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•	Highly Strategic Combination Creates Unique Provider of Technology-Enabled Solutions to the Federal Government

•	Financially Transformative and Expected to be Immediately Accretive to Earnings and Cash Flow

•	Pro Forma for the Acquisition, Calendar Year 2015 Revenue and Adjusted EBITDA of Over $100 Million and $10 Million, Respectively, and Total Backlog in Excess of $300 Million

•	Purchase Price of $38.75 Million: $36.25 Million Cash, $2.5 Million Restricted Stock

•	Management to Host Conference Call at 2:00PM ET

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•	Expands Business in Current and Adjacent Federal Agencies: Danya’s customers and capabilities are highly complementary to DLH’s existing work with the Department of Veterans Affairs (“VA”). The combined entity is a pure-play, technology-enabled government healthcare and human services company with a customer base including four of the largest government health agencies.

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Enhances DLH’s Growth in National Priority, Mission-Critical Programs: DLH’s flagship contracts supporting all seven of VA’s Consolidated Mail Outpatient Pharmacy locations are mission-critical, ensuring that our nation’s veterans receive prescriptions in a timely and accurate manner. Similarly, Danya’s monitoring and evaluation services to OHS are critical to ensure educational, health, and social standards are being achieved in an effort to ensure school readiness for underprivileged children. Danya complements DLH’s services with significant operational synergies that we expect will serve the existing customer base along with expanding the base to additional government agencies.

•	Accelerates DLH’s Strategic Initiatives: Danya’s public health expertise with the CDC and the U.S. Navy enhances DLH’s advancement in key areas:

◦	Medication adherence and medication therapy management solutions;

◦	Telehealth research and service offerings to the Department of Defense and federal civilian agencies;

◦	Health IT and information systems solutions and services; and

◦	Case management system solutions and services.

•	Additive to Revenue Visibility and Accretive to Margins: With over $300 million of total backlog, which includes funded and unfunded amounts, the combined company maintains significant revenue visibility. Moreover, Danya’s margin profile is expected to be accretive to DLH in the current fiscal year.

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Enhanced Free Cash Flow Profile: DLH believes that the combined company expects to maintain a strong free cash flow generation profile driven by enhanced profitability and limited working capital intensity, and augmented by DLH’s deferred tax assets from utilization of net operating losses. DLH expects to be able to shield substantially all cash payments of federal income taxes in the initial years following the acquisition. DLH believes that these factors will provide the ability to accelerate debt repayment.

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•	Purchase Price of $38.75 Million: Consisting of $36.25 million in cash and approximately $2.5 million of restricted common stock, subject to customary post-closing adjustments.

•	New Senior Debt of $30 Million Funded at Closing: DLH has entered into a new loan agreement with Fifth Third Bank providing for a $25 million term loan and $10 million revolving line of credit, of which $5 million is drawn as of the closing. The term loan and line of credit bear interest at a rate of LIBOR plus a margin of 300 basis points.

•	Restricted Common Stock Issued to Former Owner: DLH has issued 670,242 restricted shares of its common stock to the primary shareholder of Danya, valued at $2.5 million, or $3.73 per share, based on the volume weighted average price for the past 20 trading days.

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Bridge Financing of $2.5 Million: Affiliates of Wynnefield Capital, the largest shareholder of DLH, have provided $2.5 million in a subordinated bridge loan. The Wynnefield bridge loan will accrue interest at an annual rate of 4%. DLH also issued the Wynnefield entities warrants with an exercise price of $3.73 covering 8% of the face value of the loan. It is the intention of DLH to repay the bridge loan with the proceeds of a rights offering so that all existing shareholders of DLH will have the opportunity to participate in the equity financing of the transaction. It is anticipated that Wynnefield will act as a standby purchaser of the rights offering to the extent of $2.5 million. The exercise price of the rights will be fixed at the time of the offering and will be subject to market conditions.

•	DLH will also use a portion of its existing cash balance to finance the remainder of the purchase price and transaction related expenses.

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