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    DocGo Inc (DCGO)

    Q1 2024 Earnings Summary

    Reported on Feb 25, 2025 (After Market Close)
    Pre-Earnings Price$3.50Last close (May 8, 2024)
    Post-Earnings Price$3.49Open (May 9, 2024)
    Price Change
    $-0.01(-0.29%)

    What went well

    • Strong demand for DocGo's care gap closure services is driving growth in partnerships with major health insurance companies, including contracts with two of the five largest insurers. This unique mobile health model differentiates DocGo by bringing care directly to patients' homes, effectively improving health outcomes and helping insurance companies improve HEDIS and Stars ratings.
    • Expansion into virtual and in-home primary care offerings positions DocGo for significant growth, leveraging their ability to provide both virtual and in-person care when needed. This approach meets patient needs more effectively than telehealth alone and is attracting interest from payers and commercial partners, with monetization through per-member-per-month fees and potential risk-sharing arrangements.
    • DocGo projects substantial growth in its core businesses, aiming for $400 million in revenues in 2025, driven by a strong pipeline in hospital systems, municipal population health programs, and payer/provider partnerships. The company plans to redeploy resources from winding down migrant-related projects to focus on its base business, potentially leading to additional revenue growth.

    What went wrong

    • The company's core revenue is expected to remain flat in 2024 at approximately $300 million, indicating limited organic growth in its base business segments.
    • The wind-down of migrant-related projects is expected to significantly reduce overall revenue, creating uncertainty about future revenue streams since these projects have been substantial contributors to growth.
    • The company faces reputational risks due to the politicization of its migrant-related work, leading at least one partner to pause engagements, which could negatively impact future contracts and growth prospects.

    Q&A Summary

    1. 2025 Core Revenue and Migrant Contracts
      Q: Will 2025 core revenue include migrant contract revenue?
      A: The $400 million core revenue expectation for 2025 excludes any migrant-related revenues, which would be incremental depending on circumstances.

    2. 2025 Revenue Breakdown and Growth Rates
      Q: What are the growth rates of the 2025 revenue segments?
      A: Hospital systems revenue is expected to grow around 15% from 2024 to 2025. Municipal revenue will focus on long-term programs, and payer/provider programs are the fastest-growing segment, though from a smaller base.

    3. Reduction in Migrant Revenue Guidance
      Q: Why was migrant revenue guidance reduced by $100 million?
      A: The reduction is due to the transition and anticipated wind-down of HPD sites; H&H migrant work remains flat at roughly $180 million for the full year.

    4. Margin Expectations Amid Revenue Changes
      Q: How will margins be affected as you exit HPD revenue?
      A: Overall margins should remain consistent, with a potential slight improvement as lower-margin projects wind down first.

    5. Revenue Trends and Seasonality in 2024
      Q: How will revenue trend throughout 2024 with declining migrant contracts?
      A: Overall revenue will decrease sequentially due to declining HPD revenue, making Q1 the high watermark; core revenue growth won't offset the decline.

    6. Operating Cash Flow Relative to EBITDA
      Q: What operating cash flow is expected relative to EBITDA this year?
      A: Operating cash flow is expected to be between $70 million and $80 million, slightly higher than EBITDA due to positive working capital changes.

    7. Impact of Migrant Care Noise on Other Deals
      Q: Is migrant care noise affecting other deals in NYC or state?
      A: While one partner paused, we're proactively managing the situation, and overall it hasn't significantly affected our other deals.

    8. Core Growth Rate for 2024
      Q: What's the expected core growth rate in 2024 excluding migrant work?
      A: Non-migrant revenue is projected to be roughly $300 million in 2024, which is flat year-over-year due to offsetting factors.

    9. Margins on Base Revenues for 2025 Targets
      Q: Can you explain margins on base revenues to reach 12.5% EBITDA in 2025?
      A: We expect a blended gross margin around 35%, with SG&A at about 23%, leading to an adjusted EBITDA margin of approximately 12.5% in 2025.

    10. Payer-Facing Business and Care Gap Closures
      Q: What demand are you seeing for care gap closures from payers?
      A: There's strong demand as payers invest in improving quality scores; our unique in-home model differentiates us from brick-and-mortar competitors.

    11. Virtual Primary Care Monetization
      Q: What's the revenue model for your virtual primary care business?
      A: Initially, we'll use a per-member-per-month fee from health plans or payers, moving towards risk-sharing arrangements over time.

    12. Segment Margins Between Transport and Mobile Health
      Q: Did you provide segment EBITDA margins between Transport and Mobile Health?
      A: Yes, the Transport gross margin is about 33%, and Mobile Health base gross margin is in the high 30s; details are in our filings.

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