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    DocGo (DCGO)

    Q2 2024 Earnings Summary

    Reported on Feb 25, 2025 (After Market Close)
    Pre-Earnings Price$2.99Last close (Aug 7, 2024)
    Post-Earnings Price$3.28Open (Aug 8, 2024)
    Price Change
    $0.29(+9.70%)
    • DocGo anticipates strong growth in its core business in the second half of 2024, driven by new contracts and programs ramping up, with an expected base business revenue of approximately $400 million in 2025. , ,
    • The company is securing new contracts due to demonstrated ROI, including a 50% reduction in hospital readmissions for complex patients, attracting strong interest from hospital systems and insurance partners.
    • DocGo is diversifying its customer base, projecting that less than five customers will account for over 10% of total revenue next year, thereby reducing customer concentration risk.
    • Flat sequential growth in the core business: The company's core business was relatively flat sequentially from Q1 to Q2 of 2024, indicating potential weakness in underlying demand or challenges in organic growth.
    • Declining margins in the transportation segment: The transportation segment's adjusted gross margins decreased to 29.1% in Q2 2024, down from 30.7% in Q2 2023, due to increased subcontractor costs and unexpected workers' compensation adjustments, suggesting potential ongoing margin pressures in this segment.
    • High Days Sales Outstanding (DSOs) and cash flow concerns: The company acknowledged that DSOs remain a significant factor, with expectations of catching up on collections extending into the first quarter of next year, which may impact cash flow and liquidity.
    1. Fiscal 2025 Revenue Expectations
      Q: Can you elaborate on fiscal '25 revenue expectations of $400M?
      A: They expect base business revenue of $400 million in 2025, excluding some migrant-related services that may continue and add to revenue. The $400 million comprises revenues from hospital systems, municipal programs, and the payer vertical, with $50 million projected from payers.

    2. Margins and EBITDA
      Q: Are you still expecting 10% margins on $400M revenue in 2025?
      A: Yes, they project 10% EBITDA margins as a floor, targeting up to 12.5%, consistent with previous guidance.

    3. Cash Flow Conversion
      Q: What cash flow conversion do you expect on $40M EBITDA next year?
      A: They anticipate converting about $30 million of the $40 million EBITDA into cash flow, indicating a 75% conversion rate.

    4. Core Business Growth
      Q: Did the core business grow 30% year-over-year this quarter?
      A: No, the core business was relatively flat quarter-over-quarter but is expected to grow strongly in the back half of the year as new contracts ramp up.

    5. Care Gap Closures
      Q: How will doubling assigned lives in care gaps affect revenue?
      A: Doubling assigned lives is a top-of-funnel metric; as they close care gaps, revenue will be generated, boosting growth in Q3 and Q4.

    6. Impact of Medical Cost Ratios
      Q: How do rising medical cost ratios affect DocGo?
      A: They fit well in this environment by providing proactive care that helps manage chronic conditions before they become costly, saving health plans money.

    7. Mobile Transport Growth
      Q: Is mobile transport expected to grow 30% plus next year?
      A: Mobile transport is expected to grow in the 15% to 20% range; mobile health is where they foresee larger growth.

    8. Customer Concentration
      Q: How many customers will be over 10% of revenue next year?
      A: They project less than 5 customers will represent more than 10% of total revenue, aiming to diversify their customer base.

    9. Recent Contract Wins
      Q: What is driving the recent flurry of contract wins?
      A: It's due to both increased market adoption of in-home care and the ROI of their programs, which reduce hospital readmissions by 50%.

    10. 2024 Base Business Guidance
      Q: Are you still expecting $280M–$300M for the base business in 2024?
      A: Yes, they maintain the projection of $280 million to $300 million for this year.

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