DocGo Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparative period is Q1 2023. DocGo provides mobile healthcare and medical transportation services in the U.S. and U.K., through Mobile Health Services and Transportation Services, with shared costs reported in Corporate.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / prior period |
|---|---|---|
| Revenue | $192.1 million | $113.0 million; up 70.0% |
| Gross profit and margin | $67.3 million; 35.0% | $31.8 million; 28.1% |
| Operating income (loss) and margin | $15.9 million; 8.3% | $(6.9) million; (6.1%) |
| Net income (loss) | $10.6 million | $(3.9) million |
| Net income (loss) attributable to DocGo stockholders | $11.2 million; diluted EPS $0.10 | $(3.5) million; diluted EPS $(0.03) |
| Cash from operations | $(10.6) million | $(23.1) million |
| Cash and cash equivalents, March 31 | $41.2 million | $59.3 million at December 31, 2023 |
| Working capital, March 31 | $175.0 million | $168.8 million at December 31, 2023 |
| Revolving credit facility, March 31 | $30.0 million drawn; $60.0 million unused | $25.0 million drawn at December 31, 2023 |
Gross margin is calculated from reported revenue and cost of revenues. The company reported total liabilities of $175.6 million and total stockholders’ equity of $315.1 million at quarter-end. Notes payable were $0.06 million. Operating and finance lease liabilities totaled approximately $22.1 million. The $17.6 million of restricted cash is not included in cash and cash equivalents.
Operating cash use reflected a $22.4 million increase in accounts receivable and a $20.8 million decline in accrued liabilities, partly offset by increased accounts payable and lower prepaid expenses. Investing activities used $1.7 million; financing activities used $0.9 million. The quarter included $4.9 million of share repurchases.
Changes and operating drivers
- Mobile Health Services revenue rose 97.3% to $143.9 million, primarily reflecting expanded government-related services, including services for recent migrants in New York City and upstate New York.
- Transportation Services revenue increased 20.2% to $48.1 million. Trip volume rose 20% to 69,977, while average trip price decreased to $400 from $415, mainly due to service mix.
- Cost of revenues fell to 65.0% of revenue from 71.9%, lifting gross margin. Operating expenses increased 32.8% in dollars but declined to 26.8% of revenue from 34.3%.
- Corporate operating loss narrowed to $17.4 million from $21.2 million. Mobile Health Services operating income was $32.2 million; Transportation Services operating income was $1.0 million.
- Interest and other items shifted from $0.9 million of net other income in Q1 2023 to $0.2 million of net other expense in Q1 2024. The income tax line shifted from a $2.1 million benefit to a $5.1 million provision.
Outlook, risks and unusual items
- Management expects cash, operating cash flows and available revolver capacity to be sufficient for operating requirements for at least the next 12 months. It notes that municipal customers’ longer payment cycles create working-capital pressure; the company expects collections to support near-term needs.
- Some migrant-related services were under a contract scheduled to end in Q2 2024. Part of the contract was extended through December 31, 2024, while other services are expected to wind down beginning in Q2. Management expects revenue from these projects to be somewhat lower in the second half of 2024 than in the first half; timing and pace remain uncertain.
- Management identifies labor, subcontracting, medical supplies, fuel, insurance, inflation, government funding and contract risks as factors that may affect results. Government contracts can be subject to audits, reimbursement adjustments, fines or loss of eligibility.
- Two customers represented approximately 39% and 32% of Q1 2024 revenue, respectively; together they represented 80% of net receivables. This concentration makes customer retention and collection timing material considerations.
- A federal securities class action is pending. The company disputes the allegations and intends to defend itself; because the case is at an early stage, it cannot reasonably estimate a potential loss, if any.
- The Board authorized a $36 million repurchase program through July 30, 2024. The company repurchased and cancelled 1,255,614 shares for $4.9 million in Q1; approximately $31.1 million remained available at March 31.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. The filing states there were no material changes to the risk factors in the 2023 Form 10-K.
Key facts for investors to verify
- Whether the large municipal and migrant-services receivables are collected on schedule, and how that affects operating cash flow and revolver usage.
- The timing and financial impact of the expected second-half 2024 wind-down of certain government-related services.
- Customer concentration, including the reported revenue and receivable shares, and whether these relationships or payment terms change.
- Compliance with the revolver’s financial covenants, borrowing costs, and liquidity needs as the $30 million balance and working-capital requirements evolve.
- Developments in the securities class action and any resulting change in the company’s ability to estimate exposure.
- Whether repurchases continue while cash balances have declined and operating cash flow remains negative.