Earnings call: DocGo reports robust growth and positive outlook for 2024

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Earnings call: DocGo reports robust growth and positive outlook for 2024
Credit: © Reuters.

DocGo (ticker: DCGO), a leading provider of mobile health and medical transportation services, has reported a strong financial performance for the fourth quarter and full year of 2023. The company's Q4 revenues surged by 83% to $199.2 million, compared to the same period last year, while adjusted EBITDA saw a significant increase of 232% year-over-year to $22.6 million. DocGo's growth was fueled by a substantial rise in mobile health interactions and medical transports.

Looking ahead, DocGo has raised its revenue guidance for 2024 and announced a share repurchase program, signaling confidence in its continued growth and strong business fundamentals.

Key Takeaways

  • Q4 revenues reached $199.2 million, an 83% increase from Q4 2022.
  • Adjusted EBITDA for Q4 jumped to $22.6 million, a 232% year-over-year increase.
  • Mobile health interactions and medical transports significantly grew in Q4.
  • 2024 revenue guidance updated to $720 million to $750 million.
  • Adjusted EBITDA guidance for 2024 set at $80 million to $85 million.
  • Share repurchase approval announced for up to $36 million.
  • The company saved partners and patients over $167 million in healthcare spending in 2023.

Company Outlook

  • Projected sustainable gross margin expansion and a 250 basis point improvement in adjusted EBITDA margin for 2024.
  • Anticipate a balanced mix of gross margin expansion and operational expenditure efficiency.
  • Key hires made in the value-based care segment to optimize care delivery.
  • New national payer partnership focused on value-based care, though specific details are currently undisclosed.

Bearish Highlights

  • Revenue from migrant services is expected to decline throughout 2024.
  • Employee count is projected to remain relatively flat for the year.
  • Lower cash flow from operations due to taxes.

Bullish Highlights

  • Gross margin percentage rebounded to 33.5% in Q4 2023.
  • Net income in Q4 2023 increased to $8 million from $4.6 million in Q3 2023.
  • Mobile Health expected to continue growing at approximately 30%.
  • Expansion into behavioral healthcare and partnerships with hospital systems.


  • Gross margin percentage in Q4 2023 was lower than in Q4 2022.
  • Selling, General & Administrative (SG&A) expenses as a percentage of total revenues increased in Q4 2023.

Q&A Highlights

  • Company plans to adapt and pivot business model as necessary.
  • Emphasis on operational execution and revenue expansion.
  • CEO acknowledges staff commitment and the company's role in democratizing healthcare.
  • Next earnings report scheduled for early May.

In summary, DocGo's earnings call revealed a company on the rise with strong financial results and an optimistic outlook for the future. The expansion of services and strategic initiatives in value-based care and medical transportation are set to drive growth, despite expectations of declining revenue from migrant services. With a robust pipeline of deals and projects, DocGo is well-positioned to continue its upward trajectory in the healthcare sector.

InvestingPro Insights

DocGo’s (ticker: DCGO) robust financial results for the fourth quarter of 2023 are further illuminated by key metrics from InvestingPro. With a market capitalization of $423.98 million, the company showcases a solid market presence. A noteworthy revenue growth of 41.72% in the last twelve months as of Q4 2023 highlights the company's strong performance and potential for future expansion. This is further supported by the impressive quarterly revenue growth of 83.16% in Q4 2023.

The company's P/E ratio stands at 63.48, reflecting investor expectations of future earnings growth, in line with the company's optimistic revenue guidance for 2024. Furthermore, the gross profit margin of 31.3% demonstrates the company's efficiency in generating profit from its revenues.

InvestingPro Tips suggest that while the company's PEG ratio of -0.67 indicates potential undervaluation relative to its earnings growth, investors should consider the broader financial context and the company’s strategic initiatives, such as its expansion into value-based care and medical transportation, which are likely to influence future performance. Additionally, with 22 additional tips available on InvestingPro, users can gain deeper insights into DocGo's financial health and market position.

For those interested in a comprehensive analysis, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of information to guide investment decisions.

Full transcript - Motion Acquisition (DCGO) Q4 2023:

Operator: Good day, ladies and gentlemen and welcome to the DocGo Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Mike Cole, Vice President of Investor Relations. Please go ahead, sir.

Mike Cole: Thank you, operator. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. All statements made in this conference call other than statements of historical fact are forward-looking statements. The words may, will, plan, potential, could, goal, outlook, design, anticipate, aim, believe, estimate, expect, intend, guidance, confidence, target, project and other similar expressions may be used to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and we cannot assure you that we will achieve or realize our plans, intentions, outcomes, results or expectations. Forward-looking statements are inherently subject to substantial risks, uncertainties and assumptions, many of which are beyond our control and which may cause our actual results or outcomes or the timing of results or outcomes to differ materially from those contained in our forward-looking statements. These risks, uncertainties, assumptions include, but are not limited to, those discussed in our risk factors and elsewhere in DocGo’s annual report on Form 10-K, quarterly reports on Form 10-Q, and other reports and statements filed by DocGo with the SEC to which your attention is directed. Actual outcomes and results or the timing of results of our outcome may differ materially from what is expressed or implied by these forward-looking statements. In addition, today’s call contains references to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided directly as part of this call or included in our earnings release, which is posted on our website, docgo.com, as well as filed with the Securities and Exchange Commission. The information contained in this call is accurate as of only the date discussed. Investors should not assume that statements will remain relevant and operative at a later time. We undertake no obligation to update any information discussed in this call to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events, except to as the extent required by law. At this time. It is now my pleasure to turn the call over to Mr. Lee Bienstock, CEO of DocGo. Lee, please go ahead.

Lee Bienstock: Thank you, Mike and thank you all for joining today. It is certainly fair to say that 2023 was an eventful year and my first hundred days as CEO were laser-focused on setting an ambitious vision for how we will proactively help make patients healthier and help keep them out of the hospital. Our record Q4 and full year results are proof that this vision is taking shape, and I look forward to continuing to build on this momentum in 2024 and beyond. During the quarter, we experienced significant growth and strong operational execution as we made considerable progress with our core strategic objectives in all three key customer verticals, insurance partners, hospital systems and our government population health programs. I’m going to share accomplishments and progress across all three of these verticals, but first, I want to lead off with our financial performance and guidance for 2024. In Q4, we grew revenues and adjusted EBITDA to $199.2 million and $22.6 million, respectively, up 83% and 232% when compared to the fourth quarter of 2022. In the fourth quarter alone, DocGo performed over 72,000 mobile health interactions and 190,000 medical transports globally, while leveraging a workforce of now more than 8,000. We continue to grow not only in size, but also in scope as we have more than doubled our service offerings in the last year to include procedures such as bone density scans, depression screenings and other valuable services we can deliver where convenient outside of the traditional brick-and-mortar healthcare system. While there is more work to do, we made substantial progress late in the fourth quarter with our cash collections and that trend has accelerated in 2024. Subsequent to year end, we have collected approximately $120 million in outstanding receivables and are working with our largest customers to maintain a more consistent cadence going forward. We’re also moving into a more mature state with some of our recent municipal and population health initiatives and are seeing the associated higher costs that came with those program launches abate. This puts us in a strong position to achieve improved adjusted EBITDA margins and cash flow as we progress through 2024. On that note, today, we updated our 2024 revenue guidance to a range of $720 million to $750 million. This is consistent with our previously disclosed view that suggested 2024 revenue would exceed $700 million. Our 2024 adjusted EBITDA guidance range is $80 million to $85 million. We also recently announced a share repurchase approval for up to $36 million. DocGo is confident in our cash position, we are confident in our cash collections, we are confident in our access to capital, and we are confident in our strong business fundamentals. At current valuation levels, we believe that share repurchases represent an efficient and value-enhancing use of capital. Since becoming CEO, I centered our efforts around our core customers, insurance partners, hospital systems and government population health programs. Now, I would like to share progress and growth on all three. First, one area that is relatively small, a relatively small contributor to revenues today, but which we believe offers tremendous growth potential, is our care gap closure programs with major insurance companies. The core initial focus of these programs is on non-compliant patients who have not seen their primary care provider in over a year and have at least one chronic condition. By leveraging our mobile capabilities and meeting patients where they are, by bringing care to their homes, we are validating to these customers that we can improve patient compliance rates materially. We are now offering over 30 different care gap closure services, including colon cancer screenings and diabetic retinal exams. Late in 2023, we launched payer programs in Michigan, Connecticut and New Jersey, and during the fourth quarter alone, we more than doubled the number of patients seen under these programs when compared to the third quarter, and we expect that trend to continue. The reality is, that a certain percentage of the population simply avoids or is unable to go to a traditional brick-and-mortar facility for these services. By making the process extremely convenient and efficient in the comfort of their own home, we can improve health outcomes, lower costs, help stratify risk and help keep people out of the hospital, which is what our insurance partners want. And it’s, of course, what our patients want. Our remote patient monitoring efforts continue to progress as well. We currently monitor approximately 50,000 CIED or Cardiac Implantable Electronic Device patients, which is up from 38,000 at the start of 2023. We continue to see a significant opportunity in our monitoring efforts, both on a standalone basis and as part of our HEDIS quality score improvement and value-based service offerings. Second, with our Medical Transportation segment, which is largely hospital systems, we closed out the year with another strong performance. To put the progress in perspective, in the fourth quarter of 2023, this business was at a revenue run rate of $160 million with a gross margin of 28.9%. Closing the year, that run rate was $190 million with a gross margin of 37.5%. We announced a number of meaningful RFP wins in the second half of 2023, both domestically and in the UK, which we expect will continue to help drive strong growth in 2024. We have also placed a significant emphasis on cross-selling and growing our Mobile Health presence with our hospital system partners, and expect the results of that effort to begin yielding benefits later in the year. And third, in the government RFP channel, we currently operate population health programs in Arizona, California, Michigan and Tennessee in addition to New York. These represent excellent opportunities to prove our value proposition and grow these geographies over time, much like we have done so successfully in the northeast. Our work with asylum seeker populations in New York has enabled us to expand and augment DocGo’s offerings, including scaling our behavioral health competency by performing over 50,000 depression screenings, growing our mobile pharmacy to prescribe over 70 different types of medications, and increasing our vaccine administration capacity to over 40 different types of vaccines. We will continue to expand our capabilities and use this institutional knowledge and experience to create valuable new programs for current and prospective customers. A great statistic that highlights the value we are providing. We estimate that in 2023, we prevented over 54,000 unnecessary emergency room visits and saved our partners and their patients over $167 million in healthcare spending across our various programs, demonstrating just how much of a positive impact DocGo can have for our partners and perhaps more importantly, for the communities we serve. The impact and reach of our business extends far beyond underserved populations like the homeless and asylum seekers. We provide Medical Transportation for hundreds of hospitals, we deploy vaccination programs in multiple states, we monitor tens of thousands of cardiac patients, we close care gaps for bedbound, chronically ill and so much more. In summary, our mission remains the same, to continue bringing healthcare to people where and when they need it, which we did for many hundreds of thousands of patients in 2023 from all walks of life, all with the goal of helping keep them out of the hospital and we’re seeing great success with this effort. At this time, I’ll turn the call over to Norm, our CFO, to review the financials for both the fourth quarter and the full year 2023. Norm, please go ahead.

Norman Rosenberg: Thank you, Lee and good afternoon, everyone. Total revenue for the fourth quarter of 2024 was $199.2 million, which was a 7% increase from a quarter ago and an 83% increase from the fourth quarter of 2022. For the full year, total revenue was $624.2 million at the high end of our upwardly revised guidance range, and more than 40% higher than full year 2022 revenues of $440.5 million. Mobile Health revenue for the fourth quarter of 2023 was $150.4 million, up 8% from the third quarter and more than double the levels of fourth quarter 2022. We experienced growth across several projects, business lines and geographies. Medical Transportation revenue increased to $48.8 million in Q4 of 2023, 32% higher than the transport revenues we recorded in the fourth quarter of 2022. Nearly every transportation market witnessed year-over-year revenue growth, continuing the momentum that began in the second half of last year. Transport revenues have now increased sequentially for six consecutive quarters, more than doubling during that time. In the fourth quarter, Mobile Health revenues accounted for about 75% of total revenues and transport for the other 25%. We expect that Mobile Health will continue to account for about 75% of total revenue in 2024. Net income was $8 million in Q4 2023, compared with net income of $4.6 million in the third quarter and net income of $7.1 million in the fourth quarter of 2022. As the fourth quarter of 2022 saw a tax benefit of $9.1 million relating to the release of a valuation allowance for net operating losses. For the full year, net income was $10 million compared to $30.7 million in 2022. The year-over-year drop in net income is explained by two line items, non-cash stock compensation expense and income tax expense. We have expanded our stock compensation program to include a broader group of managers, so that more of our colleagues who drive strategy and execution are incentivized to maximize shareholder value. On the tax front, in 2022, we realized a tax benefit of approximately $9 million as we released the valuation allowance on our net operating loss carryforwards or NOLs, as we began generating pre-tax income and those NOLs became realizable. In 2023, we recorded income tax expense as we exhausted those federal net operating loss carryforwards due to the generation of pre-tax income. Our effective tax rate for the fourth quarter was approximately 35%, which we believe is a good assumption for future periods. Adjusted EBITDA for the fourth quarter of 2023 was $22.6 million, up 35% from adjusted EBITDA of $16.7 million in the third quarter and more than tripled to $6.8 million in last year’s fourth quarter. For the full year, adjusted EBITDA was $54 million, a 31% increase from $41.3 million in 2022 and more than doubled the adjusted EBITDA recorded back in 2021. The adjusted EBITDA margin was 11.4% in Q4, up from 8.9% in the third quarter and up from 6.3% in the fourth quarter of 2022. In fact, the fourth quarter’s adjusted EBITDA margin represents the highest level we’ve recorded since the first quarter of 2022, when nearly a third of total company revenues came from relatively high margin mass COVID testing services. Total gross margin percentage during the fourth quarter of 2023 was 33.5%, up nicely from the 29.5% in the third quarter, but lower than the 39% gross margin recorded in the fourth quarter of 2022. The fourth quarter of 2023 was the highest margin quarter during the year, slightly higher than what we saw in the second quarter. Gross margin in the fourth quarter represented a solid rebound from the subpar levels of the third quarter, which had been negatively impacted by the increased cost that resulted from the recent launch and ramp up of new projects. During the fourth quarter, while we were able to maintain third quarter revenue levels and, in fact, increase them further, we were able to improve margins by bringing overtime costs and subcontracted labor expenses closer in line with their projected levels. As these projects hit their stride, through the first two months of 2024, we have seen further improvements in these areas and believe that we should see some sequential gross margin improvements in Q1 of 2024. During the fourth quarter of 2023, gross margins from the Mobile Health segment was 32.2% compared to 28.8% in the third quarter and 43.9% in the fourth quarter of ‘22, which had benefited from some one-time high-margin revenue streams. In the Transportation segment, gross margin continued to expand, increasing to 37.4% in Q4 of 2023, up from 31.7% in the third quarter and 29.4% in Q4 of 2022. Transportation gross margin has now expanded for six consecutive quarters, alongside the sequential revenue increases I mentioned earlier, as we’ve benefited from scale, improved utilization and easing of wage and fuel price pressures, and a higher value mix of trips, along with a continued shift toward higher-margin leased hour programs. Looking at operating costs. SG&A as a percentage of total revenues amounted to 27.6% in the fourth quarter of 2023, up from 24.8% in the third quarter, but much lower than the 38.1% in the fourth quarter of 2022. As revenues increased over the second half of 2023, we saw SG&A decline as a percentage of total revenues, leading to operating margin expansion. We are also regularly reviewing our expense base for efficiency gains, particularly our non-field headcount. During Q1 of 2024, we executed a targeted reduction in force, which resulted in some cost savings that will be realized as we move into Q2 and beyond. Turning to the balance sheet. As of December 31st, 2023, our total cash and cash equivalents, including restricted cash, was $72.2 million as compared to $67.3 million as of the end of Q3. Our accounts receivable continued to increase, reflecting the spike in revenues that we witnessed over the second half of 2023. This increase in accounts receivable is being driven by our government business, which features a very long initial payment cycle, as we’ve discussed. However, as Lee mentioned earlier, in the fourth quarter, we began to receive payments for this work, with an acceleration of these payments taking place since the beginning of the New Year. A significant proportion of the year end accounts receivable have now been collected in the recent weeks. Looking at our project with New York City’s Department of Housing Preservation and Development or HPD, as of today, we have collected nearly 80% of the year end 2023 accounts receivable for this project, and we are very close to being current on this project. As we further work down this receivable, we expect that near term collections will be enough to drive our total cash balance higher in subsequent periods, despite our ongoing working capital needs as we grow. The recent collections have allowed us to pay down the outstanding amounts on our credit line and the present outstanding balance is zero. Turning to our guidance and outlook for 2024, we anticipate continued strong demand from our customers for both Mobile Health and Transportation Services. We are forecasting that revenues for 2024 will be in the range of $720 million to $750 million. We anticipate quarterly revenues resembling the levels we saw in Q3 of 2023 throughout the year. As any anticipated declines in migrant related revenues in the second half of the year are expected to be offset by new programs and growth in other areas. We expect gross margins to come in above the levels of the full year 2023, much more in line with what we experienced in Q4. We expect to see adjusted EBITDA in the range of $80 million to $85 million, with adjusted EBITDA margins expected to be solidly in the double-digit area. We expect that full year 2024 adjusted EBITDA margins will be 250 to 300 basis points higher than the adjusted EBITDA margins we experienced over the course of the full year 2023. Finally, we expect to generate cash flow from operations of $65 million to $75 million in 2024. At this point, I’d like to turn the call back over to the operator for Q&A. Operator, please go ahead.

Operator: Thank you. Ladies and gentlemen, we will now be conducting the question-and-answer session. [Operator Instructions] Our first question comes from Ryan MacDonald of Needham & Company. Please go ahead.

Ryan MacDonald: Hi, thanks for taking my questions and congrats on a really strong quarter and strong guide for ‘24 here. Lee, great to hear all the success and the update across sort of the three sort of end market priorities. But as you’re thinking about and looking at the pipeline for 2024, where are you seeing maybe the most optimism across payers’ health systems and sort of the government channel? And how do you expect that optimism to translate in terms of mix of revenues across those three segments for ‘24?

Lee Bienstock: Hey, Ryan, thanks so much for the question. Great to speak with you. So I’m optimistic about all three. We have really strong pipeline with our hospital systems, both in Medical Transportation and with other Mobile Health opportunities, and I think those will continue to drive growth for us with hospital systems. I’m also always optimistic about our work in the municipal space. I mentioned lots of the new geographies we really focused on in 2023. We’re going to continue to submit 100 RFPs this year, and I think our win rate is going to stay consistent throughout this year as we seek opportunities. And I think those first two, the hospital systems and our municipal work, will continue to drive a lot of the growth this year. And then I’m also very optimistic and very excited about our work with our insurance partners. I think that will continue to be the smaller piece of the business, but perhaps be the fastest growing. And I think it’ll bear fruit in the later months and into sort of 2025 and beyond. But we’re really laying a really great foundation with our insurance partners, where we’re able to drive results for our patients with them, to help close care gaps, to really bring care to patients that haven’t seen a doctor in over a year. And we’re really seeing great early success with that. And so I think you’ll see us expand, and I think you’ll also see us evolve those relationships. We signed our first partnership, and we have others, where we are going to be able to share in the risk alongside our insurance partner. So as we drive down total cost and as we participate in helping improve health outcomes, then we’re rewarded for that, which we’re also very excited, because we think we have a really strong opportunity to do that. So we’re really optimistic about all three to answer your question directly I think the first two will be continue to be the primary drivers of growth in 2024, but we’re really laying a really great foundation and you’ll see the growth play out in 2024 and beyond with our insurance partners.

Ryan MacDonald: Really helpful color there, Lee, thanks a lot. Maybe for my follow-up for Norm. I’m really impressed by the sort of the magnitude of margin expansion that’s being built into the initial guide for fiscal ‘24. And it sounds like there’s some nice sustainable gross margin expansion, but maybe just to double click on, as you think about that, I think implied 250 basis points at the midpoint of expansion on adjusted EBITDA margin in ‘24. How are you thinking about the balance of mix of sort of gross margin expansion versus sort of continued OpEx efficiency?

Norman Rosenberg: So, Ryan. I mean there’s a mathematical aspect to it as well, because our exit rate EBITDA margin was about 11.5%, and that compares to the full year, which was about 8.5% to 9%. So what we’re really saying is that, we expect that operating leverage that we gain in the back part of the year will be sustained. We think that the gains in gross margin that we saw in Q4 compared to Q3 will be sustained. So if we simply were to – if we were to experience the same type of EBITDA margins that we did in Q4 across the year, that’s your 250, 300 basis point improvement. So here and there, there are some areas where we think there’s some incremental improvement as we go. We just don’t want to get too far ahead of ourselves in terms of our assumption on the gross margin.

Ryan MacDonald: Appreciate the comment –

Norman Rosenberg: We exited the year at a good rate. I mean that was a big part of that.

Operator: Thank you. Thank you. Our next question comes from David Larsen of BTIG. Please go ahead.

David Larsen: Hi. Congrats on the quarter. Can you maybe talk about these value-based care hires that you mentioned in the press report? It seems to me like the managed care plans, DocGo is very sort of well suited to serve them, in my view. It’s great to have data systems like a lot of health tech companies have, but it’s another thing to actually do something with them. And it seems like you’re on the right path, from what I could tell, a little more clarity there would be great. Thanks very much.

Lee Bienstock: Sure. Hi, David. I really appreciate the question. So we continue to add to our talent. We really made some incredible hires at the back half of 2023. You alluded to Yong, who joined as our VP of our Payer Program. So really leading that business segment with our Chief Product Officer and others in the space, and our CEO of our Clinical Practice Group, Dr. Powell. Really building a wonderful team there with rich experience, deep experience. And Yong joins us directly from CVS. So CVS Health (NYSE: CVS ) so really great experience and he’s going to help really build that business with us. We also added to our government program business with the great hire, Jen, who joins us formerly as a Chief Operating Officer of City Harvest. And so we continue to add to our team. We have a wonderful, wonderful team, hardworking team, really smart team, people with different points of experience, and really helping us build out the programs. And as you mentioned, our value-based arrangements is something we’re particularly very excited about, because we really feel like our tech platform that helps us optimize the right clinician in the right vehicle, with the right tools, with the right tech in the home of a patient. And making the care way more accessible, we think will really drive improved health outcomes and we’re seeing that play out. And obviously, as patients health improves, then the cost for the overall system and the cost for our insurance partners goes down. And so it’s this wonderful experience for the patient where we bring care to them. We also help them become much healthier, and then everybody wins in that scenario. And so we’re very, very excited about it. It really allows us to leverage our mobile capabilities that we’ve built out now over eight years. It allows us to leverage our tech platform that’s helped us optimize the routing of the almost thousand vehicles we have operating every single day throughout the US and the UK, and then allows us to bring care in innovative ways with our wonderful clinicians and our Clinical’s Practice Group to really bring better health outcomes to communities. And we’re seeing that play out in multiple states now. So we’re excited to continue to invest there, we’re excited to continue to focus, and we think as we enter into more and more value-based arrangements, we think that there’s a lot of opportunity for us there.

David Larsen: Great. Thanks very much. And then for the City of New York deal, the migrant services piece, if that’s trending at $300 million annually at its peak, what are your expectations for, say, the back half of ‘24 and into 2025? Will that turn into like $150 million? And in my view, it’s like that would be fine. It’s kind of been a little bit of a resource drag, if you will. Just any more thoughts there would be very helpful. Thank you.

Lee Bienstock: Of course. So we’ve modeled in a moderating amount of revenue from the asylum seeker work as the year progresses. So as the quarters go through 2024, the asylum seeker revenue will moderate and decline as the year progresses. And then, of course, that’s going to be replaced by other programs and other investments we’re making and other customers that we’re growing with. And so that’s how we modeled the year. That’s how we arrived at our guidance. It was – we were very thoughtful about the guidance that we’re giving. We have line of sight, as you know that’s how we set our guidance. And so that’s – that is how we factored everything in. We think as Norm mentioned, quarterly revenues are going to be pretty consistent with what we saw in Q3 of ‘23, and that will stay relatively consistent throughout this year. And then, as I mentioned, with migrant related revenues sort of trailing off and other projects take its place. For 2025, thanks for the [ER] [ph] for that. We’ll give more information on 2025 as we get closer to 2025.

David Larsen: Great, thanks. Congrats on a good quarter.

Lee Bienstock: Thanks.

Operator: Our next question comes from Michael Latimore of Northland Capital Markets. Please go ahead.

Michael Latimore: Thanks. Yeah, congrats on the quarter. I like the stat and number of ER visits prevented. That was great. So just on the guidance a little bit, should we assume EBITDA margin is similar each quarter or does it grow throughout the year? And then in terms of the new business that will fill in for the declining migraine care, is that business you’ve already won or is there some of that you have to kind of go out and win?

Norman Rosenberg: Well, Mike it’s Norm. I’ll take that first one. I think that what you saw in terms of the EBITDA margin, which we broke out for Q4, is a pretty good proxy to use as we go through the quarters. Realistically, you’re going to have some quarters a little bit higher, a little bit lower, and there’s going to be a mix of where the gross margin goes versus the SG&A percentage, but essentially it should be pretty consistent throughout the year.

Lee Bienstock: And then. Hi, Mike, regarding the question on the pipeline and the revenues, all of the revenues that we are looking at right now for this year are all with our current customers or projects that we’ve already won. And, of course, we submit new RFPs every week. We work on growing our sales pipeline every day. And so as new things come in, that’ll be additional opportunities for us.

Michael Latimore: Great. And then where do you see the employee count going this year? What do you expect it to be by year end?

Lee Bienstock: Yeah, so we have a wonderful team. It grew significantly over the course of 2023, I think our employee count will stay relatively flat for this year. I think we’ve built out our team. Our employee count is consistent with our revenues from Q3 and Q4, and so we really built out the team. So we feel like our current team size right now is optimized and it will be consistent throughout this year.

Michael Latimore: All right, great. Thanks a lot.

Operator: Our next question comes from Sarah James of Cantor Fitzgerald. You may go ahead. Hello, Sarah, your line is open. You can ask your question.

Sarah James: Sorry about that. I wanted to get a little bit more color on the ‘24 revenue guide. What changed since January to drive the increase? And can you unpack the mechanics of what you’re thinking about New York, HPD and the trail down? So just mechanically, how does that work after May? Do you guys keep operating or is there an assumption that there’s multi-vendor at that point?

Lee Bienstock: Yeah. So in terms of what’s changed since the January revenue. So we – and Hi, Sarah, great to hear from you, I should say. I should start off with thanks so much for the question. On the revenue guide, when we initially provided that sort of initial revenue guide in January, we said that revenues would be greater than $700 million. We really wanted to share a number that we had good clarity on and that we felt very confident in, and we felt at the time that that was very much needed. All the while, we have built a model where we have line of sight to all of our customers, all of our projects, all of the revenue that’s expected on a monthly basis. We run a very, very exhaustive process with all of our market leaders, with all of our project leaders to forecast for this year, and then we meet with every single one of them. And those meetings were going on at that exact time. And so as we refined that forecast, as we worked with those market leaders who really have good line of sight into the revenue we’re expecting for this year. That’s how we’ve updated guidance now during the call to share, and so revised it upwards. We shared that it was going to be greater than $700 million. Now we’re sharing that the range is going to be $720 million to $750 million. And that’s the process we’ve always followed, and we’ve always given specific guidance exactly on this first call of the year. So we wanted to follow that cadence.

Sarah James: Great and –

Lee Bienstock: Go ahead, Sarah, go ahead, please.

Sarah James: No, no, I was just going to restate the question that seems like you got it.

Lee Bienstock: Yeah. So in terms of the HPD, you’re referring to the migrant related revenues. We baked in that that will – the migrant related revenues will moderate as the year progresses. We have various different models relating to the migrant revenues, and we’re continuing to help the city through the humanitarian crisis. And so we did forecast in that migrant related revenues would decline in the back half of the year, and we’ll continue to update on how that progresses throughout the year.

Sarah James: Got it. And last question is just going to be on the EBITDA margin guidance. So if I look at the range it sort of implies at the high end, you guys would keep where you are at 4Q. But it almost feels a little conservative given that you have a bunch of contracts maturing. So can you talk about some of the moving pieces that you think about in the margin progression from ‘23 to ‘24?

Lee Bienstock: Yeah, so I think on the EBITDA guide, you mentioned something very important, which is, we do have projects that as they mature, we’re able to optimize and expand the margins. But we’re also balancing that with some of the new initiatives we’re growing and the new investments we’re making, particularly in the insurance payer business, launching new markets, launching new geographies, adding capabilities, and making sure that we deliver a fantastic, fantastic patients and customer service experience for the insurance partners that we’re working with. And we’re really investing deeply there, new vehicles, we’re building out new product features, we’re bringing on wonderful clinicians, we’re investing deeply in training for them. We’re investing in new and new technologies and devices and integrating all of them together. And so, as you mentioned, we continue to scale the programs we have, but we are going to be – continue to be in growth mode, and we’re going to continue to be investing in all the areas of our business, particularly in that insurance payer business. And that’s where you see sort of a blending of those EBITDA margins.

Sarah James: Great. Thank you.

Operator: Our next question comes from Richard Close of Canaccord. Please go ahead.

Richard Close: Great, thanks. Congratulations on a strong year. Maybe, Lee, on the national payer partnership, the value-based care agreement that you announced here this morning that’s new. Any more details you can provide? Is this just a pilot? Or is this like a set number of lives, a certain state, any kind of economics that you can share with respect to the risk component?

Lee Bienstock: Yeah. So we’re going to be sharing more and more as the year progresses with these contracts. We really want to make sure that we get them off the ground. We were already operating a number of them, and really there – they start with essentially identifying our work with our health plan partners, of which we have many, we’ve announced Elevance and Healthfirst and Emblem and L.A. Care, and we have others that we’ll be announcing. So we’re already working with many of them. We’re working in different geographies, as I mentioned. And it really starts with identifying the health plan, identifying patients that are hard to reach, identifying patients that haven’t seen their doctor and – that have chronic conditions. In some cases, have more than one chronic condition. And in some cases, we go and visit a patient and we know they have one chronic condition, and the health plan knows they have one chronic condition. But by going and seeing them, because, again, they haven’t seen their doctor in over a year, we’re able to identify that they have more than one chronic condition, which obviously helps stratify risk and helps manage patient population a lot more accurately. And so, it really starts with that. We go into the home, we engage the patient, and we close a care gap. That’s really where it starts. And then, it evolves to where we can become the primary care provider for that patient. And then as we’re becoming the primary care provider and as we’re able to perhaps enroll them in RPM and Virtual Care Management, now we’re getting readings from them, we’re getting their blood pressure perhaps every day or every other day. We’re getting their weight perhaps every day or every other day. We’re able to monitor their health, and then we’re able to intervene when needed. And so, now you can see how we can really have a material impact on that patient’s health. And then we want to make sure that we’re entering into those value-based arrangements and the risk sharing in a really intelligent way. And so that’s the way we really approach the market, and it’s the way we’re really approaching our work with our payer partners to make sure that first and foremost, we’re helping close care gaps. First and foremost, we’re bringing care to patients that haven’t been receiving it. First and foremost, we’re able to identify the risk level of the patient, the RAPS score, and then we’re able to perhaps become the primary care provider and then really grows from there.

Richard Close: Well, I guess as a follow-up, what’s the revenue model like for these arrangements? And is the risk component, is that like at the end of the year, you see how you performed? And is there a lump sum bonus? Just trying to get a better feel of what exactly the revenue model is for this business. Obviously, it’s small now, and if you want to tell us how big the insurance business is, that would be helpful, but just trying to get a grasp of that as this business grows over time.

Lee Bienstock: Yeah. And so it’s great question. So our arrangements essentially start as a care gap arrangement. Once we reach a critical mass of patients, then we have the ability to share an upside risk only. And obviously the risk quotient is the value sharing is mitigated in that situation where we only have upside benefit and then we have the opportunity to progress into upside – full risk, upside and downside risk. And so there’s sort of a gradation there. In terms of the economics, we get a care gap closure rate when we go into the home or do a care gap virtually. In some cases, we close care gaps, we’re able to do so virtually when we need to go into the home, we get a care gap rate. And then as we become the primary care provider, as we start to share risk, we take a percentage of the medical loss ratio, essentially, and those are negotiated with the payer partners, and that’s the way that business is structured.

Richard Close: Okay. And one final question for Norm, with respect to the lease rate model on transportation, can you give us any update of where lease rate stands in terms of the percentage of maybe the transportation revenue in the fourth quarter?

Norman Rosenberg: So it’s still probably about half of what we do, maybe even lower in some markets. And I think that’s an important – it’s a good question and important thing to address because we’ve been talking for quite some time, going back probably a year and a half, about how we’re sort of phasing out the fee-for-service. But a funny thing happened sort of on the way to phasing it out, which is that we find in our APCs, which we measure and we report upon, which is our average price per trip, and some of the other metrics like utilization around the fee-for-service business have improved. The improvement that you’ve seen. The six sequential quarters of margin improvement on the Transport side have not occurred as much because of the fact that we’ve done more leased hour than fee-for-service. It’s happened because the fee-for-service has become a much more profitable business after a lot of focus, after a lot of things are moving in the right direction. So I would say, again, as we try to negotiate new contracts, we’re certainly moving towards a leased hour model. But from my perspective, the fee-for-service part of the business is always going to be somewhat significant and it’s going to be a profitable driver of the business. Having said that, when you look at the margins that we saw. It’s important to point this out. If you look at the margins that we saw for Transport in the fourth quarter above 37%, I would say that represented us doing particularly well. And a couple of things happened that maybe had us see some outlier margins. I wouldn’t say that’s necessarily the run rate of the margin going forward. I think that number is closer to 34%, 35%, but that’s still much, much higher than it had been a year earlier when it was in the upper 20s. So that’s one of those things that’s going to sort of moderate itself as we go into 2024. But the story, both on the revenue side and the margin side for the Transport business is exceedingly healthy.

Richard Close: Okay, thank you very much.

Operator: Our next question comes from David Grossman of Stifel. Please go ahead.

David Grossman: Thank you. I just wanted to follow-up on a couple of questions that have been asked already. And the first was, as you think about the Mobile Health business, just back-of-the-envelope, it would appear at least, that if you back out the HPD contract that you’re assuming probably north of 30% growth for the residual. So first, does that math sound right? And then, secondly, when you look at that assumption of 30% growth, do you have decent visibility on that today? Maybe you could just give us some sense of where the visibility is on that kind of non-HPD Mobile growth outlook for ‘24.

Norman Rosenberg: Yes, so hey David, it’s Norm. I’ll jump in on that. I think the first thing is that, part of our guidance, I’m not sure we’re exactly at the same point in terms of our expectation for how the HPD revenues evolve. We do definitely as Lee pointed out, we definitely expect it to back up a little bit. But as the year goes on, as we get closer to the end of the contract, we feel that the drop off will not be as abrupt as maybe we might have thought in the past. So, having said that, I don’t know if that backs into a 30% growth on the Mobile Health side, but it’s obviously a pretty robust growth number. It’ll be higher than the growth rate of the overall revenues that we’re putting out here. So it’s going to become a higher proportion of the total. We have pretty good visibility into it. I mean, there’s not a big go-get number that’s in there. It’s – anything we talk about in our number for 2024 is organic. So if we do any acquisitions, which is always a possibility, but that’s not part of how we get there, I think we have a reasonable amount of visibility into that. I’m looking at it from a pure numbers perspective. I know, Lee, if you want to offer anything from what’s going on on the ground.

Lee Bienstock: Yeah, I think, David, you’re in the ballpark in terms of the growth rate for the rest of the business. Different pieces are growing at different rates. But as Norm mentioned, we have models that have the migrant revenue declining in the back half of the year. And then other projects are coming in and increasing in growth as the year progresses. So the growth rate will continue to, I think, at the Q3 level we saw last year consistent with that. And then as migrant abates, other stuff are going to come in and that will obviously boost the growth rates of those other things that are coming in.

David Grossman: Right. And then maybe one way to think about it, Lee, is, maybe if you can give us a little more color on the nature of the deals, maybe that are in the Mobile pipeline but not in the guide in terms of the nature of the contracts, the timing, and if you can share magnitude just to give us a sense of what you’re seeing in the pipeline with some of these newer pieces of business?

Lee Bienstock: Yeah, so we have – we continue to have very similar deals and projects in the pipeline that we’ve always had. A lot of the Medical Transportation deals in the pipeline are very similar in nature. They’re identical to our leased hour arrangements that we have today. Then we’re just continuing to do more of those deals. We’re continuing to do more of those partnerships, with more hospital systems or expanding to additional hospitals that our current hospital systems have, additional locations. So those will continue. They look the same as they have for us. We’ve seen success with it. It’s working. And the contracts do really well with our partners. They align incentives really, really well. And on the municipal side, it’s going to continue to be – well we’re going to be more and more thoughtful on the municipal side, I should share that. So our projects on the municipal side have historically been relating to access to vaccines, infectious disease management. We’re seeing more and more. We’re responding and having success in health coaching, bringing access to underserved populations, particularly Medicaid populations and other populations that don’t have access to care in municipalities, they have healthcare deserts. Municipalities have healthcare deserts that we’re helping to bring care to. We’ve always done really well there. The access that we bring has really helped those underserved communities, and we continue to see success with those projects, and they’ll continue. We’re getting more and more into behavioral healthcare. We’ve always done that. We’ve been doing that for years, but we’ve really expanded our capabilities there. We now have hundreds of social workers and case workers that are providing wonderful services from depression screenings to other crisis response. And so we’re going to continue to scale that. We see a lot of RFP opportunities available in the behavioral health space. That’s a very growing field, and so I think you’ll see more growth in that area as well.

David Grossman: Okay, great. Thank you. And just one other question, if I may. Norm, looking at your cash flow guidance, and it looks like the cash flow from operations guidance is like $10 million to $15 million lower than adjusted EBITDA may just be a definition, but I was just trying to understand that dynamic, given what appears to be a fairly material working capital tailwind that you should get from the HPD contract this year.

Norman Rosenberg: Right. So let’s walk you through that. Obviously, the big gap there is taxes. We’re a taxpayer now. We’ve exhausted our federal NOLs. We have plenty of state NOLs, as we point out in the K that we filed today. But we have to take into account that we’re going to be a taxpayer going forward. So that’s the big part of the difference. Obviously, you would add back the – any non-cash stock comp or depreciation to your calculation. In terms of that estimate, though, that estimate assumes a somewhat neutral working capital environment. And to your point, David, maybe there’s a little bit of room there, because if we do see a, and we have seen it in Q1 to-date, if we do see a reversal of some of the working capital movements that we had at the end of last year, the second half of last year, then, in fact, it would be a tailwind. But that assumption of, and again, I want to make sure that everybody’s got different definitions and different types of cash flow. I refer to the cash flow from operations, i.e., the number that you will see in our cash flow statements as we go throughout the year, our assumption is a neutral to slightly positive working capital movement as we go through the year. That’s what’s built –

Operator: Our next question – apologies, sir.

Norman Rosenberg: No, go ahead.

Operator: Thank you. Our next question comes from Pito Chickering of Deutsche Bank (ETR: DBKGn ). Please go ahead.

Pito Chickering: Yeah, good afternoon or good evening. Thanks for taking my questions. To ask the last questions sort of a little bit differently. Like I said, if you stepped down for HPD, you would probably be less than feared. So from a pipeline perspective, do you think you can grow EBITDA in 2025 without HPD? And as you think about HPD, should we think about it as like a $250 million annualized contract and a 30% gross margin as a ballpark?

Norman Rosenberg: Yeah, I mean I would say – it’s Norm. I would say, maybe a little bit lower than that in terms of run rate, but that’s in the general ballpark. The margin is somewhat consistent with our overall margin on Mobile Health. Maybe a couple of points lower than some of our other projects, but not materially different one way or the other. But as far as 2025 is concerned, I can tell you that in terms of our internal planning, we are planning as though that contract or that program doesn’t exist. So whatever goals we put out there in terms of where we want to be in 2025 or an exit rate for 2025, those remain the internal goals. And the mandate that we’ve given to the folks in the organization here that are going to make that happen is that they have to come up with a model and plan that gets us there without assuming a big chunk of that from HPD.

Pito Chickering: Okay, so here just to ask it differently. If let’s say, this ballpark, I say $60 million of EBITDA. If we model ‘25 without that contract, I guess, should we still be using the guidance from today and think about growth on that? Or should we think about a step back before it normalizes in ‘25?

Norman Rosenberg: I think as we have it modeled out, we think it’s going to moderate at a pretty – nothing is ever linear, but we think it’s going to moderate at a pretty linear path. And the stuff that we have visibility into would help us sort of fill in those gaps as we get to the end of 2024, I don’t really see a big cliff, right. I think that’s the biggest thing here that as we went into the year, as we’re going into the second half of last year, there was always that potential. I don’t think we really see a cliff. I don’t think it’s going to happen that way. So I think it’ll be a little bit more gradual. But there does come a point where we have to make the assumption that it’s going to have to be entirely replaced.

Lee Bienstock: And just to add, Pito, I think we’re talking a lot about how we have in our models the migrant related revenues abating in the back half of the year, and we do, we have it there. But as Norm mentioned, we don’t foresee necessarily a cliff. We’re doing our best to help know our partners, New York City, which again, we’ve been working with for a number of years we’ve been running lots of different population health programs with them, including today, we operate programs for unsheltered homeless populations. And with regards to the migrant service, we don’t have it, where it just hits a cliff. Again, we are modeling that it’s abating, because we like to take a conservative approach to that. But I can tell you we’re really proud of the work that we’re doing at an enormous scale that we are able to provide it at. And we’re doing everything we possibly can to help the city manage the crisis and ultimately help asylum seekers as they arrive, enter the system, and then ultimately exit the system. And we have programs designed to do that. And so we’re going to continue to help there. We did take a conservative approach towards the back half of the year, as we’ve been talking about, but there’s no indication right now at all that there’s some cliff or there’s a reason to think that everything is abating towards the back half of the year. Again, that’s the approach we’ve taken, and that’s what you hear us communicating to you on the call, but again, we feel like we’ve modeled that out towards the back half of the year. But again, no indication that necessarily there’s a cliff coming here, which I want to make sure that we’re communicating.

Pito Chickering: Perfect. Yeah on your [inaudible] has always been your ability to pivot and adapt your business model, which has been extraordinary. I guess the investor questions I keep getting is around sort of ‘25, worst case scenario, HPD is not there. So I guess let me sort of ask this one more time differently, and then I apologize. But, if I think about your ‘24 guidance, if there’s no HPD, we’re still thinking about EBITDA growth off of that base in 2025?

Lee Bienstock: Yeah, that’s absolutely what we’re modeling right now. And again, we’ll share a lot more about 2025 as we progress through this year. But I can tell you we are focused on executing operationally. We’re always looking for ways to optimize the business. From day one, we’ve operated these projects as profitable projects. We’ve operated the business so that we can expand the business and invest in different areas. And so I can tell you, we’re going to continue to be looking for efficiencies and continuing to expand both revenues, top line and bottom line.

Operator: Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now hand over to the CEO, Lee Bienstock for closing comments.

Lee Bienstock: Thank you. Thank you, everyone for joining us. We experienced another year of strong growth across each of our key customer verticals in 2023. Before we close, I just want to take this opportunity to thank our 8,000-plus dedicated staff members who helped us achieve this success. You continue to embody DocGo’s total commitment to democratizing healthcare by delivering high-quality, highly accessible care to all. I’ll continue to spend even more time in the field with you so that I can see you in action and it’s inspiring to witness the empathy, professionalism and expert care you provide to each of our patients. I’m endlessly grateful for your extraordinary efforts, and I’m proud, I’m proud to be leading a company that’s helping transform how healthcare is being delivered for the good. Thank you, all for joining us and I look forward to our next report in early May. Be well.

Operator: Thank you. Ladies and gentlemen, that concludes today’s event. Thank you for attending. And you may now disconnect your lines.

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