DocGo (DCGO) - 2023 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents DocGo Inc.'s unaudited condensed consolidated financial statements for Q1 2023 and 2022, encompassing balance sheets, statements of operations, equity changes, cash flows, and detailed notes on accounting policies, operations, and acquisitions Unaudited Condensed Consolidated Balance Sheets This table presents DocGo Inc.'s financial position, detailing assets, liabilities, and equity as of March 31, 2023, and December 31, 2022 | Metric | March 31, 2023 (Unaudited, $) | December 31, 2022 (Audited, $) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $120,056,897 | $157,335,323 | | Accounts receivable, net | $131,599,567 | $102,995,397 | | Total current assets | $258,393,842 | $271,080,905 | | Total assets | $407,545,176 | $393,277,628 | | Total current liabilities | $108,974,683 | $100,158,490 | | Total liabilities | $123,624,152 | $114,350,237 | | Total stockholders' equity | $283,921,024 | $278,927,391 | Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income This table outlines DocGo Inc.'s financial performance, including revenue, expenses, and net income (loss) for the three months ended March 31, 2023, and 2022 | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :-------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue, net | $113,002,703 | $117,891,552 | | Total expenses | $119,905,290 | $107,796,987 | | (Loss) Income from operations | $(6,902,587) | $10,094,565 | | Net (loss) income | $(3,918,790) | $9,372,437 | | Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries | $(3,465,670) | $10,629,694 | | Net (loss) income per share - Basic | $(0.03) | $0.11 | | Net (loss) income per share - Diluted | $(0.03) | $0.09 | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity This section details the changes in DocGo Inc.'s stockholders' equity, including net loss, additional paid-in capital, and foreign currency adjustments for the three months ended March 31, 2023 - For the three months ended March 31, 2023, DocGo Inc.'s total stockholders' equity increased from $278,927,391 at December 31, 2022, to $283,921,024 Key changes included an increase in additional paid-in capital by $8,598,429, a net loss attributable to stockholders of $(3,465,670), and a foreign currency translation adjustment of $243,658[18] Unaudited Condensed Consolidated Statements of Cash Flows This table summarizes DocGo Inc.'s cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2023, and 2022 | Cash Flow Activity | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :----------------- | :-------------------------------- | :-------------------------------- | | Operating Activities | $(23,117,951) | $18,264,682 | | Investing Activities | $(1,689,495) | $(1,137,040) | | Financing Activities | $(11,951,059) | $2,496,798 | | Net (decrease) increase in cash and restricted cash | $(36,590,356) | $19,618,577 | | Cash and restricted cash at end of period | $127,518,718 | $198,724,307 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed disclosures on DocGo's accounting policies, business operations, acquisitions, financial instruments, and other significant financial events for the reporting period 1. Description of Organization and Business Operations DocGo Inc. is a healthcare transportation and mobile health services company operating in the US and UK, utilizing proprietary technology. The company was formed through a reverse recapitalization in November 2021, with Ambulnz, Inc. being the accounting acquirer - DocGo Inc. provides healthcare transportation and mobile health services in major metropolitan cities in the United States and the United Kingdom, leveraging proprietary dispatch and communication technology[29] - The company's formation involved a business combination in November 2021, where Motion Acquisition Corp. merged with Ambulnz, Inc., with Ambulnz, Inc. treated as the accounting acquirer in a reverse recapitalization[26][35] 2. Summary of Significant Accounting Policies This section outlines DocGo's key accounting policies, including the basis of presentation under U.S. GAAP, principles of consolidation (including a Variable Interest Entity, MD1 Medical Care P.C.), foreign currency translation, use of estimates, self-insurance reserves, and fair value measurements. It also details policies for revenue recognition, stock-based compensation, earnings per share, equity method investments, and leases, and notes the company's status as an 'emerging growth company' - DocGo consolidates MD1 Medical Care P.C. as a Variable Interest Entity (VIE) because it has the power to direct MD1's activities and the obligation to absorb its losses, despite not having direct equity ownership[37] - The company's revenue is primarily derived from Transportation Services and Mobile Health Services, recognized when performance obligations are satisfied, typically based on fixed or usage-based fees[84][85] Revenue Disaggregation by Geography and Service Line (Three Months Ended March 31) | Revenue Breakdown | 2023 ($) | 2022 ($) | | :---------------- | :------------ | :------------ | | Primary Geographical Markets | | | | United States | $98,909,521 | $115,053,431 | | United Kingdom | $14,093,182 | $2,838,121 | | Major Segments/Service Lines | | | | Transportation Services | $40,055,946 | $27,812,510 | | Mobile Health | $72,946,757 | $90,079,042 | | Total revenue | $113,002,703 | $117,891,552 | - DocGo is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards, which may affect comparability with other public companies[48][50] - The Company had one customer that accounted for approximately 46% of sales and 62% of net accounts receivable for the three months ended March 31, 2023, indicating a significant customer concentration[45] 3. Property and Equipment, net DocGo's net property and equipment increased to $21.7 million as of March 31, 2023, from $21.3 million at December 31, 2022, with transportation equipment being the largest component. Depreciation expenses significantly increased year-over-year | Asset Category | March 31, 2023 ($) | December 31, 2022 ($) | | :--------------- | :------------- | :---------------- | | Transportation equipment | $21,907,460 | $20,773,862 | | Medical equipment | $5,835,273 | $5,177,520 | | Total property and equipment, net | $21,729,460 | $21,258,175 | | Depreciation expenses (3 months ended March 31) | $1,482,610 | $711,878 | 4. Acquisition of Businesses and Asset Acquisitions DocGo completed several acquisitions in 2022 and early 2023, including Government Medical Services, Exceptional Medical Transportation, Ryan Brothers Fort Atkinson, Community Ambulance Services, Location Medical Services, and Cardiac RMS. These acquisitions expanded its medical transportation and mobile health services, with Cardiac RMS (acquired March 31, 2023) marking an entry into cardiac remote monitoring - On March 31, 2023, DocGo acquired 51% of Cardiac RMS, LLC (CRMS) for $10 million in cash and stock, with an additional $15.8 million probable contingent consideration, expanding into cardiac implantable electronic device remote monitoring and virtual care management[113] - In 2022, DocGo acquired Government Medical Services, Exceptional Medical Transportation, Ryan Brothers Fort Atkinson, Community Ambulance Service Ltd (UK), and Location Medical Services, LLC, totaling $94.97 million in consideration, primarily to expand medical transportation services and market presence[106][107][108][109][112][114] - The acquisition of Community Ambulance Service Ltd resulted in a gain on bargain purchase of $1,593,612 due to acquired net assets exceeding the purchase price[109][115] 5. ABC Transaction and Held for Sale Ambulnz Health, LLC (Health) commenced an assignment for the benefit of creditors (ABC) on February 3, 2023, a state-governed liquidation process. As of December 31, 2022, Health's assets and liabilities were classified as held for sale, reflecting the company's intention to liquidate - Ambulnz Health, LLC (Health) initiated an assignment for the benefit of creditors (ABC) on February 3, 2023, a state-law governed liquidation process, leading to the termination of employees and transfer of assets to an assignee[117][118] - As of December 31, 2022, Health's assets and liabilities, including $4.48 million in assets and $4.48 million in liabilities, were classified as held for sale at the lower of carrying value or fair value less costs to sell[119][122] 6. Goodwill DocGo recognized a non-cash goodwill impairment charge of $2.9 million for its Health reporting unit in 2022 due to the ABC transaction. Despite this, the carrying value of goodwill increased to $47.7 million by March 31, 2023, primarily from new acquisitions - A non-cash goodwill impairment charge of $2,921,958 was recognized for the Health reporting unit in 2022, primarily due to the ABC filing, which had no impact on cash flow or liquidity[123][124] Goodwill Carrying Value Changes | Metric | Amount ($) | | :-------------------------- | :------------- | | Balance as of December 31, 2022 | $38,900,413 | | Goodwill acquired during the period | $8,642,190 | | CTA | $126,051 | | Balance as of March 31, 2023 | $47,668,654 | 7. Intangibles DocGo's net intangible assets significantly increased to $38.9 million as of March 31, 2023, from $23.0 million at December 31, 2022, primarily driven by additions to customer relationships and operating licenses from acquisitions. Amortization expenses also rose year-over-year | Intangible Asset Category | March 31, 2023 (Net Carrying Amount, $) | December 31, 2022 (Net Carrying Amount, $) | | :------------------------ | :----------------------------------- | :------------------------------------ | | Operating licenses | $9,399,004 | $8,799,004 | | Customer relationship | $27,322,949 | $11,803,653 | | Total intangibles, net | $38,939,054 | $22,969,246 | | Amortization expenses (3 months ended March 31) | $1,365,636 | $633,363 | - The estimated future amortization expense for definite life intangible assets is projected to be $3.1 million for the remainder of 2023 and $3.8 million in 2024[130] 8. Accrued Liabilities DocGo's total accrued liabilities decreased slightly to $30.5 million as of March 31, 2023, from $31.6 million at December 31, 2022. Accrued subcontractors and accrued general expenses remain the largest components | Accrued Liability Category | March 31, 2023 ($) | December 31, 2022 ($) | | :------------------------- | :------------- | :---------------- | | Accrued subcontractors | $8,889,201 | $8,101,150 | | Accrued general expenses | $7,080,279 | $11,436,462 | | Accrued workers compensation and insurance liabilities | $6,564,201 | $3,766,469 | | Total accrued liabilities | $30,544,082 | $31,573,031 | 9. Line of Credit DocGo entered into a new $90 million revolving loan and security agreement in November 2022, maturing in November 2027, with an option to increase by $50 million. This facility replaced a previous $12 million line of credit that was repaid in December 2022. As of March 31, 2023, no amounts were outstanding under the new facility - On November 1, 2022, DocGo secured a new revolving loan and security agreement with a maximum advance of $90 million, maturing on November 1, 2027, and an option to increase by $50 million[135] - The new revolving facility is secured by a first-priority lien on substantially all of the Company's present and future personal and intangible assets and is subject to financial covenants[135] - As of March 31, 2023, DocGo had not made any draws under the new $90 million revolving facility, and no amounts were outstanding[135] 10. Notes Payable DocGo's total notes payable remained stable at approximately $1.9 million as of March 31, 2023, primarily consisting of equipment and financing loans with interest rates between 2.5% and 8%, maturing through 2027. The current portion of notes payable was $0.65 million | Metric | March 31, 2023 ($) | December 31, 2022 ($) | | :-------------------------------- | :------------- | :---------------- | | Equipment and financing loans payable | $1,922,223 | $1,901,514 | | Total notes payable | $1,922,223 | $1,901,514 | | Less: current portion | $(649,808) | $(664,913) | | Total non-current portion | $1,272,415 | $1,236,601 | - Future minimum annual maturities of notes payable are $425,309 for the remainder of 2023, $478,492 in 2024, and $463,573 in 2025[139] 11. Business Segment Information Beginning Q1 2023, DocGo reports in three segments: Transportation Services, Mobile Health Services, and Corporate. While Mobile Health Services generated higher revenue in Q1 2022, Transportation Services saw significant growth in Q1 2023. The Corporate segment, introduced for shared services, reported a substantial operating loss due to increased infrastructure and stock compensation costs - DocGo now reports in three operating segments: Transportation Services, Mobile Health Services, and Corporate, with the Corporate segment introduced in Q1 2023 to analyze shared services and personnel[141] Operating Results by Business Segment (Three Months Ended March 31) | Metric | Transportation Services (2023, $) | Mobile Health Services (2023, $) | Corporate (2023, $) | Total (2023, $) | Transportation Services (2022, $) | Mobile Health Services (2022, $) | Corporate (2022, $) | Total (2022, $) | | :-------------------------- | :----------------------------- | :---------------------------- | :--------------- | :----------- | :----------------------------- | :---------------------------- | :--------------- | :----------- | | Revenues | $40,055,946 | $72,946,757 | $- | $113,002,703 | $27,812,510 | $90,079,042 | $- | $117,891,552 | | Income (loss) from operations | $1,083,040 | $13,188,159 | $(21,173,786) | $(6,902,587) | $(2,538,760) | $23,402,298 | $(10,768,973) | $10,094,565 | | Total assets | $118,998,556 | $152,352,877 | $136,193,743 | $407,545,176 | $73,244,007 | $48,736,456 | $203,215,841 | $325,196,304 | - The Corporate segment's operating loss significantly increased from $(10.8) million in Q1 2022 to $(21.2) million in Q1 2023, primarily due to higher stock compensation and investments in corporate infrastructure[143] 12. Equity DocGo's share repurchase program, authorized in May 2022 for up to $40 million, saw no repurchases in Q1 2023. In 2022, the company repurchased 536,839 shares for $3.7 million, which were subsequently cancelled - DocGo's share repurchase program, authorized for up to $40 million, resulted in no share repurchases during the first quarter of 2023[145] - In 2022, the company repurchased 536,839 shares of common stock for $3,731,712, which were subsequently cancelled[145] 13. Stock Based Compensation As of March 31, 2023, DocGo had 11.2 million stock options outstanding with a weighted-average exercise price of $7.15, and 3.2 million options vested. Unrecognized compensation for stock options was $32.1 million, expected to be recognized over approximately 2 years. For RSUs, 225,579 units were outstanding, with $1.9 million in unrecognized compensation cost Stock Option Activity (Three Months Ended March 31, 2023) | Metric | Options Shares | Weighted Average Exercise Price ($) | | :-------------------------- | :------------- | :------------------------------ | | Balance as of Dec 31, 2022 | 11,571,308 | $7.11 | | Exercised during the year | (96,101) | $2.60 | | Cancelled during the year | (267,539) | $7.74 | | Balance as of March 31, 2023 | 11,207,668 | $7.15 | | Options vested and exercisable at March 31, 2023 | 3,153,550 | $6.12 | - Total unrecognized compensation related to unvested stock option awards was $32,118,556 as of March 31, 2023, expected to be recognized over a weighted-average period of approximately 2 years[150] - For Restricted Stock Units (RSUs), 225,579 units were non-vested as of March 31, 2023, with $1,934,998 in unrecognized compensation cost expected to be recognized over approximately 1.1 years[153][154] 14. Leases DocGo's operating lease ROU assets increased to $9.4 million and liabilities to $9.7 million as of March 31, 2023, with a weighted average remaining lease term of 4.86 years. Finance lease ROU assets were $9.2 million and liabilities $8.8 million, with a weighted average remaining lease term of 3.66 years. Cash payments for operating leases increased significantly year-over-year Operating Lease Position (March 31, 2023) | Metric | March 31, 2023 ($) | December 31, 2022 ($) | | :------------------------ | :------------- | :---------------- | | Lease right-of-use assets | $9,375,132 | $9,074,277 | | Total lease liability | $9,668,609 | $9,366,006 | | Weighted average remaining lease term | 4.86 years | | | Weighted average discount rate | 5.99% | | | Operating lease expense (3 months ended March 31) | $756,245 | $462,625 | Finance Lease Position (March 31, 2023) | Metric | March 31, 2023 ($) | December 31, 2022 ($) | | :------------------------ | :------------- | :---------------- | | Lease right-of-use assets | $9,170,429 | $9,039,663 | | Total lease liability | $8,834,857 | $8,646,803 | | Weighted average remaining lease term | 3.66 years | | | Weighted average discount rate | 5.95% | | | Finance lease payment (3 months ended March 31) | $744,030 | $622,575 | - In June 2022, the Company recognized a $1.4 million gain on lease remeasurement due to a reassessment of finance lease estimates for vehicle mileage and residual value, leading to a decision to purchase vehicles at lease end[167] 15. Other Income (Expenses) DocGo reported total other income of $853,927 for the three months ended March 31, 2023, a significant improvement from a loss of $(281,949) in the prior year. This was primarily driven by a substantial increase in net interest income | Other Income (Expenses) Category | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Interest income (expense), net | $809,172 | $(135,606) | | Loss on remeasurement of warrant liabilities | $- | $(58,749) | | Loss on equity method investments | $(115,286) | $(83,341) | | Loss on disposal of fixed assets | $(54,839) | $- | | Other income (expenses) | $214,880 | $(4,253) | | Total other income (expenses) | $853,927 | $(281,949) | 16. Related Party Transactions DocGo engaged in related party transactions, including legal services from Ely D. Tendler Strategic & Legal Services PLLC (owned by the General Counsel) totaling $234,230 in Q1 2023, and subcontractor services from PrideStaff (owned by an operations manager and spouse) totaling $93,311 in Q1 2023 - DocGo paid $234,230 for legal services to Ely D. Tendler Strategic & Legal Services PLLC, a firm owned by the Company's General Counsel, during the three months ended March 31, 2023[177] - Subcontractor payments to PrideStaff, a related party owned by an operations manager and spouse, amounted to $93,311 for the three months ended March 31, 2023, a decrease from $209,153 in the prior year[178] 17. Income Taxes DocGo recorded an income tax benefit of $2.1 million for the three months ended March 31, 2023, compared to an expense of $0.4 million in the prior year, reflecting a pre-tax loss in the current period and the inclusion of state income taxes from new jurisdictions Income Tax Benefit (Provision) and Effective Tax Rate | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :------------------------ | :-------------------------------- | :-------------------------------- | | Income tax benefit (provision) | $2,129,870 | $(440,179) | | Effective tax rate | 38.21% | 4.85% | 18. 401(K) Plan DocGo established a 401(k) plan in January 2022 for eligible U.S. employees but did not make any employer contributions as of March 31, 2023 - DocGo established a 401(k) plan in January 2022 for eligible U.S. employees but made no employer contributions as of March 31, 2023[180] 19. Legal Proceedings DocGo recorded a $1.0 million liability as of March 31, 2023, for an agreed-upon settlement of class-based claims under California state law, stemming from wage and hour violations alleged in a consolidated lawsuit - DocGo recorded a $1,000,000 liability as of March 31, 2023, for a preliminarily approved settlement of class-based claims related to wage and hour violations under California state law[182][183] 20. Risk and Uncertainties The COVID-19 pandemic had mixed impacts on DocGo, initially decreasing transportation volumes but accelerating demand for mobile health services. While COVID-19 testing revenue has significantly declined, the company anticipates continued growth in mobile health and transportation services due to secular factors like an aging population and patient preference for at-home care - COVID-19 testing activity, a significant revenue driver in 2021 and early 2022, has slowed considerably and is expected to account for an insignificant proportion of total revenues in 2023 and beyond[186][187] - DocGo's business plan assumes continued recovery of industry-wide transportation volumes and increased demand for Mobile Health services, driven by longer-term secular factors such as an aging population and patient desire for treatments outside traditional settings[187][200] 21. Subsequent Events In April 2023, DocGo acquired the remaining noncontrolling interest in FMC NA for $7.0 million, consisting of $3.0 million in equity and $4.0 million in cash, resulting in 100% ownership - In April 2023, DocGo purchased the remaining noncontrolling interest in FMC NA for $7,000,000, comprising $3,000,000 in equity (360,145 shares) and $4,000,000 in cash, achieving 100% ownership[188] Item 2. Management's Discussion and Analysis of Financial Condition and Result of Operations This section provides management's perspective on DocGo's financial condition and results of operations for the three months ended March 31, 2023, compared to 2022. It covers an overview of the business, the impact of COVID-19, factors affecting performance, detailed analysis of revenue and expenses by segment, liquidity, capital resources, and critical accounting policies Cautionary Note Regarding Forward-Looking Statements This section advises readers that the report contains forward-looking statements subject to risks and uncertainties, with no obligation for future updates - The report contains forward-looking statements regarding DocGo's plans, strategies, and financial prospects, which are subject to substantial risks and uncertainties beyond management's control[190] - DocGo explicitly states it undertakes no obligation to publicly update or revise any forward-looking statements due to new information, future events, or otherwise[192] Overview This section provides a general introduction to DocGo's business as a healthcare transportation and mobile services company, outlining its operating segments and recent financial performance - DocGo, founded in 2015, is a healthcare transportation and mobile services company operating in the US and UK, leveraging proprietary technology for in-person medical treatment[193] - Beginning Q1 2023, DocGo reports in three operating segments: Transportation Services, Mobile Health Services, and a new Corporate segment for shared services, with prior-year figures adjusted for comparability[194][195] - For the three months ended March 31, 2023, the Company recorded a net loss of $3.9 million, a decline from net income of $9.4 million in the prior-year period[196] COVID-19 Impact This section discusses the mixed impact of COVID-19 on DocGo's business, noting the decline in testing revenue but the acceleration and diversification of mobile health services - COVID-19 initially caused a decline in non-emergency medical transport and event-related revenues but accelerated demand for mobile health services, which has since diversified beyond COVID-19 testing[197][199] - COVID-19 testing revenue significantly declined in Q3 and Q4 2022 and Q1 2023, becoming an insignificant proportion of total revenues as the pandemic enters an endemic phase[199] - The pandemic accelerated the diversification and expansion of the Mobile Health segment, which is now DocGo's larger operating segment in terms of revenues and personnel[199] Factors Affecting Our Results of Operations This section identifies key internal and external factors influencing DocGo's financial performance, including market conditions, acquisitions, competition, and macroeconomic trends - DocGo's operating results are influenced by its ability to obtain operating licenses, the success of its acquisition strategy, conditions in healthcare transportation and mobile health markets, and the competitive environment[203][204][205][208] - Overall macroeconomic conditions, including rising interest rates, inflation, potential recession, and financial institution instability, significantly impact DocGo's financial performance, particularly by compressing gross profit margins due to increased labor, fuel, and medical supply costs[209][214] - Future revenue growth depends on penetrating new and existing markets, controlling expenses (especially labor and vehicle costs), and continuous investment in R&D for innovative software services and mobile applications[203][213][215] Components of Results of Operations This section describes the primary components of DocGo's financial results, detailing revenue and cost structures across its Transportation Services, Mobile Health Services, and Corporate segments - DocGo's business is divided into three reportable segments: Transportation Services, Mobile Health Services, and Corporate, with all revenue and cost of goods sold contained within the first two segments[217] - Cost of revenues primarily includes revenue-generating wages, vehicle insurance, maintenance, fuel, laboratory fees, facility rent, medical supplies, and subcontractors, expected to rise with revenue[219] - Operating expenses, such as general and administrative, depreciation and amortization, legal and regulatory, technology and development, and sales, advertising, and marketing, are expected to increase to support business growth and public company operations[220][221][223][224][225] Results of Operations (Comparison of the Three Months Ended March 31, 2023 and March 31, 2022) This section provides a detailed comparative analysis of DocGo's financial performance, including revenue, cost of revenue, and operating expenses, for Q1 2023 versus Q1 2022 Consolidated Revenue This section analyzes DocGo's total revenue performance, highlighting a slight decrease for the three months ended March 31, 2023, compared to the prior year | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | Change ($) | Change (%) | | :------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Revenue, net | $113.0 million | $117.9 million | $(4.9) million | (4%) | Mobile Health Revenue This section details the decline in Mobile Health revenue, primarily due to reduced COVID-19 testing services, partially offset by growth in other mobile health offerings | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | Change ($) | Change (%) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Mobile Health revenue | $72.9 million | $90.1 million | $(17.2) million | (19.1%) | | Estimated COVID-19 testing revenue | $1.0 million | $38.0 million | $(37.0) million | (97.4%) | Transportation Services Revenue This section highlights the significant growth in Transportation Services revenue, driven by increased trip volumes, higher average trip prices, and strategic acquisitions | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | Change ($) | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Transportation Services revenue | $40.1 million | $27.8 million | $12.3 million | 44% |\ | Trip volumes | 58,176 | 48,110 | 10,066 | 21% | | Average trip price | $415 | $353 | $62 | 17.6% | - The increase in average trip price was also supported by an 8.7% increase in the average Medicare reimbursement rate for ambulance transports[231] Cost of Revenue This section examines the increase in DocGo's total cost of revenue and its percentage of revenue, attributing it to higher compensation and vehicle costs, despite reduced COVID-related expenses | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | Change ($) | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Total cost of revenue | $81.2 million | $78.0 million | $3.2 million | 4.1% | | Cost of revenue as % of revenue | 71.9% | 66.2% | 5.7 pp | | - Key drivers for the increase in cost of revenue included a $15.7 million increase in total compensation and a $0.6 million increase in vehicle costs, partially offset by a $1.9 million decline in subcontracted labor, an $8.2 million decrease in medical supplies, and a $3.4 million decline in lab fees[233] - For Mobile Health, cost of revenues as a percentage of revenues increased to 72.3% in Q1 2023 from 62.7% in Q1 2022, due to declining COVID-testing revenues and higher compensation expenses[234] - For Transportation Services, cost of revenues as a percentage of revenues declined to 71.1% in Q1 2023 from 77.3% in Q1 2022, reflecting higher per-trip prices, increased standby contracts, and lower average fuel prices[235] Operating Expenses This section details the substantial increase in DocGo's operating expenses, driven by higher compensation, depreciation, legal fees, and IT infrastructure investments | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | Change ($) | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Total operating expenses | $38.7 million | $29.8 million | $8.9 million | 30% | | Operating expenses as % of revenue | 34.3% | 25.3% | 9.0 pp | | - Key increases included $6.9 million in total compensation (driven by stock compensation), $1.4 million in depreciation and amortization, $2.3 million in legal and regulatory fees, $1.2 million in insurance costs, and $1.0 million in IT infrastructure[236] - These increases were partially offset by a $3.0 million decline in bad debt expense, a $0.5 million decline in commissions, and a $0.5 million decline in marketing costs[236] - Corporate segment operating expenses significantly increased from $10.8 million in Q1 2022 to $21.12 million in Q1 2023, primarily due to higher headcount and stock compensation for corporate infrastructure[239] Interest Income/(Expense), Net This section reports a shift to net interest income, reflecting higher cash balances and increased market interest rates for the three months ended March 31, 2023 | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :------------------------ | :-------------------------------- | :-------------------------------- | | Interest income (expense), net | $809,172 | $(135,606) | Gain/(loss) on Remeasurement of Warrant Liabilities This section notes the absence of warrant liability remeasurement gain or loss in Q1 2023, following the redemption of warrants in the prior year | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Loss on remeasurement of warrant liabilities | $- | $(58,749) | Gain/(Loss) on Equity Method Investment This section reports an increased loss from equity method investments, reflecting DocGo's share of losses from a minority-interest entity | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Loss on equity method investments | $(115,286) | $(83,341) | Gain/(loss) on Disposal of Fixed Assets This section reports a loss on the disposal of fixed assets for the three months ended March 31, 2023, with no comparable event in the prior year | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Loss on disposal of fixed assets | $(54,839) | $- | Income Tax Benefit/(Expense) This section details a shift to an income tax benefit, reflecting a pre-tax loss in Q1 2023 and the inclusion of state income taxes from new jurisdictions | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :------------------------ | :-------------------------------- | :-------------------------------- | | Income tax benefit (provision) | $2.1 million | $(0.4) million | Net Loss Attributable to Noncontrolling Interest This section reports a decrease in net loss attributable to noncontrolling interests, indicating improved performance in DocGo's joint venture investments | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss attributable to noncontrolling interests | $(0.5) million | $(1.3) million | Liquidity and Capital Resources DocGo's liquidity is primarily supported by existing cash, expected operating cash flows, and a $90 million revolving credit line (undrawn as of March 31, 2023). The company anticipates these resources will be sufficient for at least the next twelve months, despite a decrease in working capital and cash balances due to acquisitions and operational timing - DocGo's primary sources of liquidity include equity financing, operating cash flows, and a $90 million revolving loan and security agreement, which was undrawn as of March 31, 2023[246][247] - The company anticipates that existing cash, future operating cash flows, and the available line of credit will be sufficient to meet operating requirements for at least the next twelve months[249] - Future capital requirements are dependent on potential acquisitions, technology investments, and growth rates, and may be affected by external factors like interest rates and inflation[246] Capital Resources This section details DocGo's working capital and available cash, noting a decrease primarily due to reduced cash balances and increased current liabilities | Metric | As of March 31, 2023 ($) | As of March 31, 2022 ($) | Change ($) | Change (%) | | :---------------- | :------------------- | :------------------- | :--------- | :--------- | | Current assets | $258.4 million | $268.2 million | $(9.8) million | (4%) | | Current liabilities | $109.0 million | $61.0 million | $48.0 million | 79% | | Total working capital | $149.4 million | $207.2 million | $(57.8) million | (28%) | | Available cash | $120.1 million | $188.4 million | $(68.3) million | (36.3%) | - Working capital decreased by $57.8 million to $149.4 million as of March 31, 2023, primarily due to reduced cash balances and increased current liabilities from business growth and acquisition-related payables[250] Cash Flows This section analyzes DocGo's cash flow activities, highlighting cash used in operating, investing, and financing activities for the three months ended March 31, 2023 | Cash Flow Activity | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | Change ($) | Change (%) | | :----------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Operating Activities | $(23.1) million | $18.3 million | $(41.4) million | (226%) | | Investing Activities | $(1.7) million | $(1.1) million | $(0.6) million | (55%) | | Financing Activities | $(12.0) million | $2.5 million | $(14.5) million | (580%) | | Net (decrease) increase in cash | $(36.6) million | $19.7 million | $(56.3) million | (286%) | - Operating activities used $23.1 million of cash in Q1 2023, primarily due to a net loss of $3.9 million and a $24.7 million increase in accounts receivable, partially offset by non-cash charges[252] - Investing activities used $1.7 million in Q1 2023, mainly for property and equipment acquisitions ($2.0 million) and intangibles ($1.4 million), partially offset by cash from an acquisition ($1.6 million)[254] - Financing activities used $12.0 million in Q1 2023, driven by $11.5 million in deferred payments for acquisitions and $0.8 million in finance lease payments, partially offset by $0.4 million from stock option exercises[256] Critical Accounting Policies This section outlines DocGo's key accounting policies, including consolidation, business combinations, goodwill impairment, and revenue recognition, which involve significant management judgments and estimates - DocGo's financial statements are prepared under U.S. GAAP, consolidating wholly-owned subsidiaries and Variable Interest Entities (VIEs) like MD1 Medical Care P.C., where the company has power and benefits[261][264] - Business combinations are accounted for using the acquisition method, recording acquired assets and liabilities at fair value, with goodwill representing the excess purchase price over identifiable net assets[266][267] - Goodwill is not amortized but tested for impairment annually or more frequently if indicators suggest impairment, such as the $5.1 million impairment related to Ambulnz Health, LLC's liquidation in 2022[270][272] - Revenue recognition follows ASC 606, identifying performance obligations and recognizing revenue as benefits are consumed by the customer, typically based on fixed or usage-based fees, net of estimated contractual allowances[273][274][275] Item 3. Quantitative and Qualitative Disclosures About Market Risk DocGo's primary market risks include interest rate risk (minimal impact due to fixed-rate notes payable and undrawn credit line), foreign exchange risk (limited due to majority USD transactions), and concentration of credit risk from cash deposits and major customers - DocGo's principal market risk is interest rate volatility on cash equivalents, but cash flows are not expected to be significantly affected due to fixed interest rates on notes payable and an undrawn revolving credit facility[278] - Foreign exchange risk is limited as the majority of transactions are in U.S. dollars, with a foreign exchange gain of $243,658 in Q1 2023, and no hedging strategies are currently utilized[279] - The company faces concentration of credit risk, with one customer accounting for approximately 46% of sales and 62% of net accounts receivable for the three months ended March 31, 2023[280][281] Item 4. Controls and Procedures DocGo's management, including its principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023. There were no material changes in internal control over financial reporting during the quarter - DocGo's disclosure controls and procedures were deemed effective as of March 31, 2023, ensuring timely and accurate reporting of information[282] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[283] PART II - OTHER INFORMATION Item 1. Legal Proceedings DocGo is subject to legal proceedings and claims in the ordinary course of business, with details provided in Note 19 of the financial statements. The company also receives information requests from government agencies and takes appropriate action - DocGo is involved in legal actions and claims arising in the ordinary course of business, with specific details referenced in Note 19 of the unaudited Condensed Consolidated Financial Statements[285] - The company is also subject to requests for information and investigations from government agencies related to regulatory or investigational authority[286] Item 1A. Risk Factors As of the filing date, there have been no material changes to the risk factors previously disclosed in DocGo's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022, have occurred as of the date of this Quarterly Report on Form 10-Q[287] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds DocGo issued $1.0 million worth of common stock in a private placement to four accredited investors as part of its acquisition of Cardiac RMS, LLC on March 31, 2023. The company also reported no share repurchases in Q1 2023 under its $40 million program, which had seen $3.7 million in repurchases in 2022 - On March 31, 2023, DocGo issued $1,000,000 worth of common stock in a private placement to four accredited investors as part of the acquisition of 51% of Cardiac RMS, LLC[288][289] - No shares were repurchased during the first quarter of 2023 under the $40 million share repurchase program, which is set to expire on November 24, 2023[290] Item 3. Defaults Upon Senior Securities DocGo reported no defaults upon senior securities for the period - There were no defaults upon senior securities[291] Item 4. Mine Safety Disclosures This item is not applicable to DocGo Inc - This item is not applicable[292] Item 5. Other Information DocGo reported no other information for the period - There is no other information to report[293] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, officer certifications, and XBRL-related documents - The exhibits include the Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, an Offer Letter, and certifications from the Principal Executive Officer and Principal Financial Officer[295] - XBRL Instance Document and Taxonomy Extension documents (Schema, Calculation, Definition, Label, Presentation) are also filed as exhibits[295] Signatures The report is duly signed on May 9, 2023, by Anthony Capone, Chief Executive Officer, and Norman Rosenberg, Chief Financial Officer, on behalf of DocGo Inc - The report was signed on May 9, 2023, by Anthony Capone, Chief Executive Officer, and Norman Rosenberg, Chief Financial Officer, confirming due authorization[298][300]