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Business Overview | 9 Months Ended
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Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Business Overview | Business Overview DLH is a technology-enabled health and human services company, providing solutions to three market focus areas: Defense and Veterans' Health Solutions, Human Solutions and Services and Public Health and Life Sciences. 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. 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 1,900 skilled employees working in more than 30 locations throughout the United States and one location overseas. On June 7, 2019, the Company acquired Social & Scientific Systems, Inc. (“SSS”), which provides clinical and biomedical research, epidemiology, health policy, and program evaluation services in the public health market. SSS utilizes advanced research (including longitudinal studies), data analytics, and secure IT platform services to assist public health agencies within the Department of Health and Human Services, including the National Institutes of Health ("NIH") and the Centers for Medicare and Medicaid Services ("CMS"). The acquisition expands our ability to provide complementary services across multiple government markets. Presently, the Company derives approximately 100% of its revenue from agencies of the federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors. A major customer is defined as a customer from whom the Company derives at least 10% of its revenues. Our largest customer continues to be the VA, which comprised approximately 65% and 64% of revenue for the nine months ended June 30, 2019 and 2018, respectively. Additionally, HHS, which comprised approximately 33% and 34% of revenue for the nine months ended June 30, 2019 and 2018, respectively, represents a major customer. Our contracts are within the following markets: Defense/VA (66%), Human Services and Solutions (28%) and Public Health/Life Sciences (6%); of which 93% of these contracts have been awarded on a Time and Materials basis, 5% are Cost Reimbursable contracts, and 2% are Firm Fixed Price contracts. For additional information, see Note 4, Revenue Recognition. In addition, substantially all accounts receivable, including contract assets, are from agencies of the U.S. Government as of June 30, 2019 and September 30, 2018. We generally operate as a prime contractor, but have also entered into contracts as a subcontractor. The Company's current business base is 95% prime contracts and 5% subcontracts for the three months ended June 30, 2019. We believe that the credit risk associated with our receivables is limited due to the creditworthiness of these customers. See Note 5, Supporting Financial Information - Accounts Receivable. The VA comprised approximately 65% and 64% of revenue for the nine months ended June 30, 2019 and 2018, which 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 program. Approximately 58% of the Company's business base with the VA is derived from nine contracts (for pharmacy services), which are currently operating under extensions through October 31, 2019 pending completion of the procurement process for a new contract. We believe further extensions are possible until the procurement is completed. A single renewal request for proposal ("RFP") has currently been issued for these contracts that requires the prime contractor be a service-disabled veteran owned small business ("SDVOSB"), which precludes the Company from bidding on the RFP as a prime contractor. The Company has joined an SDVOSB team to respond to this RFP. Should the contract be awarded to an SDVOSB partner of DLH, the Company expects to continue to perform a significant amount of the contract's volume of business. The remaining seven contracts for logistics services to the VA are performed under contracts that have been extended through November 2019. An RFP for the seven logistics contracts has been issued and provides for evaluation and award of the contract based on the classification of the bidder, with preference given to an SDVOSB prime contractor. The Company has joined an SDVOSB team to respond to this RFP. Additionally, the Company believes that these contracts may similarly be extended during the procurement process. Further, the Company's contract with HHS in support of its Head Start program generated 27% and 32% of its revenue for the nine months ended June 30, 2019 and 2018, respectively. This contract is on a time and materials basis and consists of a base period of four option periods for a total term of five years through April 2020. The Company's Danya subsidiary has provided these and similar services to HHS since 1999. Danya was acquired by the Company in May 2016. The Company's results of operations, cash flows and financial condition would be materially adversely affected in the event that we were unable to continue our relationship with VA or HHS, or if the amount of services we provide to them was materially reduced. Given the uncertainty regarding both the outcome and the timing of the VA RFP's discussed above, the Company has not reflected any current impact to its financial statements from the award of these contracts.

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