LDOS · 8-K · 20260804PR000243

Operating Margin Drivers

Leidos Holdings, Inc. · 2026-08-04 · Importance 29 · Surprise 22

GAAP operating income declined 10% year over year to $514 million from $571 million, reducing total operating margin to 11.3% from 13.4%. Adjusted EBITDA decreased 2% to $631 million, and adjusted EBITDA margin declined to 13.8% from 15.2%. The prior-year quarter included a $25 million insurance reimbursement for legal costs, creating a comparison benefit. Homeland operating margin improved to 9.0% from 8.3% through a better security-product mix, improved program performance, and lower indirect expenses, while Health margin fell to 23.4% from 25.8% on lower exam volumes.

Key facts

• Non-GAAP net income for the three months ended July 3, 2026 was $413 million (adjusting for certain items) source
• Adjusted EBITDA of $631 million for the three months ended July 3, 2026 source
• Adjusted EBITDA margin of 13.8% for the three months ended July 3, 2026 source
• Adjusted EBITDA was $631 million for the second quarter, down 2% year-over-year source
• Quarterly adjusted EBITDA margin of 13.8% decreased from 15.2% in the second quarter of 2025 source
• Health operating income margin for the quarter was 23.4% compared to 25.8% in the prior year quarter, with non-GAAP operating income margin of 23.8% versus 26.3% prior year source
• Net income and diluted EPS were down 9% and 7%, respectively, year-over-year source
• Net income of $356 million for the three months ended July 3, 2026 source