DocGo Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report; the supplied filing text does not provide a standalone Q4 income statement. DocGo provides mobile healthcare and medical transportation services in the U.S. and U.K., through Mobile Health Services and Transportation Services.
Financial and operating performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $624.3 million | $440.5 million |
| Gross profit / margin | $195.4 million / 31.3% | $154.7 million / 35.1% |
| Operating income / margin | $15.1 million / 2.4% | $21.8 million / 4.9% |
| Net income | $10.0 million | $30.7 million |
| Net income attributable to DocGo stockholders | $6.9 million; diluted EPS $0.06 | $34.6 million; diluted EPS $0.34 |
| Operating cash flow | $(64.2) million | $28.9 million |
| Cash and cash equivalents at year-end | $59.3 million | $157.3 million |
| Working capital at year-end | $168.8 million | $170.9 million |
| Revolving credit facility outstanding at year-end | $25.0 million | None |
- Revenue grew 41.7%. Mobile Health Services contributed $442.8 million, up 35.9%; Transportation Services contributed $181.5 million, up 58.3%.
- Transportation trip volume increased 15.8%, from 216,009 to 250,114, while average trip price rose from $380 to $407.
- Cost of revenue increased faster than sales, rising to 68.7% of revenue from 64.9%. Management attributed margin pressure primarily to higher labor, subcontractor and medical-supply costs. Labor costs were approximately 73% of revenue, versus 69% in 2022.
- Operating expenses increased 35.7% to $180.3 million, but declined as a share of revenue to 28.9% from 30.2%. Mobile Health Services generated $80.4 million of operating income; Transportation Services generated $3.5 million; Corporate recorded a $68.8 million operating loss.
- Investing cash outflow was $29.9 million, including $20.2 million for business acquisitions. Financing cash flow was $1.1 million. Cash and restricted cash together decreased $91.9 million.
Material changes and notable items
- Accounts receivable increased to $262.1 million from $103.0 million. The $160.5 million increase was the primary driver of negative operating cash flow; management cited growth in municipal business and longer collection cycles.
- Two customers accounted for approximately 40% and 21% of FY2023 revenue and 42% and 40% of net receivables, respectively. Government contract work represented approximately 73% of revenue, compared with 64% in 2022.
- COVID-related revenue fell to less than 1% of total revenue in 2023, from approximately 17% in 2022; management says growth depends on replacing those revenues with other services.
- DocGo completed three acquisitions in 2023. The filing reports $34.2 million of aggregate purchase price in MD&A; acquisition accounting tables show $102.0 million of total consideration for listed acquisitions, including deferred and contingent consideration. These measures are not directly comparable and should be reconciled.
- Net income fell substantially from 2022, when results included a $7.9 million income-tax benefit; 2023 included a $6.2 million tax provision. The filing also reports $21.0 million of stock-based compensation in 2023, versus $8.1 million in 2022.
- CEO Anthony Capone resigned in September 2023; Lee Bienstock became CEO. Capone remained as a consultant through March 15, 2024 under a transition agreement.
- No shares were repurchased during 2023. A new authorization for up to $36 million of repurchases, expiring July 30, 2024, was approved after year-end; it does not require the company to repurchase shares.
Liquidity, outlook, risks and contingencies
- Management states that cash, expected operating cash flows and available credit are expected to support operating requirements for at least 12 months. It notes that timing gaps between customer collections and payroll/vendor payments can require cash balances to fund working capital.
- The $90 million revolving facility carried $25 million outstanding at December 31, 2023, with $65 million available then, subject to borrowing conditions. DocGo repaid the outstanding balance in February 2024; no amounts were outstanding as of the filing date. The facility matures in November 2027, is secured by substantially all personal and intangible assets, and has financial covenants.
- Management anticipates continued inflation moderation in 2024, but provides no numerical revenue or earnings guidance in the supplied filing text. It warns that higher-than-expected inflation may pressure gross margins and cash flows.
- Key exposures include reliance on government contracts and a small number of customers; termination, renewal, funding and collection risks; labor availability and cost; healthcare reimbursement and regulatory compliance; potential fee-splitting/corporate-practice-of-medicine issues; and cybersecurity, privacy, litigation, acquisition-integration and value-based reimbursement risks.
- A securities class-action complaint filed in October 2023 alleges securities-law violations; DocGo disputes the allegations and says it cannot reasonably estimate potential loss at this early stage. A previously accrued $1.0 million California wage-and-hour settlement was approved and paid in 2023.
- The auditor issued unqualified opinions on the financial statements and internal control over financial reporting. Management also concluded disclosure controls and internal controls were effective at December 31, 2023.
Important facts for investors to verify
- Collection progress on the $262.1 million receivables balance, particularly amounts due from the two largest customers and municipal contracts.
- Whether revenue growth can translate into improved gross margins and positive operating cash flow as labor and subcontractor costs evolve.
- Customer concentration, government contract renewal/funding status, and the impact of any contract changes or delays in payment.
- Acquisition consideration and remaining earnout/deferred-payment obligations, including the difference between the MD&A purchase-price figure and acquisition-note total consideration.
- Current cash, borrowing capacity and covenant headroom after the February 2024 credit-facility repayment, alongside the planned share repurchase program.
- Developments in the securities litigation and any changes to legal, regulatory or reimbursement exposures.