DLH (DLHC) 10-Q 5 Aug 19 2019 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2019	Jul. 31, 2019
Document and Entity Information
Entity Registrant Name	DLH Holdings Corp.
Entity Central Index Key	0000785557
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		12,036,161

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Revenue	$ 38,700	$ 36,131	$ 106,208	$ 100,747
Direct expenses	28,777	27,793	80,424	78,429
Gross margin	9,923	8,338	25,784	22,318
General and administrative expenses	6,072	5,136	15,782	14,700
Transaction expenses	1,247	0	1,391	0
Depreciation and amortization	914	588	2,037	1,654
Income from operations	1,690	2,614	6,574	5,964
Interest expense, net	562	262	1,284	801
Income before income taxes	1,128	2,352	5,290	5,163
Income tax expense	325	738	1,532	5,084
Net income	$ 803	$ 1,614	$ 3,758	$ 79
Net income per share, basic (in dollars per share)	$ 0.07	$ 0.14	$ 0.31	$ 0.01
Net income per share - diluted (in dollars per share)	$ 0.06	$ 0.13	$ 0.29	$ 0.01
Weighted average common stock outstanding
Basic (in shares)	12,036	11,899	12,011	11,875
Diluted (in shares)	13,077	12,884	13,048	12,872

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Current assets:
Cash and cash equivalents	$ 6,005	$ 6,355
Accounts receivable	24,024	10,280
Other current assets	2,715	760
Total current assets	32,744	17,395
Equipment and improvements, net	5,674	1,566
Deferred taxes, net	2,885	4,137
Goodwill	51,777	25,989
Intangible assets, net	41,156	13,365
Other long-term assets	778	89
Total assets	135,014	62,541
CURRENT LIABILITIES
Accrued payroll	8,290	4,983
Accounts payable, accrued expenses, and other current liabilities	19,093	10,950
Debt obligations - current	787	0
Total current liabilities	28,170	15,933
Debt obligations - long term, net of deferred financing costs	62,844	6,958
Other long term liabilities	194	232
Total long term liabilities	63,038	7,190
Total liabilities	91,208	23,123
SHAREHOLDERS’ EQUITY
Common stock, $0.001 par value; authorized 40,000 shares; issued and outstanding 12,036 and 11,899 at June 30, 2019 and September 30, 2018, respectively	12	12
Additional paid-in capital	84,915	84,285
Accumulated deficit	(41,121)	(44,879)
Total shareholders’ equity	43,806	39,418
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 135,014	$ 62,541

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2019	Sep. 30, 2018
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	40,000	40,000
Common stock, issued (in shares)	12,036	11,899
Common stock, outstanding (in shares)	12,036	11,899

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating activities
Net income	$ 3,758	$ 79
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	2,037	1,654
Amortization of deferred financing costs	799	202
Stock based compensation expense	591	1,169
Deferred taxes, net	1,253	4,764
Changes in operating assets and liabilities
Accounts receivable	(925)	(508)
Other current assets	(376)	(259)
Accounts payable, accrued expenses, and other current liabilities	4,039	897
Other long term assets/liabilities	(23)	(5)
Net cash provided by operating activities	11,153	7,993
Investing activities
Business acquisition, net of cash acquired	(66,520)	0
Purchase of equipment and improvements	(29)	(571)
Net cash used in investing activities	(66,549)	(571)
Financing activities
Borrowing on senior debt	70,000	0
Repayments of senior debt	(11,646)	(5,730)
Deferred debt financing costs	(3,347)	(70)
Repayments of capital lease obligations	0	(8)
Proceeds from issuance of common stock upon exercise of options	39	46
Net cash provided by (used in) financing activities	55,046	(5,762)
Net change in cash and cash equivalents	(350)	1,660
Cash and cash equivalents at beginning of period	6,355	4,930
Cash and cash equivalents at end of period	6,005	6,590
Supplemental disclosures of cash flow information
Cash paid during the period for interest	248	619
Cash paid during the period for income taxes	406	630
Supplemental disclosures of non-cash financing activity
Derivative warrant liability reclassified as equity	0	(306)
Non-cash issuance of stock upon exercise of options	$ 0	$ 25

CONSOLIDATED STATEMENTS OF SHAR

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Beginning Balance (shares) at Sep. 30, 2017		11,767,000
Beginning Balance at Sep. 30, 2017	$ 35,855	$ 12	$ 82,687	$ (46,844)
Directors' stock grants and expense (in shares)		93,000
Stock-based compensation	1,169		1,169
Exercise of stock options (shares)		39,000
Exercise of stock options	46		46
Net income	79			79
Ending Balance (shares) at Jun. 30, 2018		11,899,000
Ending Balance at Jun. 30, 2018	37,455	$ 12	84,079	(46,636)
Beginning Balance (shares) at Mar. 31, 2018		11,899,000
Beginning Balance at Mar. 31, 2018	35,600	$ 12	83,838	(48,250)
Stock-based compensation	241		241
Net income	1,614			1,614
Ending Balance (shares) at Jun. 30, 2018		11,899,000
Ending Balance at Jun. 30, 2018	$ 37,455	$ 12	84,079	(46,636)
Beginning Balance (shares) at Sep. 30, 2018	11,899	11,899,000
Beginning Balance at Sep. 30, 2018	$ 39,418	$ 12	84,285	(44,879)
Directors' stock grants and expense (in shares)		102,000
Stock-based compensation	$ 591		591
Exercise of stock options (shares)	35,000	35,000
Exercise of stock options	$ 39		39
Net income	$ 3,758			3,758
Ending Balance (shares) at Jun. 30, 2019	12,036	12,036,000
Ending Balance at Jun. 30, 2019	$ 43,806	$ 12	84,915	(41,121)
Beginning Balance (shares) at Mar. 31, 2019		12,036,000
Beginning Balance at Mar. 31, 2019	42,804	$ 12	84,716	(41,924)
Stock-based compensation	199		199
Net income	$ 803			803
Ending Balance (shares) at Jun. 30, 2019	12,036	12,036,000
Ending Balance at Jun. 30, 2019	$ 43,806	$ 12	$ 84,915	$ (41,121)

Basis of Presentation

Basis of Presentation	9 Months Ended
	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements include the accounts of DLH Holdings Corp. and its subsidiaries (together with its subsidiaries, "DLH" or the "Company" and also referred to as "we," "us" and "our"), all of which are wholly owned. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Certain figures presented for comparative purposes have been reclassified to conform to the presentation adopted in the current period. In management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending September 30, 2019 . Amounts as of and for the periods ended June 30, 2019 and June 30, 2018 are unaudited. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2018 filed with the Securities and Exchange Commission on December 12, 2018 .

Business Overview

Business Overview	9 Months Ended
	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.

New Accounting Pronouncements

New Accounting Pronouncements	9 Months Ended
	Jun. 30, 2019
Accounting Changes and Error Corrections [Abstract]
New Accounting Pronouncements	New Accounting Pronouncements In February 2016, the FASB issued new accounting guidance Accounting Standard Codification ("ASC") 842 related to leases. This new accounting guidance is intended to improve financial reporting about leasing transactions. This accounting standard will require organizations that lease assets, referred to as “Lessees”, to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with terms of more than twelve months. An organization is to provide disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements concerning additional information about the amounts recorded in the financial statements. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP which requires only capital leases to be recognized on the balance sheet, new guidance will require both types of leases (i.e., operating and finance) to be recognized. Finance leases will be accounted for in substantially the same manner as capital leases. Public companies will be required to adopt the new leasing standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Accounting Standard Update ("ASU") 2018-11 allows companies to elect not to recast comparative period presented when transitioning to ASC 842. The Company expects an impact in balance sheet net assets and liabilities resulting from the adoption of this new lease accounting guidance of approximately $21.2 million of lease obligations as of June 30, 2019 that will be further evaluated as the implementation of this guidance becomes effective. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new standard is effective for fiscal years beginning after December 15, 2019 for both interim and annual reporting periods. The Company is currently assessing the potential impact of the adoption of ASU 2017-04 on its consolidated financial statements. In May 2017, the FASB issued Accounting Standards Update ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The Company adopted this standard in the first quarter of fiscal 2019 and adoption did not have a material impact on the Company’s consolidated financial statements. In June 2018, the FASB issued ASU 2018-07 Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company is currently assessing the potential impact on the Company’s consolidated financial statements and related disclosures.

Revenue Recognition

Revenue Recognition	9 Months Ended
	Jun. 30, 2019
Revenue from Contract with Customer [Abstract]
Revenue Recognition	Revenue Recognition On October 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers using the modified retrospective method. ASC 606 outlines a five-step model whereby revenue is recognized as performance obligations within the contract are satisfied. ASC 606 also requires new, expanded disclosures regarding revenue recognition. We recognized the impact of adopting ASC 606, but did not record an entry as the impact was immaterial at less than $10 thousand . Results for reporting periods beginning after October 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and will continue to be reported under ASC 605, the accounting standards in effect for those periods. In past periods, the Company recognized and recorded revenue on government contracts when: (a) persuasive evidence of an arrangement existed; (b) the services had been delivered to the customer; (c) the sales price was fixed or determinable and free of contingencies or significant uncertainties; and (d) collectibility was reasonably assured. We account for a contract when both we and the customer approve and commit; our rights and those of the customer are identified, payment terms are identified; the contract has commercial substance; and collectability of consideration is probable. At contract inception, we identify the distinct goods or services promised in the contract, referred to as performance obligations. Then we determine the total transaction price for the contract; which is the total consideration which we can expect in exchange for the promised goods or services in the contract. The transaction price may include fixed or variable amounts. Due to our contracts being predominantly time and material, the Company does not have variable consideration. The transaction price is allocated to each distinct performance obligation using our best estimate of the standalone selling price for each service promised in the contract. The primary method used to estimate standalone selling price is the hourly billing rate for each labor category identified in the contract with the customer. Revenue is recognized when, or as, the performance obligation is satisfied. We recognize revenue over time when there is a continuous transfer of control to our customer. For our U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the U.S. government to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. 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 a cost-based input method to measure progress. Contract costs include labor, material and allocable indirect expenses. For time-and-material contracts, we bill the customer per labor hour and per material, and revenue is recognized in the amount invoiced since the amount corresponds directly to the value of our performance to date. We consider control to transfer when we have a present right to payment. Essentially, all of our contracts satisfy their performance obligations over time. Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications impact performance obligations when the modification either creates new or changes the existing enforceable rights and obligations. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue and profit cumulatively. Furthermore, a significant change in one or more estimates could affect the profitability of our contracts. We recognize adjustments in estimated profit on contracts in the period identified. For time-and-materials contracts, revenue is recognized to the extent of billable rates times hours delivered plus materials and other reimbursable costs incurred. Revenue for cost-reimbursable contracts is recorded as reimbursable costs are incurred, including an estimated share of the applicable contractual fees earned. Contract costs are expensed as incurred. Estimated losses are recognized when identified. Contract assets - Amounts are invoiced as work progresses in accordance with agreed-upon contractual terms. In part, revenue recognition occurs before we have the right to bill, resulting in contract assets. These contract assets are reported within receivables, net on our consolidated balance sheets and are invoiced in accordance with payment terms defined in each contract. Period end balances will vary from period to period due to agreed-upon contractual terms. Contract liabilities - Amounts are a result of billings in excess of costs incurred. The following table summarizes the contract balances recognized on the Company's consolidated balance sheets: (in thousands) June 30, September 30, 2019 2018 Contract assets $ 2,045 $ 214 Contract liabilities $ 135 $ — Disaggregation of revenue from contracts with customers We disaggregate our revenue from contracts with customers by customer, contract type, as well as whether the Company acts as prime contractor or subcontractor. We believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The following series of tables presents our revenue disaggregated by these categories: Revenue by customer: (in thousands) Three Months Ended Nine Months Ended June 30, June 30, 2019 2019 Department of Veterans Affairs $ 23,056 $ 68,563 Department of Health and Human Services 14,297 34,987 Other 1,347 2,658 Total revenue $ 38,700 $ 106,208 Revenue by contract type: (in thousands) Three Months Ended Nine Months Ended June 30, June 30, 2019 2019 Time and materials $ 33,426 $ 98,841 Cost reimbursable 4,545 5,791 Firm fixed price 729 1,576 Total revenue $ 38,700 $ 106,208 Revenue by whether the Company acts as a prime contractor or a subcontractor: (in thousands) Three Months Ended Nine Months Ended June 30, June 30, 2019 2019 Prime $ 36,882 $ 103,947 Subcontractor 1,818 2,261 Total revenue $ 38,700 $ 106,208

Supporting Financial Informatio

Supporting Financial Information	9 Months Ended
	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Supporting Financial Information	Supporting Financial Information Accounts receivable (in thousands) June 30, September 30, Ref 2019 2018 Billed receivables $ 21,979 $ 10,066 Contract assets 2,045 214 Total accounts receivable (a) 24,024 10,280 Less: Allowance for doubtful accounts (b) — — Accounts receivable, net $ 24,024 $ 10,280 Ref (a): The total accounts receivable balance includes $13.1 million from SSS. Ref (b): Accounts receivable are non-interest bearing, unsecured and carried at net realizable value. We evaluate our receivables on a quarterly basis and determine whether an allowance is appropriate based on specific collection issues. No allowance for doubtful accounts was deemed necessary at either June 30, 2019 or September 30, 2018 . Other current assets (in thousands) June 30, September 30, 2019 2018 Prepaid insurance and benefits $ 806 $ 401 Other receivables 874 319 Other prepaid expenses 1,035 40 Other current assets $ 2,715 $ 760 Equipment and improvements, net (in thousands) June 30, September 30, Ref 2019 2018 Furniture and equipment $ 1,246 $ 326 Computer equipment 1,002 751 Computer software 3,667 1,731 Leasehold improvements 1,595 66 Total equipment and improvements 7,510 2,874 Less accumulated depreciation and amortization (1,836 ) (1,308 ) Equipment and improvements, net (a) $ 5,674 $ 1,566 Ref (a): Equipment and improvements are stated at cost. 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. Maintenance and repair costs are expensed as incurred. Depreciation and amortization expense was $0.3 million and $0.1 million for the three months ended June 30, 2019 and 2018 , respectively, and $0.5 million and $0.3 million for the nine months ended June 30, 2019 and 2018 , respectively. Intangible assets (in thousands) June 30, September 30, Ref 2019 2018 Intangible assets (a) Customer contracts and related customer relationships $ 16,626 $ 16,626 Covenants not to compete 480 480 Trade name 517 517 Acquired intangibles - SSS acquisition (b) 29,301 — Total intangible assets 46,924 17,623 Less accumulated amortization Customer contracts and related customer relationships (5,266 ) (4,018 ) Covenants not to compete (152 ) (116 ) Trade name (164 ) (124 ) Acquired intangibles - SSS acquisition (b) (186 ) — Total accumulated amortization (5,768 ) (4,258 ) Intangible assets, net $ 41,156 $ 13,365 Ref (a): Intangible assets subject to amortization. The intangibles are amortized on a straight-line basis over their estimated useful lives of 10 years . The total amount of amortization expense was $0.6 million and $0.4 million for the three months ended June 30, 2019 and 2018 , respectively, and $1.5 million and $1.3 million for the nine months ended June 30, 2019 and 2018 , respectively. Ref (b): The Company is currently valuing the acquired intangible assets from the SSS acquisition. The balances provided are an estimate and subject to revision. Estimated amortization expense for future years: Ref (in thousands) Remaining Fiscal 2019 $ 988 Fiscal 2020 4,692 Fiscal 2021 4,692 Fiscal 2022 4,692 Fiscal 2023 4,692 Thereafter 21,400 Total amortization expense (a) $ 41,156 Ref (a): The amortization expense includes the Danya and SSS acquisitions. The Company is currently valuing the acquired intangible assets from the SSS acquisition. The balances provided are an estimate and subject to revision. Goodwill Goodwill: Ref (in thousands) Acquired from previous acquisitions $ 25,989 Acquired from SSS acquisition (a) 25,788 Total Goodwill $ 51,777 Ref (a): The Company is currently valuing the goodwill from the SSS acquisition. The balance provided is an estimate and subject to revision. Accounts payable, accrued expenses and other current liabilities (in thousands) June 30, September 30, Ref 2019 2018 Accounts payable $ 9,290 $ 3,393 Accrued benefits 2,173 2,060 Accrued bonus and incentive compensation 1,577 2,191 Accrued workers compensation insurance 3,836 2,642 Other accrued expenses 2,217 664 Accounts payable, accrued expenses, and other current liabilities (a) $ 19,093 $ 10,950 Ref (a): The total accounts payable, accrued expenses, and other current liabilities includes $4.9 million from SSS. Debt obligations (in thousands) June 30, September 30, Ref 2019 2018 Bank term loan $ 66,063 $ 7,708 Less unamortized deferred financing cost (1,906 ) (750 ) Net bank debt obligation 64,157 6,958 Less current portion of bank debt obligations (1,313 ) — Long term portion of bank debt obligation $ 62,844 $ 6,958 Interest expense (in thousands) (in thousands) Three Months Ended Nine Months Ended June 30, June 30, Ref 2019 2018 2019 2018 Interest expense (a) $ (297 ) $ (192 ) $ (485 ) $ (619 ) Amortization of deferred financing costs (b) (265 ) (70 ) (799 ) (202 ) Other income (expense), net — — — 20 Interest expense, net $ (562 ) $ (262 ) $ (1,284 ) $ (801 ) Ref (a): Interest expense on borrowing. Ref (b): Amortization of deferred financing costs include write-offs of unamortized deferred financing costs of $0.2 million for three months ended June 30, 2019 and $0.6 million for the nine months ended June 30, 2019 related to the early extinguishment of the prior credit facility that was in place until June 7, 2019.

Credit Facilities

Credit Facilities	9 Months Ended
	Jun. 30, 2019
Debt Disclosure [Abstract]
Credit Facilities	Credit Facilities A summary of this loan facility as of June 30, 2019 , is as follows: Arrangement Loan Balance Interest Maturity Date Secured term loan $70 million (a) $ 66.1 million LIBOR* + 4.0% 6/7/2024 Secured revolving line of credit $25 million ceiling (b) $ — LIBOR* + 4.0% 6/7/2024 *LIBOR rate as of June 30, 2019 was 2.42% (a) Represents the principal amounts payable on our secured term loan. The $70.0 million secured term loan was secured by liens on substantially all of the assets of the Company. The principal of the term loan is payable in quarterly installments with the remaining balance due on June 7, 2024 . The Credit Agreement requires compliance with a number of financial covenants and contains restrictions on our ability to engage in certain transactions. Among other matters, we must comply with limitations on: granting liens; incurring other indebtedness; maintenance of assets; investments in other entities and extensions of credit; mergers and consolidations; and changes in nature of business. The loan agreement also requires us to comply with certain quarterly financial covenants including: (i) a minimum fixed charge coverage ratio of at least 1.25 to 1.00 commencing with the quarter ending September 30, 2019, and for all subsequent periods, and (ii) a Funded Indebtedness to Adjusted EBITDA ratio not exceeding the ratio of 4.25 :1.0 to 3.25 :1.0 through maturity. Adjusted EBITDA ratio is calculated by dividing the Company's total interest-bearing debt by net income adjusted to exclude (i) interest and other expenses, (ii) provision for or benefit from income taxes, if any, (iii) depreciation and amortization, and (iv) non-recurring charges, losses or expenses to include transaction and non-cash equity expense. The term loan has an interest rate spread range from 2.5% to 4.5% depending on the funded indebtedness to adjusted EBITDA ratio. We are in compliance with all loan covenants and restrictions. In addition to quarterly payments of the outstanding indebtedness, the loan agreement also requires annual payments of a percentage of excess cash flow, as defined in the loan agreement. The loan agreement states that an excess cash flow recapture payment must be made equal to (a) 75% of the excess cash flow for the immediately preceding fiscal year in which indebtedness to consolidated EBITDA ratio is greater than or equal to 2.50 :1.0; (b) 50% of the excess cash flow for the immediately preceding fiscal year in which the funded indebtedness to consolidated EBITDA Ratio is less than 2.50 :1.0 but greater than or equal to 1.5 :1.0; or (c) 0% of the excess cash flow for the immediately preceding fiscal year in which the funded indebtedness to consolidated EBITDA Ratio is less than 1.5 :1.0. In addition, the Company must make additional mandatory prepayment of amounts outstanding based on proceeds received from asset sales and sales of certain equity securities or other indebtedness. DLH made a voluntary prepayment of term debt of $3.9 million in June 2019, which satisfies the next three quarterly principal installments. For additional information regarding the schedule of future payment obligations, please refer to Note 10, Commitments and Contingencies . (b) The secured revolving line of credit has a ceiling of up to $25.0 million . Borrowing on the line of credit is secured by liens on substantially all of the assets of the Company. The Company did not access funds from the revolving credit facility at the closing, and such facility will be available to support future cash needs. The Company's total borrowing availability, based on eligible accounts receivables at June 30, 2019 , was $19.6 million . We had unused borrowing capacity of $19.6 million as there were no outstanding letters of credit. As part of the revolving credit facility, the lenders agreed to a sublimit of $3 million for letters of credit for the account of the Company, subject to applicable procedures. The revolving line of credit has a maturity date of June 7, 2024 and is subject to loan covenants as described above. DLH is fully compliant with those covenants.

Significant Accounting Policies

Significant Accounting Policies	9 Months Ended
	Jun. 30, 2019
Accounting Policies [Abstract]
Significant Accounting Policies	Significant Accounting Policies 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. Significant estimates include valuation of goodwill and intangible assets, valuation allowances established against accounts receivable and deferred tax assets, and measurement of loss development on workers’ compensation claims. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current and expected future outcomes, third-party evaluations and various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. We revise material accounting estimates if changes occur, such as more experience is acquired, additional information is obtained, or there is new information on which an estimate was or can be based. Actual results could differ from those estimates. In particular, a material reduction in the fair value of goodwill could have a material adverse effect on the Company’s financial position and results of operations. We account for the effect of a change in accounting estimate during the period in which the change occurs. Fair value of financial instruments The carrying amounts of the Company's cash and cash equivalents, accounts receivable, contract assets, accrued expenses, and accounts payable approximate fair value due to the short-term nature of these instruments. The fair values of the Company's debt instruments approximated fair value because the underlying interest rates approximate market rates that the Company could obtain for similar instruments at the balance sheet dates. Goodwill and other intangible assets We have used the acquisition method of accounting for the SSS transaction, whereby the assets acquired and liabilities assumed are recognized based upon their estimated fair values at the acquisition date. The estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Therefore, the provisional measurements of fair value reflected are subject to change and such changes could be significant. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. Initial estimates of this allocation are shown under Note 12 Business Combinations . On the basis of the estimated assets acquired, the Company amortized $0.2 million for the three months ended June 30, 2019. DLH continues to review its goodwill and other intangible 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. At September 30, 2018 , we performed a goodwill impairment evaluation on the year-end carrying value of approximately $26 million . We performed both a qualitative and quantitative 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, 2018 . For the nine months ended June 30, 2019 , the Company determined that no change in business conditions occurred which would have a material adverse effect on the valuation of goodwill. 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. Long lived assets Equipment and improvements are stated at cost. 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. Maintenance and repair costs are expensed as incurred. Income taxes DLH 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. Deferred tax assets are reflected on the consolidated balance sheet when it is determined that it is more likely than not that the asset will be realized. 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. We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon the technical merits, it is "more-likely-than-not" that the position will be sustained upon examination. We had no uncertain tax positions at either June 30, 2019 or September 30, 2018 . We report interest and penalties as a component of income tax expense. In the three and nine months ended June 30, 2019 and June 30, 2018 , we recognized no interest and no penalties related to income taxes. Stock-based equity compensation The Company uses the fair value-based method for stock-based equity compensation. 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. All awards to employees and non-employees are recorded at fair value on the date of the grant and expensed over the period of vesting. The Company uses a binomial simulation option pricing model to estimate the fair value of each stock option at the date of grant. Any consideration paid by the option holders to purchase shares is credited to capital stock. Cash and cash equivalents We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. We maintain cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 . Deposits held with financial institutions may exceed the $250,000 limit. The Company adopted ASU 2016-18, Restricted Cash , in a previous filing, but until this filing it was not applicable. At June 30, 2019, the Company had a restricted cash balance of $2.3 million . The cash was restricted because letters of credit and credit cards issued under the previous credit facility were in the process of being transferred to the credit facility executed during the current quarter. Cash collateral was required by the previous lenders to secure the outstanding obligations. The Company expects the restrictions to be relieved prior to the fiscal year-end. Earnings per share Basic earnings per share is calculated by dividing income available to common shareholders by the weighted average number of common stock outstanding and restricted stock grants that vested or are likely to vest during the period. Diluted earnings per share is calculated by dividing income available to common shareholders by the weighted average number of basic common shares outstanding, adjusted to reflect potentially dilutive securities. Diluted earnings per share is calculated using the treasury stock method.

Stock-based Compensation, Equit

Stock-based Compensation, Equity Grants, and Warrants	9 Months Ended
	Jun. 30, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based Compensation, Equity Grants, and Warrants	Stock-based Compensation, Equity Grants, and Warrants Stock-based compensation expense Options issued under equity incentive plans are designated as either an incentive stock or a non-statutory stock option. No option is granted with a term of more than 10 years from the date of grant. Exercisability of 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 shares. As of June 30, 2019 , there were 1.5 million shares available for grant. Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our statement of operations: (in thousands) (in thousands) Three Months Ended Nine Months Ended Ref June 30, June 30, 2019 2018 2019 2018 DLH employees $ 67 $ 68 $ 196 $ 199 Non-employee directors (a) 132 173 395 970 Total stock option expense $ 199 $ 241 $ 591 $ 1,169 Ref (a): Equity grants of restricted stock units, in accordance with DLH compensation policy for non-employee directors were made in the first quarter of fiscal 2019 and in total 90,000 restricted stock units were granted. Unrecognized stock-based compensation expense (in thousands) June 30, Ref 2019 Unrecognized expense for DLH employees (a) $ 699 Unrecognized expense for non-employee directors (b) 132 Total unrecognized expense $ 831 Ref (a): Compensation expense for the portion of equity awards for which the requisite service has not been rendered is recognized as the requisite service is rendered. The compensation expense for that portion of awards has been based on the grant-date fair value of those awards as calculated for recognition purposes under applicable guidance. For options that vest based on the Company’s common stock achieving and maintaining defined market prices, the Company values the awards with a binomial model that utilizes various probability factors and other criterion in establishing fair value of the grant. The related compensation expense is recognized over the derived service period determined in the valuation. Ref (b): Unrecognized stock expense related to current year's equity grants of restricted stock units to non-employee directors in accordance with DLH compensation policy for non-employee directors. The remaining term for the weighted average expense of all stock-based compensation is 3.60 years. Stock option activity for the nine months ended June 30, 2019 The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount will change based on the fair market value of the Company’s stock. (in years) Weighted Weighted Average (in thousands) (in thousands) Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value Options outstanding, September 30, 2018 2,134 $ 4.31 6.3 $ 6,949 Granted 35 $ 5.25 — — Exercised (35 ) $ 1.12 — — Options outstanding, June 30, 2019 2,134 $ 4.36 6.0 $ 5,755 Stock options shares outstanding, vested and unvested for the period ended (in thousands) June 30, September 30, Ref 2019 2018 Vested and exercisable (a) 1,300 1,335 Unvested 834 799 Options outstanding 2,134 2,134 Ref (a): Certain awards vest upon satisfaction of certain performance criteria.

Earnings Per Share

Earnings Per Share	9 Months Ended
	Jun. 30, 2019
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share Basic earnings per share is calculated by dividing income available to common shareholders by the weighted average number of common shares outstanding and restricted stock grants that vested or are likely to vest during the period. Diluted earnings per share is calculated by dividing income available to common shareholders by the weighted average number of basic common shares outstanding, adjusted to reflect potentially dilutive securities. Diluted earnings per share is calculated using the treasury stock method. Three Months Ended Nine Months Ended June 30, June 30, 2019 2018 2019 2018 Numerator: Net income $ 803 $ 1,614 $ 3,758 $ 79 Denominator: Denominator for basic net income per share - weighted-average outstanding shares 12,036 11,899 12,011 11,875 Effect of dilutive securities: Stock options and restricted stock 1,041 985 1,037 997 Denominator for diluted net income per share - weighted-average outstanding shares 13,077 12,884 13,048 12,872 Net income per share - basic $ 0.07 $ 0.14 $ 0.31 $ 0.01 Net income per share - diluted $ 0.06 $ 0.13 $ 0.29 $ 0.01

Commitment and Contingencies

Commitment and Contingencies	9 Months Ended
	Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Contractual obligations as of June 30, 2019 Payments Due By Period Next 12 2-3 4-5 More than 5 (Amounts in thousands) Total Months Years Years Years Debt obligations $ 66,063 $ 1,313 $ 10,500 $ 54,250 $ — Facility leases 21,166 4,486 8,361 6,086 2,233 Equipment operating leases 33 33 — — — Total obligations $ 87,262 $ 5,832 $ 18,861 $ 60,336 $ 2,233 Worker's compensation We accrue worker's compensation expense based on claims submitted, applying actuarial loss development factors to estimate the costs incurred but not yet recorded. Our accrued liability for claims development as of June 30, 2019 and September 30, 2018 was $3.8 million and $2.6 million , respectively. Legal proceedings As a commercial enterprise and employer, the Company is subject to various claims and legal actions in the ordinary course of business. These matters can include professional liability, employment-relations issues, workers’ compensation, tax, payroll and employee-related matters, other commercial disputes arising in the course of its business, and inquiries and investigations by governmental agencies regarding our employment practices or other matters. The Company is not aware of any pending or threatened litigation that it believes is reasonably likely to have a material adverse effect on its results of operations, financial position or cash flows.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Jun. 30, 2019
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions The Company has determined that for the three and nine months ended June 30, 2019 and 2018 there were no significant related party transactions that have occurred which require disclosure through the date that these financial statements were issued.

Business Combinations

Business Combinations	9 Months Ended
	Jun. 30, 2019
Business Combinations [Abstract]
Business Combinations	Business Combinations: Acquisition of Social and Scientific Systems, Inc. ("SSS") On June 7, 2019, the Company acquired 100% of the equity interests of SSS for a net purchase price of $66.5 million , or $69.6 million net of cash on hand of $3.1 million . The acquisition was financed through a combination of: • borrowings of $70 million under the Company’s new senior credit facility • cash on hand to pay transaction expenses and financings costs of $4.7 million The acquisition of SSS is consistent with the Company’s growth strategy, as it provided contract diversification, addition of key capabilities and increased presence in the public health market. We have used the acquisition method of accounting for this transaction, whereby the assets acquired and liabilities assumed are recognized based upon their estimated fair values at the acquisition date. The preliminary base purchase price for SSS was $70 million adjusted to reflect acquired cash, assumed liabilities and preliminary net working capital adjustments. The purchase price is subject to post-closing adjustments based on SSS’s final debt, transaction costs, net working capital, and other adjustments, as determined in accordance with the Purchase Agreement. The Company is continuing to evaluate all acquisition related adjustments. Subject to certain limitations and conditions, the Company will be indemnified by the seller for damages resulting from breaches or inaccuracies of the representations, warranties, and covenants of the seller and SSS as set forth in the Purchase Agreement. The Purchase Agreement further provides that escrow funds of an aggregate amount of approximately $1.2 million have been established for the benefit of DLH in order to satisfy the purchase price adjustment and indemnification obligations of the seller that may arise following the closing of the acquisition. A representations and warranties insurance policy has been purchased by the Company in connection with the Purchase Agreement, under which the Company may seek recourse for breaches of the seller’s representations and warranties to supplement the indemnity escrow. The representations and warranties insurance policy is subject to certain customary exclusions and a deductible. In accordance with ASU 2017-01, which was previously adopted, the Company is accounting for this transaction as an acquisition. We are in the process of allocating the acquisition price to the fair value of the assets and liabilities of SSS at the acquisition date. Initial estimates of the purchase price and its allocation are shown below but may be subject to change as we complete our assessment of the acquisition date balance sheet. Based on the unaudited financial statements of SSS on June 7, 2019, we estimate total acquisition consideration and the preliminary allocation of fair value to the related assets and liabilities as follows: (Amounts in thousands) Preliminary purchase price for SSS $ 69,558 Estimated net assets acquired Cash and cash equivalents $ 3,037 Accounts receivable 12,819 Other current assets 1,418 Total current assets 17,274 Accounts payable and accrued expenses (3,933 ) Payroll liabilities (3,458 ) Estimated net working capital 9,883 Property and equipment, net 4,605 Net identifiable assets acquired 14,488 Goodwill and other intangibles 55,070 Net assets acquired $ 69,558 During the three and nine months ended June 30, 2019, SSS contributed approximately $4.5 million of revenue and $0.2 million of income from operations. The following table presents certain results for the three and nine months ended June 30, 2019 and 2018 as though the acquisition of SSS had occurred on October 1, 2017. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of our results if the acquisition had taken place on that date. The pro forma information was prepared by combining our reported historical results with the historical results of SSS for the pre-acquisition periods. In addition, the reported historical amounts were adjusted for the following items, net of associated tax effects: • The impact of acquisition financing. • The removal of certain SSS operations due to completed and nonrecurring contracts. • The removal of the legacy SSS Employee Stock Ownership Plan ("ESOP") expenses. • The removal of SSS's historical goodwill amortization. • The impact of recording SSS's intangible asset amortization. • The removal of SSS's historical debt-related interest expense. • The impact of interest expense for the new credit facility. • The removal of legacy SSS director's fees. • The removal of transaction costs for the acquisition incurred by SSS. (in thousands) (in thousands) Three Months Ended Nine Months Ended June 30, June 30, Pro forma results 2019 2018 2019 2018 Revenue $ 51,344 $ 53,578 $ 151,654 $ 154,570 Net income (loss) (191 ) 752 1,346 2,262 Number of shares outstanding - basic 12,036 11,899 12,011 11,875 Number of shares outstanding - diluted 13,077 12,884 13,048 12,872 Basic earnings per share (loss) $(0.02) $0.06 $0.11 $0.19 Diluted earnings per share (loss) $(0.01) $0.06 $0.10 $0.18

Income Taxes

Income Taxes	9 Months Ended
	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes DLH accounts for income taxes in accordance with the liability method. Under this method, 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. Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized. 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. As of June 30, 2019 and September 30, 2018, the Company is reporting a $2.9 million and $4.1 million respectively, deferred tax asset, which is presented on the balance sheets as deferred taxes, net.

Significant Accounting Polici_2

Significant Accounting Policies (Policies)	9 Months Ended
	Jun. 30, 2019
Accounting Policies [Abstract]
New Accounting Pronouncements and Adoption of New Accounting Standards	New Accounting Pronouncements In February 2016, the FASB issued new accounting guidance Accounting Standard Codification ("ASC") 842 related to leases. This new accounting guidance is intended to improve financial reporting about leasing transactions. This accounting standard will require organizations that lease assets, referred to as “Lessees”, to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with terms of more than twelve months. An organization is to provide disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements concerning additional information about the amounts recorded in the financial statements. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP which requires only capital leases to be recognized on the balance sheet, new guidance will require both types of leases (i.e., operating and finance) to be recognized. Finance leases will be accounted for in substantially the same manner as capital leases. Public companies will be required to adopt the new leasing standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Accounting Standard Update ("ASU") 2018-11 allows companies to elect not to recast comparative period presented when transitioning to ASC 842. The Company expects an impact in balance sheet net assets and liabilities resulting from the adoption of this new lease accounting guidance of approximately $21.2 million of lease obligations as of June 30, 2019 that will be further evaluated as the implementation of this guidance becomes effective. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies that an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new standard is effective for fiscal years beginning after December 15, 2019 for both interim and annual reporting periods. The Company is currently assessing the potential impact of the adoption of ASU 2017-04 on its consolidated financial statements. In May 2017, the FASB issued Accounting Standards Update ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The Company adopted this standard in the first quarter of fiscal 2019 and adoption did not have a material impact on the Company’s consolidated financial statements. In June 2018, the FASB issued ASU 2018-07 Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company is currently assessing the potential impact on the Company’s consolidated financial statements and related disclosures.
Revenue Recognition	Revenue Recognition On October 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers using the modified retrospective method. ASC 606 outlines a five-step model whereby revenue is recognized as performance obligations within the contract are satisfied. ASC 606 also requires new, expanded disclosures regarding revenue recognition. We recognized the impact of adopting ASC 606, but did not record an entry as the impact was immaterial at less than $10 thousand . Results for reporting periods beginning after October 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and will continue to be reported under ASC 605, the accounting standards in effect for those periods. In past periods, the Company recognized and recorded revenue on government contracts when: (a) persuasive evidence of an arrangement existed; (b) the services had been delivered to the customer; (c) the sales price was fixed or determinable and free of contingencies or significant uncertainties; and (d) collectibility was reasonably assured. We account for a contract when both we and the customer approve and commit; our rights and those of the customer are identified, payment terms are identified; the contract has commercial substance; and collectability of consideration is probable. At contract inception, we identify the distinct goods or services promised in the contract, referred to as performance obligations. Then we determine the total transaction price for the contract; which is the total consideration which we can expect in exchange for the promised goods or services in the contract. The transaction price may include fixed or variable amounts. Due to our contracts being predominantly time and material, the Company does not have variable consideration. The transaction price is allocated to each distinct performance obligation using our best estimate of the standalone selling price for each service promised in the contract. The primary method used to estimate standalone selling price is the hourly billing rate for each labor category identified in the contract with the customer. Revenue is recognized when, or as, the performance obligation is satisfied. We recognize revenue over time when there is a continuous transfer of control to our customer. For our U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the U.S. government to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. 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 a cost-based input method to measure progress. Contract costs include labor, material and allocable indirect expenses. For time-and-material contracts, we bill the customer per labor hour and per material, and revenue is recognized in the amount invoiced since the amount corresponds directly to the value of our performance to date. We consider control to transfer when we have a present right to payment. Essentially, all of our contracts satisfy their performance obligations over time. Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications impact performance obligations when the modification either creates new or changes the existing enforceable rights and obligations. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue and profit cumulatively. Furthermore, a significant change in one or more estimates could affect the profitability of our contracts. We recognize adjustments in estimated profit on contracts in the period identified. For time-and-materials contracts, revenue is recognized to the extent of billable rates times hours delivered plus materials and other reimbursable costs incurred. Revenue for cost-reimbursable contracts is recorded as reimbursable costs are incurred, including an estimated share of the applicable contractual fees earned. Contract costs are expensed as incurred. Estimated losses are recognized when identified. Contract assets - Amounts are invoiced as work progresses in accordance with agreed-upon contractual terms. In part, revenue recognition occurs before we have the right to bill, resulting in contract assets. These contract assets are reported within receivables, net on our consolidated balance sheets and are invoiced in accordance with payment terms defined in each contract. Period end balances will vary from period to period due to agreed-upon contractual terms. Contract liabilities - Amounts are a result of billings in excess of costs incurred. Disaggregation of revenue from contracts with customers We disaggregate our revenue from contracts with customers by customer, contract type, as well as whether the Company acts as prime contractor or subcontractor. We believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
Use of 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. Significant estimates include valuation of goodwill and intangible assets, valuation allowances established against accounts receivable and deferred tax assets, and measurement of loss development on workers’ compensation claims. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current and expected future outcomes, third-party evaluations and various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. We revise material accounting estimates if changes occur, such as more experience is acquired, additional information is obtained, or there is new information on which an estimate was or can be based. Actual results could differ from those estimates. In particular, a material reduction in the fair value of goodwill could have a material adverse effect on the Company’s financial position and results of operations. We account for the effect of a change in accounting estimate during the period in which the change occurs.
Fair Value of Financial Instruments	Fair value of financial instruments The carrying amounts of the Company's cash and cash equivalents, accounts receivable, contract assets, accrued expenses, and accounts payable approximate fair value due to the short-term nature of these instruments. The fair values of the Company's debt instruments approximated fair value because the underlying interest rates approximate market rates that the Company could obtain for similar instruments at the balance sheet dates.
Goodwill and Other Intangible Assets	Goodwill and other intangible assets We have used the acquisition method of accounting for the SSS transaction, whereby the assets acquired and liabilities assumed are recognized based upon their estimated fair values at the acquisition date. The estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Therefore, the provisional measurements of fair value reflected are subject to change and such changes could be significant. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. Initial estimates of this allocation are shown under Note 12 Business Combinations . On the basis of the estimated assets acquired, the Company amortized $0.2 million for the three months ended June 30, 2019. DLH continues to review its goodwill and other intangible 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.
Long-lived Assets	Long lived assets Equipment and improvements are stated at cost. 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. Maintenance and repair costs are expensed as incurred.
Income Taxes	Income taxes DLH 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. Deferred tax assets are reflected on the consolidated balance sheet when it is determined that it is more likely than not that the asset will be realized. 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. We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon the technical merits, it is "more-likely-than-not" that the position will be sustained upon examination. We had no uncertain tax positions at either June 30, 2019 or September 30, 2018 . We report interest and penalties as a component of income tax expense. In the three and nine months ended June 30, 2019 and June 30, 2018 , we recognized no interest and no penalties related to income taxes.
Stock-based Equity Compensation	Stock-based equity compensation The Company uses the fair value-based method for stock-based equity compensation. 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. All awards to employees and non-employees are recorded at fair value on the date of the grant and expensed over the period of vesting. The Company uses a binomial simulation option pricing model to estimate the fair value of each stock option at the date of grant. Any consideration paid by the option holders to purchase shares is credited to capital stock.
Cash and Cash Equivalents	Cash and cash equivalents We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. We maintain cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 . Deposits held with financial institutions may exceed the $250,000 limit.
Earnings Per Share	Earnings per share Basic earnings per share is calculated by dividing income available to common shareholders by the weighted average number of common stock outstanding and restricted stock grants that vested or are likely to vest during the period. Diluted earnings per share is calculated by dividing income available to common shareholders by the weighted average number of basic common shares outstanding, adjusted to reflect potentially dilutive securities. Diluted earnings per share is calculated using the treasury stock method.

Revenue Recognition (Tables)

Revenue Recognition (Tables)	9 Months Ended
	Jun. 30, 2019
Revenue from Contract with Customer [Abstract]
Schedule of Contract Balances Recognized on the Company's Consolidated Balance Sheets	The following table summarizes the contract balances recognized on the Company's consolidated balance sheets: (in thousands) June 30, September 30, 2019 2018 Contract assets $ 2,045 $ 214 Contract liabilities $ 135 $ —
Schedule of Disaggregation of Revenue From Contracts with Customers	The following series of tables presents our revenue disaggregated by these categories: Revenue by customer: (in thousands) Three Months Ended Nine Months Ended June 30, June 30, 2019 2019 Department of Veterans Affairs $ 23,056 $ 68,563 Department of Health and Human Services 14,297 34,987 Other 1,347 2,658 Total revenue $ 38,700 $ 106,208 Revenue by contract type: (in thousands) Three Months Ended Nine Months Ended June 30, June 30, 2019 2019 Time and materials $ 33,426 $ 98,841 Cost reimbursable 4,545 5,791 Firm fixed price 729 1,576 Total revenue $ 38,700 $ 106,208 Revenue by whether the Company acts as a prime contractor or a subcontractor: (in thousands) Three Months Ended Nine Months Ended June 30, June 30, 2019 2019 Prime $ 36,882 $ 103,947 Subcontractor 1,818 2,261 Total revenue $ 38,700 $ 106,208

Supporting Financial Informat_2

Supporting Financial Information (Tables)	9 Months Ended
	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of Accounts Receivable	Accounts receivable (in thousands) June 30, September 30, Ref 2019 2018 Billed receivables $ 21,979 $ 10,066 Contract assets 2,045 214 Total accounts receivable (a) 24,024 10,280 Less: Allowance for doubtful accounts (b) — — Accounts receivable, net $ 24,024 $ 10,280 Ref (a): The total accounts receivable balance includes $13.1 million from SSS. Ref (b): Accounts receivable are non-interest bearing, unsecured and carried at net realizable value. We evaluate our receivables on a quarterly basis and determine whether an allowance is appropriate based on specific collection issues. No allowance for doubtful accounts was deemed necessary at either June 30, 2019 or September 30, 2018 .
Schedule of Other Current Assets	Other current assets (in thousands) June 30, September 30, 2019 2018 Prepaid insurance and benefits $ 806 $ 401 Other receivables 874 319 Other prepaid expenses 1,035 40 Other current assets $ 2,715 $ 760
Schedule of Equipment and Improvements, Net	Equipment and improvements, net (in thousands) June 30, September 30, Ref 2019 2018 Furniture and equipment $ 1,246 $ 326 Computer equipment 1,002 751 Computer software 3,667 1,731 Leasehold improvements 1,595 66 Total equipment and improvements 7,510 2,874 Less accumulated depreciation and amortization (1,836 ) (1,308 ) Equipment and improvements, net (a) $ 5,674 $ 1,566 Ref (a): Equipment and improvements are stated at cost. 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. Maintenance and repair costs are expensed as incurred. Depreciation and amortization expense was $0.3 million and $0.1 million for the three months ended June 30, 2019 and 2018 , respectively, and $0.5 million and $0.3 million for the nine months ended June 30, 2019 and 2018 , respectively.
Schedule of Intangible Assets	Intangible assets (in thousands) June 30, September 30, Ref 2019 2018 Intangible assets (a) Customer contracts and related customer relationships $ 16,626 $ 16,626 Covenants not to compete 480 480 Trade name 517 517 Acquired intangibles - SSS acquisition (b) 29,301 — Total intangible assets 46,924 17,623 Less accumulated amortization Customer contracts and related customer relationships (5,266 ) (4,018 ) Covenants not to compete (152 ) (116 ) Trade name (164 ) (124 ) Acquired intangibles - SSS acquisition (b) (186 ) — Total accumulated amortization (5,768 ) (4,258 ) Intangible assets, net $ 41,156 $ 13,365 Ref (a): Intangible assets subject to amortization. The intangibles are amortized on a straight-line basis over their estimated useful lives of 10 years . The total amount of amortization expense was $0.6 million and $0.4 million for the three months ended June 30, 2019 and 2018 , respectively, and $1.5 million and $1.3 million for the nine months ended June 30, 2019 and 2018 , respectively. Ref (b): The Company is currently valuing the acquired intangible assets from the SSS acquisition. The balances provided are an estimate and subject to revision.
Schedule of Estimated Amortization of Intangible Assets	Estimated amortization expense for future years: Ref (in thousands) Remaining Fiscal 2019 $ 988 Fiscal 2020 4,692 Fiscal 2021 4,692 Fiscal 2022 4,692 Fiscal 2023 4,692 Thereafter 21,400 Total amortization expense (a) $ 41,156 Ref (a): The amortization expense includes the Danya and SSS acquisitions. The Company is currently valuing the acquired intangible assets from the SSS acquisition. The balances provided are an estimate and subject to revision.
Schedule of Goodwill	Goodwill Goodwill: Ref (in thousands) Acquired from previous acquisitions $ 25,989 Acquired from SSS acquisition (a) 25,788 Total Goodwill $ 51,777 Ref (a): The Company is currently valuing the goodwill from the SSS acquisition. The balance provided is an estimate and subject to revision.
Schedule of Accounts Payable, Accrued Expenses, and Other Current Liabilities	Accounts payable, accrued expenses and other current liabilities (in thousands) June 30, September 30, Ref 2019 2018 Accounts payable $ 9,290 $ 3,393 Accrued benefits 2,173 2,060 Accrued bonus and incentive compensation 1,577 2,191 Accrued workers compensation insurance 3,836 2,642 Other accrued expenses 2,217 664 Accounts payable, accrued expenses, and other current liabilities (a) $ 19,093 $ 10,950
Schedule of Debt Obligations	Debt obligations (in thousands) June 30, September 30, Ref 2019 2018 Bank term loan $ 66,063 $ 7,708 Less unamortized deferred financing cost (1,906 ) (750 ) Net bank debt obligation 64,157 6,958 Less current portion of bank debt obligations (1,313 ) — Long term portion of bank debt obligation $ 62,844 $ 6,958
Schedule of Interest Expense	Interest expense (in thousands) (in thousands) Three Months Ended Nine Months Ended June 30, June 30, Ref 2019 2018 2019 2018 Interest expense (a) $ (297 ) $ (192 ) $ (485 ) $ (619 ) Amortization of deferred financing costs (b) (265 ) (70 ) (799 ) (202 ) Other income (expense), net — — — 20 Interest expense, net $ (562 ) $ (262 ) $ (1,284 ) $ (801 ) Ref (a): Interest expense on borrowing. Ref (b): Amortization of deferred financing costs include write-offs of unamortized deferred financing costs of $0.2 million for three months ended June 30, 2019 and $0.6 million for the nine months ended June 30, 2019 related to the early extinguishment of the prior credit facility that was in place until June 7, 2019.

Credit Facilities (Tables)

Credit Facilities (Tables)	9 Months Ended
	Jun. 30, 2019
Debt Disclosure [Abstract]
Schedule of Loan Facility	A summary of this loan facility as of June 30, 2019 , is as follows: Arrangement Loan Balance Interest Maturity Date Secured term loan $70 million (a) $ 66.1 million LIBOR* + 4.0% 6/7/2024 Secured revolving line of credit $25 million ceiling (b) $ — LIBOR* + 4.0% 6/7/2024 *LIBOR rate as of June 30, 2019 was 2.42%

Stock-based Compensation, Equ_2

Stock-based Compensation, Equity Grants, and Warrants (Tables)	9 Months Ended
	Jun. 30, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Stock-based Compensation Expense	Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our statement of operations: (in thousands) (in thousands) Three Months Ended Nine Months Ended Ref June 30, June 30, 2019 2018 2019 2018 DLH employees $ 67 $ 68 $ 196 $ 199 Non-employee directors (a) 132 173 395 970 Total stock option expense $ 199 $ 241 $ 591 $ 1,169 Ref (a): Equity grants of restricted stock units, in accordance with DLH compensation policy for non-employee directors were made in the first quarter of fiscal 2019 and in total 90,000 restricted stock units were granted. Unrecognized stock-based compensation expense (in thousands) June 30, Ref 2019 Unrecognized expense for DLH employees (a) $ 699 Unrecognized expense for non-employee directors (b) 132 Total unrecognized expense $ 831 Ref (a): Compensation expense for the portion of equity awards for which the requisite service has not been rendered is recognized as the requisite service is rendered. The compensation expense for that portion of awards has been based on the grant-date fair value of those awards as calculated for recognition purposes under applicable guidance. For options that vest based on the Company’s common stock achieving and maintaining defined market prices, the Company values the awards with a binomial model that utilizes various probability factors and other criterion in establishing fair value of the grant. The related compensation expense is recognized over the derived service period determined in the valuation. Ref (b): Unrecognized stock expense related to current year's equity grants of restricted stock units to non-employee directors in accordance with DLH compensation policy for non-employee directors.
Schedule of Stock Option Activity	The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount will change based on the fair market value of the Company’s stock. (in years) Weighted Weighted Average (in thousands) (in thousands) Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value Options outstanding, September 30, 2018 2,134 $ 4.31 6.3 $ 6,949 Granted 35 $ 5.25 — — Exercised (35 ) $ 1.12 — — Options outstanding, June 30, 2019 2,134 $ 4.36 6.0 $ 5,755
Schedule of Option Shares Outstanding, Vested and Expected to Vest	Stock options shares outstanding, vested and unvested for the period ended (in thousands) June 30, September 30, Ref 2019 2018 Vested and exercisable (a) 1,300 1,335 Unvested 834 799 Options outstanding 2,134 2,134 Ref (a): Certain awards vest upon satisfaction of certain performance criteria.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	9 Months Ended
	Jun. 30, 2019
Earnings Per Share [Abstract]
Schedule of Diluted Earnings per Share	Diluted earnings per share is calculated using the treasury stock method. Three Months Ended Nine Months Ended June 30, June 30, 2019 2018 2019 2018 Numerator: Net income $ 803 $ 1,614 $ 3,758 $ 79 Denominator: Denominator for basic net income per share - weighted-average outstanding shares 12,036 11,899 12,011 11,875 Effect of dilutive securities: Stock options and restricted stock 1,041 985 1,037 997 Denominator for diluted net income per share - weighted-average outstanding shares 13,077 12,884 13,048 12,872 Net income per share - basic $ 0.07 $ 0.14 $ 0.31 $ 0.01 Net income per share - diluted $ 0.06 $ 0.13 $ 0.29 $ 0.01

Commitment and Contingencies (T

Commitment and Contingencies (Tables)	9 Months Ended
	Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Schedule of Contractual Obligations	Contractual obligations as of June 30, 2019 Payments Due By Period Next 12 2-3 4-5 More than 5 (Amounts in thousands) Total Months Years Years Years Debt obligations $ 66,063 $ 1,313 $ 10,500 $ 54,250 $ — Facility leases 21,166 4,486 8,361 6,086 2,233 Equipment operating leases 33 33 — — — Total obligations $ 87,262 $ 5,832 $ 18,861 $ 60,336 $ 2,233

Business Combinations (Tables)

Business Combinations (Tables)	9 Months Ended
	Jun. 30, 2019
Business Combinations [Abstract]
Schedule of Total Consideration and Preliminary Fair Value of Assets and Liabilities	Based on the unaudited financial statements of SSS on June 7, 2019, we estimate total acquisition consideration and the preliminary allocation of fair value to the related assets and liabilities as follows: (Amounts in thousands) Preliminary purchase price for SSS $ 69,558 Estimated net assets acquired Cash and cash equivalents $ 3,037 Accounts receivable 12,819 Other current assets 1,418 Total current assets 17,274 Accounts payable and accrued expenses (3,933 ) Payroll liabilities (3,458 ) Estimated net working capital 9,883 Property and equipment, net 4,605 Net identifiable assets acquired 14,488 Goodwill and other intangibles 55,070 Net assets acquired $ 69,558
Schedule of Pro Forma Information	The following table presents certain results for the three and nine months ended June 30, 2019 and 2018 as though the acquisition of SSS had occurred on October 1, 2017. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of our results if the acquisition had taken place on that date. The pro forma information was prepared by combining our reported historical results with the historical results of SSS for the pre-acquisition periods. In addition, the reported historical amounts were adjusted for the following items, net of associated tax effects: • The impact of acquisition financing. • The removal of certain SSS operations due to completed and nonrecurring contracts. • The removal of the legacy SSS Employee Stock Ownership Plan ("ESOP") expenses. • The removal of SSS's historical goodwill amortization. • The impact of recording SSS's intangible asset amortization. • The removal of SSS's historical debt-related interest expense. • The impact of interest expense for the new credit facility. • The removal of legacy SSS director's fees. • The removal of transaction costs for the acquisition incurred by SSS. (in thousands) (in thousands) Three Months Ended Nine Months Ended June 30, June 30, Pro forma results 2019 2018 2019 2018 Revenue $ 51,344 $ 53,578 $ 151,654 $ 154,570 Net income (loss) (191 ) 752 1,346 2,262 Number of shares outstanding - basic 12,036 11,899 12,011 11,875 Number of shares outstanding - diluted 13,077 12,884 13,048 12,872 Basic earnings per share (loss) $(0.02) $0.06 $0.11 $0.19 Diluted earnings per share (loss) $(0.01) $0.06 $0.10 $0.18

Business Overview (Details)

Business Overview (Details)	3 Months Ended	9 Months Ended
	Jun. 30, 2019employeeoptioncontractmarketbusiness_arealocation	Jun. 30, 2019employeeoptioncontractmarketbusiness_arealocation	Jun. 30, 2018
Concentration Risk [Line Items]
Number of market focus areas | business_area	3	3
Number of market leveraging core competencies | market	7	7
Revenue concentration | Customer concentration | US Federal Government
Concentration Risk [Line Items]
Concentration risk percentage		100.00%
Revenue concentration | Customer concentration | VA
Concentration Risk [Line Items]
Concentration risk percentage		65.00%	64.00%
Number of contracts	16	16
Revenue concentration | Customer concentration | VA | Pharmacy Services
Concentration Risk [Line Items]
Concentration risk percentage		58.00%
Number of contracts	9	9
Revenue concentration | Customer concentration | VA | Logistic Services
Concentration Risk [Line Items]
Number of contracts	7	7
Revenue concentration | Customer concentration | HHS
Concentration Risk [Line Items]
Concentration risk percentage		33.00%	34.00%
Revenue concentration | Customer concentration | Defense/VA
Concentration Risk [Line Items]
Concentration risk percentage		66.00%
Revenue concentration | Customer concentration | Human Services and Solutions
Concentration Risk [Line Items]
Concentration risk percentage		28.00%
Revenue concentration | Customer concentration | Public Health/Life Sciences
Concentration Risk [Line Items]
Concentration risk percentage		6.00%
Revenue concentration | Customer concentration | Head Start Program
Concentration Risk [Line Items]
Concentration risk percentage		27.00%	32.00%
Revenue concentration | Customer concentration | Head Start Program | Time and materials
Concentration Risk [Line Items]
Government contract, number of option periods | option	4	4
Government contract, term of award		5 years
Revenue concentration | Revenue from Rights Concentration Risk | Prime
Concentration Risk [Line Items]
Concentration risk percentage	95.00%
Revenue concentration | Revenue from Rights Concentration Risk | Subcontractor
Concentration Risk [Line Items]
Concentration risk percentage	5.00%
UNITED STATES
Concentration Risk [Line Items]
Number of employees | employee	1,900	1,900
Number of locations in which entity operates | location	30	30

New Accounting Pronouncements (

New Accounting Pronouncements (Details) $ in Thousands	Jun. 30, 2019USD ($)
ASC 842
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Impact in balance sheet net assets and liabilities resulting from the adoption of new accounting pronouncement	$ 21,166

Revenue Recognition - Narrative

Revenue Recognition - Narrative (Details) $ in Thousands	Oct. 01, 2018USD ($)
ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of adoption of new accounting pronouncement in opening balance sheet (less than)	$ 10

Revenue Recognition - Contract

Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Revenue from Contract with Customer [Abstract]
Contract assets	$ 2,045	$ 214
Contract liabilities	$ 135	$ 0

Revenue Recognition - Disaggreg

Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Total Revenue	$ 38,700	$ 36,131	$ 106,208	$ 100,747
Prime
Disaggregation of Revenue [Line Items]
Total Revenue	36,882		103,947
Subcontractor
Disaggregation of Revenue [Line Items]
Total Revenue	1,818		2,261
Time and materials
Disaggregation of Revenue [Line Items]
Total Revenue	33,426		98,841
Cost reimbursable
Disaggregation of Revenue [Line Items]
Total Revenue	4,545		5,791
Firm fixed price
Disaggregation of Revenue [Line Items]
Total Revenue	729		1,576
Department of Veterans Affairs
Disaggregation of Revenue [Line Items]
Total Revenue	23,056		68,563
Department of Health and Human Services
Disaggregation of Revenue [Line Items]
Total Revenue	14,297		34,987
Other
Disaggregation of Revenue [Line Items]
Total Revenue	$ 1,347		$ 2,658

Supporting Financial Informat_3

Supporting Financial Information - Accounts Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Business Acquisition [Line Items]
Billed receivables	$ 21,979	$ 10,066
Contract assets	2,045	214
Total accounts receivable	24,024	10,280
Less: Allowance for doubtful accounts	0	0
Accounts receivable, net	24,024	$ 10,280
SSS
Business Acquisition [Line Items]
Accounts receivable, net	$ 13,100

Supporting Financial Informat_4

Supporting Financial Information - Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Prepaid insurance and benefits	$ 806	$ 401
Other receivables	874	319
Other prepaid expenses	1,035	40
Other current assets	$ 2,715	$ 760

Supporting Financial Informat_5

Supporting Financial Information - Equipment and Improvements, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2018
Property, Plant and Equipment [Line Items]
Furniture and equipment	$ 1,246		$ 1,246		$ 326
Computer equipment	1,002		1,002		751
Computer software	3,667		3,667		1,731
Leasehold improvements	1,595		1,595		66
Total equipment and improvements	7,510		7,510		2,874
Less accumulated depreciation and amortization	(1,836)		(1,836)		(1,308)
Equipment and improvements, net	5,674		$ 5,674		$ 1,566
Minimum
Property, Plant and Equipment [Line Items]
Estimated useful of long-lived assets			3 years
Maximum
Property, Plant and Equipment [Line Items]
Estimated useful of long-lived assets			7 years
Leasehold Improvements | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful of long-lived assets			3 years
Leasehold Improvements | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful of long-lived assets			7 years
Equipment
Property, Plant and Equipment [Line Items]
Depreciation of equipment	$ 300	$ 100	$ 500	$ 300

Supporting Financial Informat_6

Supporting Financial Information - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2018
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 46,924		$ 46,924		$ 17,623
Total accumulated amortization	(5,768)		(5,768)		(4,258)
Intangible assets, net	41,156		$ 41,156		13,365
Estimated useful live of intangible assets			10 years
Amortization expense of intangible assets	600	$ 400	$ 1,500	$ 1,300
SSS
Finite-Lived Intangible Assets [Line Items]
Amortization expense of intangible assets	200
Customer contracts and related customer relationships
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	16,626		16,626		16,626
Total accumulated amortization	(5,266)		(5,266)		(4,018)
Covenants not to compete
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	480		480		480
Total accumulated amortization	(152)		(152)		(116)
Trade name
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	517		517		517
Total accumulated amortization	(164)		(164)		(124)
Other Intangibles | SSS
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	29,301		29,301		0
Total accumulated amortization	$ (186)		$ (186)		$ 0

Supporting Financial Informat_7

Supporting Financial Information - Estimated Future Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Remaining Fiscal 2019	$ 988
Fiscal 2020	4,692
Fiscal 2021	4,692
Fiscal 2022	4,692
Fiscal 2023	4,692
Thereafter	21,400
Intangible assets, net	$ 41,156	$ 13,365

Supporting Financial Informat_8

Supporting Financial Information - Goodwill (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Goodwill [Line Items]
Goodwill	$ 51,777	$ 25,989
Danya acquisition
Goodwill [Line Items]
Goodwill	25,989
SSS
Goodwill [Line Items]
Goodwill	$ 25,788

Supporting Financial Informat_9

Supporting Financial Information - Accounts Payable, Accrued Expense and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Business Acquisition [Line Items]
Accounts payable	$ 9,290	$ 3,393
Accrued benefits	2,173	2,060
Accrued bonus and incentive compensation	1,577	2,191
Accrued workers compensation insurance	3,836	2,642
Other accrued expenses	2,217	664
Accounts payable, accrued expenses, and other current liabilities	19,093	$ 10,950
SSS acquisition
Business Acquisition [Line Items]
Accounts payable, accrued expenses, and other current liabilities	$ 4,900

Supporting Financial Informa_10

Supporting Financial Information - Debt Obligations (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Debt Instrument [Line Items]
Less current portion of bank debt obligations	$ (787)	$ 0
Long term portion of bank debt obligation	62,844	6,958
Debt obligations
Debt Instrument [Line Items]
Bank term loan	66,063	7,708
Less unamortized deferred financing cost	(1,906)	(750)
Net bank debt obligation	64,157	6,958
Less current portion of bank debt obligations	(1,313)	0
Long term portion of bank debt obligation	$ 62,844	$ 6,958

Supporting Financial Informa_11

Supporting Financial Information - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Interest expense	$ (297)	$ (192)	$ (485)	$ (619)
Amortization of deferred financing costs	(265)	(70)	(799)	(202)
Other income (expense), net	0	0	0	20
Interest expense, net	(562)	$ (262)	(1,284)	$ (801)
Write-off of remaining financing costs related to debt fully satisfied	$ 200		$ 600

Credit Facilities - Summary of

Credit Facilities - Summary of Loan Facility (Details) - Secured Debt	9 Months Ended
	Jun. 30, 2019USD ($)
Term Loans
Line of Credit Facility [Line Items]
Secured term loan, face amount	$ 70,000,000
Total bank debt obligation	$ 66,100,000
Term Loans | LIBOR
Line of Credit Facility [Line Items]
Interest rate percentage	2.42%
Basis spread on variable rate percentage	4.00%
Revolving Line of Credit
Line of Credit Facility [Line Items]
Secured revolving line of credit ceiling	$ 25,000,000
Total bank debt obligation	$ 0
Revolving Line of Credit | LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate percentage	4.00%

Credit Facilities - Narrative (

Credit Facilities - Narrative (Details) - Secured Debt	1 Months Ended	9 Months Ended
	Jun. 30, 2019USD ($)	Jun. 30, 2019USD ($)
Term Loans
Line of Credit Facility [Line Items]
Secured term loan, face amount	$ 70,000,000	$ 70,000,000
Fixed charge coverage ratio		1.25
Ratio of funded indebtedness to EBITDA through maturity		3.25
Voluntary repayments of lines of credit	$ 3,900,000
Number of quarterly principal installments voluntarily paid	3
Term Loans | Excess Cash Flows Greater Than Or Equal to 2.50
Line of Credit Facility [Line Items]
Percentage of excess cash flow for each year of funded indebtedness to EBDTA		75.00%
Ratio of funded indebtedness to adjusted EBDTA, actual		2.50
Term Loans | Excess Cash Flows Less Than 2.50 But Greater Than 1.50 [Member]
Line of Credit Facility [Line Items]
Percentage of excess cash flow for each year of funded indebtedness to EBDTA		50.00%
Term Loans | Excess Cash Flows Equal to 1.50
Line of Credit Facility [Line Items]
Ratio of funded indebtedness to adjusted EBDTA, actual		1.5
Term Loans | Excess Cash Flows Less Than 1.50
Line of Credit Facility [Line Items]
Percentage of excess cash flow for each year of funded indebtedness to EBDTA		0.00%
Ratio of funded indebtedness to adjusted EBDTA, actual		1.5
Term Loans | Maximum
Line of Credit Facility [Line Items]
Ratio of funded indebtedness to EBITDA through maturity		4.25
Term Loans | Maximum | Excess Cash Flows Less Than 2.50 But Greater Than 1.50 [Member]
Line of Credit Facility [Line Items]
Ratio of funded indebtedness to adjusted EBDTA, actual		2.50
Term Loans | LIBOR
Line of Credit Facility [Line Items]
Interest rate spread	2.42%	2.42%
Term Loans | LIBOR | Maximum
Line of Credit Facility [Line Items]
Interest rate spread	4.50%	4.50%
Term Loans | LIBOR | Minimum
Line of Credit Facility [Line Items]
Interest rate spread	2.50%	2.50%
Revolving Line of Credit
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 25,000,000	$ 25,000,000
Line of credit, current borrowing capacity	19,600,000	19,600,000
Line of credit, unused borrowing capacity	19,600,000	19,600,000
Letter of Credit
Line of Credit Facility [Line Items]
Line of credit, current borrowing capacity	3,000,000	3,000,000
Line of credit, unused borrowing capacity	$ 0	$ 0

Significant Accounting Polici_3

Significant Accounting Policies (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2018
Acquired Indefinite-lived Intangible Assets [Line Items]
Amortization on the basis of estimated assets acquired	$ 600,000	$ 400,000	$ 1,500,000	$ 1,300,000
Goodwill	51,777,000		51,777,000		$ 25,989,000
Goodwill impairment					0
Uncertain tax positions	0		0		$ 0
Income tax interest expense	0	0	0	0
Income tax penalties expense	0	$ 0	0	$ 0
Cash, FDIC insured amount	250,000		250,000
Restricted cash	$ 2,300,000		$ 2,300,000
Employee Stock Option
Acquired Indefinite-lived Intangible Assets [Line Items]
Number of awards authorized for issuance (in shares)	0		0
Expiration term of share-based compensation plan			10 years
Minimum
Acquired Indefinite-lived Intangible Assets [Line Items]
Estimated useful of long-lived assets			3 years
Maximum
Acquired Indefinite-lived Intangible Assets [Line Items]
Estimated useful of long-lived assets			7 years
SSS
Acquired Indefinite-lived Intangible Assets [Line Items]
Amortization on the basis of estimated assets acquired	$ 200,000
Goodwill	$ 25,788,000		$ 25,788,000

Stock-based Compensation, Equ_3

Stock-based Compensation, Equity Grants, and Warrants - Narrative (Details) - Employee Stock Option	9 Months Ended
	Jun. 30, 2019shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards authorized for issuance (in shares)	0
Expiration term of share-based compensation plan	10 years
Number of shares available for grant (in shares)	1,500,000

Stock-based Compensation, Equ_4

Stock-based Compensation, Equity Grants, and Warrants - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock option expense	$ 199	$ 241	$ 591	$ 1,169
Total unrecognized expense	831		$ 831
Weighted average share based compensation expense recognition period			3 years 7 months 6 days
DLH employees | Selling, General and Administrative Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock option expense	67	68	$ 196	199
Total unrecognized expense	$ 699		699
Non-employee directors | Restricted Stock Units
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Number of restricted stock units granted (in shares)	90,000
Non-employee directors | Selling, General and Administrative Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock option expense	$ 132	$ 173	395	$ 970
Total unrecognized expense	$ 132		$ 132

Stock-based Compensation, Equ_5

Stock-based Compensation, Equity Grants, and Warrants - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended	12 Months Ended
	Jun. 30, 2019	Sep. 30, 2018
Number of Shares
Outstanding at the beginning of the period (in shares)	2,134
Granted (in shares)	35
Exercised (in shares)	(35)
Outstanding at the end of the period (in shares)	2,134	2,134
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 4.31
Granted (in dollars per share)	5.25
Exercised (in dollars per share)	1.12
Outstanding at the end of the period (in dollars per share)	$ 4.36	$ 4.31
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term	6 years	6 years 3 months 18 days
Aggregate Intrinsic Value
Outstanding at the beginning of the period (in dollars)	$ 6,949
Outstanding at the end of the period (in dollars)	$ 5,755	$ 6,949

Stock-based Compensation, Equ_6

Stock-based Compensation, Equity Grants, and Warrants - Stock Options Outstanding, Vested and Unvested (Details) - shares shares in Thousands	Jun. 30, 2019	Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Vested and exercisable (in shares)	1,300	1,335
Unvested (in shares)	834	799
Option outstanding (in shares)	2,134	2,134

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Numerator:
Net income	$ 803	$ 1,614	$ 3,758	$ 79
Denominator:
Denominator for basic net income (loss) per share - weighted-average outstanding shares (shares)	12,036	11,899	12,011	11,875
Effect of dilutive securities:
Stock options and restricted stock (shares)	1,041	985	1,037	997
Denominator for diluted net income (loss) per share - weighted-average outstanding shares (shares)	13,077	12,884	13,048	12,872
Net income per share, basic (in dollars per share)	$ 0.07	$ 0.14	$ 0.31	$ 0.01
Net income per share - diluted (in dollars per share)	$ 0.06	$ 0.13	$ 0.29	$ 0.01

Commitment and Contingencies -

Commitment and Contingencies - Contractual Obligations (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Total Obligations
Total Obligations	$ 87,262
Next 12 Months	5,832
2-3 Years	18,861
4-5 Years	60,336
More than 5 Years	2,233
Facility leases
Operating Leases
Next 12 Months	4,486
2-3 Years	8,361
4-5 Years	6,086
More than 5 Years	2,233
Equipment operating leases
Operating Leases
Total operating leases	33
Next 12 Months	33
2-3 Years	0
4-5 Years	0
More than 5 Years	0
Debt obligations
Debt obligations
Total bank debt obligation	66,063	$ 7,708
Next 12 Months	1,313
2-3 Years	10,500
4-5 Years	54,250
More than 5 Years	$ 0

Commitment and Contingencies _2

Commitment and Contingencies - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Accrued workers compensation insurance	$ 3,836	$ 2,642

Business Combinations - Narrati

Business Combinations - Narrative (Details) - USD ($)	Jun. 07, 2019	Jun. 30, 2019	Jun. 30, 2019
Term Loans | Secured Debt
Business Acquisition [Line Items]
Borrowings		$ 70,000,000	$ 70,000,000
SSS
Business Acquisition [Line Items]
Percentage of equity interest acquired	100.00%
Net purchase price	$ 66,500,000
Consideration paid	69,558,000
Cash on hand acquired	3,100,000
Transaction expenses and financing costs	4,700,000
Escrow funds	1,200,000
Revenue contributed since the acquisition date		4,500,000	4,500,000
Income from operations contributed since the acquisition date		$ 200,000	$ 300,000
SSS | Term Loans | Secured Debt
Business Acquisition [Line Items]
Borrowings	$ 70,000,000

Business Combinations - Prelimi

Business Combinations - Preliminary Purchase Price and Net Assets Acquired (Details) - SSS $ in Thousands	Jun. 07, 2019USD ($)
Business Acquisition [Line Items]
Preliminary purchase price for SSS	$ 69,558
Estimated net assets acquired
Cash and cash equivalents	3,037
Accounts receivable	12,819
Other current assets	1,418
Total current assets	17,274
Accounts payable and accrued expenses	(3,933)
Payroll liabilities	(3,458)
Estimated net working capital	9,883
Property and equipment, net	4,605
Net identifiable assets acquired	14,488
Goodwill and other intangibles	55,070
Net assets acquired	$ 69,558

Business Combinations - Pro For

Business Combinations - Pro Forma Information (Details) - SSS - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Business Acquisition [Line Items]
Revenue	$ 51,344	$ 53,578	$ 151,654	$ 154,570
Net income (loss)	$ (191)	$ 752	$ 1,346	$ 2,262
Number of shares outstanding - basic (in shares)	12,036	11,899	12,011	11,875
Number of shares outstanding - diluted (in shares)	13,077	12,884	13,048	12,872
Basic earnings per share (loss) (in dollars per share)	$ (0.02)	$ 0.06	$ 0.11	$ 0.19
Diluted earnings per share (loss) (in dollars per share)	$ (0.01)	$ 0.06	$ 0.10	$ 0.18

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Deferred taxes, net	$ 2,885	$ 4,137

Uncategorized Items - dlhc-2019

Label	Element	Value
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 306,000
Additional Paid-in Capital [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	177,000
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 129,000