Earnings call transcript: DocGo Q1 2025 results disappoint, stock plunges

DocGo Inc. reported its first-quarter 2025 earnings, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company reported an EPS of -$0.09, falling short of the expected $0.02, with revenue reaching $96 million compared to the forecasted $111.93 million. Following the announcement, DocGo’s stock fell sharply by 19.31% in after-hours trading, closing at $1.88. According to InvestingPro analysis, the stock appears undervalued at current levels, with strong fundamentals including a healthy balance sheet and robust cash flow coverage of interest payments. For detailed valuation metrics and 11 additional expert insights, explore InvestingPro’s comprehensive analysis.

Key Takeaways

• DocGo’s Q1 2025 revenue decreased by 50% year-over-year.
• The company revised its 2025 revenue guidance downward from $410-$450 million to $300-$330 million.
• DocGo’s stock price hit a new 52-week low in after-hours trading.

Company Performance

DocGo’s overall performance in Q1 2025 was marked by a substantial decline in revenue and profitability compared to the same period in 2024. The company’s total revenue halved from $192.1 million in Q1 2024 to $96 million in Q1 2025. This decline was accompanied by a net loss of $11.1 million, a stark contrast to the net income of $10.6 million reported in the previous year. The adjusted EBITDA also turned negative, with a loss of $3.9 million compared to a positive $24.1 million in Q1 2024. Despite these challenges, InvestingPro data shows the company maintains a strong current ratio of 2.5x and holds more cash than debt on its balance sheet, indicating solid financial stability.

Financial Highlights

• Revenue: $96 million, down from $192.1 million in Q1 2024.
• Earnings per share: -$0.09, missing the forecast of $0.02.
• Gross margin: 28.2%, down from 32.8% in Q1 2024.
• Positive cash flow from operations: $9.7 million.

Earnings vs. Forecast

DocGo’s Q1 2025 results fell short of expectations, with an EPS of -$0.09 versus the forecasted $0.02, resulting in a negative surprise of approximately 550%. Revenue also missed expectations by about $15.93 million, a significant deviation that underscores the challenges the company faces.

Market Reaction

Following the earnings release, DocGo’s stock experienced a sharp decline of 19.31% in after-hours trading, closing at $1.88. This drop placed the stock below its previous 52-week low of $2.02, signaling negative investor sentiment and concerns over the company’s future performance. InvestingPro analysis reveals the stock trades at attractive multiples with a P/E ratio of 11.8x and a price-to-book ratio of 0.74x. Get access to the complete Pro Research Report, part of InvestingPro’s coverage of 1,400+ US stocks, for comprehensive valuation analysis and expert insights.

Outlook & Guidance

DocGo has revised its full-year 2025 revenue guidance downward, now expecting between $300 million and $330 million, a significant reduction from the initial $410-$450 million range. Despite the challenges, the company anticipates exiting 2025 with over $110 million in cash and aims to be debt-free by year-end.

Executive Commentary

"We are building our company around our innovative solutions for payers, providers, and health systems," said Lee Beanstalk, CEO of DocGo. He emphasized the company’s unique value proposition of "healthcare at any address" and its potential to significantly increase patient transports by the end of 2026.

Risks and Challenges

• Revenue decline: A significant drop in revenue poses a challenge to achieving profitability.
• Market competition: Intense competition in the medical transportation market could impact growth.
• Operational adjustments: The removal of the government population health vertical from guidance indicates potential volatility in revenue streams.

Q&A

During the earnings call, analysts inquired about the removal of government vertical revenues from guidance and its impact on future performance. DocGo also addressed margin improvements in the payer/provider segment and the potential effects of tariffs on fleet management.

Full transcript - DocGo Inc (DCGO) Q1 2025:

Conference Call Operator: Good afternoon, ladies and gentlemen, and welcome to the DocGo First Quarter Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on a Thursday, 05/08/2025. I would now like to turn the conference over to Mike Cole, VP of Investor Relations.

Please go ahead.

Mike Cole, VP of Investor Relations, DocGo: 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 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 and assumptions include, but are not limited to, those discussed in our risk factors and elsewhere in DACA’s annual report on Form 10 ks, quarterly reports on Form 10 Q, our earnings release for this quarter and other reports and statements filed by DACA with the SEC to which your attention is directed. Actual outcomes and results or the timing of results or outcomes 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 included in our earnings release or the current report on Form eight ks that includes our earnings release, which is posted on our website, dossko.com, as well as filed with the SEC.

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 as to the extent required by law. At this time, it is now my pleasure to turn the call over to Mr. Lee Beanstalk, CEO of Dotco.

Lee, please go ahead.

Lee Beanstalk, CEO, DocGo: Thank you, Mike, and thank you all for joining us today. I wanted to start this call discussing the important decision we made to remove our government population health vertical from our 2025 guidance, and then outline the growth plans we have for our hospital system, medical transportation and payer provider verticals, both for this year and for next. First, regarding our government population health vertical, ongoing policy changes and budget cuts in Washington have created substantial uncertainty and indecisiveness with regard to new municipal project launches and the government RFP channel in general. In fact, we are seeing substantial delays with regard to municipal decision making and delays in launch timelines for contracts we’ve already signed. We have 35 open government RFP submissions in our pipeline, a number of which were submitted over six months ago that we are still waiting to hear back on.

Moreover, we have signed contracts in this vertical, which were ready to be launched, whose implementation has been put on hold as a direct result of this channel’s uncertainty. Accordingly, we can no longer rely on these to generate meaningful revenue this calendar year. As a result, we have decided to move non migrant government population health revenue and related projects from our 2025 guidance. Along with this decision, we revised our 2025 guidance from $410,000,000 to $450,000,000 in revenue with a 5% adjusted EBITDA margin to 300,000,000 to $330,000,000 with an expected adjusted EBITDA loss of 20,000,000 to $30,000,000 I want to be clear. This revision to guidance is specifically associated with our government population health vertical.

The rest of our business continues to perform as anticipated and we believe it is on a solid growth trajectory. This year, we continue to expect approximately $225,000,000 in revenue from our medical transportation services, dollars 50,000,000 from our payer and providers, and $50,000,000 from our remaining migrant services healthcare work, all unchanged from our previous expectations. Any new municipal work would be incremental to our revised 2025 guidance, which if realized, we plan to break out as upside revenue in future quarters. We are building our company around our innovative solutions for payers, providers, and health systems, and we are incredibly confident in our mobile health at any address and medical transportation offerings. I see these businesses as both the foundation and the future of Dotco, and I am excited to share our key metrics and projected growth rates for this year and the next.

Our medical transportation business continues to perform well and on a contribution basis is expected to have adjusted EBITDA of greater than $15,000,000 in 2025. We had record trip volume in the first quarter of twenty twenty five and expect this momentum to continue in the second half of this year, ending 2025 at approximately 575,000 total transports. Beyond that, we project continued top line growth driven by a major new customer win in the Northeast and continued expansion in the Texas and UK markets. And we believe we can approach 700,000 transports by the end of twenty twenty six. Health systems continue to search for partners that can provide high quality technology enabled medical transportation solutions that deliver timely, reliable service for their patients.

We have invested in building a technology platform that integrates with industry leading EHRs, including Epic, and provides unmatched transparency for our customers and their patients. We consistently receive positive feedback from our health system partners and believe that our technology is a key differentiator that enables us to secure new contracts. Our payer and provider vertical, we continue to see substantial growth and I am pleased to share that we have now exceeded 900,000 assigned lives since the inception of our Care Gap Closure Program, up from 700,000 just a quarter ago. In addition to the growth in our number of assigned lives, I wanted to share how our volume of visits has grown over time. In the fourth quarter of twenty twenty three, we completed approximately 2,500 care gap closure and transitional care management visits.

In the fourth quarter of twenty twenty four, our number of gap closure and TCM visits grew to over 4,400. In the fourth quarter of twenty twenty five, we are projecting to complete over 11,500 care gap closure and TCM visits. In other words, this business is on track to quadruple in size over a twenty four month period. We are working with our payer customers to continue expanding our capabilities with evergreen services like pediatric Caregap programs, which have seen a significant increase in volumes with over 2,500 visits completed so far this year. These services include well visits, vaccinations, and fluoride treatments for underserved children.

In addition, we recently signed our first substantial PCP agreement with a major payer in the Northeast, which is a very significant step forward in our long term strategic vision. To put this in perspective, in 2024, we completed 144 PCP visits. That number is expected to grow to 10,000 this year and over 40,000 in 2026. Additionally, in Q1, we added PTI Health, a mobile lab collection and phlebotomy company to our portfolio. They are on track to complete over 125,000 blood drawers in patient homes in 2025, and we expect them to exceed 200,000 in 2026.

All told, between our Care Gap program, PCP and mobile lab businesses, we expect to visit over 150,000 patients in their homes this year. We continue to believe that our ability to bring care to the home in an economic and efficient manner at scale puts us in a uniquely valuable strategic position. Not only can we work to positively impact patient outcomes and drive savings for our payer customers, but we can also gain a significant data advantage in the home regarding the variables that directly impact a patient’s health. We are literally capable of taking a patient from one end of the spectrum to the other, from unengaged with little data and chronic conditions going unaddressed to engaged with complete in home data while facilitating preventative care. The savings are substantial and we are positioning the company to capture a larger and larger portion of those savings over time.

In addition to the economic savings and improved outcomes, patients absolutely love our service. In Q1, DOCO’s mobile health net promoter score was 86, which is substantially higher than the healthcare industry average NPS of 58. Turning to EBITDA, the primary driver of the anticipated adjusted EBITDA loss for 2025 is our elevated SG and A level as a percentage of revenue during this period of transition. As we wind down our migrant related business while we invest to support our growing medical transportation and payer provider mobile health verticals, as well as our technology advantage. While we are making these investments, which we believe will deliver a significant return over our three year growth plan, we have also initiated cost cutting measures.

We reduced SG and A by approximately $3,100,000 on a sequential basis during the first quarter of twenty twenty five and plan to aggressively cut SG and A over the next several quarters as well. We believe that these measures will help us achieve positive adjusted EBITDA in 2026. Now regarding our balance sheet, which remains healthy. While we are projecting a consolidated adjusted EBITDA loss for the year, we continue to anticipate positive cash flow from operations and expect to exit the year with over $110,000,000 of cash after accounting for $9,000,000 of year to date stock repurchases, 4,000,000 for the acquisition of PTI, and repayment of $30,000,000 on our revolving line of credit, which will enable us to exit the year debt free. We continue to build a company that offers a unique value proposition for payers, providers, and health systems, and our growth in 2025 and beyond will be based on the results of our proven medical transportation and rapidly growing mobile health payer and provider businesses.

In the event we mobilize any significant non migrant municipal work this year, revenue from those projects will be reported separately in future quarters and will serve as upside to our 2025 guidance. In summary, in 2025, we expect our medical transportation business to generate $225,000,000 in revenue, our payer and provider business to generate 50,000,000 and $50,000,000 from our remaining migrant services healthcare work. We are engaged in cost containment measures on our SG and A base, and we have a strong balance sheet to fund and support our continued business expansion. I am confident in the demonstrated value of our company and our offerings, and I’m excited about our future plans. Now I’ll hand it over to Norm to cover the financials.

Norm, CFO, DocGo: Thank you, Lee, and good afternoon. Total revenue for the first quarter of twenty twenty five was $96,000,000 compared to $192,100,000 in the first quarter of twenty twenty four. The revenue decline was entirely due to the government vertical, primarily in migrant related projects. As we’ve pointed out over the past several quarters, our migrant related work peaked in the fourth quarter of twenty twenty three and the first quarter of twenty twenty four and began to wind down in May of twenty twenty four with the exit from the New York City based sites. By the end of twenty twenty four, we had exited all of the HPD sites, and the remaining migrant work with New York City Health and Hospitals is expected to be substantially completed by the midpoint of this year.

Mobile health revenue for the first quarter of twenty twenty five was $45,200,000 down from $143,900,000 in the first quarter of last year, driven by this anticipated wind down of migrant revenues. Medical transportation services revenue increased to $50,800,000 in Q1 of twenty twenty five, from $48,200,000 in transport revenues that we recorded in the first quarter of twenty twenty four. Revenues were driven higher by increases in several markets, including Delaware, Tennessee, Pennsylvania, New Jersey, Wisconsin, Upstate New York, and The UK. In the first quarter, mobile health revenues accounted for about 47% of total revenues, and medical transportation for 53%. We recorded a net loss of $11,100,000 in Q1 of twenty twenty five compared with net income of $10,600,000 in the first quarter of twenty twenty four, reflecting the drop in revenues that I just described.

Adjusted EBITDA for the first quarter of twenty twenty five was a loss of $3,900,000 compared to adjusted EBITDA of $24,100,000 in the first quarter of twenty twenty four. Total GAAP gross margin percentage during the first quarter of twenty twenty five was 28.2% versus 32.8% in the first quarter of twenty twenty four. The adjusted gross margin, which removes the impact of depreciation and amortization, was 32.1% in the first quarter of twenty twenty five compared to 35% in the first quarter of twenty twenty four. During the first quarter of twenty twenty five, adjusted gross margin for the Mobile Health segment was 30.8% versus 35.5% in the first quarter of twenty twenty four, with the biggest impact coming from the early stage payer and provider business. As that business grew, while migrant revenues declined, the payer and provider business had a larger impact on overall mobile health gross margins.

As this business continues to grow, however, we would expect to see improved utilization rates for our clinicians, which make up the bulk of the cost of goods sold. We expect this improved utilization to lead to higher gross margins for this business line and to eventually raise the overall mobile health segment in the future. In the medical transportation segment, adjusted gross margins were 33.3% in Q1 twenty twenty five compared to 33.7% in Q1 of twenty twenty four. While medical transportation margins improved by more than 300 basis points on a sequential basis when compared to the fourth quarter of twenty twenty four, they were still impacted in Q1 by some higher personnel related costs in one of our larger markets. As we move forward in 2025, we would expect medical transportation gross margins to continue to improve sequentially.

Looking at operating costs, SG and A as a percentage of total revenues was 46.7% in the first quarter of twenty twenty five compared to 26.8% in the first quarter of twenty twenty four. As migrant revenues have wound down over the past several quarters, we’ve seen SG and A increase sharply as a percentage of total revenues. However, on an absolute dollar basis, SG and A expenses were 13% lower year over year in the first quarter of twenty twenty five, and they were down 7% on a sequential basis from the Q4 twenty twenty four level. We are taking costs out of the business, and we will continue to focus on lowering our SG and A costs throughout 2025, but we do expect that SG and A expense will remain elevated as a percentage of revenues when you compare it to our previous levels for the next several quarters. Despite the net loss and the negative adjusted EBITDA, we generated $9,700,000 in positive cash flow from operations in Q1, as we continued to collect our older, larger invoices.

However, our cash balances were lower at the end of Q1 than at the end of twenty twenty four, as we spent on our stock buyback program and the acquisition of PTI Health. As of 03/31/2025, our total cash and cash equivalents, which include restricted cash, was $103,100,000 down a little from $107,300,000 at the end of twenty twenty four, but up about $44,000,000 from this same time last year. Our accounts receivable continued to decrease, reflecting our cash collections and the wind down of migrant revenues that we’ve witnessed since the middle of the second quarter of twenty twenty four. At quarter end, we had approximately $120,000,000 in accounts receivable from the various migrant programs, which represented about two thirds of the total company consolidated AR. This compares to $150,000,000 in migrant program related AR at the end of twenty twenty four, which represented approximately 71% of the company total at the time.

While the wind down of migrant related programs has obviously had an impact on revenues, our balance sheet is expected to benefit substantially in 2025 as we collect this AR, leading to an improvement in cash flow from operations, which should be enough to cover any operating losses. Despite the expectation for negative adjusted EBITDA in 2025, we still expect to be operating cash flow positive for the year, given these positive changes in our working capital. While we’re sometimes disappointed about the pace of the payments from New York City, these payments are being made regularly, and we expect the continued collection of these receivables to contribute to an improvement in our overall cash balances. We believe that this will provide us with the resources we need to invest in our growth and to bolster our balance sheet. One of the ways we deployed our cash during the first quarter was to execute our stock buyback program.

During the quarter, we repurchased nearly 2,000,000 shares via open market purchases for an aggregate amount of approximately $5,800,000 So far in Q2, in accordance with the terms of our 10b5-one trading plan, we have repurchased another 1,200,000 shares for an additional $3,200,000 Having spent close to $9,000,000 on our repurchases so far this year, we still have another $13,000,000 remaining under this program. We also used our cash balance during the quarter to add to our capabilities as we acquired PTI Health, a mobile lab collection and phlebotomy company. We are considering further acquisitions over the rest of 2025 as we seek to continue to use our resources to add to our reach and clinical service offerings. At this point, I’d like to turn the call back over to the operator for Q and A. Operator, please go ahead.

Conference Call Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Please ask your question.

Ryan, Analyst, Unknown: Hi, thanks for taking my questions and sorry to hear about the uncertainty within the government vertical, but maybe let’s start there. As you think about the remainder of the year on a quarterly basis, can you just give us a sense of sort of the how much government revenue each quarter you’re kind of expecting and how we should think about the balance of where that gets pulled out? And then how are you thinking about strategically on balancing out cutting SG and A to sort of optimize the P and L with making sure you have sort of the staff ready to sort of kick off these government engagements if and when they do kick off later this year or into ’26? Thanks.

Lee Beanstalk, CEO, DocGo: Absolutely. Thanks, Ryan. Appreciate the question. So, terms of the government population health vertical, we made the decision to remove those revenues from our 2025 guidance. And so, any meaningful population health revenues coming from the non migrant population health programs, we’re going to report on separately as upside in addition to the 2025 guidance that we just revised today.

So, material new deployments in the government population health vertical will be described and explained and reported separately moving forward this quarter and into next quarters for the remainder of the year. But we are seeing substantial delays in timelines. We were awarded various different contracts that were expected to launch, but haven’t launched just yet. We submitted multiple RFPs that we should have heard back from, but are waiting to hear back on. So, as those RFPs come to fruition, as those projects that we’ve already signed get launched, we’ll report on that in the coming quarters.

And that will be in addition to this revised 2025 guidance that we updated today. In terms of the SG and A base, hit the nail on the head. We’re balancing both restructuring and reinvesting in the different parts of our business. So, Norm mentioned, we are absolutely undertaking a look at all of our shared services departments, looking for savings in those departments, and we’re also reinvesting resources into the growing parts of the company on the payer and provider side and the medical transportation side. So, we do anticipate further growth throughout the remainder of this year and into next.

We want to make sure that we’re positioned and ready for that growth. We have a lot of great team members that are helping scale the business. And so, we’re going reinvest those team members into the growing parts of the business and the new areas of focus for the company, but then also yes, we are undertaking a rigorous look at restructuring some of the various shared services departments for savings that we can cut for SG and A there.

Norm, CFO, DocGo: And Ryan, it’s Norm. So you had asked about the impact of the removal of these government revenues from our guidance, so using a round number, let’s say about $100,000,000 or so. So as you recall, we talked about, in the past we talked about how we might have expected Q2 to be the low point of revenue for the company back when we were looking at having all that government revenue in here and Q2 obviously would be when the full wind down would occur the migrant program, but then a lot of the stuff that Lee’s alluding to that either we have a signed contract for but hasn’t launched or the stuff that we’re waiting to hear about would have kicked in in Q3 and Q4. So that I think that when we look at it now, I would say that Q2 revenue, obviously, as we always expected, will be lower than what you saw here in Q1. Q3 will probably be decline further because there won’t be any migrant revenue, any material migrant revenue in that period, and we’re not counting on any of this government revenue coming in, And then we probably get a little bit of a a blip up from q four to q three, although q four will remain below the levels of q two.

So that that’s sort of how the how the quarterly trajectory changes with with the changes we’ve made to to the guidance.

Ryan, Analyst, Unknown: I appreciate all that color there. Maybe on to better topics, the payer business continues to really continue to grow at a rapid clip, and it seems like you’re experiencing a lot of success there. Can you just talk about sort of the end market demand you’re seeing within the payer segment? And obviously, we’ve heard a lot of commentary out of UnitedHealth that there’s a number of lives transitioning that were unmanaged MA lives into new plans. Just wondering if that’s creating sort of an incremental level of demand for the Care Gap closure offering.

And then any early signs of success on some of the AB testing that you’ve been doing to sort of improve patient engagement within that Care Gap Closure Program? Absolutely.

Lee Beanstalk, CEO, DocGo: So, as you mentioned, Ryan, we’re seeing healthy demand in the Care Gap Closure PCP, basically healthcare at any address, healthcare in the home business for the exact reasons you mentioned. So, off, the plans we’re working with, they want to solve for either one or both or two key objectives. One is they absolutely want to reduce their medical loss ratio. They want to reduce their healthcare spending. So, our preventative proactive screenings that we do in the home, the proactive healthcare that we’re providing in the home is absolutely targeted at reducing ED readmissions, hospitalizations, and we’re seeing very, very good success in our cohorts of patients are being readmitted to the hospital at much lower rates.

So, that is absolutely something that the health plans are focused on. Obviously, they don’t want their members That’s where they’re most expensive. And as you mentioned, the medical expenses are obviously rising. MLR is a big, big, big focus for these plans.

And so, we’re helping them with that. The second piece also is we help plans with their quality metrics. So the more and more care gaps we’re able to close in the home, the better that their quality metrics and their HEDIS measures will increase. And you mentioned additional MA members coming to the market that will absolutely help them with enrollment, will help them with plan choice and people choosing those MA plans. So, the higher quality they are, obviously, the more attractive they are to MA members.

So, we’re helping in both those scenarios. We average for every visit we do in the home, we’re right now averaging about two care gaps closed. So, for every visit, we’re averaging more than one care gap and in some cases, we’ve even closed six care gaps in one visit. You can imagine how accretive that is for the health plans and obviously as some of these managed plans and as the managed market in general gets bigger, we predict over the coming years here, we’re going to have more and more of a role to play.

Ryan, Analyst, Unknown: Excellent, great to hear. Thanks for the color. I’ll hop back in the queue.

Lee Beanstalk, CEO, DocGo: Thanks, Ryan.

Conference Call Operator: Your next question comes from the line of Pito Chickering from Deutsche Bank. Please ask your question.

Kieran Ryan, Analyst, Deutsche Bank: Hi, there. This is Kieran Ryan on for Pito. Thanks for taking the questions. Just wanted to see if we get a little bit more color on just kind of what exactly happened since, you know, the February when you last reported through the end of this quarter because just kinda looking out even at 1Q results, it looks like a decent miss there. So just wanted to understand if there was anything that got canceled in March or just if you could just talk about kind of the quarter and how that plays into the decision with the guidance.

Thank you.

Lee Beanstalk, CEO, DocGo: Absolutely, Karen, absolutely. So, as we mentioned in our prepared remarks, the revision, it’s directly tied to the decision that we made regarding the government population health vertical and how we project and report those revenues going forward. Our medical transportation, our payer provider business, that’s right on track and our expectations are unchanged there. What changed specific to the government population health vertical is that the substantial indecisiveness and hesitation has been created all the way from the federal level down to municipalities. And these policy changes that have been coming out of Washington.

As I mentioned, we signed contracts that are stalled. We’re waiting on the RFP channel. And so until more clarity emerges, decided, as you mentioned between the last call to this call, we decided to remove those from the revenue guidance and they’ll serve as sort of upside and we’ll report on them separately. So that’s what’s changed. And when you take out approximately the $100,000,000 as Norm mentioned from revenue guidance, that’s just the nature of the business model swings, the positive EBITDA expectation of 5%, it moves to the 20 to $30,000,000 adjusted EBITDA loss when you take out that revenue.

And again, in the event that that vertical stabilizes and we do generate meaningful revenues from it, it’d be incremental upside and we’ll break that out accordingly. At the same time, as I mentioned, we see great progress in the payer and provider vertical. I think you hear that coming out here and as well as our medical transportation vertical. And we’re focused on servicing that demand. We’re making sure we provide a clear picture on the fundamental performance of those verticals.

We shared a lot more key metrics on those verticals today on this call. And we’re going to continue to share that in the calls going forward. Really, to summarize what changed from last call to this call is we made the very conscious decision and the strategic decision to essentially pull those municipal revenues from the guidance and have them report separately and as upside in the coming future quarters.

Norm, CFO, DocGo: And Kieran, in terms of what impact it was on first quarter versus the expectations, so yes, even compared to our internal numbers, you know, I think we were probably on the top line. We were rounding it off. We were right about 100,000,000 as an expectation. We came in at 96. Well, looking at the pieces, the transport actually came in a little bit higher than what we thought.

You know, most of our markets were, you know, a couple hundred grand higher than maybe what we thought and and on balance, a few hundred thousand higher. The migrant revenue in itself, which was about $36,000,000 for the quarter, was a little light compared to what we had mapped out based on the dates and certain dates have changed on us a little bit. You lost a couple days here and there. You also had the wind down happening on a slightly different trajectory. When you’re dealing with that larger a number, obviously, even a little bit of a change in terms of number of shifts, number of personnel, is something that is going to move, but that’s the part of the business that’s going away anyway.

And then within mobile health, the part of our business that provides staffing to general government programs was also down a little bit. I’m not gonna say that that’s because of the general uncertainty that we’re talking about, that was probably just a matter of performance in the way that happened in the quarter. But that’s, you know, the miss, if you will, on the top line compared to the expectation was entirely contained by the government vertical.

Kieran Ryan, Analyst, Deutsche Bank: Got it. That’s helpful in the quarter. Thank you. Then just quick follow-up, just on the other, the payer provider verticals. Appreciate the extra disclosures.

Just wanted to understand kind of how you’re thinking about that ramping on revenues and EBITDA, if we think about it just kind of for those two. I think you had said it was $50,000,000 in revenue on that. So just trying to get an idea if you’re still kind of actively onboarding new projects there. And it’s just hard to see, you know, with all the other changes. So thanks for taking the questions.

Lee Beanstalk, CEO, DocGo: Absolutely. So we absolutely are onboarding new programs there, and we actually think it’s going to pick up with pace in the back half of the year as plans look to close out the year strong to address patients that have open gaps in care and really try to we see tremendous velocity heading into the back half of the year. So, we are still onboarding new customers there. We have a very robust pipeline there and each quarter as we go here, we’re expected to do more and more care gap visits and PCP visits as we progress through the year and of course into next year. So, absolutely there.

In terms of the margins, essentially for that business, it’s an early stage business. We’re ramping scale there right now. We expect those margins for that business to be approaching 40% gross margin next year. This year we’re still in suboptimal margins as we scale and build density in the markets that we’re really focused on. So, but we’re really, really excited about the growth of that business.

Patients absolutely love it. The plans are loving it and as plans, as was mentioned earlier, as plans are looking to close the year, they have to address patients that have open gaps in care, patients that haven’t gone to see their doctor. We’re able to address those patients and go see them in the home and bring a new modality of care that perhaps they haven’t been available to. So, we’re seeing tremendous, tremendous adoption there. We’re also investing pretty heavily in our patient conversion on patient engagement operations.

So, when we get lists of patients from the payers that have open gaps in care, we’re building a world class engine of how we engage those patients, how we schedule those visits, how we book the clinicians, how we route the clinicians, how we stack those visits so that the clinicians have a full productive quality day in the field and as we do that more and more, the margins are just only going to improve from there. So, we’re really excited about what we’re building there. The patients love it, as I mentioned, and I think we’re going to continue to reinvest a lot of our resources into that business. The 50,000,000 that you mentioned, that’s unchanged. That’s been our number.

That’s our target. We’re on target to hit that. Nothing has changed with that parent provider goal. In fact, if anything, I think we’re ahead of schedule there.

Norm, CFO, DocGo: Yeah, and you gotta look ahead, Karim, because at this point, as Lee is pointing out, that business is a drag on the overall consolidated margin. I would say maybe cost us a point to a point and a half of the overall consolidated margin, adjusted gross margin that we reported at 32.1, but ultimately that business becomes our highest margin business. We have lines of business within that particular vertical that are gonna be 50% plus gross margin businesses. So that’s, you know, that eventually is obviously going to bring the consolidated number up. As far as a leading indicator, it’s important for us to look at KPI and leading indicators because, you know, we’re looking to the future.

So the biggest driver of that is obviously the utilization rate of the clinicians, right? The more trips they can see or more trips they can do or patients they can see in an hour or ten hour shift, eight hour shift, the higher the margin goes. And I will say that the early indications there are encouraging. So the utilization rate to date, you know, the first, what is it, five weeks of Q2, are about 30 higher than what they were in Q1. They’re trending, if this trend continues, they’re trending at a level that we hadn’t really projected out until sometime in 2026 or 2027.

So if we keep those kinds of numbers going as we scale, then I think you might even see a steeper ramp towards that very robust and healthy gross margin. But at the moment, if you look at Q1, definitely was a drag on the overall gross margin of the business.

Kieran Ryan, Analyst, Deutsche Bank: Thanks a lot. Appreciate it.

Conference Call Operator: Your next question is from the line of Sarah James from Cantor Fitzgerald. Please ask your question.

Gabby, Analyst, Cantor Fitzgerald: Hey, everyone. This is Gabby on for Sarah. I had a quick question. I had that the government sector revenue is about $100,000,000 but it looks like guidance was taken down $115,000,000 Can you just talk about the delta between those two or if that’s just implied conservatism in the guidance?

Norm, CFO, DocGo: Yep. Yeah. The latter part of your statement is correct. In fact, Lee, a couple times in his in his comments earlier said that we’re staying on the $2.25 for transport, we’re sticking at 50,000,000 for migrant, 50,000,000 for these care gap closures and payer programs. That actually obviously adds up to $3.25 as opposed to our range of 300 to $3.20, which would have, $3.30, which would put you at $3.15.

So that’s really what it is. We’re just trying to be prudent and build something in for the range of possibilities on all our business lines.

Gabby, Analyst, Cantor Fitzgerald: Okay, awesome. And then your comment that 26 should be EBITDA positive, does that imply EBITDA positive without any contribution from the government vertical? And then quickly on the payer and provider business, are you seeing a positive more positive conversations from the positive 2026 MA rates and maybe the payers having more flexibility to apply some of your services?

Lee Beanstalk, CEO, DocGo: Yes, so as was mentioned, municipal population health vertical, yes, that would be in addition going forward and also into 2026 as well. That’s our plan to report on that in addition to the revenue guidance we’re giving today and in the future. So that would be in addition to our EBITDA projections for next year. In terms of the payer and what’s going on in the MA market, we absolutely view that as a tailwind. We’re seeing that.

I think we’ve had many, many opportunities in our pipeline going back all the way to last year and we see the pipeline even over the last two weeks really heating up, which we expected going into the sort of back half Q3 and Q4 of this year, but we’re seeing a tremendous demand for those services. So part of it is due to the macro factor of what’s going on in the MA market, but also part of it is just we’re getting more and more data and our pitch is just getting stronger and stronger because we’re able to show the ROI, we’re able to show the patient happiness, we’re able to show the impact we’re having, we’re able to show how many patients we’ve even been able to close care gaps with. They’re reporting back to their plans that they’re happy with the service. Obviously, patient satisfaction, member satisfaction is a big component of the quality score for the MA plans. So, all of that is also helping us as we scale, not only do we improve our operations, but as we scale, we just have more and more data, more and more experience, more and more references for other plans.

Plans are sharing us from one state to the next and referring us And so all of that as we perform well and we’re investing, we want to make sure that these plans love us. We want to make sure because there’s just so much opportunity. We want to make sure that the patients love us and then we’re really improving their health outcomes. And once we’re able to do all of that, there’s a tremendous opportunity ahead of us.

Gabby, Analyst, Cantor Fitzgerald: Okay, awesome. Thank you guys.

Lee Beanstalk, CEO, DocGo: Thanks, Gabby.

Conference Call Operator: Your last question is from the line of David Larson from BTIG. Please ask your question.

Jenny Shen, Analyst, BTIG: Hi, this is Jenny Shen on for Dave. I apologize if I missed this, if you had mentioned it, but can you remind us what the margin profile is of the migrant related revenue versus your core business? And then just clearly on tariffs, I know we’ve spoken about the expected impact on your fleet and the cost to manage your fleet, but do you have any potential risk from tariffs on some of your medical equipment that you use and wearable devices in the home? Thank you.

Norm, CFO, DocGo: Hey, so I’ll start with your question about the margin profile on the migrant program. The margins on that program were about 34%, and it’s pretty consistent actually. It was 34% in Q4, ’30 ’4 percent again, give or take, and a few basis points in Q1. So when you look at it that way, in the fourth quarter, gross margin for mobile health was 35.9%, so technically the rest of, the non migrant piece of mobile health was being driven at a higher margin, here it was the other way around, so the fact that the mix moved away from migrant and towards the other things such as the payer and provider programs, that obviously brought down the margins, so the mix brought it down. But I would say right about 34% or so is is the number that we’re seeing from the migrant work.

Do you wanna take tariff one

Kieran Ryan, Analyst, Deutsche Bank: or do you wanna

Lee Beanstalk, CEO, DocGo: And with regards to to tariffs, Jenny, exactly as you described, I think the tariffs would be related to our fleet. Obviously, have a substantial fleet of almost a thousand vehicles in the fleet. And I think the tariffs, the way it would be factored in is we have a calculation that we look at as to when we procure new vehicles versus maintain the ones we have. And so we’d look at the balance between perhaps the rising cost of procuring a vehicle or the cost going forward of just maintaining the ones we have and we’re in a good position to be able to balance that. So, we have a relatively new fleet in general and in addition, we have a wonderful and a dedicated fleet management team that’s able to keep our vehicles on the road and once a vehicle becomes more expensive to maintain, that’s when we procure a new one.

And so the tariffs may impact that calculation, but I’m confident that our team is doing a wonderful job maintaining the vehicles that we have. We had already placed orders on the new fleet that we were going to procure for this year, which has been placed and priced and paid for. So, I think we are in a good position, But obviously it could increase the prices for some of the parts. Obviously, we drove 8,800,000 miles last year, so that’s oil changes and tires and brake pads and everything you can imagine that keeps that tremendous fleet on the road, but ultimately we look at the cost of maintaining, the cost of procuring new ones, but like I said, we were forward thinking and we have great scale, so we’ve been most of our orders that we were looking to procure were already placed this year.

Norm, CFO, DocGo: Yeah, then on the other hand, fuel costs can go down. I mean, they’re currently running already a little bit below what we had projected and a little bit below where they were a year ago, So I think the biggest impact is going to be the one that everybody faces, which is the general inflationary environment. But again, even within an inflationary environment, oil prices will probably lower, gas prices therefore will be lower, We have some leverage for that. That would be a net benefit to us.

Jenny Shen, Analyst, BTIG: Great. Thank you.

Conference Call Operator: There are no further questions at this time. So I’d like to turn the call over to Mr. Lee of Beanstalk for closing comments. Sir, please go ahead.

Lee Beanstalk, CEO, DocGo: Thank you. And thank you all for joining us today. Be well.

Conference Call Operator: This concludes today’s conference call. Thank you very much for your participation. You may now disconnect.

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