DocGo Inc. (NASDAQ:DCGO) Q2 2025 Earnings Call Transcript

DocGo Inc. (NASDAQ:DCGO) Q2 2025 Earnings Call Transcript August 8, 2025

Operator: Good afternoon, ladies and gentlemen, and welcome to the DocGo Second Quarter Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, August 7, 2025. I would now like to turn the conference over to Mike Cole, VP, Investor Relations. Please go ahead.

Mike Cole: Thank you, Michael. 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 may, 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 DocGo’s annual report on Form 10-K, quarterly reports on Form 10-Q, our earnings release this quarter and other reports and statements filed by DocGo 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 to 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 8-K that includes our earnings release and an exhibit with additional information regarding certain non-GAAP financial measures, which are posted on our website, docgo.com as well as furnished with the SEC.

The information contained in this call is accurate as of 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 Bienstock, CEO of DocGo. Lee, please go ahead.

Lee Bienstock: Thank you, Mike, and thank you all for joining us today. On our last call, I shared how we are building DocGo around innovative solutions for payers, providers and health systems that transform the manner in which proactive healthcare is delivered. I also shared confidence in the value and strong market need for our mobile health at any address and medical transportation platform. I could not be more excited about the path that we are on, and I am pleased to share our Q2 accomplishments, which include a substantial increase in our cash balance, making key reductions to SG&A, delivering strong operational metrics and winning multiple new contracts, all of which position us to achieve our goals for 2025 and for the many growth opportunities ahead.

Regarding our cash balance, we had a very strong cash flow from operations during the quarter, totaling more than $30 million as we continue to make substantial progress collecting receivables from past migrant-related programs. Last quarter, we reported that we had approximately $120 million in migrant-related accounts receivable. At the end of Q2, that number is now roughly $54 million. Our total cash, which includes cash and restricted cash and investments was $128.7 million as of the end of Q2, up from $103.1 million last quarter, an increase of $25.6 million. We continue to expect strong cash flow from operations and total net cash of more than $110 million at year-end. In addition to our strong cash collections, we made progress reducing SG&A.

At the end of Q2, we undertook a substantial reduction in force that eliminated dozens of roles in HR, finance, operations and IT and made additional reductions to corporate overhead, resulting in an estimated $10 million annualized savings. We continue to evaluate our business structure to seek additional SG&A efficiencies and right size where it is prudent, while at the same time, working to position ourselves to capitalize on growth opportunities in each of our business verticals. We continue to make considerable progress delivering against our key operational metrics. To put the scope of our operations into perspective, during the quarter, we completed more than 176,000 medical transports, more than 6,000 gap closure and transitional care management visits and more than 28,000 mobile phlebotomy visits, hitting our targets and all consistent with our goal of bringing healthcare to any address.

The need for proactive healthcare at any address has never been more acute than it is today. Chronic disease is the biggest challenge in American healthcare with trillions of dollars being spent treating chronic disease each year, creating a substantial challenge for payers, providers, hospitals and the overall U.S. healthcare system. We’re seeing payers wrestle with these challenges, including risk pool deterioration and escalating medical loss ratios. We believe we are helping address the root causes of these issues. We are already working with an enviable roster of customers to bring proactive care to people where they are, when they need it and doing so at scale. As I normally do, I would like to spend a few minutes covering the progress in each of those verticals, payer and providers, health systems and government population health.

First, in our payer and provider vertical, we continue to make significant progress as we recently launched a new care gap closure program in Southern California with one of the largest not-for-profit Medicare and Medicaid public health plans in the U.S. Not only are we continuing to aggressively expand with our existing customer base in the Northeast and California, but we are also anticipating adding services in more than a dozen and a half dozen new states by the end of 2026 across multiple payers. In addition to our care gap closure program, we are seeing strong interest in our transition to care program designed to provide in-home visits for recently discharged patients to reduce readmissions. An early pilot for these services at 1 hospital in Southern California is now expanding to 4 locations where an on-site transition coordinator will help manage discharges that are at high risk for readmission across all business lines for this payer.

This is one of our most significant customer expansions to date and highlights the fact that while relationships in this vertical do take time to mature, the customer base we are already contracted with has tremendous potential for growth. We have collectively exceeded 1.2 million assigned lives to engage with since the inception of our care gap closure program, up from 900,000 just a quarter ago. We are seeing increased velocity in our gap closure business. In the first half of 2025, we’ve already completed more at-home visits than we did in the entirety of 2024. We are also seeing a positive trend in patient conversions as we test, learn and optimize our outreach strategies with a 50% increase in patient conversions in Q2 relative to the previous quarter.

We also expanded our care gap closure relationship with a major insurance company in the Northeast to now include primary care services. We continue to invest to build our capacity and capabilities to meet this growing level of demand, and our payer vertical pipeline has never been stronger. We are already working with 2 of the top 10 national payers and are in active discussions with both of these customers to expand those contracts. Additionally, we are in contracting with 2 more of the top 10 national payers and have an additional 35 deals with payers at various stages in our business development pipeline. Our solutions address real issues for insurance payers and clearly, they are resonating with this audience. We are on track to end the year at more than 31,000 care gap visits and believe we can increase that number to more than 54,000 by the end of 2026.

We anticipate converting a large percentage of these care gap patients to DocGo’s primary care practice, which we believe represents a much larger revenue opportunity. Not only are we scaling our impact, we continue to push the frontier of how technology and now AI can be incorporated into our operations to more efficiently engage patients and bring care to where it’s needed. For example, our engineering team built a text- based AI agent to automate appointment reminders, confirmations and rescheduling in 7 different languages. Recently launched, this AI agent has already confirmed over 3,000 appointments and rescheduled another 350, saving roughly 10% of our live operators’ time. We are now training this agent to sign patients up for care gap services as well and look forward to sharing additional results on future calls.

Second, in our medical transportation business, as I mentioned previously, we completed more than 176,000 transports across our fee- for-service and leased hour trips in the U.S. and the U.K. during the quarter as we invested and prepared resources for a major new customer launch in New York that began on July 1. This new rollout is expected to help drive record trip volumes and top line revenue for our medical transportation business in the second half of the year. Our engineering team integrated our proprietary software platform with this customer’s electronic health record system in under 5 weeks, providing the hospital with a single centralized platform to order, track and manage patient transportation across their entire health system.

Additionally, we signed a multiyear deal to provide medical transport for the Albany Stratton VA Medical Center, renewed medical transportation contracts with the city of Atlantic City and with an academic medical center in Wisconsin and continue to grow both the number of facilities and our trip volumes in Dallas, Texas. Third, in our population health vertical, we continue to wind down the migrant-related programs with the vast majority of this work concluding in late June. We launched a project with the Mescalero Apache Tribe and the New Mexico Department of Health to help expand access to preventative wellness care, women’s health services, chronic disease management and behavioral health services for rural communities in New Mexico. We also announced a new contract to provide mobile health vaccination services for San Diego County.

We continue to selectively pursue government and agency opportunities that we perceive as evergreen and not emergency response or episodic in nature. We are seeing interest in areas such as general population behavioral health, which is an area we gained significant experience with over the last couple of years. We will continue to update you on progress and plan to break out and report on the revenue impact of this municipal population health work, which Norm will touch on in his remarks. I’d like to close with this. On June 19, we rang the closing bell at NASDAQ to celebrate both our company’s 10-year anniversary and our 10 millionth patient interaction. Both of these milestones are a testament to the scale and impact of our accomplishments.

We have just completed the first decade of this 100-year journey to fundamentally transform how healthcare is delivered, and I see endless opportunity ahead of us in the next 90 years and beyond. Now I’ll hand it over to Norm to cover the financials.

Norman Rosenberg: Thank you, Lee, and good afternoon. Total revenue for the second quarter of 2025 was $80.4 million compared to $164.9 million in the second quarter of 2024. 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 2023 and the first quarter of 2024 and began to wind down in May of 2024 with the exit from the HPD sites in New York City. By the end of 2024, we had exited all the HPD sites and the remaining migrant work with New York City Health and Hospitals was substantially completed by June 30 of this year with a bit more revenue expected to extend into the second half.

Mobile Health revenue for the second quarter of 2025 was $30.8 million, down from $116.7 million in the second quarter of last year, driven by the wind down of migrant revenues. Included in this year’s amount was approximately $18 million in migrant-related revenues and less than $1 million in government population health revenues, which we’d stated previously we would break out. Medical Transportation Services revenue increased to $49.6 million in Q2 of 2025 from $48.2 million in transport revenues that we recorded in the second quarter of 2024. Revenues were driven higher by increases in Delaware, Tennessee, Pennsylvania and New Jersey, which outweighed the impact of our exiting Colorado, an exclusively fee-for-service market that did not meet our threshold for scale.

Removing Colorado results from both periods and our underlying transportation revenues increased by approximately 7% year- over-year. In the second quarter, medical transport revenues accounted for 62% of total consolidated revenue and Mobile Health for the remaining 38%. Adjusted EBITDA for the second quarter of 2025 was a loss of $6.1 million compared to adjusted EBITDA of $17.2 million in the second quarter of 2024. The adjusted gross margin, which removes the impact of depreciation and amortization and is the measure of margins that we track most closely, was 31.6% in the second quarter of 2025 compared to 33.9% in the second quarter of 2024. During the second quarter of 2025, adjusted gross margin for the Mobile Health segment was 32.5% versus 35.9% in the second quarter of 2024, but up from adjusted gross margins of 30.8% in the first quarter of 2025.

We witnessed improved margins in the early-stage payer and provider business. As this business continues to grow, we 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 continue to raise the overall Mobile Health segment in the future. In the medical transportation segment, adjusted gross margins were 31.1% in Q2 of 2025 compared to 29.1% in Q2 of 2024. Despite the 200 basis point year-over-year improvement, medical transportation margins were restrained in Q2 by several factors, including the ongoing aggressive hiring of field personnel such as EMTs in anticipation of further growth in our key markets.

The largest impact was seen in New York, where we hired field personnel during the quarter in advance of the July 1 launch of services with a major new health system customer, which Lee just mentioned. Looking at operating costs, we’ve seen SG&A increase sharply as a percentage of total revenues as migrant revenues have wound down over the past several quarters. On an absolute dollar basis, though, SG&A expenses were 7% lower year-over-year in the second quarter of 2025 and were down 5% on a sequential basis. Looking at what we call recurring SG&A by adding back noncash items such as depreciation and stock comp and nonrecurring items that are added back for adjusted EBITDA purposes, we have seen significant reductions on both a year-over-year and a sequential basis.

For Q2, recurring SG&A was $3.2 million or 9% lower than in Q1 of 2025 and $7.1 million or 18% lower than in Q2 of 2024. We are taking costs out of the business by reducing headcount across all shared services areas, and we continue to slash vendor costs by either switching to lower-cost providers or by obtaining competing bids for these services. We will continue to focus on lowering our SG&A costs throughout the remainder of 2025. Now looking ahead, we continue to expect to reach positive adjusted EBITDA in the back half of next year. For illustrative purposes, this would require us to generate quarterly revenues in the $80 million to $85 million range with gross margins between 33% and 35% and with adjusted SG&A 5% to 10% lower than what we just witnessed in Q2 of 2025.

We are confident that our robust pipeline, our strong balance sheet and these cost-cutting measures will enable us to execute this plan. Now from a cash flow perspective, Q2 was a very strong quarter. We generated $33.6 million in positive cash flow from operations as we continue to collect our older, larger invoices. Through the first 6 months of 2025, we’ve generated more than $43 million in cash flow from operations. Consequently, our cash balances were much higher at the end of Q2 than at the end of Q1 or the end of 2024 despite cash used in our stock buyback program and the acquisition of PTI Health. As of June 30, 2025, our total cash and cash equivalents, including restricted cash and investments, was $128.7 million, up more than $25 million from the $103.1 million at March 31, 2025, the highest quarter end level that we’ve seen since the second quarter of 2023.

Our accounts receivable continued to decrease, reflecting our cash collections and this wind down of migrant-related revenues that we’ve witnessed since the middle of the second quarter of 2024. We made substantial progress in Q2 collecting our municipal receivables. At quarter end, we had approximately $54 million in accounts receivable from the various migrant programs, which represented less than half of our total AR. This compares to $120 million in migrant program-related AR at the end of Q1 and $150 million at the end of 2024, which at the time represented approximately 71% of the company’s total. We have now collected about 95% of all of our migrant-related revenues from the inception of those programs until today. And we believe that we have good visibility into and full confidence in the collection of all remaining outstanding amounts.

While the wind down of migrant-related programs has had an impact on revenues, our balance sheet has benefited substantially in 2025 as we collect this AR, leading to an improvement in cash flow from operations. This will provide us with the resources we need to support the pipeline that Lee just referenced, invest in our growth and to further bolster our balance sheet. Last week, we used our enhanced cash balances to pay the outstanding amounts under our line of credit, removing $30 million in debt from our balance sheet. One of the ways that we deployed our cash during the second quarter was to execute our stock buyback program. During the quarter, we repurchased 2.5 million shares via open market purchases for an aggregate amount of approximately $5.1 million.

To this point in 2025, we have spent close to $11 million on our stock repurchase. In June, our Board of Directors approved the extension of the buyback program until December 31. We currently have approximately $11 million remaining under the terms of this program. At this point, I’d like to turn the call back over to Michael for Q&A. Michael, please go ahead.

Q&A Session

Operator: [Operator Instructions] We will take our first question now from Phil Chickering with Scotiabank.

Unidentified Analyst: It looks like the patients under the care gap closure services went from 900,000 last quarter to $1.2 million this quarter. But the revenue and EBITDA guidance for the year is left unchanged. I guess you talked about sort of, I guess, the structure of those economics, but can you sort of walk us through how adding 30,000 patients in your care gap coverage doesn’t change guidance for the year.

Lee Bienstock: Absolutely, and thank you for the question. So first off, this increase in patients is from contracts that we’ve already signed that we started the year out with. So these have been communicated to us. Of course, they materialize in the quarter, and we are planning to scale and ramp the operations to meet the demand. The key right now for us is with this increased list of patients, increasing our engagement rate with these patients, but also increasing our ability and our teams in the field to be able to go and fulfill all the visits that we’re currently booking with these list of patients. And that’s the big goal for us right now is ramping the teams in the field, making sure they’re well trained to deliver a very high-quality service. And that’s the key factor for us right now as we scale in the back half of the year.

Unidentified Analyst: Okay. Great. And then on the medical transport, revenue stepped down a little bit sequentially, something we don’t see very often. Can you just sort of bridge the moving pieces of the Colorado exit? Was there any revenues to that in the first quarter that sort of made a harder comp? Or just walk us through the bridge of revenue sequentially in medical transport from the first quarter to the second quarter?

Norman Rosenberg: So it’s Norm. So as far as Colorado is concerned, there really wasn’t much in the way of revenue in Q1. It was really more of a year- over-year comp. If you look at Q2 of 2024, there was about $1.8 million, I want to say, somewhere in that area in Colorado, and there was immaterial amount of revenue in Q2 of 2025. So it was more of a matter of the year-over-year than the sequential comp. In terms of the — a little bit of a step back between Q1 and Q2, it was mostly a matter of seasonality. We had higher revenues than we had expected in the first quarter in a couple of our larger markets. So it’s simply a matter of that settling in.

Unidentified Analyst: Okay. Great. So then there’s no changes to any of those contracts repricing negatively or anything along those lines?

Norman Rosenberg: No, no. No, no, absolutely not. I would say that when you look at a lot of this is connected, right? Because if you look at Q1, we were bumping up against what I would consider some of our capacity ceilings, right? We were able to — we managed the business at an extremely high capacity utilization rate in Q1, which sort of leads you to some of the increased cost of goods sold that we had in Q2, where we had to obviously hire people in order to be able to take more volume. So that’s the kind of thing that’s going to happen. So it’s not exactly a step function, but what tends to happen is that we will run our crews and our equipment to as much capacity as we can squeeze out of it and then you get to a point where you kind of have to take a little bit of a step back and readjust so that you can take it the next step higher. And that’s what I would say happened between Q1 and Q2.

Operator: Our next question comes from Mike Latimore with Northland Capital.

Aditya Dagaonkar: This is Aditya on behalf of Mike Latimore. Could you give some color on what was the EBITDA margin on your medical transport business? And what do you think it would be on a long-term target basis?

Norman Rosenberg: So I’ll go out of order there. I mean we’ve talked about how we want to drive a double-digit EBITDA margin on that business. During the quarter that would not have been the case. I would say it was probably in the mid-single digits during the quarter. So somewhere on the 5% to 6% area. We talked about how gross margins were probably, I would say, close to 2 points lower than we would have expected. Most of that was driven by what we did in New York, whereas we’ve talked about, there’s our #1 market size-wise. We just launched with a large hospital system here in New York. And that launched on July 1. And during the month, particularly — during the quarter, particularly towards the last month of the quarter, so during the month of June, we definitely added to our headcount.

We have people who are in training. We have people who are on payroll, but we’re not obviously running trips just yet. So we had a little bit of a mismatch in the timing between the cost of goods sold and the revenue kicking in. So that was something that suppressed margins a little bit. But otherwise, we continue to feel that, that EBITDA margin of 10% on an underlying basis for the transport business is very much doable.

Aditya Dagaonkar: Got it. And what do [ indiscernible ] the medical transport to be as a percentage of your annual revenue this year?

Norman Rosenberg: So we mentioned it’s about 62% in the past quarter. It’s not going from this point, it would probably step down from that because we have the much faster-growing health plan and provider — payer and provider business that’s growing at a faster rate. So are those ancillary businesses on the Mobile Health side. I would say that it’s still going to be something on the order of 60% or so, 60% to 65% for the year versus 35% to 40% for what we consider the Mobile Health segment.

Operator: That appears to be our last question. I’ll turn the conference at this time over back to Lee Bienstock, CEO, for any additional remarks.

Lee Bienstock: Thank you, Michael. I appreciate everyone taking the time to join today’s call and for the thoughtful questions. CMS projected that at-home healthcare expenditures are going to double from 2021 to 2031 to reach an estimated $250 billion. We believe our company is at the vanguard of this trend, care in the home, bringing quality care to the home. We’re doing so at a scale we believe few other companies can match with a purpose-built technology platform and contracts with some of the biggest names in the healthcare industry. And most importantly, patients love opening the door for DocGo. Thank you to our incredible team and our investors as we make our collective vision of healthcare at any address a reality. We look forward to speaking with you all again soon. Be well.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.