DocGo Inc (DCGO) Q1 2024 Earnings Call Transcript Highlights: Soaring Revenues and Strategic ...

• Total Revenue: $182.1 million in Q1 2024, up 70% from Q1 2023.

• Mobile Health Revenue: $143.9 million in Q1 2024, nearly double from Q1 2023.

• Transportation Services Revenue: $48.2 million in Q1 2024, up 20% from Q1 2023.

• Net Income: $10.6 million in Q1 2024, compared to a net loss of $3.9 million in Q1 2023.

• Adjusted EBITDA: $24.1 million in Q1 2024, more than four times the $5.6 million in Q1 2023.

• Gross Margin: Increased to 35% in Q1 2024 from 28.1% in Q1 2023.

• Operating Costs (SG&A): 26.7% of total revenues in Q1 2024, down from 34.2% in Q1 2023.

• Cash and Cash Equivalents: $58.9 million as of March 31, 2024, down from $72.2 million at the end of 2023.

• Stock Buyback: Repurchased 1.3 million shares for approximately $4.9 million in Q1 2024.

• 2024 Revenue Guidance: Updated to $600 million to $650 million.

• 2024 Adjusted EBITDA Guidance: Updated to $65 million to $75 million.

• Warning! GuruFocus has detected 5 Warning Signs with DCGO.

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• DocGo Inc reported a significant increase in total revenue for Q1 2024, reaching $182.1 million, a 70% increase from Q1 2023.

• Adjusted EBITDA for Q1 2024 was the highest ever recorded at $24.1 million, more than four times the $5.6 million from the previous year's first quarter.

• Net income for Q1 2024 was $10.6 million, compared to a net loss of $3.9 million in Q1 2023, reflecting higher revenues and improved gross margins.

• DocGo Inc has expanded its service offerings, including launching a mobile x-ray program and a virtual primary care service, enhancing its healthcare delivery models.

• The company has secured multiple new contracts, including with two of the five largest health insurance companies in the country, and expanded its medical transportation services.

Negative Points

• DocGo Inc revised its 2024 revenue and adjusted EBITDA guidance downwards due to the accelerated wind-down of migrant-related projects, now expecting revenues of $600 million to $650 million.

• The company's reliance on migrant-related projects, which are subject to political and operational uncertainties, poses risks to stable revenue streams.

• Despite overall growth, some segments like non-migrant mobile health saw a decrease due to the expiration of COVID-adjacent projects early in the year.

• The company faces challenges in managing operating expenses effectively as it transitions away from high-revenue migrant projects.

• There was a significant increase in accounts receivable, indicating potential issues in cash flow management and collection processes.

Q & A Highlights

Q: As you're thinking about going into 2025, your expectations are for the core business to be around $400 million of revenue with $50 million of EBITDA. Are you expecting any migrant contract or related revenue at all? A: (Lee Bienstock - CEO, DocGo Inc) Any migrant related revenues into 2025 would be incremental to the $400 million base revenue. It's possible depending on the nature of the crisis and the needs of the city, but that would be additional to the base business revenue.

Q: Can you give us a sense of the respective growth rates in your end markets as you think about this year into next year? A: (Lee Bienstock - CEO, DocGo Inc) The medical transportation business is expected to grow in the 15% range from 2024 to 2025. The municipal business will grow through long-term sustainable RFPs focusing on core medical services and technology. The insurance and patient monitoring business, though the smallest, is the fastest growing based on expanding current payer relationships and new partnerships.

Q: With respect to the migraine, are you expecting the NYC Health and Hospitals migrant work to wind down or go away? A: (Norman Rosenberg - CFO, DocGo Inc) The reduction in migrant-related revenue guidance is mainly due to the wind-down of certain sites, particularly the downstate and upstate sites. The Health and Hospitals related migrant work does not show a significant change in revenue projections.

Q: Can you talk about the payer facing business and the demand you're seeing for care gap closures? Who is your competition in this space? A: (Lee Bienstock - CEO, DocGo Inc) There is significant demand from health plans focusing on improving their quality scores and health outcomes. Competition mainly includes brick-and-mortar clinics. DocGo's mobile model offers a differentiated patient experience by providing convenient home visits, which is proving to be successful and valuable.

Q: Is there any way you can help us understand what the margins on your base revenues are today or in 2024 as we think about bridging to that 12.5% for 2025 on the 400 million in revs and 50 million in EBITDA? A: (Norman Rosenberg - CFO, DocGo Inc) The transport business gross margin is about 33%, and mobile health is around 35%. The goal is to manage corporate expenses effectively as revenue scales down from migrant-related projects, aiming for a blended gross margin of 40% in the mobile health segment.

Q: Could you give some color on the noise around the migrant care affecting your other deals in NYC? A: (Stephen Sugrue - Chief Compliance Officer, DocGo Inc) The company proactively addresses any misleading information by communicating directly with partners and prospective clients. One partner paused their dealings until the noise subsides, but overall, the quality of DocGo's work and strong partnerships have helped manage the situation effectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.