DLH Holdings Corp.
For the period ended Dec 31, 2025. Filed Feb 9, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2025 · Filed Feb 9, 2026
DLHC$3.61-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-06.
0000785557-25-000082
ITEM 2. : MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-09.
0000785557-26-000013
ITEM 2. : MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 100 current paragraphs.
57 unchanged; 29 reworded; 13 added; 16 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
The U.S. budget and regulatory landscape remains uncertain, and this uncertainty is expected to continue. The Company’s performance depends on overall federal spending levels and how well its capabilities align with government priorities. The administration is reviewing agency spending to improve efficiency and productivity, which has already led to some contract reductions, cancellations, and price renegotiations for the Company. Future reviews may cause further adjustments or mandates to cut costs.
Current report
The Company closely monitors federal budget, legislative, and contracting developments to adapt its strategies accordingly. While defense and national security spending enjoy bipartisan support amid global tensions, uncertainty persists around the timing and passage of annual appropriations bills.
Current report
We continue to align the Company’s capabilities with well-funded budget priorities and take steps to maintain a competitive cost structure in line with our expectations of future business opportunities. In light of these actions, as well as the budgetary environment discussed above, we believe we are well positioned to continue to win new business in our addressable market.
Current report
On November 12, 2025, Congress passed and the President signed an appropriations bill to fund certain agencies and extend funding at current levels for the remaining agencies through January 30, 2026. As Congress did not enact full-year appropriations or a continuing resolution by the expiration of that funding measure, a partial government shutdown commenced on January 31, 2026. The partial shutdown ended on February 3, 2026 when Congress passed and the President signed funding appropriations for five federal agencies, including DoD and HHS. A short-term continuing resolution providing two weeks of funding for the Department of Homeland Security (DHS) was included in the appropriations. The Company does not expect this to have a material impact on its operations and financial performance.
Current report
Provision for Income Taxes (Benefit) Expense
Current report
Provision for income taxes decreased $1.0 million for the three months ended December 31, 2025 over 2024. The effective tax rate for the three months ended December 31, 2025 and 2024 was 32.5% and 25.9%, respectively. The increase in the effective tax rate compared to the prior year period was primarily attributable to state income taxes and changes in permanent differences, partially offset by the impact of federal tax legislation enacted in July 2025. The One Big Beautiful Bill Act modified the limitation on the deductibility of business interest expense. The Company’s tax provision for the current quarter reflects these changes, including a more favorable limitation on business interest expense under Section 163(j). The Company’s effective tax rate differs from the federal statutory rate of 21.0% primarily due to state income taxes and permanent differences, partially offset by the effects of the legislative changes described above.
Current report
The Company is presenting certain non-GAAP measures regarding its financial performance. The measures presented are Earnings Before Interest, Tax, Depreciation, and Amortization ("EBITDA") and Adjusted EBITDA. In calculating Adjusted EBITDA, we have added back to EBITDA certain costs associated with scaling indirect costs to revenue volume. These resulting measures present our financial performance compared to the results delivered in the prior year period.
Current report
These supplemental performance measurements may vary from and may not be comparable to similarly titled measures by other companies in our industry. EBITDA and Adjusted EBITDA 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. We have defined these non-GAAP measures as follows:
Current report
"EBITDA" represents net income before income taxes, interest, depreciation and amortization.
Current report
“Adjusted EBITDA” represents net income before income taxes, interest, depreciation and amortization and thecosts associated with scaling general and administrative costs to revenue volume.
Current report
Below is a reconciliation of EBITDA and Adjusted EBITDA reported for the three months ended December 31, 2025 and 2024 to its most directly comparable financial measure calculated and presented in accordance with GAAP as follows (in thousands):
Current report
Cash was approximately $0.3 million and $0.1 million for the period ended December 31, 2025 and September 30, 2025, respectively.
Current report
Cash flows used in operating activities totaled approximately $(4.8) million and $(11.5) million for the three months ended December 31, 2025 and 2024, respectively. The increase in cash from operations was principally due to an increase in collections over the prior year period, which resulted in a reduction in our accounts receivable.
Removed paragraphs (16)
Previous report
We were awarded new task orders under this IDIQ contract for the remaining six locations with varying periods of performance. The task order for the Leavenworth, Kansas location has an end date of August 31, 2025. The VA has awarded a task order to provide services at the Leavenworth location to a new prime contractor with whom we are not affiliated. At the conclusion of our task order ending August 31, 2025, we expect to cease operations at that location. The remaining five locations have task orders with periods of performance through October 2025. To continue ordering services after expiration of the current task orders, the VA would need to award a new bridge contract.
Previous report
The Company's contract with HHS in support of its Head Start program generated $28.4 million and $31.4 million of revenues for the nine months ended June 30, 2025 and 2024 respectively. This contract has a period of performance through October 2025. The customer is evaluating responses to its request for proposals and until the procurement process is complete, we expect to continue providing monitoring and evaluation services.
Previous report
Provision for Income Tax (Benefit) Expense
Previous report
Provision for income tax expense decreased $0.6 million for the three months ended June 30, 2025 over 2024. The effective tax rate for the three months ended June 30, 2025 and 2024 was (34.2)% and 29.7%, respectively. The tax provision for this quarter reflects the positive impact of an increase in estimated year end income before provision for income tax as the year end effective tax rate decreased from approximately 28% to approximately 23%.
Previous report
Revenue
Previous report
Revenue decreased $36.2 million for the nine months ended June 30, 2025 over 2024, primarily reflecting the conversion of certain contracts in our VA and DOD portfolios to small business contractors. The revenue decrease from small business conversion was partially offset by contributions from new contract awards.
Previous report
Cost of Operations
Previous report
For the nine months ended June 30, 2025, depreciation and amortization expense were approximately $0.5 million and $12.3 million, respectively, as compared to approximately $0.4 million and $12.3 million for the nine months ended June 30, 2024, respectively.
Previous report
Interest Expense, net
Previous report
Provision for Income Tax Expense
Previous report
Provision for income tax expense increased $0.2 million for the nine months ended June 30, 2025 over 2024. The effective tax rate for the nine months ended June 30, 2025 and 2024 was 22.9% and 7.8%, respectively. The tax provision from the prior year period was positively impacted by the exercise of non-qualifying stock options.
Previous report
The Company uses Earnings Before Interest, Tax, Depreciation, and Amortization ("EBITDA") as a supplemental non-GAAP measure of our performance. DLH defines EBITDA as net income excluding (i) depreciation and amortization, (ii) interest expense, and (iii) provision for income tax expense.
Previous report
Reconciliation of GAAP net income to EBITDA, a non-GAAP measure(in thousands):
Previous report
Cash was approximately $0.2 million and $0.3 million as of June 30, 2025 and September 30, 2024, respectively.
Previous report
Cash flows provided by operating activities totaled approximately $12.5 million and $14.9 million for the nine months ended June 30, 2025 and 2024, respectively. The decrease in cash provided by operating activities is primarily due to a decrease in revenue volume as compared to the prior year.
Previous report
(a) The increase in facility operating lease obligations was due to an amendment to an existing lease extending the lease term.
Reworded paragraphs (29)
Previous wording
You should read the following discussion in conjunction with the Consolidated Financial Statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended September 30, 2024, and in other reports we have subsequently filed with the SEC. This Quarterly Report on Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in this Management’s Discussion and Analysis are forward-looking statements that involve risks and uncertainties. Any statements that refer to expectations, projections or other characterizations of future events or circumstances or that are not statements of historical fact (including without limitation statements to the effect that the Company or its management “believes”, “expects”, “anticipates”, “plans”, “intends” and similar expressions) should be considered forward-looking statements that involve risks and uncertainties which could cause actual events or DLH’s actual results to differ materially from those indicated by the forward-looking statements. Forward-looking statements in this report include, among others, statements regarding benefits of acquisitions, estimates of future revenues, operating income, earnings, earnings per share, backlog, and cash flows. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Our actual results may differ materially from such forward-looking statements made in this report due to a variety of factors, including: the failure to achieve the anticipated benefits of any future acquisition (including anticipated future financial operating performance and results); the diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations; the inability to retain employees and customers; contract awards in connection with re-competes for present business and/or competition for new business; our ability to manage our increased debt obligations; compliance with bank financial and other covenants; changes in client budgetary priorities; government contract procurement (such as bid and award protests, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; the impact of inflation and higher interest rates; and other risks described in our SEC filings. For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s periodic reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, as well as interim quarterly filings thereafter. The forward-looking statements contained herein are not historical facts, but rather are based on current exp…
Excerpt shortened here; the source contains the full paragraph.
Current wording
You should read the following discussion in conjunction with the Consolidated Financial Statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended September 30, 2025, and in other reports we have subsequently filed with the SEC. This Quarterly Report on Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in this Management’s Discussion and Analysis are forward-looking statements that involve risks and uncertainties. Any statements that refer to expectations, projections or other characterizations of future events or circumstances or that are not statements of historical fact (including without limitation statements to the effect that the Company or its management “believes”, “expects”, “anticipates”, “plans”, “intends” and similar expressions) should be considered forward-looking statements that involve risks and uncertainties which could cause actual events or DLH’s actual results to differ materially from those indicated by the forward-looking statements. Forward-looking statements in this report include, among others, statements regarding benefits of acquisitions, estimates of future revenues, operating income, earnings, earnings per share, backlog, and cash flows. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Our actual results may differ materially from such forward-looking statements made in this report due to a variety of factors, including: the failure to achieve the anticipated benefits of any future acquisition (including anticipated future financial operating performance and results); the diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations; the inability to retain employees and customers; contract awards in connection with re-competes for present business and/or competition for new business; our ability to manage our debt obligations; compliance with bank financial and other covenants; changes in client budgetary priorities; government contract procurement (such as bid and award protests, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; significant delays or reductions in appropriations for our programs and broader changes in U.S. government funding and spending patterns; legislation that amends or changes discretionary spending levels or budget priorities; legal, regulatory, and political changes from the federal government that could result in economic uncertainty; the impact of inflation and higher interest rates; and other risks described in our SEC filings. For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward-looking sta…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
DLH Holdings Corp. ("DLH") delivers improved health and readiness solutions for federal government customers through digital transformation, science research and development, and systems engineering and integration. We bring a unique combination of government sector experience, proven methodology, and unwavering commitment to solve the complex problems faced by civilian and military customers alike, doing so by leveraging multiple capabilities, including cyber technology, artificial intelligence, advanced analytics, cloud-based applications, and telehealth systems.
Current wording
DLH Holdings Corp. ("DLH") delivers improved health and readiness solutions for federal government customers through digital transformation and cyber security, science research and development, and systems engineering and integration. We bring a unique combination of government sector experience, proven methodology, and unwavering commitment to solve the complex problems faced by civilian and military customers alike, doing so by leveraging multiple capabilities, including cyber technology, artificial intelligence, advanced analytics, cloud-based applications, and telehealth systems.
Previous wording
We have invested in leading credentials and capabilities that we expect will deliver value to our customers. These investments include development of secure Information Technology ("IT") platforms; 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.
Current wording
We have invested in leading credentials and capabilities that we expect will deliver value to our customers. These investments include the development of secure Information Technology ("IT") platforms; sophisticated data analytic tools and techniques;
Previous wording
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 (52.5%), firm fixed price contracts (26.2%), and cost reimbursable contracts (21.3%).
Current wording
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 (44.4%), firm fixed price contracts (35.3%), and cost reimbursable contracts (20.3%).
Previous wording
IT modernization and cyber security maturity are priority initiatives throughout our customer set. Our customers, including numerous institutes and centers within the National Institutes of Health ("NIH"), the Defense Health Agency ("DHA"), US Army Medical Research & Development Command ("MRDC"), and US Navy, rely on our information technology support to enable their vital missions. We work with these customers to reduce risk and build resilience to cyber and physical threats to the federal government’s infrastructure, providing the full spectrum of cyber capabilities, cryptographic and true cyber engineering, Certified Information Security Officer ("CISO") / Information System Security Officer ("ISSO") support, risk management frameworks, Continuity of Operations ("COOP") / Disaster Recovery, and enterprise infrastructure and cloud governance focused on designing and implementing zero trust architecture.
Current wording
IT modernization and cyber security maturity are priority initiatives throughout our customer set. Our customers, including numerous institutes and centers within the National Institutes of Health ("NIH"), the Defense Health Agency ("DHA"), Telemedicine and Advanced Technology Research Center ("TATRC"), and US Navy, rely on our information technology support to enable their vital missions. We work with these customers to reduce risk and build resilience to cyber and physical threats to the federal government’s infrastructure, providing the full spectrum of cyber capabilities, cryptographic and true cyber engineering, Certified Information Security Officer ("CISO") / Information System Security Officer ("ISSO") support, risk management frameworks, Continuity of Operations ("COOP") / Disaster Recovery, services under Cybersecurity Maturity Model Certification ("CMMC") Level 2, and enterprise infrastructure and cloud governance focused on designing and implementing zero trust architecture.
Previous wording
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. 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 and development program. Our employees provide expert knowledge and experience that supports the missions of our customers.
Current wording
Our employees support innovative, cutting-edge research on emerging trends, health informatics analyses, and the application of best practices including mobile, social, and interactive media. We leverage evidence-based methods and web technology to drive health equity to our most vulnerable populations through public engagement. Projects often involve highly specialized expertise and transformative R&D support services. 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.
Previous wording
•CMOP pharmacy and logistic services represent approximately $89.8 million and $105.8 million of revenues for the nine months ended June 30, 2025 and 2024, respectively.
Current wording
•CMOP pharmacy and logistic services represent approximately $26.9 million and $34.1 million of revenues for the quarter ended December 31, 2025 and 2024, respectively.
Previous wording
As previously disclosed, the VA issued solicitations for performance of the CMOP program by separate contracts for each of its eight locations, with the awards limited to service-disabled veteran owned small business (“SDVOSB”) prime contractors. As that ongoing acquisition evaluation is occurring, DLH continues performance as the prime contractor under a sole-source Indefinite Quantity/Indefinite Delivery ("IDIQ") contract effective May 1, 2024. The IDIQ initially had ceiling value of $200.0 million, and the ceiling value was increased by $50 million to $250 million in April 2025. It also has a maximum ordering period through April 30, 2025, with the potential for orders placed within that period to extend performance beyond April 2025. To date, VA has transitioned performance for two locations previously covered by this IDIQ: Chelmsford, Massachusetts (July 31, 2024) and Hines, Illinois (January 31, 2025).
Current wording
As previously disclosed, the VA issued solicitations for performance of the CMOP program under separate contracts for each of its eight locations, with the awards limited to service-disabled veteran owned small business (“SDVOSB”) prime contractors. As this ongoing acquisition evaluation is occurring, DLH was awarded a new sole-source Indefinite Quantity/Indefinite Delivery ("IDIQ") contract effective October 28, 2025. The IDIQ has ceiling value of $90.0 million, and a maximum ordering period through October 2026, with the potential for orders placed within that period to extend performance through April 2027. Depending on the timing of the acquisition process, revenue recognized under the IDIQ may be less than the awarded value.
Previous wording
With respect to the remaining five locations that DLH expects to operate through October 2025, the VA has solicitations to evaluate for three locations and has not yet assigned a proposal due date for the solicitations for the remaining two locations. Until the VA has completed its procurement processes, we expect to continue providing pharmacy and logistics services at these locations. DLH intends to provide additional updates to the progression of these solicitations as a part of its regular quarterly and annual filings.
Current wording
During the quarter, we performed services at four CMOP locations. The VA made an award for one location, which transitioned to a new prime contractor on November 28, 2025. For the remaining three locations, the VA made two awards for additional locations, but that transition timing has not yet been established. Until the VA has completed its procurement and transition processes, we expect to continue providing pharmacy and logistics services at these locations. DLH intends to provide additional updates to the progression of these solicitations as a part of its regular quarterly and annual filings.
Previous wording
At June 30, 2025, our backlog was approximately $555.3 million of which $92.3 million was funded backlog. At September 30, 2024, our backlog was approximately $690.3 million, of which $155.1 million was funded backlog.
Current wording
At December 31, 2025, our backlog was approximately $517.4 million of which $124.0 million was funded backlog. At September 30, 2025, our backlog was approximately $514.3 million, of which $114.1 million was funded backlog.
Previous wording
As we continue to align the Company’s capabilities with well-funded budget priorities and the current budgetary environment, we believe we are well positioned to win new business in our large addressable market. Additional factors that could affect federal government spending in our addressable market include changes in set-asides for small businesses, changes in budgetary priorities associated with the new administration, and the effect of initiatives such as the Department of Government Efficiency (DOGE), on limiting or reducing federal government spending in general. Further, the changing priorities of the new administration may have an adverse impact on our results and, as such new priorities are implemented, it may be difficult for us to accurately predict the effect they will have on our results.
Current wording
As we continue to align the Company’s capabilities with well-funded budget priorities and the current budgetary environment, we believe we are well positioned to win new business in our large addressable market. We are focused on increasing organic growth across our addressable market and delivering robust cash flow. We believe these priorities position the Company to expand within key national programs and mission-critical areas of health and national security. However, additional factors that could affect federal government spending in our addressable market include changes in set-asides for small businesses, changes in budgetary priorities associated with the new administration, and the effect of initiatives such as the Department of Government Efficiency ("DOGE"), on limiting or reducing federal government spending in general. Further, the changing priorities of the new administration may have an adverse impact on our results and, as such new priorities are implemented, it may be difficult for us to accurately predict the effect they will have on our results.
Previous wording
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. 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.
Current wording
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.
Previous wording
During the nine months ended June 30, 2025, we generated revenues of approximately $89.8 million from our set of contracts in support of the VA's CMOP program. As previously reported, the VA has been soliciting proposals for new contracts covering this work with a preference for a Service-Disabled Veteran Owned Small Business, or SDVOSB, to perform as the prime contractor. To date, the VA has awarded three locations to a new SDVOSB prime contractor, including the Leavenworth, Kansas location, which is expected to transition to the new contractor on August 31, 2025. The remaining five locations continue to be operated by DLH as the prime contractor. Should awards for the locations for which we have submitted a proposal be offered to a partner of DLH, we expect to continue to perform a significant amount of those contracts' volume of business as a subcontractor.
Current wording
During the quarter ended December 31, 2025, we generated revenues of approximately $26.9 million from our set of contracts in support of the VA's CMOP program. As previously reported, the VA has been soliciting proposals for new contracts covering this work with a requirement for a Service-Disabled Veteran Owned Small Business, or SDVOSB, to perform as the prime contractor. To date, the VA has awarded and completed the transition process for five locations to new SDVOSB prime contractors; the remaining three locations continue to be operated by DLH as the prime contractor. Should awards for the locations for which we have submitted a proposal be offered to a partner of DLH, we expect to continue to perform a significant amount of those contracts' volume of business as a subcontractor.
Previous wording
Revenue decreased $17.4 million for the three months ended June 30, 2025 over 2024, primarily reflecting the conversion of certain contracts in our VA and DOD portfolios to small business contractors. The revenue decrease from small business conversion was partially offset by contributions from new contract awards.
Current wording
Revenue decreased $21.9 million for the three months ended December 31, 2025 over 2024, primarily reflecting the conversion of certain contracts in our contract portfolio to small business contractors.
Previous wording
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. Contract costs decreased $14.2 million for the three months ended June 30, 2025 over 2024; the decrease was primarily due to the decrease in revenue volume and a decrease in overhead costs.
Current wording
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. Contract costs decreased $17.4 million for the three months ended December 31, 2025 over 2024; the decrease was primarily due to the decrease in revenue volume.
Previous wording
General and administrative costs are for those employees not directly providing services to our customers, to include but not limited to executive management, business development, accounting, and human resources. These costs decreased $1.2 million for the three months ended June 30, 2025 as compared to 2024. As a percentage of revenue, general and administrative costs increased to 9.4% from 9.0%, with the increase primarily due to incremental business development costs.
Current wording
General and administrative costs are for those employees not directly providing services to our customers, to include but not limited to executive management, business development, accounting, and human resources. These costs decreased $0.3 million for the three months ended December 31, 2025 as compared to 2024. As a percentage of revenue, general and administrative costs increased to 11.3% from 8.9%, with the increase being primarily due to the decrease in revenue volume. Subsequent to the end of the quarter, we reduced general and administrative costs to align more closely with our expected revenue volume. The impact of the cost scaling initiatives is described in more detail in the Non-GAAP Financial Measures section.
Previous wording
For the three months ended June 30, 2025, depreciation and amortization expense were approximately $0.2 million and $4.1 million, respectively, as compared to approximately $0.2 million and $4.1 million for the three months ended June 30, 2024, respectively.
Current wording
For the three months ended December 31, 2025, depreciation and amortization expense were approximately $0.2 million and $4.1 million, respectively, which was flat as compared with the three months ended December 31, 2024, respectively.
Previous wording
Interest expense, net, includes interest expense on the Company's term loan and amortization of deferred financing costs on debt obligations. Interest expense decreased $0.6 million for the three months ended June 30, 2025 over 2024, primarily due to the prepayment of debt and a decrease in the floating interest rate.
Current wording
Interest expense, net, includes interest expense on the Company's term loan and amortization of deferred financing costs on debt obligations. Interest expense decreased $0.7 million for the three months ended December 31, 2025 over 2024, primarily due to the prepayment of debt and a decrease in the floating interest rate.
Previous wording
On a non-GAAP basis, EBITDA for the nine months ended June 30, 2025 and 2024 was approximately $27.4 million and $31.3 million, respectively. The decrease was primarily due to the decrease in revenue volume driven by conversion of certain VA and DoD contracts to small business contractors, partially offset by revenue from new contract awards.
Current wording
On a non-GAAP basis, EBITDA for the three months ended December 31, 2025 and 2024 was approximately $5.7 million and $9.9 million and Adjusted EBITDA for such periods was $6.5 million and $9.9 million, respectively. The year over year decrease in both measures was primarily due to the decrease in revenue volume driven by conversion of certain VA and HHS contracts to small business contractors.
Previous wording
This non-GAAP measure of our performance is used by management to conduct and evaluate its business during its regular review of operating results for the periods presented. Management and our Board utilize this non-GAAP measure to make decisions about the use of our resources, analyze performance between periods, develop internal projections and measure management's performance. We believe that this non-GAAP measure is useful to investors in evaluating our ongoing operating and financial results and understanding how such results compare with our historical performance. By providing this non-GAAP measure as a supplement to GAAP information, we believe this enhances investors understanding of our business and results of operations. EBITDA is not a recognized measurement under accounting principles generally accepted in the United States, or GAAP, and when analyzing our performance investors should (i) evaluate adjustments in our reconciliation to the nearest GAAP financial measures and (ii) use non-GAAP measures in addition to, and not as an alternative to, measures of our operating results as defined under GAAP.
Current wording
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. We have prepared Adjusted EBITDA to eliminate the impact of items that we do not consider indicative of ongoing operating performance due to their inherently unusual nature. 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.
Previous wording
Available borrowings under our revolving credit facility was approximately $15.1 million and $18.1 million for the periods ended June 30, 2025 and September 30, 2024, respectively. The decrease is primarily due to a lower outstanding receivables balance at June 30, 2025.
Current wording
Available borrowings under our revolving credit facility was approximately $10.7 million and $23.6 million for the period ended December 31, 2025 and September 30, 2025, respectively. The decrease is primarily due the additional short-term revolving debt to fund prepayment of labor and payroll tax costs at December 31, 2025 due to banking holidays.
Previous wording
Cash used in investing activities totaled $0.2 million and $0.6 million for the nine months ended June 30, 2025 and 2024, respectively. The cash utilized was predominantly due to capital expenditures in the nine months ended June 30, 2025 and 2024, respectively.
Current wording
Cash used in investing activities totaled $0.0 million and $(0.6) million for the three months ended December 31, 2025 and 2024, respectively. The cash utilized was predominantly due to capital expenditures in the three months ended December 31, 2025 and 2024, respectively.
Previous wording
Cash used in financing activities during the nine months ended June 30, 2025 and 2024 were approximately $12.5 million and $14.1 million, respectively. The cash used in financing activities was primarily due to the prepayment of term debt.
Current wording
Cash provided by financing activities during the three months ended December 31, 2025 and 2024 were approximately $4.9 million and $12.2 million, respectively. The cash provided by financing activities was principally to satisfy short-term working capital needs for the three months ended December 31, 2025.
Previous wording
As of June 30, 2025, our immediate sources of liquidity include cash, accounts receivable, and access to our secured revolving line of credit facility. This credit facility provides us with access of up to $50.0 million, subject to certain conditions including eligible accounts receivable. As of June 30, 2025, we had unused borrowing capacity of $15.1 million, which is net of outstanding letters of credit. The Company's present operating liabilities are largely predictable and consist of vendor and payroll related obligations. 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.
Current wording
As of December 31, 2025, our immediate sources of liquidity include cash of approximately $0.3 million, accounts receivable, and access to our secured revolving line of credit facility. This credit facility provides us with access of up to $50.0 million, subject to certain conditions including eligible accounts receivable. As of this filing, we had unused borrowing capacity of $10.7 million, which is net of outstanding letters of credit. The Company's present operating liabilities are largely predictable and consist of vendor and payroll related obligations. 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.
Previous wording
A summary of our credit facilities for the period ended June 30, 2025 is as follows (in millions):
Current wording
A summary of our credit facilities for the period ended December 31, 2025 is as follows (in thousands):
Previous wording
1 Secured Overnight Financing Rate ("SOFR") as of June 30, 2025 was 4.3%.
Current wording
1 Secured Overnight Financing Rate ("SOFR") as of December 31, 2025 was 3.9%.
Previous wording
On January 31, 2023, we executed a floating-to-fixed interest rate swap with FNB which has a notional amount of$74.0 million at June 30, 2025, a fixed interest rate of 4.10% and a maturity date of January 31, 2026. As a result of entering these agreements, for the nine months ended June 30, 2025, interest expense has been decreased by approximately $0.2 million.
Current wording
On January 31, 2023, we executed a floating-to-fixed interest rate swap with FNB which has a notional amount of$74.0 million at December 31, 2025, a fixed interest rate of 4.10% and a maturity date of January 31, 2026. As a result of entering these agreements, for the three months ended December 31, 2025, interest expense has been increased by approximately $0.0 million.
Previous wording
(b) As amended, the secured revolving line of credit has a ceiling of up to $50.0 million and a maturity date of December 8, 2027. The Company has accessed funds from the revolving credit facility during the quarter and has a balance outstanding at June 30, 2025 of$14.0 million.
Current wording
(b) As amended, the secured revolving line of credit has a ceiling of up to $50.0 million and a maturity date of December 8, 2027. The Company has accessed funds from the revolving credit facility during the quarter and has a balance outstanding at December 31, 2025 of$13.1 million.
Previous wording
The qualitative assessment of goodwill at June 30, 2025 determined a triggering event occurred requiring that we conduct additional quantitative analyses. The triggering event was primarily due to the decrease in the Company's share price resulting in a decline in market capitalization. Management's assessment was that the market capitalization at the end of the 3rd quarter was not indicative of the Company's fair value.
Current wording
The qualitative assessment of goodwill at December 31, 2025 determined a triggering event occurred requiring that we conduct additional quantitative analyses. The triggering event was primarily due to the decrease in the Company's share price resulting in a decline in market capitalization. Management's assessment was that the market capitalization at the end of the 1st quarter was not indicative of the Company's fair value.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
and implementation process improvement and quality assurance programs and techniques. We are actively pursuing additional credentials that will support our customers' ever evolving missions.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The following table summarizes results of operations for the nine months ended June 30, 2025 and 2024 (in thousands except for per share amounts, and percentage of revenue):
Previous report — wording carried elsewhere
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. Contract costs decreased $28.8 million for the nine months ended June 30, 2025 and 2024. The decrease was primarily due to a decrease in revenue volume from low margin non-labor costs and a decrease in overhead costs.
Previous report — wording carried elsewhere
General and administrative costs are for those employees not directly providing services to our customers, to include but not limited to executive management, business development, accounting, and human resources. These costs decreased $3.5 million for the nine months ended June 30, 2025 over 2024. As a percentage of revenue, general and administrative costs were 9.5% for both periods. The decrease in general and administrative costs are primarily due to a reduction in support costs proportionally with the change in revenue volume.
Previous report — wording carried elsewhere
Interest expense, net, includes interest expense on the Company's term loan and amortization of deferred financing costs on debt obligations. Interest expense decreased $1.4 million for nine months ended June 30, 2025 over 2024, primarily due to the prepayment of debt and a decrease in the floating interest rate.