations.

Added

We have defined these non-GAAP measures as follows: “Adjusted Revenue” represents revenue less the contribution to revenue from the short-term FEMA task orders.

Removed

Further, we have partnered with our clients to adopt particular measures to protect our employees at distribution centers, and we have been and expect to continue to execute on the remainder of our contracts through remote and teleworking arrangements.

Added

“Adjusted Operating Income” represents operating income plus the corporate development costs associated with completing the GRSi acquisition in fiscal 2023 and 2022 and the impairment loss on the right of use asset incurred only in fiscal 2023, less the contribution from the FEMA task orders, which occurred only in fiscal 2022.

Removed

We continue to monitor the evolving situation related to the COVID-19 pandemic and intend to continue to work with government authorities and other stakeholders to assess further potential implications to us, continue with employee safety measures to ensure that we are able to continue our operations during the pandemic, and take other actions where appropriate to mitigate other adverse consequences.

Added

“Adjusted Net Income” represents net income including the corporate development costs associated with completing the acquisition, the impairment loss on the right of use asset, as well as the FEMA task orders. “Adjusted Diluted EPS” represents diluted EPS calculated using Adjusted Net Income as opposed to net income.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−0 removed1 unchanged

2022 filing

2023 filing

Biggest changeThe notional amount in the floating-to-fixed interest rate swap is $16.2 million at the end of fiscal year 2022. The remaining outstanding balance of our secured term loan is subject to interest rate fluctuations.

Biggest changeThe notional amount in the floating-to-fixed interest rate swap on September 30, 2023 is $16.2 million and matures in 2024 and the fixed rate of 1.61%.

The Company has limited foreign operations and therefore is not materially subject to fluctuations in foreign exchange rates, commodity prices or other market rates or prices from market sensitive instruments. On September 30 2019, we executed a floating-to-fixed interest rate swap with FNB as counter party.

The Company has limited foreign operations and therefore is not materially subject to fluctuations in foreign exchange rates, commodity prices or other market rates or prices from market sensitive instruments. On September 30, 2019, we executed a floating-to-fixed interest rate swap with First National Bank ("FNB") as counter party.

As interest rates rise due to inflation-related pressures in the economy, we expect to continue to use interest rate swaps to mitigate our cash risk of rising rates. The Company has determined that a 1.0% increase to the LIBOR rate would incrementally impact our interest expense by approximately $0.3 million per year.

As interest rates rise due to inflation-related pressures in the economy, we expect to continue to use interest rate swaps to mitigate our cash risk of rising rates. The Company has determined that a 1.0% increase to the SOFR rate would incrementally impact our interest expense by approximately $0.7 million per year.

As of September 30, 2022, the interest rate was 5.02%.

As of September 30, 2023, the interest rate was 9.51%. 34

Added

On January 31, 2023, we executed an additional floating-to-fixed interest rate swap with FNB; the notional amount as of September 30, 2023 is $96.0 million, it matures in January 2026, and the fixed rate is 4.10%. The total floating-to-fixed swap balance as of September 30, 2023 is $112.2 million.

Top changes in DLH Holdings Corp.'s 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Other DLHC 10-K year-over-year comparisons