DocGo Inc

Previous wording

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act regarding, among other things, the plans, strategies, outcomes, and prospects, both business and financial, of the Company. These statements are based on the beliefs and assumptions of our management. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these 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 our results or outcomes, to differ materially from those contained in our forward-looking statements. Accordingly, you should not place undue reliance on such statements. All statements other than statements of historical fact are forward-looking. Forward-looking statements include, but are not limited to, statements concerning our possible or assumed future actions; business strategies, plans and goals; future events; future revenues or performance; financing needs; business trends; results of operations; objectives and intentions with respect to future operations, services and products, including our geographic expansion; our margin normalization initiative; new and existing contracts and backlog; M&A activity; workforce growth; leadership transitions; cash position; our share repurchase program; expected impacts of macroeconomic factors, including inflationary pressures, general economic slowdown or a recession, rising interest rates, foreign exchange rate volatility, changes in monetary pressure, financial institution instability or the prospect of a shutdown of the U.S. federal government; potential changes in federal, state or local government policies regarding immigration and asylum seekers; expected impacts of geopolitical instability, including the conflict in Ukraine, conflict in Israel and surrounding areas and rising tensions between mainland China and Taiwan; our competitive position and opportunities, including our ability to realize the benefits from our operating model; our ability to improve gross margins; cost-containment measures; legislative and regulatory actions; the impact of legal proceedings and compliance risk; the impact on our business and reputation in the event of information technology system failures, network disruptions, cybersecurity incidents or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data privacy and protection; and others. In some cases, these statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act regarding, among other things, the plans, strategies, outcomes and prospects, both business and financial, of the Company. These statements are based on the beliefs and assumptions of our management. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these 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 our results or outcomes, to differ materially from those contained in our forward-looking statements. Accordingly, you should not place undue reliance on such statements. All statements other than statements of historical fact are forward-looking. Forward-looking statements include, but are not limited to, statements concerning our possible or assumed future actions; business strategies, plans and goals; future events; future revenues or performance; financing needs; business trends; results of operations; objectives and intentions with respect to future operations, services and products, including our geographic expansion; new and existing contracts; M&A activity; workforce growth; leadership transitions; cash position; our share repurchase program; expected impacts of macroeconomic factors, including inflationary pressures, general economic slowdown or a recession, rising interest rates, foreign exchange rate volatility, changes in monetary pressure, financial institution instability or the prospect of a shutdown of the U.S. federal government; potential changes in federal, state or local government policies regarding immigration and asylum seekers; expected impacts of geopolitical instability, including the conflict in Ukraine, conflict in Israel and surrounding areas and rising tensions between mainland China and Taiwan; our competitive position and opportunities, including our ability to realize the benefits from our operating model; our ability to improve gross margins; cost-containment measures; legislative and regulatory actions; the impact of legal proceedings and compliance risk; the impact on our business and reputation in the event of information technology system failures, network disruptions, cybersecurity incidents or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data privacy and protection; and others. In some cases, these statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “might,” “will,” “should,” “could,” “can,” “woul…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

DocGo is a mobile healthcare services company that uses proprietary dispatch and communication technology to help provide (i) quality mobile, in-person medical treatment directly to patients in the comfort of their homes, workplaces and other non-traditional locations; and (ii) medical transportation in major metropolitan cities in the United States and the United Kingdom.

Current wording

The Company is a mobile healthcare services company that uses proprietary dispatch and communication technology to help provide (i) quality mobile, in-person medical treatment directly to patients in the comfort of their homes, workplaces and other non-traditional locations; and (ii) medical transportation in major metropolitan cities in the United States and the United Kingdom.

Previous wording

For the three months ended March 31, 2024, the Company recorded net income of $10.6 million, compared to net loss of $3.9 million in the three months ended March 31, 2023.

Current wording

For the three months ended June 30, 2024, the Company recorded net income of $5.8 million, compared to net income of $1.3 million in the three months ended June 30, 2023.

Previous wording

The Mobile Health Services market is dependent on several factors, including increased patient acceptance of services that are provided outside of traditional healthcare facilities, such as in homes, businesses or other designated locations; healthcare coverage of the various Mobile Health Services; and continued desire on the part of government and municipal entities to fund programs to assist currently underserved patient segments via “population health” programs. These programs have increased in number, scale and scope since the beginning of the COVID-19 pandemic. While COVID-19 testing and vaccination programs have been scaled back from their levels at the pandemic’s peak, there have been expansions of these population health programs into other areas, such as the provision of healthcare and related services to recent migrants and asylum seekers.

Current wording

The Mobile Health Services market is dependent on several factors, including increased patient acceptance of services that are provided outside of traditional healthcare facilities, such as in homes, businesses or other designated locations; healthcare coverage of the various Mobile Health Services; and continued desire on the part of government and municipal entities to fund programs to assist currently underserved patient segments via “population health” programs. These programs have increased in number, scale and scope since the beginning of COVID-19. While COVID-19 testing and vaccination programs have been scaled back from their levels at the pandemic’s peak, there have been expansions of these population health programs into other areas, such as the provision of healthcare and related services to recent migrants and asylum seekers.

Previous wording

The Transportation Services market is highly dependent on patients requiring transportation after surgeries and other medical procedures and treatments. The Company primarily focuses on the non-emergency medical transport market, which includes services that are provided to patients who need assistance getting to and from medical appointments. Key drivers of this market are the increase in chronic conditions and the number of elective surgeries as well as the ongoing aging of the population, as the older demographics tend to be much more frequent consumers of medical transportation services. The market will also grow if hospitals and other healthcare facilities continue to outsource more of their transportation needs to independent providers, such as the Company, allowing these facilities to concentrate their efforts on their core competencies.

Current wording

The Transportation Services market is highly dependent on patients requiring transportation after surgeries and other medical procedures and treatments. The Company primarily focuses on the non-emergency medical transport market, which includes services that are provided to patients who need assistance getting to and from medical appointments. Key drivers of this market are the increase in chronic conditions and the number of elective surgeries as well as the ongoing aging of the population, as the older demographics tend to be much more frequent consumers of medical transportation services. We believe the market will also grow if hospitals and other healthcare facilities continue to outsource more of their transportation needs to independent providers, such as the Company, allowing these facilities to concentrate their efforts on their core competencies.

Previous wording

The inflation rate in the United States, as measured by the Consumer Price Index, has generally trended up since early 2021. This data is reported monthly, showing year-over-year changes in prices across a basket of goods and services. Though the inflation rate declined to 4.1% in 2023 from 8.0% in 2022, it remains above historical averages. The increased inflation rate has had an impact on the Company’s expenses in several areas, including wages, fuel and medical and other supplies. This has had the impact of compressing gross profit margins, as the Company is generally unable to pass these higher costs on to its customers, particularly in the short term. In a continued attempt to dampen inflation, the U.S. Federal Reserve implemented four interest rate hikes in 2023, raising its benchmark rate to the current level of 5.25-5.50%, which remained unchanged as of the date of the filing of this Quarterly Report on Form 10-Q. Inflation has remained elevated to this point in 2024, with a rate of 3.5% being recorded for March, but looking to the remainder of 2024, we anticipate a continued moderation of the inflation rate. If inflation is above the levels that the Company anticipates, gross margins could be below plan and our business, operating results and cash flows may be adversely affected.

Current wording

The inflation rate in the United States, as measured by the Consumer Price Index, has generally trended up since early 2021. This data is reported monthly, showing year-over-year changes in prices across a basket of goods and services. Though the inflation rate declined to 4.1% in 2023 from 8.0% in 2022, it remains above historical averages. The increased inflation rate has had an impact on the Company’s expenses in several areas, including wages, fuel and medical and other supplies. This has had the impact of compressing gross profit margins, as the Company is generally unable to pass these higher costs on to its customers, particularly in the short term. In a continued attempt to dampen inflation, the U.S. Federal Reserve implemented four interest rate hikes in 2023, raising its benchmark rate to the current level of 5.25%-5.50%, which remained unchanged as of the date of the filing of this Quarterly Report on Form 10-Q. Inflation has moderated in the first half of 2024, with a rate of 3.0% being recorded for June. Looking to the remainder of 2024, we anticipate a continued moderation of the inflation rate, with an interest rate cut now being viewed as a possibility before the end of the year. If inflation is above the levels that the Company anticipates, gross margins could be below plan and our business, operating results and cash flows may be adversely affected.

Previous wording

During the three months ended March 31, 2024, the Company did not complete any acquisitions. During the three months ended March 31, 2023, the Company completed one acquisition for an aggregate purchase price of $25.8 million.

Current wording

During the six months ended June 30, 2024, the Company did not complete any acquisitions. During the six months ended June 30, 2023, the Company completed three acquisitions for an aggregate purchase price of $34.2 million.

Previous wording

In recent years, the Company’s government contract work has represented a substantial portion of its overall revenue, and maintaining and continuing to grow this revenues stream is an important part of the Company’s growth strategy. However, government contract work is subject to risks and uncertainties. For example, starting in the second quarter of 2023, the Company began providing services to the recent migrant population in New York City and in upstate New York. Some of these services were provided pursuant to a contract with an ending date during the second quarter of 2024. A portion of that contract has been extended through December 31, 2024, while other services are expected to wind down, beginning in the second quarter of 2024. While the specific timing and the rate of the wind-down of services is still uncertain, the Company expects that the revenues from these projects will be somewhat lower in the second half of 2024 than in the first half of the year.

Current wording

In recent years, the Company’s government contract work has represented a substantial portion of its overall revenue, and maintaining and continuing to grow this revenues stream is an important part of the Company’s growth strategy. However, government contract work is subject to risks and uncertainties. For example, starting in the second quarter of 2023, the Company began providing services to the recent migrant population in New York City and in upstate New York. Some of these services were provided pursuant to a contract with an ending date during the second quarter of 2024. A portion of that contract has been extended through December 31, 2024, while other services began to wind down in May 2024. While the specific timing and the rate of the wind-down of the remaining services is still uncertain, the Company expects that the revenues from these migrant-related projects will be lower in the second half of 2024 than in the first half of the year.

Previous wording

General and administrative expense consists primarily of salaries, bad debt expense, insurance expense, consultant fees and professional fees for accounting services. We expect our general and administrative expense to increase as we continue to scale our business and grow headcount and as a result of operating as a public company, including our compliance with SEC rules and regulations, audit activities, additional insurance expenses, investor relations activities and other administrative and professional services.

Current wording

General and administrative expenses consist primarily of salaries, bad debt expense, insurance expense, consultant fees and professional fees for accounting services. We expect our general and administrative expenses to increase as we continue to scale our business and grow headcount and as a result of operating as a public company, including our compliance with SEC rules and regulations, audit activities, additional insurance expenses, investor relations activities and other administrative and professional services.

Previous wording

Technology and development expense, net of capitalization consists primarily of costs incurred in the design and development of the Company’s proprietary technology, third-party software and technologies. We expect technology and development expense to increase in future periods to support our growth, including our intent to continue investing in the optimization, accuracy and reliability of our dispatch and communication platform and driving efficiency in our operations. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments, particularly when entering new business lines or customer sales channels.

Current wording

Technology and development expenses, net of capitalization, consist primarily of costs incurred in the design and development of the Company’s proprietary technology, third-party software and technologies. We expect technology and development expenses to increase in future periods to support our growth, including our intent to continue investing in the optimization, accuracy and reliability of our dispatch and communication platform and driving efficiency in our operations. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments, particularly when entering new business lines or customer sales channels.

Previous wording

For the three months ended March 31, 2024, total revenues were $192.1 million, an increase of $79.1 million, or 70.0%, compared to the three months ended March 31, 2023.

Current wording

For the three months ended June 30, 2024, total revenues were $164.9 million, an increase of $39.4 million, or 31.4%, compared to the three months ended June 30, 2023.

Previous wording

For the three months ended March 31, 2024, Mobile Health Services revenues were $143.9 million, an increase of $71.0 million, or 97.3%, compared to the three months ended March 31, 2023. The increase in revenues was primarily due to an expansion in services offered by the Mobile Health Services segment, particularly in the government customer sector. Specifically, starting in the second quarter of 2023, the Company began providing services to the recent migrant population in New York City and in upstate New York. These projects, which included both medical and non-medical services, such as shelter and security, expanded throughout the second half of 2023 and into the first quarter of 2024. However, some of these services were provided pursuant to a contract with an ending date during the second quarter of 2024. A portion of that contract has been extended through December 31, 2024, while other services are expected to wind down, beginning in the second quarter of 2024. While the specific timing and the rate of the wind-down of services is still uncertain, the Company expects that the revenues from these projects will be somewhat lower in the second half of 2024 than in the first half of the year.

Current wording

For the three months ended June 30, 2024, Mobile Health Services revenues were $116.7 million, an increase of $36.7 million, or 45.8%, compared to the three months ended June 30, 2023. The increase in revenues was primarily due to an expansion in services offered by the Mobile Health Services segment, particularly in the government customer sector. Specifically, starting in the second quarter of 2023, the Company began providing services to the recently arrived migrant population in New York City and in upstate New York. These projects, which included both medical and non-medical services, such as shelter and security, expanded throughout the second half of 2023 and into the first quarter of 2024. However, some of these services were provided pursuant to a contract with an ending date during the second quarter of 2024. A portion of that contract has been extended through December 31, 2024, while other services began to wind down in May 2024. While the specific timing and the rate of the wind-down of the remaining services is still uncertain, the Company expects that the revenues from these migrant-related projects will be lower in the second half of 2024 than in the first half of the year. As such, while we expect to launch new Mobile Health Services projects during the second half of the year, these will be outweighed by a decline in revenues from migrant-related projects and we expect that overall Mobile Health Services revenues will be lower in the second half of 2024 than in the first half of the year.

Previous wording

For the three months ended March 31, 2024, total cost of revenues (exclusive of depreciation and amortization) increased by 53.7% compared to the three months ended March 31, 2023, while revenues increased by approximately 70.0%. Cost of revenues as a percentage of revenues decreased to 65.0% in the three months ended March 31, 2024 from 71.9% in the three months ended March 31, 2023.

Current wording

For the three months ended June 30, 2024, total cost of revenues (exclusive of depreciation and amortization) increased by 30.5% compared to the three months ended June 30, 2023, while revenues increased by approximately 31.4%. Cost of revenues as a percentage of revenues decreased to 66.2% in the three months ended June 30, 2024 from 66.6% in the three months ended June 30, 2023.

Previous wording

For the Mobile Health Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended March 31, 2024 amounted to $92.9 million, up 76.3% from $52.7 million in the three months ended March 31, 2023. Cost of revenues as a percentage of revenues decreased to 64.5% from 72.3% in the prior year period, due to a significant increase in revenues, and in the absence of certain project ramp-up costs, in the form of higher overtime rates and a greater proportion of subcontracted labor, that were recorded in the prior year period.

Current wording

For the Mobile Health Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended June 30, 2024 amounted to $74.9 million, up 43.8% from $52.1 million in the three months ended June 30, 2023. Cost of revenues as a percentage of revenues decreased to 64.2% from 65.1% in the prior year period, due to a significant increase in revenues and the absence of certain project ramp-up costs in the form of higher overtime rates and a greater proportion of subcontracted labor that were recorded in the prior year period.

Previous wording

For the three months ended March 31, 2024, the Company recorded $51.4 million of operating expenses compared to $38.7 million for the three months ended March 31, 2023, an increase of 32.8%. As a percentage of revenue, operating expenses decreased from 34.3% in the first quarter of 2023 to 26.8% in the first quarter of 2024, reflecting the increase in revenues described above. The increase of $12.7 million of operating expenses related primarily to a $0.6 million increase in depreciation and amortization due to an increase in assets to support revenue growth, capitalized software amortization and assets that were added as part of acquisitions that the Company completed during 2023; a $0.9 million increase in insurance costs, primarily being driven by the Mobile Health segment; a $0.6 million increase in IT infrastructure, driven by the Company’s business and headcount expansion and acquisitions; a $0.7 million increase in professional fees, including higher audit fees resulting from the growth of the business; a $3.3 million increase in bad debt expense, reflecting the growth of the business and related increase in accounts receivable; and a net $6.6 million increase spread across a variety of other operating expense categories. The Company anticipates that operating expenses will continue to fluctuate based upon the levels of revenues that are generated.

Current wording

For the three months ended June 30, 2024, the Company recorded $45.7 million of operating expenses compared to $40.3 million for the three months ended June 30, 2023, an increase of 13.4%. As a percentage of revenue, operating expenses decreased from 32.1% in the second quarter of 2023 to 27.7% in the second quarter of 2024, reflecting the increase in revenues described above. The increase of $5.4 million of operating expenses related primarily to a $0.5 million increase in depreciation and amortization due to an increase in assets to support revenue growth, capitalized software amortization and assets that were added as part of acquisitions that the Company completed during 2023; a $0.1 million increase in IT infrastructure, driven by the Company’s business and headcount expansion and acquisitions; a $1.4 million increase in professional fees, including higher audit fees resulting from the growth of the business; a $0.5 million increase in bad debt expense, reflecting the growth of the business and related increase in accounts receivable; and a net $2.9 million increase spread across a variety of other operating expense categories. The Company anticipates that operating expenses will continue to fluctuate based upon the levels of revenues that are generated.

Previous wording

For the Mobile Health Services segment, operating expenses in the three months ended March 31, 2024 were $18.9 million, up from $7.2 million in the three months ended March 31, 2023. Operating expenses as a percentage of revenues increased to 13.1% in the first quarter of 2024, from 9.8% in the first quarter of 2023, reflecting significant expenditures that have been made in recent quarters in the expansion of services and geographic areas of operation, as well as the continued buildout of the Mobile Health Services management infrastructure.

Current wording

For the Mobile Health Services segment, operating expenses in the three months ended June 30, 2024 were $15.8 million, up from $9.9 million in the three months ended June 30, 2023. Operating expenses as a percentage of revenues increased to 13.5% in the second quarter of 2024, from 12.3% in the second quarter of 2023, reflecting significant expenditures that have been made in recent quarters in the expansion of services, particularly in relation to the migrant-related projects in New York as well as the continued build out of the Mobile Health Services management infrastructure.

Previous wording

For the Transportation Services segment, operating expenses in the three months ended March 31, 2024 were $15.2 million, compared to $10.5 million in the three months ended March 31, 2023. Operating expenses as a percentage of revenues increased to 31.5% for the three months ended March 31, 2024 from 26.1% in the three months ended March 31, 2023, despite the increased revenues in the current year period, reflecting increases in non-field headcount, such as dispatch and back office departments, as well as higher insurance costs, due to a larger vehicle fleet.

Current wording

For the Transportation Services segment, operating expenses in the three months ended June 30, 2024 were $16.1 million, compared to $14.6 million in the three months ended June 30, 2023. Operating expenses as a percentage of revenues increased to 33.4% for the three months ended June 30, 2024 from 32.1% in the three months ended June 30, 2023, despite the increased revenues in the current year period, reflecting increases in non-field headcount, such as dispatch and back office departments, as well as higher insurance costs, due to a larger vehicle fleet.

Previous wording

For the Corporate segment, which represents primarily shared services that are not contained within the entities included in either the Mobile Health Services or Transportation Services segments, operating expenses in the three months ended March 31, 2024 were $17.3 million, compared to $21.1 million in the three months ended March 31, 2023. Corporate expenses amounted to approximately 9.0% of total consolidated revenues in the first quarter of 2024, compared to 18.7% in the first quarter of 2023, reflecting the significant increase in total consolidated revenues as well as some corporate expense reduction programs implemented at the end of 2023 and in early 2024.

Current wording

For the Corporate segment, which represents primarily shared services that are not contained within the entities included in either the Mobile Health Services or Transportation Services segments, operating expenses in the three months ended June 30, 2024 were $13.8 million, compared to $15.9 million in the three months ended June 30, 2023. Corporate expenses amounted to approximately 8.4% of total consolidated revenues in the second quarter of 2024, compared to 12.6% in the second quarter of 2023, reflecting the significant increase in total consolidated revenues as well as some corporate expense reduction programs implemented at the end of 2023 and in early 2024.

Previous wording

For the three months ended March 31, 2024, the Company recorded $0.4 million of interest expense, net compared to $0.8 million of interest income, net in the three months ended March 31, 2023. Interest expenses on borrowings under the Company's revolving credit line outweighed interest earned on balances in the Company’s interest-bearing accounts in the three months ended March 31, 2024, while average cash balances in these accounts were also lower when compared to the three months ended March 31, 2024.

Current wording

For the three months ended June 30, 2024, the Company recorded $0.5 million of interest expense, net compared to $0.5 million of interest income, net in the three months ended June 30, 2023. Interest expenses on borrowings under the Revolving Facility outweighed interest earned on balances in the Company’s interest-bearing accounts in the three months ended June 30, 2024, while average cash balances in these accounts were also lower when compared to the three months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2024, the Company had net loss attributable to noncontrolling interests of approximately $0.6 million, compared to a net loss attributable to noncontrolling interests of approximately $0.5 million for the three months ended March 31, 2023.

Current wording

For the three months ended June 30, 2024, the Company had net loss attributable to noncontrolling interests of approximately $0.7 million, compared to net income attributable to noncontrolling interests of approximately $3.3 million for the three months ended June 30, 2023.

Previous wording

For the three months ended March 31, 2024, Transportation Services revenues were $48.2 million, an increase of $8.2 million, or 20.2%, compared to the three months ended March 31, 2023. This increase was due to a 20% increase in trip volumes, to 69,977 trips in the three months ended March 31, 2024, from 58,176 trips for the three months ended March 31, 2023. The increase in trip volumes was due to a combination of growth in the Company's customer base in certain core markets and increased volumes with existing customers. Our average trip price declined to $400 in the three months ended March 31, 2024, from $415 in the three months ended March 31, 2023. The decline in the average trip price in the 2024 period reflected a shift in mix toward lower-priced transports when compared to the first quarter of 2023. However, the average trip price remains well above the levels of early 2022, reflecting a shift in mix toward higher-priced transports with existing customers, as well as the acquisition of licenses to provide higher acuity transports that earn higher prices per trip.

Current wording

For the six months ended June 30, 2024, Transportation Services revenues were $96.4 million, an increase of $10.9 million, or 12.7%, compared to the six months ended June 30, 2023. This increase was due to a 18.7% increase in trip volumes, to 143,699 trips in the six months ended June 30, 2024, from 121,083 trips for the six months ended June 30, 2023. The increase in trip volumes was due to a combination of growth in the Company’s customer base in certain core markets and increased volumes with existing customers. Our average trip price declined to $396 in the six months ended June 30, 2024, from $402 in the six months ended June 30, 2023. The decline in the average trip price in the 2024 period reflected a shift in mix toward lower-priced transports when compared to the first half of 2023. However, the average trip price remains well above the levels of early 2022, reflecting a shift in mix toward higher-priced transports with existing customers, as well as the acquisition of licenses to provide higher acuity transports that earn higher prices per trip.

Previous wording

Total cost of revenues in the three months ended March 31, 2024 increased by $43.6 million compared to the same period in 2023. This increase was primarily attributable to a $7.6 million increase in total compensation, due to higher headcount for both the Mobile Health Services and Transportation Services segments; a $20.5 million increase in subcontracted labor costs, primarily driven by projects in both segments that required more personnel than the Company was able to initially provide through its existing staff; a $12.0 million increase in medical and related supplies; a $1.1 million increase in travel costs for field personnel and other clinicians who traveled out of their home regions to provide Mobile Health Services; and a $4.3 million net increase in other cost of revenues categories. These items were partially offset by a $1.9 million decline in vehicle costs, as the Company exited certain rental agreements during 2023.

Current wording

Total cost of revenues in the six months ended June 30, 2024 increased by $69.1 million compared to the same period in 2023. This increase was primarily attributable to a $8.3 million increase in total compensation, due to higher headcount for both the Mobile Health Services and Transportation Services segments; a $33.9 million increase in subcontracted labor costs, primarily driven by projects in both segments that required more personnel than the Company was able to initially provide through its existing staff; a $16.9 million increase in medical and related supplies; a $1.5 million increase in travel costs for field personnel and other clinicians who traveled out of their home regions to provide Mobile Health Services; a $2.8 million increase in lab fees; and a $5.7 million net increase in other cost of revenues categories, including insurance.

Previous wording

For the Transportation Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended March 31, 2024 amounted to $31.9 million, up 11.9% from $28.5 million in the three months ended March 31, 2023. Cost of revenues as a percentage of revenues decreased to 66.3% from 71.1% in the prior year quarter, reflecting the impact of increased revenues from standby contracts (for which we are paid a daily or hourly rate) and the overall increase in revenue, as well as a decline in the average fuel price.

Current wording

For the Transportation Services segment, cost of revenues (exclusive of depreciation and amortization) in the six months ended June 30, 2024 amounted to $66.1 million, up 10.4% from $59.9 million in the six months ended June 30, 2023. Cost of revenues as a percentage of revenues decreased to 68.6% from 70.2% in the prior year quarter, reflecting the impact of increased revenues from standby contracts (for which we are paid a daily or hourly rate) and the overall increase in revenue.

Previous wording

During the three months ended March 31, 2024, the Company recorded a gain on the disposal of fixed assets of $0.1 million, compared to a loss on the disposal of fixed assets of $0.1 million during the three months ended March 31, 2023.

Current wording

During the six months ended June 30, 2024, the Company recorded a gain on the disposal of fixed assets of $0.1 million, compared to a loss on the disposal of fixed assets of $0.2 million during the six months ended June 30, 2023.

Previous wording

During the three months ended March 31, 2024, the Company recorded an income tax provision of $5.1 million, compared to an income tax benefit of $2.1 million in the three months ended March 31, 2023. The increased tax expense in the 2024 period was due to the recording of pretax income in the 2024 period, as compared to a pretax loss in the 2023 period.

Current wording

During the six months ended June 30, 2024, the Company recorded an income tax provision of $8.8 million, compared to an income tax benefit of $2.5 million in the six months ended June 30, 2023. The increased tax expense in the 2024 period was due to the recording of pretax income in the 2024 period, as compared to a pretax loss in the 2023 period.

Previous wording

Between the inception of DocGo’s wholly owned subsidiary Ambulnz and the Business Combination, Ambulnz completed three equity financing transactions as its principal source of liquidity. In November 2021, upon the completion of the Business Combination and the PIPE Financing, the Company received proceeds of approximately $158.1 million, net of transaction expenses. Generally, the Company has utilized proceeds from the equity financing transactions and the Business Combination to finance operations, invest in assets, make acquisitions and fund accounts receivable. The Company has also funded these activities through operating cash flows. Despite the fact that the Company generated positive net income for the three months ended March 31, 2024, operating cash flows are not always sufficient to meet immediate obligations arising from current operations. For example, as the business has grown, the Company’s expenditures for human capital and supplies has expanded accordingly, and the timing of the payments for payroll and to associated vendors, compared to the timing of receipts of cash from customers, frequently results in the need to use existing cash balances to fund working capital needs. During the three months ended March 31, 2024, as a greater proportion of the Company’s overall revenues were generated through services provided to municipal customers with long payment cycles, and expenditures made by the Company to allow for the provision of these services were substantial, operating cash flows were not sufficient to meet these demands for working capital, leading to a continued decline in the Company’s cash balances. As these invoices are collected, the Company expects cash flows to be sufficient for near term working capital needs.

Current wording

Between the inception of the Company’s wholly owned subsidiary Ambulnz and the Business Combination, Ambulnz completed three equity financing transactions as its principal source of liquidity. In November 2021, upon the completion of the Business Combination and the PIPE Financing, the Company received proceeds of approximately $158.1 million, net of transaction expenses. Generally, the Company has utilized proceeds from the equity financing transactions and the Business Combination to finance operations, invest in assets, make acquisitions and fund accounts receivable. The Company has also funded these activities through operating cash flows. Despite the fact that the Company generated net income for the six months ended June 30, 2024, operating cash flows are not always sufficient to meet immediate obligations arising from current operations. For example, as the business has grown, the Company’s expenditures for human capital and supplies has expanded accordingly, and the timing of the payments for payroll and to associated vendors, compared to the timing of receipts of cash from customers, frequently results in the need to use existing cash balances to fund working capital needs. During the six months ended June 30, 2024, as a greater proportion of the Company’s overall revenues were generated through services provided to municipal customers with long payment cycles, and expenditures made by the Company to allow for the provision of these services were substantial, near-term operating cash flows were not always sufficient to meet these demands for working capital, leading to fluctuations in the Company’s cash balances. As these invoices are collected, the Company expects cash flows to be sufficient for near term working capital needs.

Previous wording

The Company’s future working capital needs depend on many factors, including the overall growth of the Company and the various payment terms that are negotiated with customers and vendors. The Company’s future capital requirements depend on many factors, including potential acquisitions, the Company’s level of investment in technology and ongoing technology development, and rate of growth in existing markets and into new markets. Capital requirements might also be affected by factors outside of the Company’s control, such as interest rates, rising inflation and other monetary and fiscal policy changes to the manner in which the Company currently operates. If the Company’s growth rate is higher than is currently anticipated, resulting in greater-than-anticipated capital requirements, the Company might need to, or choose to, raise additional capital through debt or equity financings. This last factor has been evident at different times during the second half of 2023 and the first quarter of 2024, leading to a draw down in the Company’s credit line during the fourth quarter of 2023 and the first quarter of 2024, as described below.

Current wording

The Company’s future working capital needs depend on many factors, including the overall growth of the Company and the various payment terms that are negotiated with customers and vendors. The Company’s future capital requirements depend on many factors, including potential acquisitions, the Company’s level of investment in technology and ongoing technology development, and rate of growth in existing markets and into new markets. Capital requirements might also be affected by factors outside of the Company’s control, such as interest rates, rising inflation and other monetary and fiscal policy changes to the manner in which the Company currently operates. If the Company’s growth rate is higher than is currently anticipated, resulting in greater-than-anticipated capital requirements, the Company might need to, or choose to, raise additional capital through debt or equity financings. This last factor has been evident at different times during the second half of 2023 and during the first quarter of 2024, leading to a draw down in the Company’s credit line during the fourth quarter of 2023 and during the first quarter of 2024, as described below.

Previous wording

Considering the foregoing, DocGo anticipates that its existing balances of cash and cash equivalents, future expected cash flows generated from its operations and its available line of credit under the Revolving Facility will be sufficient to satisfy operating requirements for at least the next twelve months. Looking beyond the next twelve months, DocGo anticipates that expected future cash flows, its available line of credit and proceeds from potential additional financings will be sufficient to satisfy any operating and potential investing requirements.

Current wording

Considering the foregoing, the Company anticipates that its existing balances of cash and cash equivalents, future expected cash flows generated from its operations and amounts available under the Revolving Facility will be sufficient to satisfy operating requirements for at least the next twelve months. Looking beyond the next twelve months, the Company anticipates that expected future cash flows, amounts available under the Revolving Facility and proceeds from potential additional financings will be sufficient to satisfy any operating and potential investing requirements.

Previous wording

As of March 31, 2024, available cash totaled $41.2 million, which represented a decrease of $18.0 million compared to December 31, 2023, reflecting a significant increase in accounts receivable during the three months ended March 31, 2024. As of March 31, 2024, working capital amounted to $175.0 million, which represented an increase of $6.2 million compared to December 31, 2023, as the decreased cash balance was outweighed by higher accounts receivable and a decline in accrued liabilities. Increased accounts receivable in the three months ended March 31, 2024, which reflected the growth of the business and a shift towards higher credit quality customers who have longer payment terms, were outweighed by the decline in cash and a reduction in prepaid expenses and other assets, resulting in a small decline in current assets as of March 31, 2024 compared to December 31, 2023. However, this was outweighed by the decline in current liabilities in thethree months ended March 31, 2024, due to lower accrued liabilities, reflecting lower invoices and accrued liabilities in the current period for certain expenses, such as subcontracted labor, and as the Company paid down a significant amount of its accrued liabilities during the quarter.

Current wording

As of June 30, 2024, available cash totaled $66.1 million, which represented an increase of $6.8 million compared to December 31, 2023, reflecting a small decline in accounts receivable during the six months ended June 30, 2024, as the Company collected some of its larger invoices. As of June 30, 2024, working capital amounted to $174.6 million, which represented an increase of $5.8 million compared to December 31, 2023, as an increase in cash and a decline in accrued liabilities outweighed a decline in accounts receivable. Current assets declined by $10.2 million, due to a drop in prepaid expenses. However, this was outweighed by the decline in current liabilities in the six months ended June 30, 2024, due to lower accrued liabilities, reflecting lower invoices and accrued liabilities in the current period for certain expenses, such as subcontracted labor, and as the Company paid down a significant amount of its accrued liabilities during the quarter.

Previous wording

Cash flows as of thethree months ended March 31, 2024 and 2023 were as follows:

Current wording

Cash flows as of the six months ended June 30, 2024 and 2023 were as follows:

Previous wording

During the three months ended March 31, 2024, operating activities used $10.6 million of cash, despite net income of $10.6 million. Non-cash charges amounted to $9.5 million and included $2.5 million in depreciation of property and equipment and right-of-use assets, $1.7 million from amortization of intangible assets, $4.0 million of stock compensation expense, bad debt expense of $1.4 million, and a loss of $0.1 million from an investment that is accounted for under the equity method. These were partially offset by a $0.1 million gain on the disposal of assets and $0.1 million in deferred taxes. Changes in assets and liabilities resulted in approximately $30.7 million in negative operating cash flow, as a $22.4 million increase in accounts receivable, primarily driven by an increased amount of business with municipalities, which tend to have longer payment cycles, a $20.7 million decrease in accrued liabilities, due to payment of certain payables, and a $0.1 million increase in other assets were partially offset by a $5.8 million increase in accounts payable and a $6.7 million decrease in prepaid expenses and other current assets.

Current wording

During the six months ended June 30, 2024, operating activities provided $26.4 million of cash, aided by net income of $16.5 million. Non-cash charges amounted to $16.2 million and included $5.1 million in depreciation of property and equipment and right-of-use assets, $3.3 million from amortization of intangible assets, $6.6 million of stock compensation expense, bad debt expense of $2.8 million, a loss of $0.1 million from an investment that is accounted for under the equity method and a change in the fair value of contingent consideration of $0.3 million. These were partially offset by $2.0 million in deferred taxes. Changes in assets and liabilities resulted in approximately $6.3 million in negative operating cash flow, as a $1.6 million increase in accounts receivable, primarily driven by an increased amount of business with municipalities, which tend to have longer payment cycles, and a $27.9 million decrease in accrued liabilities due to payment of certain payables were partially offset by a $10.9 million increase in accounts payable and a $12.3 million decrease in prepaid expenses and other current assets.

Previous wording

During the three months ended March 31, 2023, operating activities used $23.1 million of cash, driven by a net loss of $3.9 million. Non-cash charges amounted to $9.4 million and included $2.3 million in depreciation of property and equipment and right-of-use assets, $1.4 million from amortization of intangible assets, $8.5 million of stock compensation expense and a $0.1 million loss on an equity investment. These were partially offset by a $1.9 million reduction in bad debt expense related to an adjustment in the provision for potential uncollectible accounts receivable and a $1.0 million gain from a deferred tax asset. Changes in assets and liabilities resulted in approximately $28.6 million in negative cash flow, as a

Current wording

During the six months ended June 30, 2023, operating activities used $12.4 million of cash, due in part to a net loss of $2.6 million. Non-cash charges amounted to $19.4 million and included $4.7 million in depreciation of property and equipment and right-of-use assets, $2.8 million from amortization of intangible assets, $1.0 million in bad debt expense primarily related to a provision for potential uncollectible accounts receivable, $11.8 million of stock compensation expense, a $0.2 million loss on the disposal of assets and a loss of $0.2 million from an investment that is accounted for under the equity method. These were partially offset by a non-cash gain of $1.3 million from a deferred tax asset. Changes in assets and liabilities resulted in approximately $29.2 million in negative operating cash flow, as a $15.4 million increase in accounts receivable, driven by an increased amount of business with municipalities, who tend to have longer payment cycles; a $14.9 million decrease in accounts payable; and a $0.2 million decrease in prepaid expenses outweighed a $1.2 million increase in accrued liabilities.

Previous wording

During the three months ended March 31, 2024, investing activities used $1.7 million of cash and consisted of the acquisition of property and equipment totaling approximately $1.0 million and the acquisition of intangibles in the amount of $0.8 million, slightly offset by $25,000 in proceeds from the disposal of property and equipment.

Current wording

During the six months ended June 30, 2024, investing activities used $3.8 million of cash and consisted of the acquisition of property and equipment totaling approximately $2.2 million and the acquisition of intangibles in the amount of $1.6 million.

Previous wording

During the three months ended March 31, 2023, investing activities used $1.7 million of cash and consisted of the acquisition of property and equipment totaling $2.0 million and the acquisition of intangibles in the amount of $1.4 million, partially offset by $1.6 million in cash added via an acquisition and $0.1 million in proceeds from the disposal of property and equipment.

Current wording

During the six months ended June 30, 2023, investing activities used $25.4 million of cash and consisted of the acquisition of property and equipment totaling approximately $3.6 million, the acquisition of intangibles in the amount of $1.9 million and $20.2 million from the acquisition of businesses, partially offset by $0.3 million in cash from the disposal of property and equipment.

Previous wording

During the three months ended March 31, 2024, financing activities used $0.9 million of cash, as $45.0 million in proceeds from the Company’s Revolving Facility were mostly offset by $40.0 million in repayments of the Revolving Facility. In addition, the Company spent approximately $4.9 million on its share repurchase program and $1.0 million in payments under the terms of a finance lease.

Current wording

During the six months ended June 30, 2024, financing activities used $8.9 million of cash, as $45.0 million in proceeds from the Revolving Facility were mostly offset by $40.0 million in repayments of the Revolving Facility. In addition, the Company spent approximately $9.8 million on its share repurchase program, $2.0 million in payments under the terms of a finance lease, $1.6 million in earnout payments on contingent liabilities, $0.2 million in dividends paid to a noncontrolling interest and $0.3 million in taxes related to shares withheld for employee taxes.

Previous wording

During the three months ended March 31, 2023, financing activities used $12.0 million of cash, due to a reduction of $11.5 million in amounts due to seller, as deferred payments were made under the terms of previously-closed acquisitions; $0.8 million in payments under the terms of finance leases; and $0.1 million in repayments of notes payable. These items were partially offset by $0.4 million in proceeds from the exercise of stock options.

Current wording

During the six months ended June 30, 2023, financing used $3.2 million of cash, primarily due to a $2.6 million decrease in amounts due to seller, relating to payments made for acquisitions that were completed in the second half of 2022 and early 2023; $1.5 million in payments on obligations under the terms of finance leases; and $0.2 million in repayments of notes payable. These were partially offset by $1.1 million in proceeds from the exercise of stock options.

Previous wording

Net loss for the Company's VIEs was $275,905 and $186,637 for the three months ended March 31, 2024 and 2023, respectively. The total assets amounted to $5,364,950 and $4,364,274 as of March 31, 2024 and December 31, 2023, respectively. Total liabilities were $6,088,439 and $4,811,857 as of March 31, 2024 and December 31, 2023, respectively. The Company's VIEs' total stockholders’ deficit was $723,489 and $447,583 as of March 31, 2024 and December 31, 2023, respectively.

Current wording

Net income (loss) for the Company’s VIEs was $(81,978) and $306,854 for the three months ended June 30, 2024 and 2023, respectively. and $(357,883) and $120,217 for the six months ended June 30, 2024 and 2023, respectively. Total assets amounted to $6,798,202 and $4,364,274 as of June 30, 2024 and December 31, 2023, respectively. Total liabilities were $7,603,668 and $4,811,857 as of June 30, 2024 and December 31, 2023, respectively. The Company’s VIEs’ total stockholders’ deficit was $805,466 and $447,583 as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

The Company accounts for its business combinations under the provisions of ASC 805-10, Business Combinations (“ASC 805-10”), which requires that the acquisition method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including noncontrolling interests, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill.

Current wording

The Company accounts for its business combinations under the provisions of ASC 805-10, which requires that the acquisition method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including noncontrolling interests, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill.

Previous wording

On February 3, 2023, Health commenced an ABC pursuant to California law. An ABC is a liquidation process governed by state law (California law in this instance) that is an alternative to a bankruptcy case under federal law. Prior to commencing the ABC, Health ceased business operations and all of its employees were terminated and treated in accordance with California law. In the ABC, all of Health’s assets were transferred to the Assignee, who acted as a fiduciary for creditors and in a capacity equivalent to that of a bankruptcy trustee. The Assignee was responsible for liquidating the assets. Similar to a bankruptcy case, there was a claims process. Creditors of Health received notice of the ABC and a proof of claim form and were required to submit a proof of claim in order to participate in distribution of net liquidation proceeds by the Assignee.

Current wording

On February 3, 2023, Health commenced an ABC pursuant to California law. An ABC is a liquidation process governed by state law (California law in this instance) that is an alternative to a bankruptcy case under federal law. Prior to commencing the ABC, Health ceased business operations and all of its employees were terminated and treated in accordance with California law. In the ABC, all of Health’s assets were transferred to the Assignee, who acts as a fiduciary for creditors and in a capacity equivalent to that of a bankruptcy trustee. The Assignee is responsible for liquidating the assets. Similar to a bankruptcy case, there was a claims process. Creditors of Health received notice of the ABC and a proof of claim form and were required to submit a proof of claim in order to participate in distribution of net liquidation proceeds by the Assignee.

Previous wording

On January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), as amended.

Current wording

On January 1, 2019, the Company adopted ASC 606.