UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023March 31, 2024
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-39618
DocGo Inc.
(Exact Name of Registrant as Specified in Its Charter)
| | | | | | | | |
Delaware | | 85-2515483 |
(State or Other Jurisdiction of Incorporation or Organization) | | (I.R.S. Employer Identification Number) |
| | |
35 West 35th Street, Floor 6 New York, New York | | 10001 |
(Address of Principal Executive Offices) | | (Zip Code) |
(844) 443-6246
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of Each Class | | Trading Symbol(s) | | Name of Each Exchange on Which Registered |
Common Stock, par value $0.0001 per share | | DCGO | | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
Large accelerated filer | ¨x | | Accelerated filer | x¨ |
Non-accelerated filer | ¨ | | Smaller reporting company | ¨ |
| | | Emerging growth company | x¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of August 7, 2023, 103,785,806May 6, 2024, 101,565,541 shares of Common Stock,the registrant’s common stock, par value $0.0001 per share, were issued and outstanding.
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DocGo Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | | June 30, 2023 | | December 31, 2022 |
| Unaudited | | Audited |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Unaudited | | | Unaudited | | Audited |
ASSETS | ASSETS | |
| Current assets: | |
Current assets: | |
Current assets: | Current assets: | |
Cash and cash equivalents | Cash and cash equivalents | $ | 109,159,519 | | | $ | 157,335,323 | |
Accounts receivable, net of allowance of $4,204,532 and $7,818,702 as of June 30, 2023 and December 31, 2022, respectively | 118,498,751 | | | 102,995,397 | |
Assets held for sale | — | | | 4,480,344 | |
Cash and cash equivalents | |
Cash and cash equivalents | |
Accounts receivable, net of allowance of $6,319,441 and $6,276,454 as of March 31, 2024 and December 31, 2023, respectively | |
Prepaid expenses and other current assets | Prepaid expenses and other current assets | 6,786,787 | | | 6,269,841 | |
| Total current assets | Total current assets | 234,445,057 | | | 271,080,905 | |
| Property and equipment, net | |
Property and equipment, net | |
Property and equipment, net | Property and equipment, net | 21,937,494 | | | 21,258,175 | |
Intangibles, net | Intangibles, net | 38,050,268 | | | 22,969,246 | |
Goodwill | Goodwill | 47,820,840 | | | 38,900,413 | |
Restricted cash | Restricted cash | 14,601,243 | | | 6,773,751 | |
Operating lease right-of-use assets | Operating lease right-of-use assets | 9,288,582 | | | 9,074,277 | |
Finance lease right-of-use assets | Finance lease right-of-use assets | 8,963,759 | | | 9,039,663 | |
Equity method investment | 392,118 | | | 597,977 | |
Equity method investments | |
Deferred tax assets | Deferred tax assets | 11,247,764 | | | 9,957,967 | |
Other assets | Other assets | 3,538,920 | | | 3,625,254 | |
Total assets | Total assets | $ | 390,286,045 | | | $ | 393,277,628 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities: | Current liabilities: | | | | Current liabilities: | | | |
Accounts payable | Accounts payable | $ | 6,690,956 | | | $ | 21,582,866 | |
Accrued liabilities | Accrued liabilities | 34,787,144 | | | 31,573,031 | |
Line of credit | |
Notes payable, current | Notes payable, current | 696,308 | | | 664,913 | |
Due to seller | Due to seller | 17,896,030 | | | 26,244,133 | |
Contingent consideration | Contingent consideration | 26,489,294 | | | 10,555,540 | |
Operating lease liability, current | Operating lease liability, current | 2,479,340 | | | 2,325,024 | |
Liabilities held for sale | — | | | 4,480,344 | |
Finance lease liability, current | Finance lease liability, current | 2,717,546 | | | 2,732,639 | |
Total current liabilities | Total current liabilities | 91,756,618 | | | 100,158,490 | |
| Notes payable, non-current | |
Notes payable, non-current | |
Notes payable, non-current | Notes payable, non-current | 1,580,516 | | | 1,236,601 | |
Operating lease liability, non-current | Operating lease liability, non-current | 7,162,046 | | | 7,040,982 | |
Finance lease liability, non-current | Finance lease liability, non-current | 5,926,286 | | | 5,914,164 | |
Total liabilities | Total liabilities | 106,425,466 | | | 114,350,237 | |
| Commitments and Contingencies | |
| STOCKHOLDERS’ EQUITY: | | | |
Common stock ($0.0001 par value; 500,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 103,762,092 and 102,411,162 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 10,376 | | | 10,241 | |
Commitments and contingencies | |
Commitments and contingencies | |
Commitments and contingencies | | | | |
Stockholders’ equity: | | Stockholders’ equity: | | | |
Common stock ($0.0001 par value; 500,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 102,961,495 and 104,055,168 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively) | |
Additional paid-in-capital | Additional paid-in-capital | 312,101,281 | | | 301,451,435 | |
Accumulated deficit | Accumulated deficit | (33,729,702) | | | (28,972,216) | |
Accumulated other comprehensive income | Accumulated other comprehensive income | 1,390,642 | | | 741,206 | |
Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries | Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries | 279,772,597 | | | 273,230,666 | |
Noncontrolling interests | Noncontrolling interests | 4,087,982 | | | 5,696,725 | |
Total stockholders’ equity | Total stockholders’ equity | 283,860,579 | | | 278,927,391 | |
Total liabilities and stockholders’ equity | Total liabilities and stockholders’ equity | $ | 390,286,045 | | | $ | 393,277,628 | |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial StatementsStatements.
DocGo Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INCOME
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | |
Revenue, net | $ | 125,486,760 | | | $ | 109,519,304 | | | $ | 238,489,463 | | | $ | 227,410,856 | |
Expenses: | | | | | | | |
Cost of revenues (exclusive of depreciation and amortization, which is shown separately below) | 83,617,876 | | | 70,176,462 | | | 164,844,374 | | | 148,164,035 | |
Operating expenses: | | | | | | | |
General and administrative | 30,797,237 | | | 24,637,618 | | | 60,017,554 | | | 48,498,234 | |
Depreciation and amortization | 3,831,061 | | | 2,037,771 | | | 7,480,390 | | | 4,238,792 | |
Legal and regulatory | 2,404,856 | | | 3,061,276 | | | 6,043,177 | | | 4,409,259 | |
Technology and development | 2,574,389 | | | 1,148,320 | | | 4,437,968 | | | 2,290,153 | |
Sales, advertising and marketing | 685,387 | | | 1,000,100 | | | 992,633 | | | 2,258,061 | |
Total expenses | 123,910,806 | | | 102,061,547 | | | 243,816,096 | | | 209,858,534 | |
Income (loss) from operations | 1,575,954 | | | 7,457,757 | | | (5,326,633) | | | 17,552,322 | |
| | | | | | | |
Other income (expenses): | | | | | | | |
Interest income (expense), net | 521,872 | | | 98,276 | | | 1,331,044 | | | (37,330) | |
Gain on remeasurement of warrant liabilities | — | | | 3,027,766 | | | — | | | 2,969,017 | |
(Loss) gain on initial equity method investments | (90,573) | | | 89,810 | | | (205,859) | | | 6,469 | |
Gain on remeasurement of finance leases | — | | | 1,388,273 | | | — | | | 1,388,273 | |
(Loss) gain on disposal of fixed assets | (98,630) | | | — | | | (153,469) | | | — | |
Other (expense) income | (920,058) | | | 15,640 | | | (705,178) | | | 11,387 | |
Total other (expense) income | (587,389) | | | 4,619,765 | | | 266,538 | | | 4,337,816 | |
| | | | | | | |
Net income (loss) before income tax benefit (expense) | 988,565 | | | 12,077,522 | | | (5,060,095) | | | 21,890,138 | |
Income tax benefit (provision) | 355,054 | | | (321,660) | | | 2,484,924 | | | (761,839) | |
Net income (loss) | 1,343,619 | | | 11,755,862 | | | (2,575,171) | | | 21,128,299 | |
Net income (loss) attributable to noncontrolling interests | 3,354,886 | | | (979,791) | | | 2,901,766 | | | (2,237,048) | |
Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries | (2,011,267) | | | 12,735,653 | | | (5,476,937) | | | 23,365,347 | |
Other comprehensive (loss) income | | | | | | | |
Foreign currency translation adjustment | 405,778 | | | 10,434 | | | 649,436 | | | 4,571 | |
Total comprehensive (loss) income | $ | (1,605,489) | | | $ | 12,746,087 | | | $ | (4,827,501) | | | $ | 23,369,918 | |
| | | | | | | |
Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Basic | $ | (0.02) | | | $ | 0.13 | | | $ | (0.05) | | | $ | 0.23 | |
Weighted-average shares outstanding - Basic | 103,585,661 | | 99,303,948 | | 103,085,257 | | 100,372,146 |
| | | | | | | |
Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Diluted | $ | (0.02) | | | $ | 0.11 | | | $ | (0.05) | | | $ | 0.20 | |
Weighted-average shares outstanding - Diluted | 103,585,661 | | 115,279,676 | | 103,085,257 | | 116,347,874 |
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2024 | | 2023 |
| | | |
Revenues, net | $ | 192,087,529 | | | $ | 113,002,703 | |
Expenses: | | | |
Cost of revenues (exclusive of depreciation and amortization, which is shown separately below) | 124,808,914 | | | 81,226,498 | |
Operating expenses: | | | |
General and administrative | 40,181,035 | | | 29,220,317 | |
Depreciation and amortization | 4,182,781 | | | 3,649,329 | |
Legal and regulatory | 4,313,503 | | | 3,638,321 | |
Technology and development | 2,388,919 | | | 1,863,579 | |
Sales, advertising and marketing | 337,010 | | | 307,246 | |
Total expenses | 176,212,162 | | | 119,905,290 | |
Income (loss) from operations | 15,875,367 | | | (6,902,587) | |
| | | |
Other income (expense): | | | |
Interest (expense) income, net | (369,008) | | | 809,172 | |
Change in fair value of contingent liability | 6,446 | | | — | |
Loss on equity method investments | (83,167) | | | (115,286) | |
Loss on remeasurement of operating and finance leases | (4,697) | | | — | |
Gain (loss) on disposal of fixed assets | 52,835 | | | (54,839) | |
Other income | 244,607 | | | 214,880 | |
Total other income (expense) | (152,984) | | | 853,927 | |
| | | |
Net income (loss) before income tax provision | 15,722,383 | | | (6,048,660) | |
(Provision for) benefit from income taxes | (5,119,004) | | | 2,129,870 | |
Net income (loss) | 10,603,379 | | | (3,918,790) | |
Net loss attributable to noncontrolling interests | (624,070) | | | (453,120) | |
Net income (loss) attributable to stockholders of DocGo Inc. and Subsidiaries | 11,227,449 | | | (3,465,670) | |
Other comprehensive income | | | |
Foreign currency translation adjustment | (140,134) | | | 243,658 | |
Total comprehensive income (loss) | $ | 11,087,315 | | | $ | (3,222,012) | |
| | | |
Net income (loss) per share attributable to DocGo Inc. and Subsidiaries - Basic | $ | 0.11 | | | $ | (0.03) | |
Weighted-average shares outstanding - Basic | 103,818,362 | | 102,579,291 |
| | | |
Net income (loss) per share attributable to DocGo Inc. and Subsidiaries - Diluted | $ | 0.10 | | | $ | (0.03) | |
Weighted-average shares outstanding - Diluted | 108,506,435 | | 102,579,291 |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial StatementsStatements.
DocGo Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | | Additional Paid-in- Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Loss | | Noncontrolling Interests | | Total Stockholders’ Equity |
| | Shares | | Amount | | | | | | |
Balance - December 31, 2021 | | 100,133,953 | | $ | 10,013 | | | | $ | 283,161,216 | | | $ | (63,556,714) | | | $ | (32,501) | | | $ | 7,475,010 | | | $ | 227,057,024 | |
Exercise of stock options | | 195,152 | | 195 | | | | 374,149 | | | — | | | — | | | — | | | 374,344 | |
Stock based compensation | | — | | — | | | | 1,422,937 | | | — | | | — | | | — | | | 1,422,937 | |
Equity cost | | — | | — | | | | (19,570) | | | — | | | — | | | — | | | (19,570) | |
UK Ltd. restricted stock (Note 4) | | | | — | | | | — | | | — | | | — | | | — | | | — | |
Noncontrolling interest contribution | | — | | — | | | | — | | | — | | | — | | | 2,063,000 | | | 2,063,000 | |
Foreign currency translation | | — | | — | | | | — | | | — | | | (5,863) | | | — | | | (5,863) | |
Net loss attributable to noncontrolling interests | | — | | — | | | | — | | | — | | | — | | | (1,257,257) | | | (1,257,257) | |
Net income attributable to stockholders of DocGo Inc. and Subsidiaries | | — | | — | | | | — | | | 10,629,694 | | | — | | | — | | | 10,629,694 | |
Balance - March 31, 2022 | | 100,329,105 | | 10,208 | | | 284,938,732 | | $ | (52,927,020) | | | (38,364) | | 8,280,753 | | $ | 240,264,309 | |
Common stock repurchased | | (70,000) | | (70) | | | | (497,829) | | | — | | | — | | | — | | | (497,899) | |
Exercise of stock options | | 417,927 | | 418 | | | | 778,648 | | | — | | | — | | | — | | | 779,066 | |
Stock based compensation | | — | | — | | | | 1,999,619 | | | — | | | — | | | — | | | 1,999,619 | |
UK Ltd. restricted stock (Note 4) | | 8,258 | | 8 | | | | 82,297 | | | — | | | — | | | — | | | 82,305 | |
Net loss attributable to Noncontrolling interests | | — | | — | | | | — | | | — | | | — | | | (979,791) | | | (979,791) | |
Foreign currency translation | | — | | — | | | | — | | | — | | | 10,434 | | | — | | | 10,434 | |
Net income attributable to stockholders of DocGo Inc. and Subsidiaries | | — | | — | | | | — | | | 12,735,653 | | | — | | | — | | | 12,735,653 | |
Balance - June 30, 2022 | | 100,685,290 | | $ | 10,564 | | | | $ | 287,301,467 | | | $ | (40,191,367) | | | $ | (27,930) | | | $ | 7,300,962 | | | $ | 254,393,696 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | | Additional Paid-in- Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Loss | | Noncontrolling Interests | | Total Stockholders’ Equity |
| | Shares | | Amount | | | | | | |
Balance - December 31, 2022 | | 102,411,162 | | $ | 10,241 | | | | $ | 301,451,435 | | | $ | (28,972,216) | | | $ | 741,206 | | | $ | 5,696,725 | | | $ | 278,927,391 | |
Exercise of stock options | | 96,101 | | 10 | | | | 249,705 | | | — | | | — | | | — | | | 249,715 | |
UK Ltd. restricted stock | | — | | — | | | | 167,175 | | | — | | | — | | | — | | | 167,175 | |
Stock-based compensation | | 424,911 | | 42 | | | | 8,181,549 | | | — | | | — | | | — | | | 8,181,591 | |
Health liquidation | | — | | — | | | | — | | | 70,284 | | | — | | | — | | | 70,284 | |
Net loss attributable to noncontrolling interests | | — | | — | | | | — | | | — | | | — | | | (453,120) | | | (453,120) | |
Foreign currency translation | | — | | — | | | | — | | | — | | | 243,658 | | | — | | | 243,658 | |
Net loss attributable to stockholders of DocGo Inc. and Subsidiaries | | — | | — | | | | — | | | (3,465,670) | | | — | | | — | | | (3,465,670) | |
Balance - March 31, 2023 | | 102,932,174 | | $ | 10,293 | | | | $ | 310,049,864 | | | $ | (32,367,602) | | | $ | 984,864 | | | $ | 5,243,605 | | | $ | 283,921,024 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | | Additional Paid-in- Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Income | | Noncontrolling Interests | | Total Stockholders’ Equity |
| | Shares | | Amount | | | | | | |
Balance - December 31, 2022 | | 102,411,162 | | $ | 10,241 | | | | $ | 301,451,435 | | | $ | (28,972,216) | | | $ | 741,206 | | | $ | 5,696,725 | | | $ | 278,927,391 | |
Equity cost | | — | | — | | | | — | | | — | | | — | | | — | | | — | |
Noncontrolling interest contribution | | — | | — | | | | — | | | — | | | — | | | — | | | — | |
Common stock repurchased | | — | | — | | | | — | | | — | | | — | | | — | | | — | |
Exercise of stock options | | 96,101 | | 10 | | | | 249,705 | | | — | | | — | | | — | | | 249,715 | |
UK Ltd. restricted stock (Note 4) | | — | | — | | | | 167,175 | | | — | | | — | | | — | | | 167,175 | |
Stock based compensation | | 424,911 | | 42 | | | | 8,181,549 | | | — | | | — | | | — | | | 8,181,591 | |
Ambulnz Health liquidation | | — | | — | | | | — | | | 70,284 | | | — | | | — | | | 70,284 | |
Net loss attributable to noncontrolling interests | | — | | — | | | | — | | | — | | | — | | | (453,120) | | | (453,120) | |
Foreign currency translation | | — | | — | | | | — | | | — | | | 243,658 | | | — | | | 243,658 | |
Net loss attributable to stockholders of DocGo Inc. and Subsidiaries | | — | | — | | | | — | | | (3,465,670) | | | — | | | — | | | (3,465,670) | |
Balance - March 31, 2023 | | 102,932,174 | | $ | 10,293 | | | | $ | 310,049,864 | | | $ | (32,367,602) | | | $ | 984,864 | | | $ | 5,243,605 | | | $ | 283,921,024 | |
Acquisition of CRMS | | 117,330 | | 12 | | | | 1,000,000 | | | — | | | — | | | — | | | 1,000,012 | |
Acquisition of FMC NA | | 360,145 | | 36 | | | | (1,432,963) | | | 649,167 | | | — | | | (3,213,956) | | | (3,997,716) | |
Acquisition of Healthworx | | — | | — | | | | — | | | — | | | — | | | (1,296,553) | | | (1,296,553) | |
Exercise of stock options | | 260,410 | | 26 | | | | 706,379 | | | — | | | — | | | — | | | 706,405 | |
Stock based compensation, net of tax settled in shares | | 92,033 | | 9 | | | | 1,778,001 | | | — | | | — | | | — | | | 1,778,010 | |
Net income attributable to noncontrolling interests | | — | | — | | | | — | | | — | | | — | | | 3,354,886 | | | 3,354,886 | |
Foreign currency translation | | — | | — | | | | — | | | — | | | 405,778 | | | — | | | 405,778 | |
Net loss attributable to stockholders of DocGo Inc. and Subsidiaries | | — | | — | | | | — | | | (2,011,267) | | | — | | | — | | | (2,011,267) | |
Balance - June 30, 2023 | | 103,762,092 | | $ | 10,376 | | | | $ | 312,101,281 | | | $ | (33,729,702) | | | $ | 1,390,642 | | | $ | 4,087,982 | | | $ | 283,860,579 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | | Additional Paid-in- Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Income | | Noncontrolling Interests | | Total Stockholders’ Equity |
| | Shares | | Amount | | | | | | |
Balance - December 31, 2023 | | 104,055,168 | | $ | 10,406 | | | | $ | 320,693,866 | | | $ | (21,394,310) | | | $ | 1,484,905 | | | $ | 4,376,089 | | | $ | 305,170,956 | |
Common stock repurchased | | (1,255,614) | | (126) | | | | (4,877,433) | | | — | | | — | | | — | | | (4,877,559) | |
Stock-based compensation | | 165,688 | | 17 | | | | 4,340,388 | | | — | | | — | | | — | | | 4,340,405 | |
Shares withheld for taxes | | (3,747) | | — | | | | (20,946) | | | — | | | — | | | — | | | (20,946) | |
Net loss attributable to noncontrolling interests | | — | | — | | | | — | | | — | | | — | | | (624,070) | | | (624,070) | |
Foreign currency translation | | — | | — | | | | — | | | — | | | (140,134) | | | — | | | (140,134) | |
Net income attributable to stockholders of DocGo Inc. and Subsidiaries | | — | | — | | | | — | | | 11,227,449 | | | — | | | — | | | 11,227,449 | |
Balance - March 31, 2024 | | 102,961,495 | | $ | 10,297 | | | | $ | 320,135,875 | | | $ | (10,166,861) | | | $ | 1,344,771 | | | $ | 3,752,019 | | | $ | 315,076,101 | |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial StatementsStatements.
DocGo Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Six Months Ended June 30, |
| 2023 | | 2022 |
| Three Months Ended March 31, | | | Three Months Ended March 31, |
| 2024 | | | 2024 | | 2023 |
CASH FLOWS FROM OPERATING ACTIVITIES: | CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
Net (loss) income | $ | (2,575,171) | | | $ | 21,128,299 | |
Adjustments to reconcile net (loss) income to net cash | |
(used in) provided by operating activities: | |
Net income (loss) | |
Net income (loss) | |
Net income (loss) | |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
Depreciation of property and equipment | |
Depreciation of property and equipment | |
Depreciation of property and equipment | Depreciation of property and equipment | 3,072,647 | | | 1,441,438 | |
Amortization of intangible assets | Amortization of intangible assets | 2,780,580 | | | 1,279,078 | |
Amortization of finance lease right-of-use assets | Amortization of finance lease right-of-use assets | 1,627,163 | | | 1,518,276 | |
Loss on disposal of assets | 153,469 | | | — | |
Deferred tax asset | (1,289,797) | | | — | |
Loss (gain) on equity method investment | 205,859 | | | (30,290) | |
(Gain) loss on disposal of assets | |
Deferred income tax | |
Loss on equity method investments | |
Bad debt expense | Bad debt expense | 976,690 | | | 1,818,792 | |
Stock based compensation | 11,801,138 | | | 3,504,861 | |
Gain on remeasurement of finance leases | — | | | (1,388,273) | |
Loss on liquidation of business | 70,284 | | | — | |
Gain on remeasurement of warrant liabilities | — | | | (2,969,017) | |
Stock-based compensation | |
Loss on remeasurement of operating and finance leases | |
Gain on liquidation of business | |
Change in fair value of contingent consideration | |
Changes in operating assets and liabilities: | Changes in operating assets and liabilities: | |
Accounts receivable | |
Accounts receivable | |
Accounts receivable | Accounts receivable | (15,407,684) | | | 4,310,990 | |
Prepaid expenses and other current assets | Prepaid expenses and other current assets | (223,468) | | | (3,173,647) | |
Other assets | Other assets | 86,334 | | | 2,128,320 | |
Accounts payable | Accounts payable | (14,901,225) | | | (2,927,492) | |
Accrued liabilities | Accrued liabilities | 1,198,399 | | | 3,545,642 | |
Net cash (used in) provided by operating activities | (12,424,782) | | | 30,186,977 | |
Net cash used in operating activities | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | CASH FLOWS FROM INVESTING ACTIVITIES: | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
Acquisition of property and equipment | |
Acquisition of property and equipment | |
Acquisition of property and equipment | Acquisition of property and equipment | (3,559,656) | | | (941,655) | |
Acquisition of intangibles | Acquisition of intangibles | (1,931,602) | | | (1,016,430) | |
Acquisition of businesses | Acquisition of businesses | (20,203,464) | | | — | |
Proceeds from disposal of property and equipment | Proceeds from disposal of property and equipment | 277,238 | | | — | |
Net cash used in investing activities | Net cash used in investing activities | (25,417,484) | | | (1,958,085) | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | CASH FLOWS FROM FINANCING ACTIVITIES: | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
Proceeds from revolving credit line | Proceeds from revolving credit line | — | | | 1,000,000 | |
Proceeds from revolving credit line | |
Proceeds from revolving credit line | |
Repayments of revolving credit line | |
Repayments of notes payable | Repayments of notes payable | (247,707) | | | (287,998) | |
Due to seller | Due to seller | (2,556,188) | | | (877,088) | |
Noncontrolling interest contributions | — | | | 2,063,000 | |
Proceeds from exercise of stock options | Proceeds from exercise of stock options | 1,123,295 | | | 1,153,410 | |
Payments for taxes related to shares withheld for employee taxes | |
Common stock repurchased | Common stock repurchased | — | | | (497,899) | |
Equity costs | — | | | (19,570) | |
Payments on obligations under finance lease | Payments on obligations under finance lease | (1,510,522) | | | (1,411,565) | |
| Net cash (used in) provided by financing activities | (3,191,122) | | | 1,122,290 | |
Net cash used in financing activities | |
| Effect of exchange rate changes on cash and cash equivalents | Effect of exchange rate changes on cash and cash equivalents | 685,076 | | | 4,571 | |
Effect of exchange rate changes on cash and cash equivalents | |
Effect of exchange rate changes on cash and cash equivalents | |
| Net (decrease) increase in cash and restricted cash | (40,348,312) | | | 29,355,753 | |
Net decrease in cash and restricted cash | |
Net decrease in cash and restricted cash | |
Net decrease in cash and restricted cash | |
Cash and restricted cash at beginning of period | Cash and restricted cash at beginning of period | 164,109,074 | | | 179,105,730 | |
Cash and restricted cash at end of period | Cash and restricted cash at end of period | $ | 123,760,762 | | | $ | 208,461,483 | |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial StatementsStatements.
DocGo Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2023 | | 2022 |
Supplemental disclosure of cash and non-cash transactions: | | | |
| | | |
Cash paid for interest | $ | 126,770 | | | $ | 129,363 | |
| | | |
Cash paid for interest on finance lease liabilities | $ | 259,051 | | | $ | 222,649 | |
| | | |
Cash paid for income taxes | $ | 4,223,810 | | | $ | 761,839 | |
| | | |
Right-of-use assets obtained in exchange for lease liabilities | $ | 1,538,961 | | | $ | 2,192,946 | |
| | | |
Fixed assets acquired in exchange for notes payable | $ | 623,017 | | | $ | — | |
| | | |
Acquisition of remaining Ambulnz-FMC North America, LLC. through Due to seller and issuance of stock | $ | 7,000,000 | | | $ | — | |
| | | |
Acquisition of Cardiac RMS, LLC | $ | 1,000,000 | | | $ | — | |
| | | |
Reconciliation of cash and restricted cash | | | |
Cash | $ | 109,159,519 | | | $ | 198,138,395 | |
| | | |
Restricted cash | 14,601,243 | | | 10,323,088 | |
| | | |
Total cash and restricted cash shown in statement of cash flows | $ | 123,760,762 | | | $ | 208,461,483 | |
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2024 | | 2023 |
Supplemental disclosure of cash and non-cash transactions: | | | |
Cash paid for interest | $ | 448,057 | | | $ | 32,827 | |
Cash paid for interest on finance lease liabilities | $ | 181,883 | | | $ | 126,584 | |
Cash paid for income taxes | $ | 557,598 | | | $ | 40,050 | |
Right-of-use assets obtained in exchange for lease liabilities | $ | 2,791,964 | | | $ | 926,468 | |
Remeasurement of finance lease right-of-use asset due to lease modification | $ | 300,000 | | | $ | — | |
Fixed assets acquired in exchange for notes payable | $ | — | | | $ | 150,079 | |
| | | |
Supplemental non-cash investing activity: | | | |
Acquisition of business funded by acquisition payable | $ | — | | | $ | 19,473,805 | |
| | | |
Reconciliation of cash and restricted cash | | | |
Cash | $ | 41,244,446 | | | $ | 120,056,897 | |
Restricted cash | 17,649,417 | | | 7,461,821 | |
Total cash and restricted cash shown in statement of cash flows | $ | 58,893,863 | | | $ | 127,518,718 | |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial StatementsStatements.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Organization and Business Operations
The BusinessBackground
On November 5, 2021, (the “Closing Date”), DocGo Inc., a Delaware corporation, (formerlythen known as Motion Acquisition Corp prior toCorp. (collectively with its subsidiaries, the Closing Date, “Motion” and after the Closing Date, “DocGo”“Company”), consummated the previously announceda business combination (the “Closing”) pursuant to that certain Agreement and Plan of Merger, dated March 8, 2021 (the “Merger Agreement”), by and among Motion Acquisition Corp., a Delaware corporation (“Motion”),the Company, Motion Merger Sub Corp., a Delaware corporation and a direct wholly owned subsidiary of Motionthe Company (“Merger Sub”), and Ambulnz, Inc., a Delaware corporation (“Ambulnz”). The transactions contemplated by the Merger Agreement are referred to herein as the “Business Combination.” In connection with the Closing,closing of the registrantBusiness Combination, the Company changed its name from Motion Acquisition Corp. to DocGo Inc.
As contemplated by the Merger Agreement and as described in Motion’sthe Company’s definitive proxy statement/consent solicitation/prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 14, 2021, , Merger Sub was merged with and into Ambulnz, with Ambulnz continuing as the surviving corporation (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”).corporation. As a result of the Merger,Business Combination, Ambulnz isbecame a wholly-ownedwholly owned subsidiary of DocGothe Company and each share of Series A preferred stock of Ambulnz, no par value, (“Ambulnz Preferred Stock”), Class A common stock of Ambulnz, no par value, (“Ambulnz Class A Common Stock”), and Class B common stock of Ambulnz, no par value, (“Ambulnz Class B Common Stock,” together with Ambulnz Class A Common Stock, “Ambulnz Common Stock”) was cancelled and converted into the right to receive a portion of the merger consideration issuable as common stock of DocGo,the Company, par value $0.0001 (“Common Stock”), pursuant to the terms and conditions set forth in the Merger Agreement.
In connection with the Business Combination, DocGothe Company raised $158.0 million$158,000,000 of net proceeds. This amount was comprisedconsisted of $43.4 million(i) $43,400,000 of cash held in Motion’sthe Company’s trust account fromestablished in connection with its initial public offering, net of DocGo’sthe Company’s transaction costs and underwriters’ fees of $9.6 million,$9,600,000, and $114.6 million(ii) $114,600,000 of cash in connection withfrom the concurrent PIPE private placementsale of shares of common stockCommon Stock to certain investors at a price of $10.00 per share in a private placement that closed concurrently with the Business Combination (the "PIPE Financing"“PIPE Financing”), net of $10.4 million$10,400,000 in transaction costs in connection with the PIPE Financing. These transaction costs consisted of banking, legal and other professional fees, which were recorded as a reduction to additional paid-in capital.
The Business
DocGo Inc. and its subsidiaries (collectively, the “Company”) is a healthcare transportation and mobile health services company that uses proprietary dispatch and communication technology to provide quality healthcare transportation and healthcare services in major metropolitan cities in the United States (“U.S.”) and the United Kingdom (“U.K.”). Mobile Health performs in-person care directly to patients in the comfort of their homes, workplaces and other non-traditional locations.
Ambulnz LLC was originally formed in Delaware on June 17, 2015 as Ambulnz, LLC, a limited liability company. On November 1, 2017, with an effective date of January 1, 2017, Ambulnz LLC converted its legal structure from a limited liability company to a C-corporation and changed its name to Ambulnz, Inc. Ambulnz. Inc.Ambulnz is the sole owner of Ambulnz Holdings, LLC (“Holdings”), which was formed in the state of Delaware on August 5, 2015 as a limited liability company. Holdings is the owner of multiple operating entities incorporated in various states in the U.S. as well as within England and Wales, United Kingdom.U.K.
The Business
The Company derives revenue primarily from twois 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) healthcare transportation in major metropolitan cities in the United States (“U.S.”) and the United Kingdom (“U.K.”).
The Company conducts business in three operating segments: Mobile Health Services, Transportation Services and Transportation Services.Corporate. Mobile Health Services include a wide variety of healthcare services performed at homes, offices and other temporary or fixed locations and event services which includesuch as on-site healthcare support at sporting events and concerts. There isThis segment also an emphasis on providingprovides total care management solutions to large, typically underserved, population groups primarily through arrangements with municipalities, which include healthcare services as well as ancillary services, such as shelter. Transportation Services encompassesencompass both emergency response and non-emergency transport services. Non-emergency transport services include ambulance transports and wheelchair transports. Net revenue from Transportation Services is derived from the transportation of patients based on billings to third party payors and healthcare facilities. The Company’s Corporate segment primarily represents shared services and personnel that support both the Mobile Health Services and Transportation Services segments. It contains operating expenses such as information technology costs, certain insurance costs and the compensation costs of senior and executive leadership. None of the Company’s revenues or cost of revenues are reported within the Corporate segment.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United StatesU.S. (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”)SEC regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022.2023.
The Consolidated Balance Sheet as of December 31, 20222023 included herein was derived from the audited financial statements as of that date but does not include all disclosures including notes required by U.S. GAAP.
Principles of Consolidation
The unaudited Condensed Consolidated Financial Statements include the accounts and operations of the CompanyDocGo Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated upon consolidation. Noncontrolling interests (“NCI”) on the unaudited Condensed Consolidated Financial Statements represent a portion of consolidated joint ventures and a variable interest entityentities ("VIEs") in which the Company does not have direct equity ownership. Accounts and transactions between consolidated entities have been eliminated. Certain amounts in the prior years’ consolidated statementsperiods’ unaudited Condensed Consolidated Statements of changesChanges in stockholders’ equityStockholders’ Equity and statementsCondensed Consolidated Statements of cash flowsCash Flows have been reclassified to conform to the current yearperiod presentation.
Pursuant to theThe Business Combination the merger between Motion and Ambulnz was accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, Motionthe Company was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Ambulnz stock for the net assets of Motion,the Company, accompanied by a recapitalization. The net assets of Motionthe Company are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Ambulnz. The shares and corresponding capital amounts and earnings per share available for common stockholders prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio (645.1452 to 1) established in the Business Combination. Further, Ambulnz was determined to be the accounting acquirer in the transaction, and as such, the acquisition is considered a business combination under Accounting Standards Codification (“ASC”), Topic 805, Business Combinations (“ASC 805”) and was accounted for using the acquisition method of accounting.
PrinciplesIn accordance with ASC 810, Consolidation (“ASC 810”), the Company assesses whether it has a variable interest in legal entities in which it has a financial relationship and, if so, whether or not those entities are VIEs. For those entities that qualify as VIEs, ASC 810 requires the Company to determine if the Company is the primary beneficiary of Consolidationthe VIE, and if so, to consolidate the VIE.
The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of DocGo Inc. and its subsidiaries. All significant intercompany transactions and balances have been eliminated in these unaudited Condensed Consolidated Financial Statements.
The Company holds a variable interestinterests in Mobile Medical Healthcare P.C. (“MD1”, formerly known as "MD1 Medical Care P.C.") which contractslegal entities that contract with physicians and other health professionals in order tothat provide services toon behalf of the Company. MD1 isThese entities are considered a variable interest entity (“VIE”)VIEs since it doesthey do not have sufficient equity to finance itstheir activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits—that is the primary beneficiary, meaning it has (1) the power to direct the activities of athe VIE that most significantly impacts the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of MD1its VIEs and funds and absorbs all losses of its VIEs. The Company has determined that it is the VIEprimary beneficiary of its VIEs and therefore appropriately consolidates MD1.its VIEs.
Net incomeloss for the VIECompany's VIEs was $120,217$275,905 and $186,637 for the sixthree months ended June 30, 2023.March 31, 2024 and 2023, respectively. The VIE’s total assets all of which were current assets apart from a fixed asset amounting to $5,237, amounted to $773,458$5,364,950 and $4,364,274 as of June 30, 2023.March 31, 2024 and December 31, 2023, respectively. Total liabilities all of which were current for the VIE, was $361,516$6,088,439 and $4,811,857 as of June 30, 2023.March 31, 2024 and December 31, 2023, respectively. The VIE’sCompany's VIEs' total stockholders’ equitydeficit was $411,941$723,489 and $447,583 as of June 30, 2023.March 31, 2024 and December 31, 2023, respectively.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Foreign Currency
The Company’s functional currency is the U.S. dollar. The functional currency of our foreign operation is the respective local currency.British pound. Assets and liabilities of foreign operations denominated in local currencies are translated at the spot rate in effect at the applicable reporting date, except for equity accounts, which are translated at historical rates. The unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income are translated at the weighted average rate of exchange during the applicable period. The resulting unrealized cumulative translation adjustment for the sixthree months ended June 30,March 31, 2024 and 2023 was $649,436. For the same period of 2022, it was not material to the financial statements.were $(140,134) and $243,658, respectively.
Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses andexpenses; the disclosure of contingent assets and liabilities in its financial statementsstatements; and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue recognition related to the allowance for doubtful accounts, stock basedstock-based compensation, calculations related to the incremental borrowing rate for the Company’s lease agreements, estimates related to ongoing lease terms, software development costs, impairment of long-lived assets, goodwill and indefinite-lived intangible assets, business combinations, reserve for losses within the Company’s insurance deductibles, income taxes and deferred income tax. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.
Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations could be adversely affected.
Self InsuranceSelf-Insurance Reserves
The Company self-insures a number of risks, including, but not limited to, workers'workers’ compensation, general liability, auto liability and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks on an undiscounted basis. The recorded liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with claims reserve valuations. To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers’ compensation, general liability and auto liability.
Concentration of Credit Risk and Off-Balance Sheet Risk
The Company is potentially subject to concentration of credit risk with respect to its cash, cash equivalents and restricted cash, which the Company attempts to minimize by maintaining cash, cash equivalents and restricted cash with institutions of sound financial quality. At times, cash balances may exceed limits federally insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the funds are held. The Company has no financial instruments with off-balance sheet risk of loss.
Major Customers
The Company had one customer that accounted for approximately 36%39% of salesrevenues and 36%34% of net accounts receivable and another customer that accounted for 32% of revenues and 46% of net accounts receivable for the three months ended June 30, 2023 and one customer that accounted for approximately 41% of sales and 36% of net accounts receivable for the six months ended June 30, 2023.March 31, 2024.
The Company had one customer that accounted for approximately 29%46% of salesrevenues and 15% of net accounts receivable and another customer that accounted for 14% of sales and 12% of net accounts receivables for the three months ended June 30, 2022. The Company had one customer that accounted for 30% of sales and 15% of net accounts receivable, and another customer that accounted for 17% of sales and 12%62% of net accounts receivable for the sixthree months ended June 30, 2022.March 31, 2023.
Major Vendor
The Company had one vendor that accounted for approximately 18% and 18% of total cost for the three months ended March 31, 2024 and 2023, respectively. The Company expects to maintain this relationship with the vendor and believes the services provided by this vendor are available from alternative sources.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Major Vendor
The Company had one vendor that accounted for approximately 13% and 16% of total cost for the three months ended June 30, 2023 and 2022, respectively. The Company expects to maintain this relationship with the vendor and believes the services provided from this vendor are available from alternative sources.
The Company had one vendor that accounted for approximately 11% and 12% of total cost for the six months ended June 30, 2023 and 2022, respectively. The Company expects to maintain this relationship with the vendor and believes the services provided from this vendor are available from alternative sources.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non- emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.
Reclassifications
Certain reclassifications of amounts previously reported have been made to the accompanying unaudited Condensed Consolidated Financial Statements to maintain consistency between periods presented. The reclassifications had no impact on previously reported net income or retained earnings.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. The Company maintains most of its cash and cash equivalents with financial institutions in the U.S. The Company’s accounts at financial institutions in the U.S. are insured by the Federal Deposit Insurance Corporation (“FDIC”)FDIC and are in excess of FDIC insured limits. The Company had cash balances of approximately $5,336,308$5,047,684 and $8,125,966$3,699,793 with foreign financial institutions on June 30, 2023March 31, 2024 and December 31, 2022,2023, respectively.
Restricted Cash and Insurance Reserves
Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash in the unaudited Condensed Consolidated Balance Sheets. Restricted cash is classified as either a current or non-current asset depending on the restriction period. The Company is required to pledge or otherwise restrict a portion of cash and cash
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
equivalents as collateral for its line of credit,self-insurance exposures, transportation equipment leases and a standby letter of credit as required by its insurance carrier (see Notes 9 and 14).
The Company utilizes a combination of insurance and self-insurance programs, including a wholly-ownedwholly owned captive insurance entity, to provide for the potential liabilities for certain risks, including workers’ compensation, automobile liability, general liability and professional liability. Liabilities associated with the risks that are retained by the Company within its high deductible limits are not discounted and are estimated, in part, by considering claims experience, exposure and severity factors and other actuarial assumptions. The Company has commercial insurance in place for catastrophic claims above its deductible limits.
ARM Insurance, Inc., a Vermont-based wholly-ownedwholly owned captive insurance subsidiary of the Company, charges the operating subsidiaries premiums to insure the retained workers’ compensation, automobile liability, general liability and professional liability exposures. Pursuant to Vermont insurance regulations, ARM Insurance, Inc. maintains certain levels of cash and cash equivalents related to its self-insurance exposures.
The Company also maintains certain cash balances related to its insurance programs, which are held in a self-depleting trust and restricted as to withdrawal or use by the Company other than to pay or settle self-insured claims and costs. These amounts are reflected in “Restricted cash” in the accompanying unaudited Condensed Consolidated Balance Sheets.
Fair Value of Financial Instruments
ASC 820, Fair Value Measurements, provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.
Level 3: Unobservable inputs whichthat are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2023March 31, 2024 and December 31, 2022.2023. For certain financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, restricted cash, accounts payable, and accrued expenses, and due to seller, the carrying amounts approximate their fair values as it isthey are short term in nature. The notes payable are presented at their carrying value, which, based on borrowing rates currently available to the Company for loans with similar terms, approximates its fair values.
Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Future changes in fair value of the contingent financial milestone consideration, as a result of changes in significant inputs such as the discount rate and estimated probabilities of financial milestone achievements, could have a material effect on the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income and Condensed Consolidated Balance Sheets in the period of the change.
DuringIn connection with the year ended December 31, 2022,acquisition of Ryan Bros. Fort Atkinson, LLC (“Ryan Brothers”), the Company recorded $4,000,000 in Contingentcontingent consideration in connection with the Ryan Brothers Atkinson, LLC business acquisition, to be paid based on the completion of certain performance obligations over a 24-month period. The Company recorded a change in fair value of contingent consideration in the amount of $7,284 and $0 for the three months ended March 31, 2024 and 2023, respectively. There was a remaining contingent liability balance of $1,828,302 and $1,821,018 as of March 31, 2024 and December 31, 2023, respectively (see Note 4).
In relation toconnection with the acquisition of Exceptional Medical Transportation, LLC (“Exceptional”), the Company also agreed to pay up to $2,000,000 in contingent consideration upon meeting certain performance conditions within two years of the Closing Date.closing date of such acquisition. The estimated ContingentCompany recorded a change in fair value of contingent consideration in the amount of $(13,730) and $0 for Exceptionalthe three months ended March 31,2024 and 2023, respectively. There was $1,080,000a remaining contingent liability balance of $265,571 and $279,301 as of March 31, 2024 and December 31, 2022.2023, respectively (see Note 4).
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
DuringIn connection with the year ended December 31, 2022, the Company also recorded $2,475,540 estimated Contingent consideration in relation to theacquisition of Location Medical Services, LLC ("LMS"(“LMS”) acquisition, the Company recorded $2,475,540 in contingent consideration to be paid upon LMS meeting certain performance conditions in 2023. The outstanding balance asCompany did not record a change in fair value of June 30,contingent consideration for the three months ended March 31, 2024 and 2023, increased to $2,587,104but recorded $(4,799) and $50,542 as a result of foreign exchange fluctuations. For Government Medical Services, LLC ("GMS")movement for the three months ended March 31, 2024 and 2023, respectively. There was a remaining contingent liability balance of $600,029 and $604,827 as of March 31, 2024 and December 31, 2023, an amount of $3,000,000 was recorded in Contingent consideration to be paid upon GMS meeting certain performance conditions within a year of the Closing Date.respectively (see Note 4).
ForIn connection with the acquisition of Cardiac RMS, LLC ("CRMS"(“CRMS”), an amount of 15,822,190 wasthe Company recorded $15,822,190 in Contingentcontingent consideration to be paid out over 36 months for the remaining 49% equity of CRMS, based on CRMS'CRMS’ attainment of full-year EBITDA targetstargets. The Company did not record a change in fair value of contingent consideration for the three months ended March 31, 2024 and 2023, respectively. There was a remaining contingent liability balance of $17,087,835 as of March 31, 2024 and December 31, 2023 (see Note 4).
Accounts Receivable
The Company contracts with hospitals, healthcare facilities, businesses, state and local government entities, and insurance providers to transport patients and to provide Mobile Health servicesServices and to transport patients at specified rates. These rates are either on a per procedure or per transport basis, or on an hourly or daily basis. Accounts receivable consist of billings for transportationhealthcare and healthcaretransportation services provided to patients. Billings typically are either paid or settled on the patient’s behalf by health insurance providers, managed care organizations, treatment facilities, government sponsored programs or businesses or patients directly. Accounts receivable are net of insurance provider contractual allowances, which are estimated at the time of billing based on contractual terms or other arrangements. Accounts receivable are periodically evaluated for collectability based on past credit history with payors and their current financial condition. Changes in the estimated collectability of accounts receivable are recorded in the results of operations for the period in which the estimate is revised. Accounts receivable deemed uncollectible are offset against the allowance for uncollectible accounts. The Company generally does not require collateral for accounts receivable.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is recorded in operating expenses in the unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss)
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Income. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows:
| | | | | | | | |
| | Estimated Useful Life |
Buildings | | 39 years |
Office equipment and furniture | | 3 years |
Vehicles | | 5-8 years |
Medical equipment | | 5 years |
Leasehold improvements | | Shorter of useful life of asset or lease term |
Expenditures for repairs and maintenance are expensed as incurred. Expenditures that improve an asset or extend its estimated useful life are capitalized.
Software Development Costs
Costs incurred during the preliminary project stage, maintenance costs and routine updates and enhancements of products are expensed as incurred. The Company capitalizes software development costs intended for internal use in accordance with ASC 350-40, Internal-Use Software. Costs incurred in developing the application of its software and costs incurred to upgrade or enhance product functionalities are capitalized when it is probable that the expenses would result in future economic benefits to the Company and the functionalities and enhancements are used for their intended purpose. Capitalized software costs are amortized over its useful life.
Estimated useful life of software development activities are reviewed annually or whenever events or changes in circumstances indicate that intangible assets may be impaired and adjusted as appropriate to reflect upcoming development activities that may include significant upgrades or enhancements to the existing functionality.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Business Combinations
The Company accounts for its business combinations under the provisions of ASC 805-10, Business Combinations (“ASC 805-10”), which requires that the purchaseacquisition method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including NCI,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.
Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: (1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or (2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings. For transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expenses acquisition-related costs and fees associated with business combinations.
The estimated fair value of net assets to be acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. Management uses assumptions based on historical knowledge of the business and projected financial information of the target. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values.
Impairment of Long-Lived Assets
The Company evaluates the recoverability of the recorded amount of long-lived assets, primarily property and equipment and finite-lived intangible assets, whenever events or changes in circumstance indicate that the recorded amount of an asset may not be fully recoverable. An impairment is assessed when the undiscounted expected future cash flows derived from
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
an asset are less than its carrying amount. If an asset is determined to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. Assets targeted for disposal are reported at the lower of the carrying amount or fair value less cost to sell.
In 2022, the Company reassigned all the assets at Ambulnz Health, LLC (“Health”) to Assets held for sale as a result of an assignment for the benefit of creditors (“ABC”) transaction. The Company also recognized a non-cash charge of $2,921,958 for its Goodwill impairment for the year ended December 31, 2022 in the Consolidated Statements of Operations.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill represents the excess of the total purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed in a business combination. Goodwill isand indefinite-lived intangible assets are not amortized but isare tested for impairment at the reporting unit level annually on December 31 or more frequently if events or changes in circumstances indicate that it is more likely than not to be impaired. These events include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization, as indicated by its publicly quoted share price, below its net book value.
Line of Credit
The costs associated with the Company’s line of credit are deferred and recognized over the term of the line of credit as interest expense.
Related Party Transactions
The Company defines related parties as affiliates of the Company, entities for which investments are accounted for by the equity method, trusts for the benefit of employees, principal owners (beneficial owners of more than 10% of the voting
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(CONTINUED)
interest), management, and members of immediate families of principal owners or management and other parties with which the Company may deal with if one party controls or can significantly influence management or the operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
Related party transactions are recorded within operating expenses in the Company’s unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income. For details regarding the related party transactions that occurred during the periodsthree months ended June 30,March 31, 2024 and 2023 and 2022, refer to Note 16.
Revenue Recognition
On January 1, 2019, the Company adopted ASU 2014-09,ASC 606, Revenue from Contracts with Customers (“ASC 606”), as amended..
To determine revenue recognition for contractual arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify each contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when (or as) the relevant performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services the Company provides to the customer.
The Company generates revenues from the provision of (1) ambulance and medical transportation services (“Transportation Services”)Mobile Health Services and (2) Mobile Health services. TheTransportation Services. Since the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, therefore the Company satisfies performance obligations immediately. The Company has utilized the “right to invoice” expedient, which allows an entity to recognize revenue in the amount of consideration to which the entity has the right to invoice when the amount that the Company has the right to invoice corresponds directly to the value transferred to the customer. Revenues are recorded net of an estimated contractual allowances for claims subject to contracts with responsible paying entities. The Company estimates contractual allowances at the time of billing based on contractual terms, historical collections or other arrangements. All transaction prices are fixed and determinable, which includes a fixed base rate, fixed mileage rate and an evaluation of historical collections by each payor.
Nature of Our Services
Revenue is primarily derived from:
i.Mobile Health Services: These services include a wide variety of healthcare services performed at homes, offices and other locations and event services such as on-site healthcare support at sporting events and concerts. This
DocGo Inc. and Subsidiaries
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(CONTINUED)
segment also provides total care management solutions to large, typically underserved population groups, primarily through arrangements with municipalities, which include healthcare services as well as ancillary services, such as shelter.
ii.Transportation Services: These services encompass both emergency response and non-emergency transport services. Non-emergency transport services include ambulance transports and wheelchair transports. Net revenue from transportation servicesTransportation Services is derived from the transportation of patients based on billings to third party payors and healthcare facilities.
ii.
For Mobile Health Services,: These the performance of the services include services performed at home and offices, COVID-19 testingany related support activities in the majority of the Company’s contracts are a single performance obligation under ASC 606. Mobile Health Services are typically billed based on a fixed rate (i.e., time and vaccinations,materials separately or combined) fee structure taking into consideration staff and event services which include on-site healthcare support at sporting events and concerts. There is also an emphasis on providing total care management solutions to large population groups, which include healthcare services as well as other services, such as shelter.
materials utilized. The Company also concluded that Transportation Services and any related support activities are a single performance obligation under ASC 606. The transaction price is determined by the fixed rate usage-based fees or fixed fees whichthat are agreed upon in the Company’s executed contracts. For Mobile Health, the performance of the services and any related support activities are a single performance obligation under ASC 606. Mobile Health services are typically billed based on a fixed rate (i.e., time and materials separately or combined) fee structure taking into consideration staff and materials utilized.
As the performance associated with such services is known and quantifiable at the end of a period in which the services occurred (i.e., monthly or quarterly), revenues are typically recognized in the respective period performed. The typical billing cycle for TransportationMobile Health Services and Mobile Health servicesTransportation Services is same day to 5five days with payments generally due within 30 days. For large municipal customers in the Mobile Health Services segment, invoices are generally produced on a monthly basis, in arrears, and are generally due within 30-60 days of when they are submitted to the customer. For Transportation Services, the Company estimates the amount unbilled at month end and recognizes such amounts as revenue, based on available data and customer history. TheSince the majority of the Company’s Mobile Health Services and Transportation Services and Mobile Health services each represent a
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
single performance obligation. Therefore,obligation, allocation is not necessary as the transaction price (fees) for the services provided is standard and explicitly stated in the contractual fee schedule and/or invoice. For contracts with multiple distinct performance obligations, the Company allocates the transaction price based on their agreed-upon price to the individually identified performance obligations in the contract. The Company monitors and evaluates all contracts on a case-by-case basis to determine if multiple performance obligations are present in a contractual arrangement.
For Mobile Health Services, the customer also generally simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled. Therefore, the Company satisfies performance obligations at the same time. For certain Mobile Health Services that have a fixed fee arrangement and are provided over time, revenue is recognized over time as the services are provided to the customer. For Transportation Services, since the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, therefore the Company satisfies performance obligations at the same time. For Transportation Services, where the customer pays fixed rate usage-based fees, the actual usage in the period represents the best measure of progress. Generally, for Mobile Health services, the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, therefore the Company satisfies performance obligations at the same time. For certain Mobile Health services that have a fixed fee arrangement, and the services are provided over time, revenue is recognized over time as the services are provided to the customer.
In the following table, revenue isrevenues are disaggregated as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue Breakdown | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
Primary Geographical Markets | | | | | | | | |
United States | | $ | 112,603,145 | | | $ | 106,314,813 | | | $ | 211,512,665 | | | $ | 221,368,244 | |
United Kingdom | | 12,883,615 | | | 3,204,491 | | | 26,976,798 | | | 6,042,612 | |
Total revenue | | $ | 125,486,760 | | | $ | 109,519,304 | | | $ | 238,489,463 | | | $ | 227,410,856 | |
| | | | | | | | |
Major Segments/Service Lines | | | | | | | | |
Transportation Services | | $ | 45,422,151 | | | $ | 22,175,233 | | | $ | 85,478,096 | | | $ | 49,987,743 | |
Mobile Health | | 80,064,609 | | | 87,344,071 | | | 153,011,367 | | | 177,423,113 | |
Total revenue | | $ | 125,486,760 | | | $ | 109,519,304 | | | $ | 238,489,463 | | | $ | 227,410,856 | |
| | | | | | | | | | | | | | | | | |
Revenue Breakdown | | Three Months Ended March 31, | |
| | 2024 | | 2023 | |
Primary Geographical Markets | | | | | |
United States | | $ | 179,110,846 | | | $ | 98,909,521 | | |
United Kingdom | | 12,976,683 | | | 14,093,182 | | |
Total revenues | | $ | 192,087,529 | | | $ | 113,002,703 | | |
| | | | | |
Major Segments/Service Lines | | | | | |
Mobile Health Services | | $ | 143,941,158 | | | $ | 72,946,757 | | |
Transportation Services | | 48,146,371 | | | 40,055,946 | | |
Total revenues | | $ | 192,087,529 | | | $ | 113,002,703 | | |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Stock-Based Compensation
The Company maintained stock incentive plans under which the Company may issue incentive and non-qualified stock options, restricted stock units and performance-based stock units. The Company accounts for stock-based compensation using the provisions of ASC 718, Stock-Based Compensation, which requires the recognition of the fair value of stock-based compensation. The Company expenses stock-based compensation over the requisite service period based on the estimated grant-date fair value of the awards. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company accounts for forfeitures as they occur. For performance-based awards, expense is recognized over the period from the grant date to the estimated attainment date, which is the derived service period of the award, if management determines that it is probable that the performance-based vesting conditions will be achieved. All stock-based compensation costs are recorded in operating expenses in the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.
Earnings per Share
Earnings per share represents the net income attributable to stockholders divided by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stockCommon Stock were exercised or converted into common stock of the CompanyCommon Stock during the reporting periods. Potential dilutive common stockCommon Stock equivalents consist of the incremental common stockshares of Common Stock issuable upon exercise of warrants and the incremental shares issuable upon conversion of stock options. In reporting periods in which the Company has a net loss, the effect is considered anti-dilutive and excluded from the diluted earnings per share calculation.
basic and diluted net income per share to stockholders of DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries: | | (2,011,267) | | | 12,735,653 | | | (5,476,937) | | | 23,365,347 | |
Weighted-average shares - basic | | 103,585,661 | | | 99,303,948 | | | 103,085,257 | | | 100,372,146 | |
Effect of dilutive options | | 1,190,120 | | | 15,975,728 | | | 1,190,120 | | | 15,975,728 | |
Weighted-average shares - dilutive | | 103,585,661 | | | 115,279,676 | | | 103,085,257 | | | 116,347,874 | |
Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Basic | | (0.02) | | | 0.13 | | | (0.05) | | | 0.23 | |
Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Diluted | | (0.02) | | | 0.11 | | | (0.05) | | | 0.20 | |
Anti-dilutive employee share-based awards excluded | | 9,181,239 | | | — | | | 9,181,239 | | | — | |
Subsidiaries: | | | | | | | | | | | | | | |
| | Three Months Ended March 31, |
| | 2024 | | 2023 |
Net income (loss) attributable to stockholders of DocGo Inc. and Subsidiaries | | $ | 11,227,449 | | | $ | (3,465,670) | |
Weighted-average shares outstanding - Basic | | 103,818,362 | | | 102,579,291 | |
Effect of dilutive options | | 4,688,073 | | | 1,236,473 | |
Weighted-average shares outstanding - Diluted | | 108,506,435 | | | 102,579,291 | |
Net income (loss) per share attributable to DocGo Inc. and Subsidiaries - Basic | | 0.11 | | | (0.03) | |
Net income (loss) per share attributable to DocGo Inc. and Subsidiaries - Diluted | | 0.10 | | | (0.03) | |
Anti-dilutive employee share-based awards excluded | | 8,675,277 | | | 9,337,239 | |
Equity Method Investment
On October 26, 2021, the Company acquired a 50% interest in RND Health Services Inc. (“RND”) for $655,876.
The Company uses the equity method to account for investments in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee but does not exercise control. The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investment” in the unaudited Condensed Consolidated Balance Sheets. Changes in value of RND are recorded in “(Loss)/gain on initial equity method investments” on the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The Company’s judgment regarding its level of influence over thean equity method investee includes considering key factors, such as ownership interest, representation on the board of directors and participation in policy-making decisions.
On November 1, 2021, the Company acquired a 20% interest in National Providers Association, LLC (“NPA”) for $30,000. The Company uses the equity method to account for investments in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, but does not exercise control. The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investment” in the unaudited Condensed Consolidated Balance Sheets. Changes in value of NPA are recorded in “Gain (loss) on equity method investment” in the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The Company’s judgment regarding its level of influence over the equity method investee includes considering key factors, such as ownership interest, representation on the board of directors, and participation in policy-making decisions. Effective December 21, 2021, three members withdrew from NPA resulting in the remaining two members obtaining the remaining ownership percentage. As of December 31, 2022 and June 30, 2023, DocGo owned 50% of NPA.
Under the equity method, the Company’s investment is initially measured at cost and subsequently increased or decreased to recognize the Company’s share of income and losses of the investee, capital contributions and distributions and impairment losses. The Company performs a qualitative assessment annually and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value.
On October 26, 2021, the Company acquired a 50% interest in RND Health Services Inc. (“RND”) for $655,876. During the year ended December 31, 2023, the Company made an additional investment amounting to $298,932. The Company’s carrying value in RND, an equity method investee, is reflected in the caption “Equity method investments” in the unaudited Condensed Consolidated Balance Sheets. Changes in value of RND are recorded in “(Loss) gain on equity method investments” in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
On November 1, 2021, the Company acquired a 20% interest in National Providers Association, LLC (“NPA”) for $30,000. Effective December 21, 2021, three members withdrew from NPA, resulting in the remaining two members obtaining the remaining ownership percentage. As of March 31, 2024 and December 31, 2023, the Company owned 50% of NPA. The Company’s carrying value in NPA, an equity method investee, is reflected in the caption “Equity method investments” in the unaudited Condensed Consolidated Balance Sheets. Changes in value of NPA are recorded in “(Loss) gain on equity method investments” in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
Leases
The Company categorizes leases at its inception as either operating or finance leases based on the criteria in FASB ASC 842, Leases, (“ASC 842”). The Company adopted ASC 842 on January 1, 2019, using the modified retrospective approach, and has established a Right-of-Use (“ROU”) Assetright-of-use asset and a current and non-current lease liability for each lease arrangement identified. The lease liability is recorded at the present value of future lease payments discounted using the discount rate that approximates the Company’s incremental borrowing rate for the lease established at the commencement date, and the ROUright-of-use asset is measured as the lease liability plus any initial direct costs, less any lease incentives received before commencement. The Company recognizes a single lease cost, so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis.
The Company has lease arrangements for vehicles, equipment and facilities. These leases typically have original terms not exceeding 10 years and in some cases contain multi-year renewal options, none of which are reasonably certain of exercise. The Company’s lease arrangements may contain both lease and non-lease components. The Company has elected
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(CONTINUED)
to combine and account for lease and non-lease components as a single lease component. The Company has incorporated residual value obligations in leases for which there isare such occurrences. Regarding short-term leases, ASC 842-10-25-2 permits an entity to make a policy election not to apply the recognition requirements of ASC 842 to short-term leases. The Company has elected not to apply the ASC 842 recognition criteria to any leases that qualify as Short-Term Leases.short-term leases.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or its tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense.
Recently Issued Accounting Standards Not Yet Adopted
In March 2022,November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure ("ASU 2022-02, Financial Instruments – Credit Losses Troubled Debt Restructurings and Vintage Disclosures (“2023-07"). ASU 2022-02”), that eliminates accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40 Receivables—Troubled Debt Restructurings by Creditors, while enhancing2023-07 updates reportable segment disclosure requirements, for certain loan refinancingsprimarily through requiring enhanced disclosures about significant segment expenses and restructurings by creditors when a borrower is experiencing financial difficulty.information used to assess segment performance. ASU 2022-02 also requires public business entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. This ASU only affects entities that already adopted ASU 2016-13, which2023-07 is effective for fiscal years beginning after December 15, 2022.2023, with early adoption permitted. The Company expects that thisis currently evaluating the impact of adopting ASU should not have a material impact2023-07 on the Company’s unaudited Condensed Consolidated Financial Statements.its disclosures.
3. PropertyIn December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 includes amendments requiring enhanced income tax disclosures, primarily related to standardization and Equipment, net
Propertydisaggregation of rate reconciliation categories and equipment, net, as of June 30, 2023income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and December 31, 2022 are as follows:
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
| | | |
Transportation equipment | $ | 22,693,944 | | | $ | 20,773,862 | |
Medical equipment | 6,445,051 | | | 5,177,520 | |
Office equipment and furniture | 3,152,504 | | | 2,686,065 | |
Leasehold improvements | 636,304 | | | 579,658 | |
Buildings | 527,283 | | | 527,283 | |
Land | 37,800 | | | 37,800 | |
| $ | 33,492,886 | | | $ | 29,782,188 | |
Less: Accumulated depreciation | (11,555,392) | | | (8,524,013) | |
Property and equipment, net | $ | 21,937,494 | | | $ | 21,258,175 | |
should be applied either prospectively or retrospectively. The Company recorded depreciation expenseis currently evaluating the impact of $1,590,037 and $729,560 for the three months ended June 30, 2023 and 2022, respectively.
The Company recorded depreciation expense of $3,072,647 and $1,441,438 for six months ended June 30, 2023 and 2022, respectively.adopting ASU 2023-09 on its disclosures.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3. Property and Equipment, Net
Property and equipment, net as of March 31, 2024 and December 31, 2023 are as follows:
| | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 |
Transportation equipment | $ | 17,493,078 | | | $ | 17,438,072 | |
Medical equipment | 7,623,138 | | | 7,104,161 | |
Office equipment and furniture | 3,916,431 | | | 3,701,657 | |
Leasehold improvements | 756,577 | | | 709,619 | |
Buildings | 527,284 | | | 527,283 | |
Land | 37,800 | | | 37,800 | |
| 30,354,308 | | | 29,518,592 | |
Less: Accumulated depreciation | (14,038,675) | | | (12,683,108) | |
Property and equipment, net | $ | 16,315,633 | | | $ | 16,835,484 | |
During the three months ended March 31, 2024, the Company disposed of assets with a cost of $102,079 and accumulated depreciation of $61,834 for proceeds of $93,080. The Company recorded a gain on disposal of assets of $52,835 for the three months ended March 31, 2024.
The Company recorded depreciation expense of $1,431,308 and $1,482,610 for the three months ended March 31, 2024 and 2023, respectively.
4. Acquisition of Businesses
Government Medical Services, LLC
On July 6, 2022, Holdings acquired 100% of the outstanding shares of common stock of GMS, a provider of medical services. The aggregate purchase price consisted of $20,338,789 in cash consideration. Holdings also agreed to pay GMS an additional $3,000,000 upon GMS meeting certain performance conditions within a year of the Closing Date. Acquisition costs are included in general and administrative expenses and totaled $1,001,883 for the twelve months ended December 31, 2022.
Exceptional Medical Transportation, LLC
On July 13, 2022, Holdings acquired 100% of the outstanding shares of common stock of Exceptional, a provider of medical transportation services, in exchange for $13,708,333 consisting of $7,708,333 in cash at closing and $6,000,000 payable over a 24-month period. Holdingsperiod following the closing date of the acquisition. The Company also agreed to pay an estimated $1,080,000 Contingentup to $2,000,000 in contingent consideration upon Exceptional meeting certain performance conditions within two years of the closing date of such acquisition.
During the three months ended March 31, 2024, the Company recorded a change in 2023. Exceptional iscontingent consideration in the businessamount of providing medical transportation services. Acquisition costs are included in general and administrative expenses and totaled $56,571 for$(13,730). During the twelve monthsyear ended December 31, 2022.2023, the Company made a payment for the first installment due on the contingent liability in the amount of $426,655. The estimated contingent consideration amount payable for Exceptional was $265,571 and $279,301 as of March 31, 2024 and December 31, 2023, respectively. Additionally, the Company paid $3,000,000 of the $6,000,000 remaining purchase price payable as of December 31, 2023. As of March 31, 2024 and December 31, 2023, there was a due to seller balance of $3,000,000.
Ryan BrothersBros. Fort Atkinson, LLC
On August 9, 2022, Holdings acquired 100% of the outstanding shares of common stock of Ryan Brothers, Fort Atkinson, LLC (“RB”)a provider of medical transportation services, in exchange for an aggregate purchase price of $11,422,252, consisting of $7,422,252 in cash at closing and an estimated $4,000,000 of estimated Contingentin contingent consideration to be paid out over 24 months, commencing on August 1, 2022, based on performance of certain obligations. RB is
During the three months ended March 31, 2024, the Company recorded a change in contingent consideration in the businessamount of providing medical transportation services. Acquisition costs are included in general and administrative expenses and totaled $230,175 for$7,284. During the twelve monthsyear ended December 31, 2022.
Community Ambulance Services LTD
On October 12, 2022, Holdings through its indirect wholly owned subsidiary, Ambulnz U.K. Ltd., acquired Community Ambulance Service Ltd (“CAS”),2023, the Company made a company located in United Kingdom, in exchange for approximately $5,541,269 in cash. The net assets acquired through the CAS acquisition was $7,134,881 mainly from the vehicles with high fair market value, which directly lead to a Gain on bargain purchase of $1,593,612. CAS is engaged in providing emergency and non-emergency transport services, including high dependency, urgent care, mental health and blue light transport services and diagnostics testing. We expect this acquisition to help us to increase our presence in that market, while giving us improved access to municipal contracts. Acquisition costs are included in general and administrative expenses totaling $171,779payment for the twelve months endedfirst installment due on the contingent liability in the amount of $1,840,026. The estimated contingent consideration amount payable for Ryan Brothers was $1,828,302 and $1,821,018 as of March 31, 2024 and December 31, 2022.2023, respectively.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Location Medical Services, LLC
On December 9, 2022, Holdings, through its indirect wholly owned subsidiary, Ambulnz U.K.UK Ltd., closed acquiringacquired 100% of the outstanding shares of common stock of LMS. The aggregate purchase price consisted of $302,450 in cash consideration. The Company also agreed to pay LMS an additional $11,279,201 in deferred consideration and an estimated $2,475,540 Contingentin contingent consideration upon LMS meeting certain performance conditions in 2023.
The Company recorded $(4,799) and $50,542 in foreign exchange movement during the three months ended March 31, 2024 and 2023, respectively. The estimated contingent consideration amount payable for LMS was $600,029 and $604,827 as of March 31, 2024 and December 31, 2023, respectively. Additionally, the Company paid $11,279,201 of deferred consideration to LMS during the six months ended June 30, 2023. Acquisition costs are included in general and administrative expenses and totaled $4,200 for the twelve monthsyear ended December 31, 2022.2023. As of March 31, 2024 and December 31, 2023, there was no remaining due to seller amounts outstanding.
On April 2, 2024, the Company paid the contingent consideration balance in the amount of $600,029.
Cardiac RMS, LLC
On March 31, 2023, Holdings acquired 51% of the outstanding shares of common stock of Cardiac RMS, LLC (“CRMS”) in exchange for $10,000,000CRMS, a provider of cardiac implantable electronic device remote monitoring and virtual care management services. The closing consideration consistingof $10,000,000 consisted of $9,000,000 in cash and $1,000,000 worth of shares of DocGo common stockCommon Stock issued in a private placement transaction. A further probable consideration of $15,822,190 is to be paid out over 36 months following the closing of the transaction for the remaining 49% equity of CRMS, based on CRMS’ attainment of full-year EBITDA targets. CRMS LLC provides cardiac implantable electronic device “CIED” remote monitoring$5,000,000 of such further probable consideration is to be paid in cash and virtual care management services.the remaining $10,822,190 is to be paid in shares of Common Stock. Acquisition costs are included in general and administrative expenses and totaled $229,937 for the six monthsyear ended June 30,December 31, 2023. During the year ended December 31, 2023, the Company recorded a change in contingent consideration in the amount of $1,265,645. As of March 31, 2024 and December 31, 2023, there was a remaining contingent liability balance of $17,087,835.
Ambulnz-FMC North America LLC
On April 1, 2023, the Company acquired the remaining outstanding shares of common stock of Ambulnz-FMC North America LLC (“FMC NA”),a prominent healthcare company that focuses on providing vital products and services for patients suffering from kidney diseases and renal failure, from its joint venture with Holdings in exchange for $4,000,000 in cash and $3,000,000 in Common Stock. Acquisition costs are included in general and administrative expenses totaling approximately $35,560 for the year ended December 31, 2023.
Healthworx LLC
On May 10, 2023, the Company acquired the remaining outstanding shares of common stock of Healthworx LLC (“Healthworx”), a provider of management, administration and support services to service providers focused on medical testing and diagnostic screening, from its joint venture with Rapid Reliable Testing, LLC (“RRT”) in exchange for $1,385,156 in cash.
The following table presents the assets acquired and liabilities assumed at the date of the acquisitions:
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
On April 1, 2023, the Company acquired the remaining outstanding shares of Ambulnz-FMC North America LLC common stock from its joint venture with Ambulnz Holdings, LLC, in exchange for $4,000,000 in cash and $3,000,000 in stock. Ambulnz-FMC North America LLC is a prominent healthcare company that focuses on providing vital products and services for patients suffering from kidney diseases and renal failure. Acquisition costs are included in general and administrative expenses totaling approximately $35,560 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | FMC NA | | CRMS | | LMS | | Ryan Brothers | | Exceptional | | Total |
Consideration: | | | | | | | | | | | | |
Cash consideration | | $ | 4,000,000 | | | $ | 9,000,000 | | | $ | 302,450 | | | $ | 7,422,252 | | | $ | 6,375,000 | | | $ | 27,099,702 | |
Stock consideration | | 3,000,000 | | | 1,000,000 | | | — | | | — | | | — | | | 4,000,000 | |
Due to seller | | — | | | — | | | 11,279,201 | | | — | | | 6,000,000 | | | 17,279,201 | |
Amounts held under an escrow account | | — | | | — | | | — | | | — | | | 1,333,333 | | | 1,333,333 | |
Contingent liability | | — | | | 15,822,190 | | | 2,475,540 | | | 4,000,000 | | | 1,080,000 | | | 23,377,730 | |
Total consideration | | $ | 7,000,000 | | | $ | 25,822,190 | | | $ | 14,057,191 | | | $ | 11,422,252 | | | $ | 14,788,333 | | | $ | 73,089,966 | |
| | | | | | | | | | | | |
Recognized amounts of identifiable assets acquired and liabilities assumed | | | | | | | | | | | | |
Cash | | $ | — | | | $ | 1,574,604 | | | $ | 5,404,660 | | | $ | 620,548 | | | $ | 299,050 | | | $ | 7,898,862 | |
Accounts receivable | | — | | | 2,033,533 | | | 623,635 | | | 5,844,494 | | | 3,785,490 | | | 12,287,152 | |
Other current assets | | — | | | 293,478 | | | 134,216 | | | 136,157 | | | — | | | 563,851 | |
Property, plant and equipment | | — | | | — | | | 519,391 | | | 2,125,134 | | | 2,450,900 | | | 5,095,425 | |
Intangible assets | | — | | | 15,930,000 | | | 2,419,600 | | | 387,550 | | | 125,000 | | | 18,862,150 | |
Total identifiable assets acquired | | — | | | 19,831,615 | | | 9,101,502 | | | 9,113,883 | | | 6,660,440 | | | 44,707,440 | |
| | | | | | | | | | | | |
Accounts payable | | — | | | 28,978 | | | 40,447 | | | 44,911 | | | — | | | 114,336 | |
Due to seller | | — | | | 2,448,460 | | | — | | | 5,844,494 | | | 4,084,540 | | | 12,377,494 | |
Other current liabilities | | — | | | 174,177 | | | 1,012,992 | | | 286,792 | | | — | | | 1,473,961 | |
Total liabilities assumed | | — | | | 2,651,615 | | | 1,053,439 | | | 6,176,197 | | | 4,084,540 | | | 13,965,791 | |
| | | | | | | | | | | | |
Noncontrolling interests | | 2,567,037 | | | — | | | — | | | — | | | — | | | 2,567,037 | |
| | | | | | | | | | | | |
Goodwill | | — | | | 8,642,190 | | | 6,009,128 | | | 8,484,566 | | | 12,212,433 | | | 35,348,317 | |
Additional paid-in-capital | | 4,432,963 | | | — | | | — | | | — | | | — | | | 4,432,963 | |
| | | | | | | | | | | | |
Total purchase price | | $ | 7,000,000 | | | $ | 25,822,190 | | | $ | 14,057,191 | | | $ | 11,422,252 | | | $ | 14,788,333 | | | $ | 73,089,966 | |
There were no new acquisitions for the three and six months ended June 30, 2023, respectively.March 31, 2024.
Healthworx LLC
On May 10, 2023, the Company acquired the remaining outstanding shares of common stock from its joint venture with Rapid Reliable Testing, in exchange for $1,385,156 in cash.
The following table presents the preliminary allocation of the assets acquired and liabilities assumed:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Ambulnz-FMC North America LLC | | Cardiac RMS LLC | | Location Medical Services | | Community Ambulance Service | | Ryan Brothers | | Exceptional Medical Transport | | Government Medical Services | | Total |
| | | | | | | | | | | | | | | | |
Consideration: | | | | | | | | | | | | | | | | |
Cash Consideration | | $ | 4,000,000 | | | $ | 9,000,000 | | | $ | 302,450 | | | $ | 5,541,269 | | | $ | 7,422,252 | | | $ | 6,375,000 | | | $ | 20,338,789 | | | $ | 52,979,760 | |
Stock Consideration | | 3,000,000 | | | 1,000,000 | | | — | | | — | | | — | | | — | | | — | | | 4,000,000 | |
Due to Seller | | — | | | — | | | 11,279,201 | | | — | | | — | | | 6,000,000 | | | — | | | 17,279,201 | |
Amounts held under an escrow account | | — | | | — | | | — | | | — | | | — | | | 1,333,333 | | | — | | | 1,333,333 | |
Contingent Liability | | — | | | 15,822,190 | | | 2,475,540 | | | — | | | 4,000,000 | | | 1,080,000 | | | 3,000,000 | | | 26,377,730 | |
Total consideration | | $ | 7,000,000 | | | $ | 25,822,190 | | | $ | 14,057,191 | | | $ | 5,541,269 | | | $ | 11,422,252 | | | $ | 14,788,333 | | | $ | 23,338,789 | | | $ | 101,970,024 | |
| | | | | | | | | | | | | | | | |
Recognized amounts of identifiable assets acquired and liabilities assumed | | | | | | | | | | | | | | | | |
Cash | | $ | — | | | $ | 1,574,604 | | | $ | 5,404,660 | | | $ | 892,218 | | | $ | 620,548 | | | $ | 299,050 | | | $ | 1,005,453 | | | $ | 9,796,533 | |
Accounts receivable | | — | | | 2,033,533 | | | 623,635 | | | 7,002,325 | | | 5,844,494 | | | 3,785,490 | | | 3,975,160 | | | 23,264,637 | |
Other current assets | | — | | | 293,478 | | | 134,216 | | | 1,167,326 | | | 136,157 | | | — | | | 30,734 | | | 1,761,911 | |
Property, plant and equipment | | — | | | — | | | 519,391 | | | 4,548,956 | | | 2,125,134 | | | 2,450,900 | | | 4,092 | | | 9,648,473 | |
Intangible assets | | — | | | 15,930,000 | | | 2,419,600 | | | — | | | 387,550 | | | 125,000 | | | 10,305,000 | | | 29,167,150 | |
Total identifiable assets acquired | | — | | | 19,831,615 | | | 9,101,502 | | | 13,610,825 | | | 9,113,883 | | | 6,660,440 | | | 15,320,439 | | | 73,638,704 | |
| | | | | | | | | | | | | | | | |
Accounts payable | | — | | | 28,978 | | | 40,447 | | | 2,036,714 | | | 44,911 | | | — | | | 137,239 | | | 2,288,289 | |
Due to Seller | | — | | | 2,448,460 | | | — | | | — | | | 5,844,494 | | | 4,084,540 | | | — | | | 12,377,494 | |
Other current liabilities | | — | | | 174,177 | | | 1,012,992 | | | 4,439,230 | | | 286,792 | | | — | | | 562,809 | | | 6,476,000 | |
Total liabilities assumed | | — | | | 2,651,615 | | | 1,053,439 | | | 6,475,944 | | | 6,176,197 | | | 4,084,540 | | | 700,048 | | | 21,141,783 | |
| | | | | | | | | | | | | | | | |
Noncontrolling interests | | 2,567,037 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,567,037 | |
| | | | | | | | | | | | | | | | |
Goodwill | | — | | | 8,642,190 | | | 6,009,128 | | | (1,593,612) | | | 8,484,566 | | | 12,212,433 | | | 8,718,398 | | | 42,473,103 | |
Additional paid-in-capital | | 4,432,963 | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,432,963 | |
| | | | | | | | | | | | | | | | |
Total purchase price | | $ | 7,000,000 | | | $ | 25,822,190 | | | $ | 14,057,191 | | | $ | 5,541,269 | | | $ | 11,422,252 | | | $ | 14,788,333 | | | $ | 23,338,789 | | | $ | 101,970,024 | |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Pro Forma Disclosures
The following unaudited pro forma combined financial information for the three months ended March 31, 2023 gives effect to the acquisitions disclosed above as if they had occurred on January 1, 2023. The pro forma information is not necessarily indicative of the results of operations that actually would have occurred under the ownership and management of the Company.
| | | | | | | | |
| | Three Months Ended March 31, 2023 |
Revenue | | $ | 116,116,322 | |
Net loss | | (2,879,996) | |
The unaudited pro forma combined financial information presented above includes the accounting effects of the acquisitions, including, to the extent applicable, amortization charges from acquired intangible assets, depreciation of property and equipment that have been revalued, transaction costs, interest expense, and the related tax effects. There were no new acquisitions for the three months ended March 31, 2024.
5. ABC Transaction and Held for Sale
During the fiscal yearIn 2022, the Company started discussions regarding the potential liquidation process of Ambulnz Health, LLC (“Health”) through an assignment for the benefit of creditors (“ABC”), with a targeted timeline for the transaction to be fully closed inby December 31, 2022. The conversation involved operations, human resources, external legal counsel, and Amb, LLC, (aa California limited liability company the(the “Assignee”). Due to operational processes, the filing was extended and finalized on February 3, 2023.
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 actsacted as a fiduciary for creditors and in a capacity equivalent to that of a bankruptcy trustee. The Assignee iswas responsible for liquidating the assets. Similar to a bankruptcy case, there iswas a claims process. Creditors of Health will receivereceived notice of the ABC and a proof of claim form and arewere required to submit a proof of claim in order to participate in distribution of net liquidation proceeds by the Assignee.
As of December 31, 2022, Health met the criteria to be classified as held for sale. As the entity has met this criteria,a result, the Company iswas required to record the respective assets and liabilities at the lower of carrying value or fair value, less any costs to sell and present the related assets and liabilities as separate line items in the Condensed Consolidated Balance Sheets.
The following table presents information related to the major classes of assetsintercompany receivables and liabilities thatintercompany payables were classified as held for saleeliminated in the Company’s Condensed Consolidated Balance SheetsSheet as of December 31, 2022:2022.
6. Goodwill
The Company recorded an aggregate of $8,642,190 in goodwill in connection with its acquisitions in the year ended December 31, 2023.
The Company also updated the carrying value of the goodwill in its unaudited Condensed Consolidated Balance Sheets to reflect the currency translation adjustment. The carrying value of goodwill amounted to $47,489,759 as of March 31, 2024. The changes in the carrying value of goodwill for the three months ended March 31, 2024 are as noted in the table below:
| | | | | | | | |
| | Carrying Value |
Balance as of December 31, 2023 | | $ | 47,539,929 | |
Currency translation adjustment | | (50,170) | |
Balance as of March 31, 2024 | | $ | 47,489,759 | |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pre ABC Adjustment | | 2022 Adjustments | | December 31, | | 1Q23 Adjustments | | June 30, |
| | | | 2022 | | | 2023 |
ASSETS | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | |
Cash and cash equivalents | | | $ | (190,312) | | | | $ | 190,312 | | | | $ | — | | | | $ | — | | | | $ | — | |
Accounts receivable, net | | | 1,219,927 | | | | (1,219,927) | | | | — | | | | — | | | | — | |
Prepaid expenses and other current assets | | | 22,850 | | | | (22,850) | | | | — | | | | — | | | | — | |
Total current assets | | | 1,052,465 | | | | (1,052,465) | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | |
Property and equipment, net | | | 1,107,279 | | | | (1,107,279) | | | | — | | | | — | | | | — | |
Intangibles, net | | | 30,697 | | | | (30,697) | | | | — | | | | — | | | | — | |
Goodwill | | | 5,085,689 | | | | (5,085,689) | | | | — | | | | — | | | | — | |
Operating lease right-of-use assets | | | 29,753 | | | | (29,753) | | | | — | | | | — | | | | — | |
Assets held for sale | | | — | | | | 4,480,344 | | | | 4,480,344 | | | | (4,480,344) | | | | — | |
Other assets | | | 18,053,495 | | | | (96,419) | | | | 17,957,076 | | | | (17,957,076) | | | | — | |
Total assets | | | $ | 25,359,378 | | | | $ | (2,921,958) | | | | $ | 22,437,420 | | | | $ | (22,437,420) | | | | $ | — | |
| | | | | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | |
Accounts payable | | | $ | 196,122 | | | | $ | (196,122) | | | | $ | — | | | | $ | — | | | | $ | — | |
Accrued liabilities | | | 63,655,442 | | | | (4,250,603) | | | | 59,404,839 | | | | (59,404,839) | | | | — | |
Operating lease liability, current | | | 33,619 | | | | (33,619) | | | | — | | | | — | | | | — | |
Liabilities held for sale | | | — | | | | 4,480,344 | | | | 4,480,344 | | | | (4,480,344) | | | | — | |
Total current liabilities | | | 63,885,183 | | | | — | | | | 63,885,183 | | | | (63,885,183) | | | | — | |
Total liabilities | | | $ | 63,885,183 | | | | $ | — | | | | $ | 63,885,183 | | | | $ | (63,885,183) | | | | $ | — | |
| | | | | | | | | | | | | | | |
STOCKHOLDERS’ EQUITY: | | | | | | | | | | | | | | | |
Accumulated deficit | | | $ | (38,525,805) | | | | $ | (2,921,958) | | | | $ | (41,447,763) | | | | $ | 41,447,763 | | | | $ | — | |
Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries | | | (38,525,805) | | | | (2,921,958) | | | | (41,447,763) | | | | 41,447,763 | | | | — | |
Noncontrolling interests | | | — | | | | — | | | | — | | | | — | | | | — | |
Total stockholders’ equity | | | $ | (38,525,805) | | | | $ | (2,921,958) | | | | $ | (41,447,763) | | | | $ | 41,447,763 | | | | $ | — | |
Total liabilities and stockholders’ equity | | | $ | 25,359,378 | | | | $ | (2,921,958) | | | | $ | 22,437,420 | | | | $ | (22,437,420) | | | | $ | — | |
7. Intangibles
Intangible assets consisted of the following as of March 31, 2024 and December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2024 |
| Estimated Useful Life (Years) | | Gross Carrying Amount | | Additions | | Accumulated Amortization | | Net Carrying Amount |
Patents | 15 years | | $ | 83,784 | | | $ | — | | | $ | (16,988) | | | $ | 66,796 | |
Computer software | 5 years | | 247,828 | | | — | | | (238,007) | | | 9,821 | |
Operating licenses | Indefinite | | 9,399,004 | | | — | | | — | | | 9,399,004 | |
Internally developed software | 4-5 years | | 10,078,087 | | | 793,240 | | | (9,702,883) | | | 1,168,444 | |
Material contracts | Indefinite | | 62,550 | | | — | | | — | | | 62,550 | |
Customer relationships | 8-9 years | | 28,337,524 | | | (17,474) | | | (4,126,814) | | | 24,193,236 | |
Trademark | 8 years | | 343,747 | | | (2,727) | | | (56,837) | | | 284,183 | |
Non-compete agreements | 5 years | | 100,000 | | | — | | | (20,000) | | | 80,000 | |
Trade credits | 5 years | | 1,500,000 | | | — | | | — | | | 1,500,000 | |
| | | $ | 50,152,524 | | | $ | 773,039 | | | $ | (14,161,529) | | | $ | 36,764,034 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| Estimated Useful Life (Years) | | Gross Carrying Amount | | Additions | | Accumulated Amortization | | Net Carrying Amount |
Patents | 15 years | | $ | 62,823 | | | $ | 20,961 | | | $ | (15,592) | | | $ | 68,192 | |
Computer software | 5 years | | 247,828 | | | — | | | (235,967) | | | 11,861 | |
Operating licenses | Indefinite | | 8,799,004 | | | 600,000 | | | — | | | 9,399,004 | |
Internally developed software | 4-5 years | | 8,284,058 | | | 1,794,029 | | | (8,821,563) | | | 1,256,524 | |
Material contracts | Indefinite | | 62,550 | | | — | | | — | | | 62,550 | |
Customer relationships | 8-9 years | | 12,397,954 | | | 15,939,570 | | | (3,334,925) | | | 25,002,599 | |
Trademark | 8 years | | 326,646 | | | 17,101 | | | (46,549) | | | 297,198 | |
Non-compete agreements | 5 years | | — | | | 100,000 | | | (15,000) | | | 85,000 | |
Trade credits | 5 years | | — | | | 1,500,000 | | | — | | | 1,500,000 | |
| | | $ | 30,180,863 | | | $ | 19,971,661 | | | $ | (12,469,596) | | | $ | 37,682,928 | |
The Intercompany receivables and Intercompany payables are eliminatedintangible assets include an immaterial foreign currency translation adjustment in the Company’s Consolidated Balance Sheets.
6. Goodwill
In connection withamount of $(3,050) for the ABC transaction, the Company evaluated its Goodwillthree months ended March 31, 2024. Intangible asset balances as of December 31, 2022are translated into U.S. dollars using exchange rates in effect at period end, and determined that there was an impairment of Goodwilladjustments related to its Health reporting unit. foreign currency translation are included in other comprehensive income.
The impairment was primarily due toCompany recorded amortization expense of $1,694,983 and $1,365,636 for the ABC filing.
three months ended March 31, 2024 and 2023, respectively.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
As a result of this impairment, the Company recognized a non-cash charge of $2,921,958 in the year ended December 31, 2022 in the Consolidated Statements of Operations. The charge was recorded as part of Other income in the Company’s Consolidated Statements of Operations and has no impact on its cash flow, liquidity, or compliance with debt covenants.
Additionally, the Company recorded Goodwill in connection with its acquisitions, the total Goodwill acquired in 2022 was $35,299,136.
The Company also updated the carrying value of the Goodwill in its unaudited Condensed Consolidated Balance Sheets to reflect the additional Goodwill and the impairment charge. The carrying value of Goodwill amounts $47,820,840, the changes in the carrying value of Goodwill for the period ended June 30, 2023 are as noted in the tables below:
| | | | | | | | |
| | Carrying Value |
Balance at December 31, 2022 | | $ | 38,900,413 | |
Goodwill acquired during the period | | 8,642,190 | |
CTA | | 278,237 | |
Balance at June 30, 2023 | | $ | 47,820,840 | |
7. Intangibles
Intangible assets consist of the following as of June 30, 2023 and December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2023 |
| Estimated Useful Life (Years) | | Gross Carrying Amount | | Additions | | Accumulated Amortization | | Net Carrying Amount |
Patents | 15 years | | $ | 62,823 | | | $ | 18,265 | | | $ | (12,800) | | | $ | 68,288 | |
Computer software | 5 years | | 247,828 | | | — | | | (231,731) | | | 16,097 | |
Operating licenses | Indefinite | | 8,799,004 | | | 600,000 | | | — | | | 9,399,004 | |
Internally developed software | 4-5 years | | 8,284,058 | | | 1,208,506 | | | (7,977,777) | | | 1,514,787 | |
Material Contracts | Indefinite | | 62,550 | | | — | | | — | | | 62,550 | |
Customer Relationship | 9 years | | 12,397,954 | | | 15,924,323 | | | (1,744,211) | | | 26,578,066 | |
Trademark | 8 years | | 326,646 | | | 14,721 | | | (24,891) | | | 316,476 | |
Non-compete Agreement | 5 years | | — | | | 100,000 | | | (5,000) | | | 95,000 | |
| | | $ | 30,180,863 | | | $ | 17,865,815 | | | $ | (9,996,410) | | | $ | 38,050,268 | |
| | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2022 |
| Estimated Useful Life (Years) | | Gross Carrying Amount | | Additions | | Accumulated Amortization | | Net Carrying Amount |
Patents | 15 years | | $ | 48,668 | | | $ | 14,155 | | | $ | (10,116) | | | $ | 52,707 | |
Computer software | 5 years | | 294,147 | | | (46,319) | | | (224,886) | | | 22,942 | |
Operating licenses | Indefinite | | 8,375,514 | | | 423,490 | | | — | | | 8,799,004 | |
Internally developed software | 4-5 years | | 6,013,513 | | | 2,270,545 | | | (6,378,911) | | | 1,905,147 | |
Material contracts | Indefinite | | — | | | 62,550 | | | — | | | 62,550 | |
Customer relationship | 8-9 years | | — | | | 12,397,954 | | | (594,301) | | | 11,803,653 | |
Trademark | 8 years | | — | | | 326,646 | | | (3,403) | | | 323,243 | |
| | | $ | 14,731,842 | | | $ | 15,449,021 | | | $ | (7,211,617) | | | $ | 22,969,246 | |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Company recorded amortization expense of $1,414,944 and $645,715 for the three months ended June 30, 2023 and 2022, respectively.
The Company recorded amortization expense of $2,780,580 and $1,279,078 for the six months ended June 30, 2023 and 2022, respectively.
Future amortization expense at June 30, 2023March 31, 2024 for the next five years and in the aggregate are as follows:
| | Amortization Expense |
2023, remaining | $ | 1,958,683 | |
2024 | 3,865,944 | |
| Amortization Expense | | | Amortization Expense |
2024, remaining | |
2025 | 2025 | 3,816,044 | |
2026 | 2026 | 3,247,559 | |
2027 | 2027 | 3,246,843 | |
2028 | |
Thereafter | Thereafter | 12,453,641 | |
Total | Total | $ | 28,588,714 | |
8. Accrued Liabilities
Accrued liabilities consistconsisted of the following as of June 30, 2023March 31, 2024 and December 31, 2022:2023:
| | June 30, 2023 | | December 31, 2022 |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
Accrued subcontractors | Accrued subcontractors | $ | 10,829,445 | | | $ | 8,101,150 | |
Accrued workers compensation and insurance liabilities | 10,330,099 | | | 3,766,469 | |
Accrued general expenses | Accrued general expenses | 6,296,541 | | | 11,436,462 | |
Accrued workers' compensation and other insurance liabilities | |
Accrued payroll | Accrued payroll | 3,752,317 | | 4,245,838 | Accrued payroll | 8,070,291 | | | 6,464,192 | | 6,464,192 |
Accrued bonus | Accrued bonus | 1,120,425 | | | 1,500,717 | |
Accrued legal fees | 1,048,393 | | | 344,417 | |
Other current liabilities | Other current liabilities | 634,526 | | | 706,528 | |
Accrued lab fees | 396,255 | | | 584,203 | |
Accrued fuel and maintenance | 314,894 | | | 253,243 | |
Credit card payable | 46,320 | | | 78,838 | |
FICA/Medicare liability | 17,929 | | | 555,166 | |
Total accrued liabilities | Total accrued liabilities | $ | 34,787,144 | | | $ | 31,573,031 | |
9. Line of Credit
On November 1, 2022, the Company entered into a revolving loan and securitycredit agreement (the "Credit Agreement") with two banks, with one bank in the capacity as a lender and the administrative agent (the(collectively with the other lender, the “Lenders”), with. The Credit Agreement provides for a maximum revolving advancecredit facility in the initial aggregate principal amount of $90,000,000.$90,000,000 (the “Revolving Facility”). The revolving facilityRevolving Facility includes the ability for the Company to request an increase to the commitment by an additional amount of up to $50,000,000, though no Lender (nor the Lenders collectively) areis obligated to increase theirits respective commitments. Borrowings under the revolving facilityRevolving Facility bear interest at a per annum rate equal to,to: (i) at the Company’s option, the (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin. The applicable margins are based on the Company’s consolidated net leverage ratio, adjusted on a quarterly basis. The initial applicable margins are 1.25% for an adjusted term SOFR loan and 0.25% for a base rate loan and will be updated based on the Company's consolidated net leverage ratio reported in the compliance certificate.ratio. The revolving facilityRevolving Facility matures on November 1, 2027, the five-year anniversary of the closing date, November 1, 2027.date. The revolving facilityRevolving Facility is secured by a first-priority lien on substantially all of the Company’s present and future personal assets and intangible assets. The revolving facilityRevolving Facility is subject to certain financial covenants such as a net leverage ratio and interest coverage ratio, as defined in the Credit Agreement.
As of December 31, 2023, there was a $25,000,000 outstanding balance on the Revolving Facility. The Company drew down an additional $15,000,000 on February 8, 2024 under the Revolving Facility. On February 27, 2024, the Company paid the $40,000,000 line of credit balance. On March 4, 2024, the Company drew down $15,000,000 and made an additional $15,000,000 draw on March 18, 2024. As of March 31, 2024, the outstanding balance of the line of credit was $30,000,000 and the unused line of credit was $60,000,000. The Company incurred $449,099 and $0 in interest charges relating to its line of credit for the three months ended March 31, 2024 and 2023, respectively, which is reflected in interest income (expense) on the Company's unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
coverage ratio, as defined in the agreement. The Company has not made any draws under the facility and as of June 30, 2023, there is no amount outstanding.
10. Notes Payable
The Company has various loans with finance companies with monthly installments aggregating $69,469,$2,864, inclusive of interest ranging from 2.5% through 10.1%7.5%. The loan notes mature at various times through 20282026 and are secured by transportation equipment.
The following table summarizes the Company’s notes payable:
| | June 30, 2023 | | December 31, 2022 |
Equipment and financing loans payable, between 2.5% and 10.1% interest and maturing between January 2023 and May 2028 | $ | 2,276,824 | | | $ | 1,901,514 | |
Loan received pursuant to the Payroll Protection Program Term Note | — | | | — | |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
Equipment and financing loans payable, between 2.5% and 7.5% interest and maturing between June 2024 and August 2026 | |
Total notes payable | Total notes payable | 2,276,824 | | | 1,901,514 | |
Less: current portion of notes payable | Less: current portion of notes payable | $ | 696,308 | | | $ | 664,913 | |
Total non-current portion of notes payable | Total non-current portion of notes payable | $ | 1,580,516 | | | $ | 1,236,601 | |
Interest expense was $32,375$883 and $20,949$29,034 for the three months period ended June 30,March 31, 2024 and 2023, and 2022, respectively.
Interest expense was $61,409 and $43,508 for the six months period ended June 30, 2023 and 2022, respectively.
Future minimum annual maturities of notes payable as of June 30, 2023March 31, 2024 are as follows:
| | Notes Payable |
2023, remaining | $ | 322,096 | |
2024 | 571,001 | |
| Notes Payable | | | Notes Payable |
2024, remaining | |
2025 | 2025 | 563,779 | |
2026 | 2026 | 492,111 | |
2027 | 273,629 | |
Thereafter | 54,208 | |
Total maturities | Total maturities | $ | 2,276,824 | |
Current portion of notes payable | Current portion of notes payable | (696,308) | |
Long-term portion of notes payable | Long-term portion of notes payable | $ | 1,580,516 | |
11. Business Segment Information
The Company conducts business in three operating segments, Transportation Services,segments: Mobile Health Services, Transportation Services and Corporate. In accordance with ASC 280, Segment Reporting, operating segments are components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker,makers, the Company’s Chief Executive Officer and Chief Financial Officer, in deciding how to allocate resources and assessing performance. Prior to 2023, the Company reported in two segments, because the Company’s entities have two main revenue streams. Beginning with the first quarter of 2023, the Company is nowbegan reporting in three operating segments, adding a Corporate segment to allow for analysis of shared services and personnel that support both the TransportationMobile Health Services and Mobile HealthTransportation Services segments. Previously, these costs had been allocated almost entirely to the Transportation Services segment. All of the Company’s revenues and costscost of goods soldrevenues continue to be reported within the Transportation Services and Mobile Health Services segments. The Corporate segment contains operating expenses such as information technology costs, certain insurance costs and the compensation costs of senior and executive leadership. The segment reporting for the prior-year period has been adjusted to conform to the new methodology, for the purposes of allowing a clearer analysis of year-over-year performance. The Company’s chief operating decision maker evaluatesChief Executive Officer and Chief Financial Officer evaluate the Company’s financial information and resources and assessesassess the performance of these resources by revenue stream and by operating income or loss performance.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its TransportationMobile Health Services, Mobile HealthTransportation Services and Corporate segments based primarily on results of operations.
Operating results for the business segments of the Company are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Transportation Services | | Mobile Health Services | | Corporate | | Total |
Three Months Ended June 30, 2023 | | | | | | | |
Revenues | $ | 45,422,151 | | | $ | 80,064,609 | | | $ | — | | | $ | 125,486,760 | |
| | | | | | | |
Income (loss) from operations | (537,625) | | | 18,217,665 | | | (16,104,086) | | | 1,575,954 | |
| | | | | | | |
Total assets | 121,884,046 | | | 142,049,757 | | | 126,352,242 | | | 390,286,045 | |
| | | | | | | |
Depreciation and amortization expense | 1,940,635 | | | 1,201,771 | | | 688,655 | | | 3,831,061 | |
| | | | | | | |
Stock compensation | 215,912 | | | 182,889 | | | 2,952,321 | | | 3,351,122 | |
| | | | | | | |
Long-lived assets | 66,188,807 | | | 48,454,044 | | | 11,418,092 | | | 126,060,943 | |
| | | | | | | |
Capital expenditures | 3,268,147 | | | 806,681 | | | 720,659 | | | 4,795,487 | |
| | | | | | | |
Three Months Ended June 30, 2022 | | | | | | | |
Revenues | $ | 22,175,233 | | | $ | 87,344,071 | | | $ | — | | | $ | 109,519,304 | |
| | | | | | | |
Income (loss) from operations | (5,398,799) | | | 30,234,461 | | | (17,377,905) | | | 7,457,757 | |
| | | | | | | |
Total assets | 67,477,663 | | | 55,936,426 | | | 208,441,299 | | | 331,855,388 | |
| | | | | | | |
Depreciation and amortization expense | 1,124,521 | | | 217,389 | | | 695,861 | | | 2,037,771 | |
| | | | | | | |
Stock compensation | 506,775 | | | 223,893 | | | 1,268,951 | | | 1,999,619 | |
| | | | | | | |
Long-lived assets | 36,437,097 | | | 4,232,044 | | | 2,691,150 | | | 43,360,291 | |
| | | | | | | |
Capital expenditures | 1,157,537 | | | 23,513,762 | | | 542,628 | | | 25,213,927 | |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
| | | | | | | | | | | | | | | | | | | | | | | |
| Transportation Services | | Mobile Health Services | | Corporate | | Total |
Six Months Ended June 30, 2023 | | | | | | | |
Revenues | $ | 85,478,096 | | | $ | 153,011,367 | | | $ | — | | | $ | 238,489,463 | |
| | | | | | | |
Income (loss) from operations | 433,522 | | | 31,159,245 | | | (36,919,400) | | | (5,326,633) | |
| | | | | | | |
Total assets | 121,884,046 | | | 142,049,757 | | | 126,352,242 | | | 390,286,045 | |
| | | | | | | |
Depreciation and amortization expense | 3,803,939 | | | 1,918,310 | | | 1,758,141.00 | | | 7,480,390 | |
| | | | | | | |
Stock compensation | 475,605 | | | 299,822 | | | 11,025,711 | | | 11,801,138 | |
| | | | | | | |
Long-lived assets | 66,188,807 | | | 48,454,044 | | | 11,418,092 | | | 126,060,943 | |
| | | | | | | |
Capital Expenditures | 13,632,633 | | | 26,539,244 | | | 2,467,347 | | | 42,639,224 | |
| | | | | | | |
Six Months Ended June 30, 2022 | | | | | | | |
Revenues | $ | 49,987,743 | | | $ | 177,423,113 | | | $ | — | | | $ | 227,410,856 | |
| | | | | | | |
Income (loss) from operations | (7,879,188) | | | 53,578,388 | | | (28,146,878) | | | 17,552,322 | |
| | | | | | | |
Total assets | 67,477,663 | | | 55,936,426 | | | 208,441,299 | | | 331,855,388 | |
| | | | | | | |
Depreciation and amortization expense | 2,439,121 | | | 430,645 | | | 1,369,026 | | | 4,238,792 | |
| | | | | | | |
Stock compensation | 892,876 | | | 268,966 | | | 2,260,714 | | | 3,422,556 | |
| | | | | | | |
Long-lived assets | 36,437,097 | | | 4,232,044 | | | 2,691,150 | | | 43,360,291 | |
| | | | | | | |
Capital Expenditures | 2,100,320 | | | 23,605,840 | | | 1,220,515 | | | 26,926,675 | |
Operating results for the business segments of the Company are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Mobile Health Services | | Transportation Services | | Corporate | | Total |
Three Months Ended March 31, 2024 | | | | | | | |
Revenues | $ | 143,941,158 | | | $ | 48,146,371 | | | $ | — | | | $ | 192,087,529 | |
Income (loss) from operations | 32,212,025 | | | 1,016,298 | | | (17,352,956) | | | 15,875,367 | |
Total assets | 290,217,792 | | | 134,876,411 | | | 65,590,914 | | | 490,685,117 | |
Depreciation and amortization expense | 1,200,642 | | | 1,998,455 | | | 983,684 | | | 4,182,781 | |
Stock compensation | 1,912,290 | | | 138,424 | | | 1,937,625 | | | 3,988,339 | |
Long-lived assets | 46,236,132 | | | 66,118,463 | | | 10,725,695 | | | 123,080,290 | |
Capital expenditures | 129,190 | | | 3,208,082 | | | 798,213 | | | 4,135,485 | |
| | | | | | | |
Three Months Ended March 31, 2023 | | | | | | | |
Revenues | $ | 72,946,757 | | | $ | 40,055,946 | | | $ | — | | | $ | 113,002,703 | |
Income (loss) from operations | 13,188,159 | | | 1,083,040 | | | (21,173,786) | | | (6,902,587) | |
Total assets | 152,352,877 | | | 118,998,556 | | | 136,193,743 | | | 407,545,176 | |
Depreciation and amortization expense | 716,539 | | | 1,863,304 | | | 1,069,486 | | | 3,649,329 | |
Stock compensation | 116,934 | | | 259,693 | | | 8,073,389 | | | 8,450,016 | |
Long-lived assets | 32,775,318 | | | 82,637,490 | | | 11,469,921 | | | 126,882,729 | |
Capital expenditures | 26,090,733 | | | 3,625,456 | | | 1,499,647 | | | 31,215,836 | |
Long-lived assets include property and equipment, goodwill, intangible assets, operating lease right-of-use assets and finance lease right-of-use assets.
Geographic Information
The following table below showssummarizes long-lived assets by geographic location.location for the three months ended March 31, 2024 and 2023:
| | June 30, 2023 | | June 30, 2022 |
| March 31, 2024 | | | March 31, 2024 | | March 31, 2023 |
Primary Geographical Markets | Primary Geographical Markets | | | |
United States | |
United States | |
United States | United States | 106,605,989 | | | 41,246,102 | |
United Kingdom | United Kingdom | 19,454,954 | | | 2,114,189 | |
Total Long-Lived Assets | Total Long-Lived Assets | 126,060,943 | | | 43,360,291 | |
Revenues by geographic location are included in Note 2.
12. Equity
Share Repurchase Program
On May 24, 2022, the Company’s Board of Directors (the “Board of Directors”) authorized a share repurchase program to purchase up to $40,000,000 of Common Stock (the “2022 Program”). During the second and fourth quarter of 2022, the Company repurchased 536,839 shares of its Common Stock for $3,731,712. These shares were subsequently cancelled. The 2022 Program, which did not obligate the Company to repurchase a specific number of shares, expired on November 24, 2023.
On January 31, 2024, the Company's Board of Directors authorized a new share repurchase program pursuant to which the Company may purchase up to $36,000,000 in shares of Common Stock during a six-month period ending July 30, 2024 (the "Repurchase Program"). The Repurchase Program does not obligate the Company to repurchase a specific number of shares.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12. Equity
ShareUnder the terms of the Repurchase Program, the Company may purchase shares of Common Stock on a discretionary basis from time to time through open market repurchases or privately negotiated transactions or through other means, including by entering into Rule 10b5-1 trading plans or accelerated share repurchase programs, in each case, during an “open window” and when the Company does not possess material non-public information.
On May 24, 2022, the Board of Directors authorized a share repurchase program to purchase up to $40 million of the Company’s common stock (the “Program”). During the second and fourth quarter of 2022, the Company repurchased 536,839 shares of its common stock for $3,731,712. These shares were subsequently cancelled. There were no shares repurchased during the three and six months ended June 30, 2023. The Program does not oblige the Company to acquire any specific number of shares and will expire on November 24, 2023. Under the Program, shares may be repurchased using a variety of methods, including privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, as part of accelerated share repurchases, block trades and other methods. The timing, manner, price and amount of any common stock repurchasesshares repurchased under the Repurchase Program are determined by the Company in its discretion andwill depend on a variety of factors, including legalstock price, trading volume, market conditions, corporate and regulatory requirements price and economic and market conditions.other general business considerations. The Repurchase Program may be modified, suspended or discontinued at any time without prior notice.
Repurchases under the Repurchase Program may be funded from the Company’s existing cash and cash equivalents, future cash flow or proceeds of borrowings or debt offerings.
During the three months ended March 31, 2024, the Company repurchased and subsequently cancelled 1,255,614 shares of Common Stock for $4,877,559.
13. Stock BasedStock-Based Compensation
Stock Options
In 2021, the Company established the DocGo Inc. 2021 Equity Incentive Plan (the “Plan”), which replaced Ambulnz, Inc.’s 2017 Equity Incentive Plan. The Plan initially reserved 16,607,894 shares of Common Stock for issuance under the Plan. The Company’s stock options generally vest on various terms based on continuous services over periods ranging from three to five years. The stock options are subject to time vesting requirements through 20322033 and are nontransferable. Stock options granted have a maximum contractual term of 10 years. On June 30, 2023,As of March 31, 2024, approximately 3.05.1 million employee stock options had vested.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Before the Company’s sharesconsummation of stock were publicly traded,the Business Combination, management took the average of several publicly traded companies that were representative of the Company’s size and industry in order to estimate its expected stock volatility. Subsequent to the Business Combination, the Company utilized publicly available pricing. The expected term of the options represented the period of time the instruments arewere expected to be outstanding. The Company based the risk-free interest rate on the rate payable on the U.S. Treasury securities corresponding to the expected term of the awards at the date of grant. Expected dividend yield was zero based on the fact that the Company had not historically paid and does not intend to pay a dividend in the foreseeable future.
The following assumptions were used to compute the fair value of the stock option grants during the periodthree months ended June 30, 2023March 31, 2024 and 2022:2023:
| | Period Ended June 30, |
| 2023 | | 2022 |
| Three Months Ended March 31, | | | Three Months Ended March 31, |
| 2024 | | | 2024 | | 2023 |
Risk-free interest rate | Risk-free interest rate | 4.14 | % | | 0.71 | % | Risk-free interest rate | 4.3 | % | | 0.7% - 4.3% |
Expected term (in years) | Expected term (in years) | 6.25 | | 4 | Expected term (in years) | 5 | | 6.25 |
Volatility | Volatility | 56 | % | | 60 | % | Volatility | 70.7 | % | | 60% - 69% |
Dividend yield | Dividend yield | 0 | % | | 0 | % | Dividend yield | — | % | | — | % |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The following table summarizes the Company’s stock option activity under the Plan for the periodthree months ended June 30, 2023:March 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | |
| Options Shares | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life in Years | | Aggregate Intrinsic Value |
Balance as of, December 31, 2022 | 11,571,308 | | $ | 7.11 | | | 9.05 | | $ | 39,389,063 | |
Granted/ Vested during the year | 312,730 | | | 8.61 | | | — | | | — | |
Exercised during the year | (356,511) | | | 2.74 | | | — | | | — | |
Cancelled during the year | (275,135) | | | 7.82 | | | — | | | — | |
Balance as of June 30, 2023 | 11,252,392 | | | 7.28 | | | 8.62 | | 46,592,930 | |
Options vested and exercisable at June 30, 2023 | 3,005,069 | | | $ | 6.36 | | | 7.89 | | 9,093,754 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Options Shares | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life in Years | | Aggregate Intrinsic Value |
Balance as of December 31, 2023 | 11,942,264 | | | $ | 7.36 | | | 8.16 | | $ | 50,315,593 | |
Granted/vested | 50,000 | | | 3.66 | | | — | | | — | |
Exercised | — | | | — | | | — | | | — | |
Cancelled | (203,279) | | | 5.69 | | | — | | | — | |
Balance as of March 31, 2024 | 11,788,985 | | | 7.38 | | | 8.05 | | 49,866,336 | |
Options vested and exercisable as of March 31, 2024 | 5,135,931 | | | $ | 6.89 | | | 7.53 | | $ | 2,173,571 | |
The aggregate intrinsic value in the above table is calculated as the difference between the fair value of the Company’s common stockCommon Stock price and the exercise price of the stock options. The weighted average grant date fair value per share for stock option grants during the periodsthree months ended June 30,March 31, 2024 and the year ended December 31, 2023 was $3.66 and $7.93, respectively.
For the three months ended March 31, 2024 and 2023, the total recorded stock-based compensation related to stock option awards granted was $2,455,143, and $2,706,591, respectively.
On March 31, 2024 and December 31, 2022 was $8.61 and $7.04, respectively. On June 30, 2023, and December 31, 2022, the total unrecognized compensation related to unvested stock option awards granted was $30,583,415$19,926,689 and $41,666,564,$29,058,756, respectively, which the Company expects to recognize over a weighted-average period of approximately 3.731.77 years.
Restricted Stock Units
The fair value of restricted stock units (“RSUs”) is determined on the date of grant. The Company records compensation expenseexpenses in the unaudited Condensed Consolidated StatementStatements of Operations and Comprehensive (Loss) Income on a straight-line basis over the vesting period for RSUs. The vesting period for employees and members of the Board of Directors ranges from one to four years.
Activity under RSUs was as follows:
| | | | | | | | | | | |
| RSUs | | Weighted- Average Grant Date Fair Value Per RSU |
Balance as of, December 31, 2022 | 305,587 | | $ | 8.35 | |
Granted | 101,358 | | 7.64 | |
Vested during the year | (136,258) | | 8.02 | |
Forfeited | — | | — | |
Balance as of, June 30, 2023 | 270,687 | | 8.25 | |
Vested and unissued at June 30, 2023 | 192,500 | | 8.25 | |
Non-vested at June 30, 2023 | 270,687 | | 8.25 | |
The total grant-date fair value of RSUs granted during the period ended June 30, 2023 was $774,218.
The Company recorded stock-based compensation expense related to RSUs of $663,748 and $1,093,423 for the three and six months ended June 30, 2023, respectively,
As of June 30, 2023, the Company had $2,232,968 in unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted-average period of approximately 0.8 years.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Activity under RSUs during the three months ended March 31, 2024 was as follows:
| | | | | | | | | | | |
| RSUs | | Weighted- Average Grant Date Fair Value Per RSU |
Balance as of December 31, 2023 | 2,424,095 | | | $ | 5.61 | |
Granted | 818,247 | | 3.67 | |
Vested | (165,688) | | 4.23 | |
Forfeited | — | | | — | |
Balance as of March 31, 2024 | 3,076,654 | | 5.16 | |
Vested and unissued as of March 31, 2024 | 58,434 | | 5.85 | |
Non-vested as of March 31, 2024 | 3,018,220 | | | $ | 5.16 | |
The total grant-date fair value of RSUs granted during the three months ended March 31, 2024 was $2,999,432.
For the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense related to RSUs of $1,184,394 and $429,675, respectively.
On March 31, 2024, and December 31, 2023, the total unrecognized compensation related to unvested RSUs granted was $13,987,767, and $12,602,662, respectively, which is expected to be recognized over a weighted-average period of approximately 2.1 years.
Performance-based Stock Units
The fair value of performance-based restricted stock units (“PSUs”) is determined on the date of grant. The Company records compensation expense in the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income on a straight-line basis over the vesting period for PSUs. The vesting period for employees and members of the Board of Directors ranges from one to four years.
Activity under PSUs during the three months ended March 31, 2024 was as follows:
| | | | | | | | | | | |
| PSUs | | Weighted- Average Grant Date Fair Value Per PSU |
Balance as of December 31, 2023 | 1,085,270 | | | $ | 5.16 | |
Granted | — | | | — | |
Vested | — | | | — | |
Forfeited | — | | | — | |
Balance as of March 31, 2024 | 1,085,270 | | 5.16 | |
Vested and unissued as of March 31, 2024 | — | | | — | |
Non-vested as of March 31, 2024 | 1,085,270 | | | $ | 5.16 | |
The total grant-date fair value of PSUs granted during the three months ended March 31, 2024 was $0.
For the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense related to PSUs of $348,802 and $0, respectively, which are included in accrued liabilities.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
As of March 31, 2024, and December 31, 2023, the total unrecognized compensation related to unvested PSUs granted was $5,178,365, and $5,527,166, respectively, which is expected to be recognized over a weighted-average period of approximately 3.8 years.
14. Leases
Operating Leases
The Company is obligated to make rental payments under non-cancellable operating leases for office, dispatch station space and transportation equipment, expiring at various dates through 2032. Under the terms of the leases, the Company is also obligated for its proportionate share of real estate taxes, insurance and maintenance costs of the property. The Company is required to hold certain funds in restricted cash and cash equivalents accounts under some of these agreements.
Certain leases for property and transportation equipment contain options to purchase, extend or terminate the lease. Determining the lease term and amount of lease payments to include in the calculation of the right-of-use (ROU) asset and lease obligations for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and whether the optional period and payments should be included in the calculation of the associated ROUright-of-use asset and lease obligation. In making such judgment,determination, the Company considers all relevant economic factors that would require whether to exercise or not exercise the option.
The Company’s lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed rates, which were used to discount its real estate lease liabilities. The Company used estimated borrowing rates of 6% on January 1, 2019 for all leases that commenced prior to that date for office spaces and transportation equipment.
Loss on Lease CostsRemeasurement
In March 2024, the Company reassessed the use of an office space for one entity. As a result, the Company terminated the leased office space, which resulted in a loss of $7,306 recorded as loss from remeasurement of operating lease on the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income during the three months ended March 31, 2024.
Lease Cost
The table below comprisecomprises operating lease expenses for the periodsthree months ended June 30, 2023March 31, 2024 and 2022:2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
Components of total lease cost: | | 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | | |
Operating lease expense | | $ | 865,987 | | | $ | 428,728 | | | $ | 1,622,232 | | | $ | 891,353 | |
Short-term lease expense | | 368,030 | | | 273,601 | | | 704,348 | | | 528,697 | |
Total lease cost | | $ | 1,234,017 | | | $ | 702,329 | | | $ | 2,326,580 | | | $ | 1,420,050 | |
| | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | |
Components of total lease cost: | | 2024 | | 2023 | |
| | | | | |
Operating lease expense | | $ | 936,750 | | | $ | 756,245 | | |
Short-term lease expense | | 468,874 | | | 336,318 | | |
Total lease cost - operating leases | | $ | 1,405,624 | | | $ | 1,092,563 | | |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Lease Position as of June 30, 2023March 31, 2024
Right-of-use lease assets and lease liabilities for the Company’s operating leases were recorded in the unaudited Condensed Consolidated Balance Sheets as follows:
| | June 30, 2023 | | December 31, 2022 |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
Assets | Assets | | | |
Lease right-of-use assets | |
Lease right-of-use assets | |
Lease right-of-use assets | Lease right-of-use assets | $ | 9,288,582 | | | $ | 9,074,277 | |
Total lease assets | Total lease assets | $ | 9,288,582 | | | $ | 9,074,277 | |
| Liabilities | |
Liabilities | |
Liabilities | Liabilities | | | | | | |
Current liabilities: | Current liabilities: | | | | Current liabilities: | | | |
Lease liability - current portion | Lease liability - current portion | $ | 2,479,340 | | | $ | 2,325,024 | |
Noncurrent liabilities: | Noncurrent liabilities: | | | | Noncurrent liabilities: | | | |
Lease liability, net of current portion | Lease liability, net of current portion | 7,162,046 | | | 7,040,982 | |
Total lease liability | Total lease liability | $ | 9,641,386 | | | $ | 9,366,006 | |
Lease Terms and Discount Rate
The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases as of March 31, 2024:
| | | | | |
Weighted average remaining lease term (in years) - operating leases | 3.54 |
Weighted average discount rate - operating leases | 5.73 | % |
Undiscounted Cash Flows
Future minimum lease payments under the operating leases as of March 31, 2024 were as follows:
| | | | | |
| Operating Leases |
2024, remaining | $ | 2,465,671 | |
2025 | 3,326,939 | |
2026 | 2,488,249 | |
2027 | 1,294,407 | |
2028 | 676,215 | |
Thereafter | 365,656 | |
Total future minimum lease payments | 10,617,137 | |
Less effects of discounting | (1,060,892) | |
Present value of future minimum lease payments | $ | 9,556,245 | |
Operating lease expense was approximately $936,750 and $756,245 for the three months ended March 31, 2024 and 2023, respectively.
For the three months ended March 31, 2024, the Company made $928,986 of fixed cash payments related to operating leases and $969,588 related to finance leases.
For the three months ended March 31, 2023, the Company made $756,245 of fixed cash payments related to operating leases and $744,030 related to finance leases.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Finance Leases
The Company leases vehicles under non-cancelable finance lease agreements with a liability of $12,585,389 and $11,430,465 as of March 31, 2024 and December 31, 2023, respectively, and accumulated depreciation of $11,469,799 and $11,679,823 as of March 31, 2024 and December 31, 2023, respectively.
Depreciation expense for the vehicles under non-cancelable finance lease agreements amounted to $1,056,490 and $801,083 for the three months ended March 31, 2024 and 2023, respectively.
Gain on Lease Remeasurement
In March 2024, the Company returned two leased vehicles. As a result, the Company terminated these leased vehicles, which resulted in a gain of $2,609 recorded as gain from remeasurement of finance leases on the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income during the three months ended March 31, 2024.
Lease Payments
The table below presents lease payments for the three months ended March 31, 2024 and 2023:
| | | | | | | | | | | | | | |
| | Three Months Ended March 31, |
Components of total lease cost: | | 2024 | | 2023 |
| | | | |
Finance lease payment | | $ | 969,588 | | | $ | 744,030 | |
Short-term lease payment | | — | | | — | |
Total lease payments | | $ | 969,588 | | | $ | 744,030 | |
Lease Position as of March 31, 2024
Right-of-use assets and lease liabilities for the Company’s finance leases were recorded in the unaudited Condensed Consolidated Balance Sheets as follows:
| | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 |
Assets | | | |
Lease right-of-use assets | $ | 13,385,131 | | | $ | 12,003,919 | |
Total lease assets | $ | 13,385,131 | | | $ | 12,003,919 | |
| | | |
Liabilities | | | |
Current liabilities: | | | |
Lease liability - current portion | $ | 3,866,929 | | | $ | 3,534,073 | |
Noncurrent liabilities: | | | |
Lease liability, net of current portion | 8,718,460 | | | 7,896,392 | |
Total lease liability | $ | 12,585,389 | | | $ | 11,430,465 | |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Lease Terms and Discount Rate
The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s finance leases as of June 30, 2023:March 31, 2024:
| | | | | |
Weighted average remaining lease term (in years) - operatingfinance leases | 4.533.46 |
Weighted average discount rate - operatingfinance leases | 5.815.58 | % |
Undiscounted Cash Flows
Future minimum lease payments under the operatingfinance leases at June 30, 2023as of March 31, 2024 are as follows:
| | | | | |
| Operating Leases |
2023, remaining | $ | 1,543,710 | |
2024 | 2,769,206 | |
2025 | 2,751,071 | |
2026 | 1,997,054 | |
2027 | 1,770,143 | |
Total future minimum lease payments | 10,831,184 | |
Less effects of discounting | (1,189,798) | |
Present value of future minimum lease payments | $ | 9,641,386 | |
Operating lease expense was approximately $865,987 and $428,728 for the three months ended June 30, 2023 and 2022, respectively.
Operating lease expense was approximately $1,622,232 and $891,353 for the six months ended June 30, 2023 and 2022, respectively.
For the three months ended June 30, 2023, the Company made $865,987 of fixed cash payments related to operating leases and $766,492 related to finance leases.
For the three months ended June 30, 2022, the Company made $428,728 of fixed cash payments related to operating leases and $851,307 related to finance leases.
For the six months ended June 30, 2023, the Company made $1,622,232 of fixed cash payments related to operating leases and $1,510,523 related to finance leases.
For the six months ended June 30, 2022, the Company made $891,353 of fixed cash payments related to operating leases and $1,473,882 related to finance leases.
Finance Leases
The Company leases vehicles under a non-cancelable finance lease agreements with a liability of $8,643,832 and $8,646,803 as of June 30, 2023 and December 31, 2022, respectively. This includes accumulated depreciation expense of $9,553,571 and $7,096,966 as of June 30, 2023 and December 31, 2022, respectively.
Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $826,180 and $662,495 for the three months ended June 30, 2023 and 2022, respectively.
Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $1,627,263 and $1,518,276 for the six months ended June 30, 2023 and 2022, respectively.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Gain on lease remeasurement
In June 2022, the Company reassessed its finance lease estimates relating to vehicle mileage and residual value. As a result, the Company determined to purchase the vehicles at the end of the leases which resulted in a gain of $1.4 million recorded as gains from lease accounting on the unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income.
Lease Payments
The table below presents lease payments for the periods ended June 30, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
Components of total lease payment: | | 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | | |
Finance lease payment | | $ | 766,492 | | | $ | 851,307 | | | $ | 1,510,522 | | | $ | 1,473,882 | |
Short-term lease payment | | — | | | — | | | — | | | — | |
Total lease payments | | $ | 766,492 | | | $ | 851,307 | | | $ | 1,510,522 | | | $ | 1,473,882 | |
Lease Position as of June 30, 2023
Right-of-use lease assets and lease liabilities for the Company’s finance leases were recorded in the unaudited Condensed Consolidated Balance Sheets as follows:
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
Assets | | | |
Lease right-of-use assets | $ | 8,963,759 | | | $ | 9,039,663 | |
Total lease assets | $ | 8,963,759 | | | $ | 9,039,663 | |
| | | |
Liabilities | | | |
Current liabilities: | | | |
Lease liability - current portion | $ | 2,717,546 | | | $ | 2,732,639 | |
Noncurrent liabilities: | | | |
Lease liability, net of current portion | 5,926,286 | | | 5,914,164 | |
Total lease liability | $ | 8,643,832 | | | $ | 8,646,803 | |
Lease Terms and Discount Rate
The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s finance leases as of June 30, 2023:
| | | | | |
Weighted average remaining lease term (in years) - finance leases | 3.57 |
Weighted average discount rate - finance leases | 5.95 | % |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Undiscounted Cash Flows
Future minimum lease payments under the finance leases at June 30, 2023 are as follows:
| | Finance Leases |
2023, remaining | $ | 1,695,729 | |
2024 | 2,840,410 | |
| Finance Leases | | | Finance Leases |
2024, remaining | |
2025 | 2025 | 2,561,843 | |
2026 | 2026 | 1,779,618 | |
2027 | 2027 | 664,614 | |
2028 | |
Thereafter | |
Total future minimum lease payments | Total future minimum lease payments | 9,542,214 | |
Less effects of discounting | Less effects of discounting | (898,382) | |
Present value of future minimum lease payments | Present value of future minimum lease payments | $ | 8,643,832 | |
15. Other (expense)/income
The Company recognized $(587,389) and $4,619,765 of Other (expenses)/income for the three months ended June 30, 2023 and June 30, 2022, respectively.
The Company recognized $266,538 and $4,337,816 of Other income for the six months ended June 30, 2023 and June 30, 2022, respectively, as follows:
| | | | | | | | | | | | | | |
| Three Months Ended | Six Months Ended |
| June 30, | June 30, |
Other (expense) income: | 2023 | 2022 | 2023 | 2022 |
Interest income (expense), net | $ | 521,872 | | $ | 98,276 | | $ | 1,331,044 | | $ | (37,330) | |
Gain on remeasurement of warrant liabilities | — | | 3,027,766 | | — | | 2,969,017 | |
(Loss)/gain on initial equity method investments | (90,573) | | 89,810 | | (205,859) | | 6,469 | |
Loss on disposal of fixed assets | (98,630) | | — | | (153,469) | | — | |
Gain on remeasurement of finance leases | — | | 1,388,273 | | — | | 1,388,273 | |
ABC Litigation | (1,000,000) | | — | | (1,000,000) | | — | |
Other income | 79,942 | | 15,640 | | 294,822 | | 11,387 | |
Total other (expense) income | $ | (587,389) | | $ | 4,619,765 | | $ | 266,538 | | $ | 4,337,816 | |
For the three months ended June 30, 2023, the Company recognized other income of $79,942, net of $6,410 from realized foreign exchange gain offset by rental income of $0.
For the three months ended June 30, 2022, the Company recognized other income of $15,640, net of $1,145 from realized foreign exchange gain offset by rental income of $14,495.
For the six months ended June 30, 2023, the Company recognized other income of $294,822, net of $5,773 from realized foreign exchange gain offset by rental income of $8,496.
For the six months ended June 30, 2022, the Company recognized other income of $11,387, net of $19,660 from realized foreign exchange loss offset by rental income of $31,047.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
15. Other income (expense)
The Company recognized $(152,984) and $853,927 of other income (expense) for the three months ended March 31, 2024 and 2023, respectively, as set forth in the table below.
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2024 | | 2023 |
Other income (expense) | | | |
Interest (expense) income, net | $ | (369,008) | | | $ | 809,172 | |
Change in fair value of contingent liability | 6,446 | | | — | |
Loss on equity method investments | (83,167) | | | (115,286) | |
Loss on remeasurement of operating and finance leases | (4,697) | | | — | |
Gain (loss) on disposal of fixed assets | 52,835 | | | (54,839) | |
Other income | 244,607 | | | 214,880 | |
Total other income (expense) | $ | (152,984) | | | $ | 853,927 | |
16. Related Party Transactions
Historically, the Company has been involved in transactions with various related parties.
Legal Services
Ely D. Tendler Strategic & Legal Services PLLC provides legalis compensated for his services forto the Company. Ely D. Tendler Strategic & Legal Services PLLC is owned by theCompany as General Counsel and Director of the Company, and therefore is a related party. The Company made legalSecretary through payments to Ely D. Tendler Strategic & Legal Services PLLC totaling $126,600("EDTSLS"), a law firm owned by Mr. Tendler. All payments made to EDTSLS by the Company were for Mr. Tendler's services to the Company as General Counsel and $234,255Secretary. No other services were provided by EDTSLS to the Company. The Company's payments to EDTSLS for Mr. Tendler's services totaled $253,250 and $234,230 for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, and $470,270 and $443,408 for the six months ended June 30, 2023 and 2022, respectively.
Included in accounts payableaccrued liabilities were $80,000$52,050 and $86,555$0 due to related parties as of June 30,March 31, 2024 and December 31, 2023, respectively related to legal services.
Subcontractor Services
Pridestaff provides subcontractor services to the Company. Pridestaff is owned by a former operations manager of the Company and his spouse, and therefore, is a related party. The Company made subcontractor payments to PrideStaff totaling $66,011 and $93,311 for the three months ended March 31, 2024 and 2023, respectively.
Included in accounts payable and accrued liabilities were $65,611 and $0 due to related parties as of March 31, 2024 and December 31, 2023, respectively related to subcontractor services.
Transition Services Agreement
On October 11, 2023, the Company and Anthony Capone, who resigned as Chief Executive Officer of the Company on September 15, 2023, entered into a separation and transition services agreement (the “Transition Agreement”). Pursuant to the Transition Agreement, Mr. Capone served as a consultant to the Company until March 15, 2024 (such period, the “Consulting Period”) to advise on matters relating to business continuity and processes and transition his institutional knowledge with respect to operational and other departmental functions.
As compensation for his services during the Consulting Period, and subject to his compliance with the Transition Agreement, including the execution and non-revocation of a general release of claims in favor of the Company, Mr. Capone received a monthly consulting fee of $45,000 and subsidized premiums for continued group health plan coverage
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
for the duration of the Consulting Period. Mr. Capone will not receive new equity awards or incentive compensation under the Company’s equity incentive compensation program during the Consulting Period. The Transition Agreement further acknowledges and affirms that Mr. Capone will be bound by and comply with certain restrictive covenants. The Company made payments to Anthony Capone totaling $135,000 and $0 for the three months ended March 31, 2024 and 2023, respectively.
Included in accounts payable were $45,000 and $45,000 due to related parties as of March 31, 2024 and December 31, 2023, respectively related to this Transition Agreement.
Consulting Agreement
On March 7, 2024, the Company entered into a separation and consulting agreement (the "Consulting Agreement") with Stan Vashovsky, who retired as a director and Chair of the Board effective March 31, 2024. Pursuant to the Consulting Agreement, Mr. Vashovsky will continue to serve as a consultant to the Company until March 31, 2025 (such period, the “Consulting Period”). During the Consulting Period, Mr. Vashovsky will provide advisory services as may be requested from time to time by the Company’s executive officers or the Board and assist with maintaining the Company’s existing customer and investor relationships and, as consideration for his services, receive an equity grant during each quarter of the Consulting Period having a grant date fair value of approximately $35,000. In consideration for a release of claims, Mr. Vashovsky will also be eligible to receive Company-subsidized healthcare coverage for the duration of the Consulting Period. The Consulting Agreement further acknowledges and affirms that Mr. Vashovsky will be bound by and comply with certain restrictive covenants.
There were no amounts included in accounts payable and accrued liabilities as of March 31, 2024 and December 31, 2022, respectively.2023, related to the Consulting Agreement.
17. Income Taxes
As a result of the Company’s history of net operating losses, (“NOL”), the Company had historically provided for a full valuation allowance against its deferred tax assets for assets that were not more-likely-than-not to be realized. The Company’s (provision for) benefit from income tax benefit (provision)taxes for the three months ended June 30,March 31, 2024 and 2023 were $(5,119,004) and 2022 were $355,054 and $(321,660), respectively, and $2,484,924 and $(761,839) for the six months ended June 30, 2023 and 2022,$2,129,870, respectively. In determining the quarterly provision for income taxes, we usethe Company uses an estimated annual effective tax rate adjusted for discrete items. This rate is based on ourthe Company's expected annual income, statutory tax rates and best estimates of non-taxable and non-deductible income and expense items.
18. 401(K)401(k) Plan
The Company has established a 401(k) plan in January 2022 that qualifies as a deferred compensation arrangement under Section 401 of the Internal Revenue Code. All U.S. employees that complete two months of service with the Company are eligible to participate in the plan. The Company did not make any employer contributions to this plan as of June 30, 2023.March 31, 2024.
19. Legal Proceedings
From time to time, the Company may be involved as a defendant in legal actions that arise in the normal course of business. In the opinion of management, the Company has adequate legal defense on all legal actions, and the results of any such proceedings would not materially impact the unaudited Condensed Consolidated Financial statementsStatements of the Company. The Company provides disclosure and records loss contingencies in accordance with the loss contingencies accounting guidance. In accordance with such guidance, the Company establishes accruals for such matters when potential losses become probable and can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the possible loss in the unaudited Condensed Consolidated Financial statements.Statements.
AsOn October 27, 2023, Joe Naclerio, individually and purportedly on behalf of June 30, 2023 and December 31, 2022,all others similarly situated, filed a putative class action complaint for violation of federal securities laws in the U.S. District Court for the Southern District of New York against the Company, recorded a liabilityits then-Chairman and former Chief Executive Officer, another former Chief Executive Officer, current Chief Financial Officer and former Chief Financial Officer (who currently serves as Executive Vice President of $1,000,000, which represents an amount for an agreed settlement of various class-based claims, both actual and potential, under California state law, as described in detail below
Stephanie Zamora, Jascha Dlugatch, et al. v. Ambulnz Health, LLC, et al. was filed in the Los Angeles Superior Court on October 11, 2018, and the complaint alleged wage and hour violations pursuant to California’s Private Attorneys’ General Act of 2004 (“PAGA”)Strategy). On February 24, 2020, this case was consolidated with Jascha Dlugatch, et. Al. v. Ambulnz Health, LLC (the “Consolidated Complaint”), another lawsuit filed in the Los Angeles Superior Court. On May 6, 2021, the parties attended mediation and settled the claims pled in the Consolidated Complaint on a class-wide and PAGA basis in exchange for a proposed $1,000,000 payment by the defendant parties, inclusive of administrative costs and fees. On September 9, 2022,January 17, 2024, the Court preliminarily approvedappointed the proposed settlement, which was paid in July 2023.
20. Risk and Uncertainties
COVID-19 Risks, Impacts and Uncertainties
The spread of COVID-19 andGenesee County Employees’ Retirement System as the related shutdowns and restrictions had a mixed impact onLead Plaintiff. On March 18, 2024, the Company’s business. In the ambulance transportation business, which predominantly comprises of non-emergency medical transportation,Lead Plaintiff filed an amended complaint against the Company, initially saw a decline in volumes from historical and expected levels, as elective surgeries and other procedures were postponed. In some of the Company’s larger markets, such as New York and California, there were declines in tripits now former
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
volume. In addition,Chairman and Chief Executive Officer, another former Chief Executive Officer and former Chief Financial Officer (who currently serves as Executive Vice President of Strategy). Due to the early stage of this proceeding, the Company experienced lost revenues associated with sporting, concertscannot reasonably estimate the potential range of loss, if any. The Company disputes the allegations of wrongdoing and other events, as those events were cancelled or had a significantly restricted (or entirely eliminated) the number of permitted attendees. Ambulance transports and event-related revenues have both since recoveredintends to pre-COVID levels or higher.defend itself vigorously in this matter.
There were two areas in which the Company initially experienced positive business impacts from COVID-19. In April
20. Risk and May 2020, the Company participated in an emergency project with Federal Emergency Management Agency (“FEMA”) in the New York City area. This engagement resulted in incremental transportation revenue. In addition, in response to the need for widespread COVID-19 testing, emergency medical technicians (“EMT”)Uncertainties
Risks, Impacts and paramedics, the Company formed a new subsidiary, Rapid Reliable Testing, LLC (“RRT”), with the goal of performing COVID-19 tests at nursing homes, municipal sites, businesses, schools and other venues. RRT is part of the Mobile Health segment. As COVID-19 testing activity slowed to account for a minor portion of the Company’s revenues, RRT expanded its services beyond COVID-19 testing to a wide variety of tests, vaccinations and other procedures.Uncertainties
The Company’s current business plan assumes increased demand for mobile healthMobile Health Services. Demand for such services a demand that was accelerated by the pandemic, but which is also being driven by longer-term secular factors, such as the increasing desire on the part of patients to receive treatments outside of traditional settings, such as doctor’s offices and hospitals.
Government Contracts
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. Government contract work subjects the Company to government audits, investigations and proceedings, which could also lead to the Company to being barred from government work or subjected to fines if it is determined that a statute, rule, regulation, policy or contractual provision has been violated. Audits can also lead to adjustments to the amount of contract costs that the Company believes are reimbursable or to the ultimate amount the Company may be paid under the agreement. Furthermore, a loss of government contract work, if not offset by revenues from new or other existing customers, could have a material adverse effect on the Company’s business, financial condition, and results of operations.
21. Subsequent Events
In July 2023,The Company evaluated subsequent events through the Company paid the settlement for the Stephanie Zamora, Jascha Dlugatch, et al. v. Ambulnz Health, LLC, et al. case for the amountdate of $1,000,000.this filing and concluded there were no material subsequent events requiring adjustment to or disclosure in these unaudited Condensed Consolidated Financial Statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. The discussion and analysis below contain certain forward-looking statements about our business and operations that are subject to risks, uncertainties, and other factors described in the sections entitled “Risk Factors,”Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022,2023, and as may be updated in this and other subsequent Quarterly Reports on Form 10-Q. These risks, uncertainties and other factors could cause our actual results to differ materially from those expressed in, or implied by, the forward-looking statements. Please refer to the section below entitled “Cautionary Note Regarding Forward-Looking Statements."
Unless the context requires otherwise, references to “DocGo,the “Company,” “we,” “us,” “our” and the “Company”“our” refer to the business and operations of DocGo Inc. and its consolidated subsidiaries. Certain figures included in this section, such as interest rates and other percentages, included in this section have been rounded for ease of presentation. Percentage figures included in this section have, in some cases, been calculated on the basis of such rounded figures. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in DocGo’sour unaudited Condensed Consolidated Financial Statements or in the associatedaccompanying notes. Certain other amounts that appear in this section may similarly not sum due to rounding.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (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,actions; business strategies, plans goals,and goals; future events,events; future revenues or performance,performance; financing needs,needs; business trends,trends; results of operations,operations; objectives and intentions with respect to future operations, services and products, including our transition to non-COVID related services, geographic expansion,expansion; our margin normalization initiative,initiative; new and existing contracts and backlog; M&A activity,activity; workforce growth,growth; leadership transition,transitions; cash position,position; our share repurchase program,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,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,” “would,” “design,” “potential,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends” or the negative of these terms or similar expressions.
Forward-lookingMoreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are not guarantees of performance and speak onlybased on information available to us as of the date of this Quarterly Report on Form 10-Q, and, while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q are based on events or circumstances as of the date on which the statements are made. While DocGo believes that these forward-looking statements are reasonable, there can be no assurance that DocGo will achieve or realize these plans, intentions, outcomes or expectations.
We undertake no intent or obligation to publicly update or revise any forward-looking statements whether becausemade in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as and to the extent required by law. Our forward-looking statements do not reflect the potential impact of any future events,acquisitions, mergers, dispositions, joint ventures, or otherwise.
investments.
Overview
DocGo which was originally formed in 2015, is a mobile healthcare transportation and mobile services company that uses proprietary dispatch and communication technology to help provide (i) quality healthcare transportation and mobile, in-person medical treatment directly to patients in the comfort of their homes, workplaces and other non-traditional locations,locations; and (ii) medical transportation in major metropolitan cities in the United States and the United Kingdom.
The Company derives revenue primarily from two operating segments: Mobile Health Services and Transportation Services.
● •Mobile Health Services: The services offered by this segment include a wide variety of healthcare services performed at homehomes, offices and offices, COVID-19 testing,other locations and event services which includesuch as on-site healthcare support at sporting events and concerts. There isThis segment also an emphasis on providingprovides total care management solutions to large, typically underserved population groups, primarily through arrangements with municipalities, which include healthcare services as well as otherancillary services, such as shelter.
● •Transportation Services: The services offered by this segment encompass both emergency response and non-emergency transport services. Non-emergency transport services include ambulance transports and wheelchair transports. Net revenue from Transportation Services is derived from the transportation of patients based on billings to third-partythird party payors and healthcare facilities.
In addition, beginning with the first quarter of 2023, the Company began reporting in three operating segments, adding a Corporate segment to allow for analysis of shared services and personnel that support both the Transportation Services and Mobile Health Services segments. Previously, these costs had been allocated almost entirely to the Transportation Services segment. All of the Company’s revenues and costs of goods sold continue to be reported within the Transportation Services and Mobile Health Services segments. The Corporate segment contains operating expenses such as information technology costs, certain insurance costs and the compensation costs of senior and executive leadership. The segment reporting for the prior-year period has been adjusted to conform to the new methodology, for the purposes of allowing for a clearer analysis of year-over-year performance. See Note 11, “Business Segment Information” to the unaudited Condensed Consolidated Financial Statements for additional information regarding DocGo’s segments and “Operating Expenses” below.
For the three months ended June 30, 2023,March 31, 2024, the Company recorded net income of $1.3$10.6 million, compared to net incomeloss of $11.8$3.9 million in the three months ended June 30, 2022.
For the six months ended June 30, 2023, the Company recorded a net loss of $2.6 million, compared to net income of $21.1 million in the six months ended June 30, 2022.
COVID-19
The spread of COVID-19 and the related shutdowns and restrictions had a mixed impact on the Company’s business. In the ambulance transportation business, which predominantly comprises of non-emergency medical transportation, the Company initially saw a decline in volumes from historical and expected levels, as elective surgeries and other procedures were postponed. In some of the Company’s larger markets, such as New York and California, there were declines in trip volume. In addition, the Company experienced lost revenues associated with sporting, concerts and other events, as those events were cancelled or had a significantly restricted (or entirely eliminated) the number of permitted attendees. Ambulance transports and event-related revenues have both since recovered to pre-COVID levels or higher.
There were two areas in which the Company initially experienced positive business impacts from COVID-19. In April and May 2020, the Company participated in an emergency project with Federal Emergency Management Agency (“FEMA”) in the New York City area. This engagement resulted in incremental transportation revenue. In addition, in response to the need for widespread COVID-19 testing, emergency medical technicians (“EMT”) and paramedics, the Company formed a new subsidiary, Rapid Reliable Testing, LLC (“RRT”), with the goal of performing COVID-19 tests at nursing homes, municipal sites, businesses, schools and other venues. RRT is part of the Mobile Health segment. As COVID-19 testing activity slowed to account for a minor portion of the Company’s revenues, RRT expanded its services beyond COVID-19 testing to a wide variety of tests, vaccinations and other procedures.
The Company’s current business plan assumes increased demand for mobile health services, a demand that was accelerated by the pandemic, but which is also being driven by longer-term secular factors, such as the increasing desire on the part of patients to receive treatments outside of traditional settings, such as doctor’s offices and hospitals.March 31, 2023.
Factors Affecting Our Results of Operations
Our operating results and financial performance are influenced by a variety of factors, including, among others, our ability to obtain orestablish, maintain operating licenses;and grow customer relationships; our ability to execute projects to the successsatisfaction of our acquisition strategy;customers; conditions in the healthcare transportation and mobile health services markets; changes in government spending on healthcare and other social services; availability of healthcare professionals and other personnel; changes in the cost of labor; our competitive environment; overall macroeconomic and geopolitical conditions, including rising interest rates, the inflationary environment, the potential recessionary environment, regional conflict and tensions, and financial institution instability and the prospect of a shutdown of the U.S. federal government; availability of healthcare professionals; changes in the cost of labor; and production schedules of our suppliers.suppliers; our ability to obtain or maintain operating licenses; and the success of our acquisition strategy. Some of these importantkey factors are briefly discussed below. Future revenue growth and improvement in operating results will be largely contingent
on DocGo’sour ability to penetrate new markets and further penetrate existing markets, which is subject to a number of uncertainties, many of which are beyond DocGo’sour control.
Operating Licenses
DocGo has historically pursued a strategy of applying for ambulance operating licenses in the states, counties and cities, identified for future new market entry. The approval of a new operating license may take an extended period of time. DocGo aims to reduce this risk through its acquisition strategy by identifying businesses and/or underlying licenses in these new markets that may be for sale.
Acquisitions
Historically, DocGo has pursued an acquisition strategy to obtain ambulance operating licenses from small operators or to obtain enhanced capabilities to offer Mobile Health services. Future acquisitions may also include larger companies that may help drive revenue, profitability, cash flow and stockholder value. During the six months ended June 30, 2023, the Company completed two acquisitions, for a purchase price of $32.8 million.
DocGo did not complete any acquisitions during the six months ended June 30, 2022.
Healthcare Services Market
The transportationMobile 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.
The Transportation Services market is highly dependent on patients requiring transportation after surgeries and other medical procedures and treatments. DuringThe Company primarily focuses on the initial stagesnon-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 pandemic, DocGo experienced a decrease inpopulation, as the older demographics tend to be much more frequent consumers of medical transportation volumes as a resultservices. The market will also grow if hospitals and other healthcare facilities continue to outsource more of fewer elective surgeries. However, demand recovered in 2021, and since the first half of 2022, the Company has seen increased demand and trip volumes in nearly all of its Transportation services markets,their transportation needs to independent providers, such as the Company, expanded its customer base.allowing these facilities to concentrate their efforts on their core competencies.
Overall Economic Conditions in the Markets Inin Which We Operate
Economic changes both nationally and locally in our markets may impact our financial performance. Unfavorable changes in demographics, health carehealthcare coverage of transportationMobile Health Services and mobile health services,Transportation Services, interest rates, inflation rates or ambulance manufacturing,manufacturing; a weakening of the national economy or of any regional or local economy in which we operateoperate; and other factors beyond our control could adversely affect our business.
Our Ability to Control Expenses
We pay close attention to the management of our working capital and operating expenses. Some of our most significant operating expenses are labor costs, medical supplies and vehicle-related costs, such as fuel, maintenance, repair and insurance. Insurance costs include premiums paid for coverage as well as reserves for estimated losses within the Company’s insurance policy deductibles. We employ our proprietary technology to help drive improvements in productivity per transport and per shift. We regularly analyze our workforce productivity to help achieve the optimum, cost-efficient labor mix for our locations. This involves managing the mix of company-employed labor and subcontracted labor as well as full-time and part-time employees.
Inflation
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.
Trip Volumes and Average Trip Price
A “trip” is defined as an instance where the Company completes the transportation of a patient to a specific destination, for which we are able to charge a fee. This metric does not include instances where a trip is ordered and subsequently either canceled (by the customer) or declined (by the Company). As trip volume represents the most basic unit of transportation service provided by the Company, the Company believes it is a good measure of the level of demand for the Company’s Transportation Services and is used by management to monitor and manage the scale of the business.
The average trip price is calculated by dividing the aggregate revenue from completed transports (“trips”)the total number of trips by the total number of transportstrips and is an important indicator of the effective rate at which the Company is being compensated for its provision of Transportation Services.
Revenues generated from programs under which DocGothe Company is paid a fixed hourly or daily rate for the use of a fully staffed and equipped ambulance do not factor in the trip counts or average trip prices mentioned above. We expect these fixed rate, “leased hour” programs to continue to account for an increasing proportion of the Transportation Services segment’s revenues in the future.
Our AbilityAcquisitions
Historically, we have pursued an acquisition strategy to Control Expensesobtain enhanced capabilities or licenses to offer Mobile Health Services or Transportation Services. Future acquisitions may also include companies that may help drive revenue, profitability, cash flow and stockholder value.
We pay close attention to the management of our working capital and operating expenses. Some of our most significant operating expenses are labor costs, medical supplies and vehicle-related costs, such as fuel, maintenance, repair and insurance. Insurance costs include premiums paid for coverage as well as reserves for estimated losses within the Company’s insurance policy deductibles. We employ our proprietary technology to drive improvements in productivity per transport and per shift. We regularly analyze our workforce productivity to achieve the optimum, cost-efficient labor mix for our locations. This involves managing the mix of company-employed labor and subcontracted labor as well as full-time and part-time employees.
Inflation
Since 2021,During the inflation rate in the US, as measured by the Consumer Price Index (“CPI”), has generally trended higher. This data is reported monthly, showing year-over-year changes in prices across a basket of goods and services. Though the inflation rate moderated in the first half of 2023, reaching an annualized level of 3.0% in June, 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, asthree months ended March 31, 2024, the Company is generally unable to pass these higher costs on to its customers, particularly indid not complete any acquisitions. During the short term. In a continued attempt to dampen inflation, the U.S. Federal Reserve implemented four interest rate hikes to date inthree months ended March 31, 2023, raising its benchmark rate (the “federal funds rate”) to the current level of 5.25%-5.50% as of the date of the filing of this Quarterly Report on Form 10-Q. Looking to the remainder of 2023, we anticipate a continued moderation of the inflation rate when compared to the levels seen in 2022, as a result of these recent interest rate hikes and additional potential rate hikes, but expect inflation to remain above the levels seen in the previous 10 years. 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.completed one acquisition for an aggregate purchase price of $25.8 million.
Investing in R&D and Enhancing Our Customer Experience
Our performance is dependent on the investments we make in research and development (“R&D”), including our ability to attract and retain highly skilled research and developmentR&D personnel. We intend to develop and introduce innovative new software services, integrateintegrations with third-party products and services, mobile applications and other new offerings. If we fail to innovate and enhance our brand and our products, our market position and revenue will likelymay be adversely affected.
Regulatory Environment
DocGoThe Company is subject to federal, state and local regulations, including healthcare and emergency medical services laws and regulations and tax laws and regulations. The Company’s current business plan assumes no material change in these laws and regulations. In the event that any such change occurs, compliance with new laws and regulations may significantly affect the Company’s operations and cost of doing business.
Government Contracts
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.
In addition, government contract work subjects the Company to government audits, investigations and proceedings, which could lead to the Company to being barred from government work or subjected to fines if it is determined that a statute, rule, regulation, policy or contractual provision has been violated. Audits can also lead to adjustments to the amount of contract costs that the Company believes are reimbursable or to the ultimate amount the Company may be paid under the agreement. Furthermore, a loss of government contract work, if not offset by revenues from new or other existing customers, could have a material adverse effect on the Company’s business, financial condition, and results of operations.
Components of Results of Operations
Our business consists of three reportable segments — Mobile Health Services, Transportation Services and Corporate. All revenuerevenues and cost of goods soldrevenues are contained within the Mobile Health Services and Transportation Services.Services segments. Accordingly, revenues and cost of goods soldrevenues are discussed below on a consolidated level and are also broken down between Mobile Health Services and Transportation Services. Operating expenses are discussed on a consolidated level and broken down among all three segments. The Company evaluates the performance of each of its segments based primarily on its results of its operations. Accordingly, other income and expenses not included in results fromof operations are only included in the discussion of consolidated results of operations.
RevenueRevenues
The Company’s revenue consistsrevenues consist of services provided by its Mobile Health Services segment and its Transportation Services segment.
Cost of Revenues
Cost of revenues consists primarily of revenuerevenues generating wages paid to employees, fees paid to subcontractors, medical supplies, vehicle insurance costs (including insurance premiums and costs incurred under the insurance deductibles), maintenance, fuel laboratory fees,and facility rent, medical supplies and subcontractors.rent. We expect cost of revenuerevenues to continue to rise along with the expected increase in revenue.as we grow our business.
Operating Expenses
General and Administrative Expenses
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 up headcount with the growth of 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.
Depreciation and Amortization
DocGoThe Company depreciates its assets using the straight-line method over the estimated useful lives of the respective assets. Amortization of intangibles consists of amortization of definite-lived intangible assets over their respective useful lives.
Legal and Regulatory Expenses
Legal and regulatory expenses include legal fees, consulting fees related to healthcare compliance claims processing fees and legal settlements.
Technology and Development Expenses
Technology and development expense, net of capitalization consists primarily of costcosts incurred in the design and development of DocGo’sthe 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 drivedriving efficiency in our operations. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we may choose to make more significant investments, particularly when entering new business lines or customer sales channels.
Sales, Advertising and Marketing Expenses
Our sales, advertising and marketing expenses consist of costs directly associated with our sales and marketing activities, which primarily include sales commissions, marketing programs, trade shows and promotional materials.materials and general branding. We expect our sales, advertising and marketing expenses to continue to increase over time as we increase our marketing activities, grow our domestic and international operations and continue to build brand awareness. As the Company expands its sales efforts to include the direct-to-consumer channel, marketing expenses are likely to increase as a percentage of revenues, given the marketing-intensive nature of that sales channel.
Interest Expense
Interest expense consists primarily of interest on our outstanding borrowings under our outstanding notes payable and financing obligations.obligations, including our Revolving Facility.
Results of Operations
Comparison of the Three Months Ended June 30,March 31, 2024 and 2023 and 2022
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Change $ | | Change % |
$ in Millions | 2023 | | 2022 | | |
| | | | | | | |
Revenue, net | $ | 125.5 | | | $ | 109.5 | | | $ | 16.0 | | | 15 | % |
| | | | | | | |
Cost of revenues | 83.6 | | | 70.2 | | | 13.4 | | | 19 | % |
Operating expenses: | | | | | | | |
General and administrative | 30.8 | | | 24.6 | | | 6.2 | | | 25 | % |
Depreciation and amortization | 3.8 | | | 2.0 | | | 1.8 | | | 88 | % |
Legal and regulatory | 2.4 | | | 3.1 | | | (0.7) | | | (21 | %) |
Technology and development | 2.6 | | | 1.1 | | | 1.5 | | | 133 | % |
Sales, advertising and marketing | 0.7 | | | 1.0 | | | (0.3) | | | (31 | %) |
Total expenses | 123.9 | | | 102.0 | | | 21.9 | | | 22 | % |
Income (loss) from operations | 1.6 | | | 7.5 | | | (5.9) | | | |
| | | | | | | |
Other income (expenses): | | | | | | | |
Interest income (expense), net | 0.5 | | | 0.1 | | | 0.4 | | | 431 | % |
Gain on remeasurement of warrant liabilities | — | | | 3.0 | | | (3.0) | | | |
(Loss) gain on initial equity method investments | (0.1) | | | 0.1 | | | (0.2) | | | |
Gain on remeasurement of finance leases | — | | | 1.4 | | | (1.4) | | | |
(Loss) gain on disposal of fixed assets | (0.1) | | | — | | | (0.1) | | | |
Other (expense) income | (0.9) | | | — | | | (0.9) | | | |
Total other (expense) income | (0.6) | | | 4.6 | | | (5.2) | | | |
| | | | | | | |
Net income (loss) before income tax benefit (expense) | 1.0 | | | 12.1 | | | (11.1) | | | |
Income tax benefit (provision) | 0.3 | | | (0.3) | | | 0.6 | | | |
Net income (loss) | 1.3 | | | 11.8 | | | (10.4) | | | |
Net income (loss) attributable to noncontrolling interests | 3.3 | | | (1.0) | | | 4.4 | | | 447 | % |
Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries | $ | (2.0) | | | $ | 12.8 | | | $ | (14.8) | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Change $ | | Change % |
$ in Millions | 2024 | | 2023 | | |
| | | | | | | | | | | |
| Actual Results | | % of Total Revenues | | Actual Results | | % of Total Revenues | | | | |
Revenues, net | $ | 192.1 | | | 100.0 | % | | $ | 113.0 | | | 100.0 | % | | $ | 79.1 | | | 70.0 | % |
Expenses: | | | | | | | | | | | |
Cost of revenues (exclusive of depreciation and amortization, which is shown separately below) | 124.8 | | | 65.0 | % | | 81.2 | | | 71.9 | % | | 43.6 | | 53.7 | % |
Operating expenses: | | | | | | | | | | | |
General and administrative | 40.2 | | | 20.9 | % | | 29.2 | | | 25.8 | % | | 11.0 | | 37.7 | % |
Depreciation and amortization | 4.2 | | | 2.2 | % | | 3.6 | | | 3.2 | % | | 0.6 | | 16.7 | % |
Legal and regulatory | 4.3 | | | 2.2 | % | | 3.6 | | | 3.2 | % | | 0.7 | | 19.4 | % |
Technology and development | 2.4 | | | 1.2 | % | | 1.9 | | | 1.7 | % | | 0.5 | | 26.3 | % |
Sales, advertising and marketing | 0.3 | | | 0.2 | % | | 0.3 | | | 0.2 | % | | — | | | — | % |
Total expenses | 176.2 | | | 91.7 | % | | 119.8 | | | 106.0 | % | | 56.4 | | 47.1 | % |
Income (loss) from operations | 15.9 | | | 8.3 | % | | (6.8) | | | (6.0) | % | | 22.7 | | 333.8 | % |
| | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | |
Interest (expense) income, net | (0.4) | | | (0.2) | % | | 0.8 | | | 0.7 | % | | (1.2) | | | (150.0) | % |
Change in fair value of contingent liability | — | | | — | % | | — | | | — | % | | — | | | — | % |
Loss on equity method investments | (0.1) | | | (0.1) | % | | (0.1) | | | (0.1) | % | | — | | | — | % |
Loss on remeasurement of operating and finance leases | — | | | — | % | | — | | | — | % | | — | | | — | % |
Gain (loss) on disposal of fixed assets | 0.1 | | | 0.1 | % | | (0.1) | | | (0.1) | % | | 0.2 | | | 200.0 | % |
Other income | 0.2 | | | 0.1 | % | | 0.2 | | | 0.2 | % | | — | | | — | % |
Total other income (expense) | (0.2) | | | (0.1) | % | | 0.8 | | | 0.7 | % | | (1.0) | | | (125.0) | % |
| | | | | | | | | | | |
Net income (loss) before income tax provision | 15.7 | | | 8.2 | % | | (6.0) | | | (5.3) | % | | 21.7 | | | 361.7 | % |
(Provision for) benefit from income taxes | (5.1) | | | (2.7) | % | | 2.1 | | | 1.9 | % | | (7.2) | | | (342.9) | % |
Net income (loss) | 10.6 | | | 5.5 | % | | (3.9) | | | (3.5) | % | | 14.5 | | | 371.8 | % |
Net loss attributable to noncontrolling interests | (0.6) | | | (0.3) | % | | (0.5) | | | (0.4) | % | | (0.1) | | | (20.0) | % |
Net income (loss) attributable to stockholders of DocGo Inc. and Subsidiaries | $ | 11.2 | | | 5.8 | % | | $ | (3.4) | | | (3.0) | % | | $ | 14.6 | | | 429.4 | % |
| | | | | | | | | | | |
Revenues
Consolidated
For the three months ended June 30, 2023,March 31, 2024, total revenues were $125.5$192.1 million, and increased by $16.0an increase of $79.1 million, or 15%70.0%, fromcompared to the three months ended June 30, 2022.
Mobile Health
For the three months ended June 30, 2023, Mobile Health revenue totaled $80.1 million, and decreased by $7.3 million, or 8.2%, as compared with the three months ended June 30, 2022. The decrease in revenues was due to a significant decline in COVID-19 related testing services and related revenues when compared to the prior year period. The Company estimates that revenues from mass COVID-19 testing programs amounted to approximately $1.0 million in the second quarter of 2023, compared to approximately $28.0 million in second quarter of 2022. The decline in COVID-19 testing revenue wasMarch 31, 2023.
mostly offset byMobile Health Services
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 of thein services offered by the Mobile Health segment. This expansion has accelerated through 2022Services 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 2023 as2024 than in the Company increased its customer base and geographic reach, while extending several large customer contracts and introducing a broader rangefirst half of services.the year.
Transportation Services
For the three months ended June 30, 2023,March 31, 2024, Transportation Services revenue totaled $45.4revenues were $48.2 million, and increased by $23.2an increase of $8.2 million, or 104.5%20.2%, as compared withto the three months ended June 30, 2022. TheMarch 31, 2023. This increase was due to a 20% increase in transportation services revenue reflected higher trip volumes, and average trip prices. Volumes increased by approximately 32%,to 69,977 trips in the three months ended March 31, 2024, from 47,67358,176 trips for the three months ended June 30, 2022, to 62,907 trips for the three months ended June 30,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 entry into new markets in 2022 and acquisitions made during the second half of 2022.increased volumes with existing customers. Our average trip price increased from $360declined to $400 in the three months ended June 30, 2022, to $390March 31, 2024, from $415 in the three months ended June 30,March 31, 2023. The increasedecline in the average trip price in 2023the 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 resulting inthat earn higher prices per trip. The average trip price also benefited from an 8.7% increase in the average Medicare reimbursement rate for ambulance transports.
Cost of RevenueRevenues
For the three months ended June 30, 2023,March 31, 2024, total cost of revenuerevenues (exclusive of depreciation and amortization) increased by 19%, as53.7% compared to the three months ended June 30, 2022,March 31, 2023, while revenuerevenues increased by approximately 15%70.0%. Cost of revenuerevenues as a percentage of revenue increasedrevenues decreased to 66.6%65.0% in the three months ended June 30, 2023March 31, 2024 from 64.1%71.9% in the three months ended June 30, 2022.March 31, 2023.
In absolute dollar terms, totalTotal cost of revenuerevenues in the three months ended June 30, 2023March 31, 2024 increased by $13.4$43.6 million compared to the same period in 2022.2023. This increase was primarily attributable to a $10.5$7.6 million increase in total compensation, due to higher headcount for both the Mobile Health Services and Transportation Services and Mobile Health segments and higher average hourly wages;segments; a $6.7$20.5 million increase in subcontracted labor costs, primarily driven by new projects in both segments whichthat required more personnel than the Company was able to initially provide through its existing staff; a $0.7$12.0 million increase in medical and related supplies; and a $1.1 million net increase in other cost of revenue categories. These items were partially offset by a $3.4 million decrease in lab fees related to COVID-19 testing activity, reflecting significantly reduced testing activity than in the prior-year period; a $1.9 million decline in travel costs as there were fewerfor field personnel and other clinicians who traveled out of their home regions to provide Mobile Health services;Services; and a $0.3$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.agreements during 2023.
For the Mobile Health Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended June 30, 2023March 31, 2024 amounted to $52.1$92.9 million, down slightlyup 76.3% from $52.5$52.7 million in the three months ended June 30, 2022.March 31, 2023. Cost of revenues as a percentage of revenues increaseddecreased to 65.1%64.5% from 60.1%72.3% in the prior year period, due to the decreasea significant increase in COVID-testing revenues, and significantlyin the absence of certain project ramp-up costs, in the form of higher compensation expenses, reflecting headcount growth;overtime rates and increaseda greater proportion of subcontracted labor, costs, which outweighedthat were recorded in the impact of reduced lab fees.prior year period.
For the Transportation Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended June 30, 2023March 31, 2024 amounted to $31.5$31.9 million, up 78%11.9% from $17.7$28.5 million in the three months ended June 30, 2022.March 31, 2023. Cost of revenues as a percentage of revenues decreased to 69.3%66.3% from 79.8%71.1% in the prior year quarter, reflecting the impact of higher per-trip prices, increased number ofrevenues 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.
Operating Expenses
For the three months ended June 30, 2023,March 31, 2024, the Company recorded $40.3$51.4 million of operating expenses compared to $31.8$38.7 million for the three months ended June 30, 2022,March 31, 2023, an increase of 27%32.8%. As a percentage of revenue, operating expenses increaseddecreased from 29.0%34.3% in the secondfirst quarter of 20222023 to 32.1%26.8% in the secondfirst quarter of 2023.2024, reflecting the increase in revenues
described above. The increase of $8.4$12.7 million of operating expenses related primarily to a $5.6 million increase in total compensation due to investments in and expansion of corporate overhead to support revenue growth, partially driven by higher stock compensation expense; a $1.8$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 in the second half of 2022 and the first quarter ofduring 2023; a $1.7$0.9 million increase in insurance costs, reflecting higher headcount and expanded operations;primarily being driven by the Mobile Health segment; a $1.5$0.6 million increase in IT infrastructure, driven by the Company’s business and headcount expansion and acquisitions; and a $0.9$0.7 million increase in rentprofessional 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 utilities, relating to the Company’s ongoing geographic expansion. These increased expenses were partially offset byrelated increase in accounts receivable; and a $2.4net $6.6 million decline in professional fees; a $0.4 million decline in subcontracted labor; and $0.3
million in net declinesincrease spread across a variety of other operating expense categories. The Company anticipates that operating expenses will decline as a percentage of revenue fromcontinue to fluctuate based upon the levels seen in the first two quarters of 2023.revenues that are generated.
For the Mobile Health Services segment, operating expenses in the three months ended June 30, 2023March 31, 2024 were $9.9$18.9 million, up from $4.6$7.2 million in the three months ended June 30, 2022.March 31, 2023. Operating expenses as a percentage of revenues increased to 12.3%13.1% in the secondfirst quarter of 2023,2024, from 5.3%9.8% in the secondfirst quarter of 2022,2023, 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 and the costs of developing the Company’s “on-demand” direct-to-consumer offering.infrastructure.
For the Transportation Services segment, operating expenses in the three months ended June 30, 2023March 31, 2024 were $14.6$15.2 million, compared to $9.9$10.5 million in the three months ended June 30, 2022.March 31, 2023. Operating expenses as a percentage of revenues decreasedincreased to 32.1%31.5% for the three months ended June 30, 2023March 31, 2024 from 44.5%26.1% in the three months ended June 30, 2022, reflectingMarch 31, 2023, despite the increased revenues in the current year period.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.
For the Corporate segment, which represents primarily shared services that are not contained within the entities which compriseincluded in either the Mobile Health Services or Transportation Services segments, operating expenses in the three months ended June 30, 2023March 31, 2024 were $15.9$17.3 million, compared to $17.4$21.1 million in the three months ended June 30, 2022.March 31, 2023. Corporate expenses amounted to approximately 12.6%9.0% of total consolidated revenues in the secondfirst quarter of 2024, compared to 18.7% in the first quarter of 2023, compared to 15.9%reflecting the significant increase in total consolidated revenues as well as some corporate expense reduction programs implemented at the second quarterend of 2022.2023 and in early 2024.
Interest Income/(Expense), Net(expense) income, net
For the three months ended June 30, 2023,March 31, 2024, the Company recorded $0.5$0.4 million of interest expense, net compared to $0.8 million of interest income, compared to $0.1 million of net interest income in the three months ended June 30, 2022. This was due to a significantly higher amount of interest earned inMarch 31, 2023. Interest expenses on borrowings under the three months ended June 30, 2023, due to higher rates ofCompany's revolving credit line outweighed interest earned on balances in the Company'sCompany’s interest-bearing accounts which reflected significantly higher market interest rates.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.
Gain/(loss)Loss on Remeasurement of Warrant Liabilitiesequity method investments
During the three months ended June 30, 2023, there were no gains or losses recorded relating to remeasurement of warrant liabilities, as all warrants were redeemed during the third quarter of 2022. During the three months ended June 30, 2022, the Company recorded a gain of approximately $3.0 million from the remeasurement of warrant liabilities. The warrants were marked-to-market in each reporting period, and this gain reflected the decrease in DocGo’s stock price relative to the beginning of the first quarter of 2022.
Gain/(Loss) on Equity Method Investment
During the three months ended June 30, 2023,March 31, 2024, the Company recorded a loss on equity method investments of $90,573$0.1 million representing its share of the losses incurred by an entity in which the Company has a minority interest. During the three months ended June 30, 2022,March 31, 2023, the Company also recorded a gainloss on equity method investments of $89,810.$0.1 million.
Gain on remeasurement of Finance Leases
During the three months ended June 30, 2023, there were no gains or losses recorded relating to remeasurement of finance leases. During the three months ended June 30, 2022, the Company recorded a gain of approximately $1.4 million, resulting from a change in estimated remaining liabilities under the terms of its leases.
Gain/(loss) on Disposaldisposal of Fixed Assetsfixed assets
During the three months ended June 30, 2023,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 $98,630. No such gain or loss was recorded$0.1 million during the three months ended June 30, 2022.March 31, 2023.
Income Tax (Expense)/Benefit(Provision for) benefit from income taxes
During the three months ended June 30, 2023,March 31, 2024, the Company recorded an income tax benefitprovision of $0.4$5.1 million, compared to an income tax expensebenefit of $0.3$2.1 million in the three months ended June 30, 2022.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.
Net Loss Attributableloss attributable to Noncontrolling Interestnoncontrolling interests
For the three months ended June 30, 2023,March 31, 2024, the Company had net incomeloss attributable to noncontrolling interests of approximately $3.3$0.6 million, compared to a net loss attributable to noncontrolling interestinterests of $1.0approximately $0.5 million for the three months ended March 31, 2023.
months ended June 30, 2022, which reflected improved performance in the Company’s joint venture markets in the three months ended June 30, 2023.
Comparison of the Six Months Ended June 30, 2023 and 2022
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | Change $ | | Change % |
$ in Millions | 2023 | | 2022 | | |
| | | | | | | |
Revenue, net | $ | 238.5 | | | $ | 227.4 | | | $ | 11.1 | | | 4.9 | % |
| | | | | | | |
Cost of revenues | 164.8 | | | 148.2 | | | 16.6 | | | 11.2 | % |
Operating expenses: | | | | | | | |
General and administrative | 60.0 | | | 48.5 | | | 11.5 | | | 23.8 | % |
Depreciation and amortization | 7.5 | | | 4.2 | | | 3.3 | | | 78.8 | % |
Legal and regulatory | 6.0 | | | 4.4 | | | 1.6 | | | 37.1 | % |
Technology and development | 4.4 | | | 2.3 | | | 2.1 | | | 92.1 | % |
Sales, advertising and marketing | 1.0 | | | 2.3 | | | (1.3) | | | (56.0 | %) |
Total expenses | 243.8 | | | 209.9 | | | 33.7 | | | 16.1 | % |
Income (loss) from operations | (5.3) | | | 17.5 | | | (22.7) | | | |
| | | | | | | |
Other income (expenses): | | | | | | | |
Interest income (expense), net | 1.3 | | | — | | | 1.3 | | | 100.0 | % |
Gain on remeasurement of warrant liabilities | — | | | 3.0 | | | (3.0) | | | |
(Loss) gain on initial equity method investments | (0.2) | | | — | | | (0.2) | | | |
Gain on remeasurement of finance leases | — | | | 1.4 | | | (1.4) | | | |
(Loss) gain on disposal of fixed assets | (0.2) | | | — | | | (0.2) | | | |
Other (expense) income | (0.7) | | | — | | | (0.7) | | | |
Total other (expense) income | 0.2 | | | 4.4 | | | (4.2) | | | (94.0 | %) |
| | | | | | | |
Net income (loss) before income tax benefit (expense) | (5.1) | | | 21.9 | | | (27.0) | | | |
Income tax benefit (provision) | 2.5 | | | (0.8) | | | 3.3 | | | |
Net income (loss) | (2.6) | | | 21.1 | | | (23.7) | | | |
Net income (loss) attributable to noncontrolling interests | 2.9 | | | (2.2) | | | 5.1 | | | 229.7 | % |
Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries | $ | (5.5) | | | $ | 23.3 | | | $ | (28.7) | | | |
Consolidated
For the six months ended June 30, 2023, total revenues were $238.5 million, an increase of $11.1 million, or 4.9%, from the total revenues recorded in the six months ended June 30, 2022.
Mobile Health
For the six months ended June 30, 2023, Mobile Health revenue totaled $153.0 million, a decrease of $24.4 million, or 14%, as compared with the six months ended June 30, 2022. The decrease in revenues was due to a significant decline in COVID-19 related mass testing services and related revenues when compared to the prior year period. The Company estimates that revenues from mass COVID-19 testing programs amounted to approximately $2.0 million in the first six months of 2023, compared to approximately $66.0 million in the first six months of 2022. The decline in COVID-19 testing revenue was partially offset by the expansion of the services offered by the Mobile Health segment. This expansion
accelerated through 2022 and into the first half of 2023 as the Company increased its customer base and geographic reach, while extending several large customer contracts and introducing a broader range of services.
Transportation Services
For the six months ended June 30, 2023, Transportation Services revenue totaled $85.5 million, an increase of $35.5 million, or 71.0%, as compared with the six months ended June 30, 2022. This increase was due to a rise in both transportation trip volumes and the average price per trip. Volumes increased by approximately 26%, from 95,783 trips for the six months ended June 30, 2022, to 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 customer base in certain core markets, entry into new markets in 2022 and acquisitions made during the second half of 2022. Our average trip price increased from $356 in the six months ended June 30, 2022, to $402 in the six months ended June 30, 2023. The increase in the average trip price in 2023 reflected a shift in mix toward higher-priced transports with existing customers, as well as the acquisition of licenses to provide higher acuity transports resulting in higher prices per trip. The average trip price also benefited from an 8.7% increase in the average Medicare reimbursement rate for ambulance transports.
Cost of Revenue
For the six months ended June 30, 2023, total cost of revenue (exclusive of depreciation and amortization) increased by 11.2% as compared to the six months ended June 30, 2022, while revenue increased by approximately 4.9%. Cost of revenue as a percentage of revenue increased to 69.1% in the first six months of 2023 from 65.2% in the first six months of 2022.
In absolute dollar terms, total cost of revenue in the six months ended June 30, 2023 increased by $16.6 million from the prior year period. This was primarily attributable to a $26.1 million increase in total compensation, reflecting higher headcount for both the Transportation Services and Mobile Health segments; a $4.5 million increase in subcontracted labor, driven mostly by the Mobile Health segment, where revenue increases outpaced the Company’s ability to service such revenue solely with internal resources; and a $1.0 million increase in vehicle costs, driven by a continued increase in the Company’s vehicle fleet. These items were partially offset by an $6.8 million decrease in lab fees related to COVID-19 testing activity and a $7.5 million decline in supplies, both reflecting the significant decline in COVID-19 testing activity in the first half of 2023 compared to the first half of 2022; and a $0.7 million net decline in expenses across a variety of other cost of revenue categories.
For the Mobile Health segment, cost of revenues (exclusive of depreciation and amortization) in the six months ended June 30, 2023 amounted to $104.9 million, down $4.1 million, or 3.8% from the six months ended June 30, 2022. Cost of revenues as a percentage of revenues increased to 68.5%, from 61.4% in the six months ended June 30, 2023, due to the decline in COVID-testing revenues and significantly higher compensation expenses, reflecting headcount growth, and subcontracted labor costs, which outweighed the impact of reduced lab fees and supplies costs.
For the Transportation Services segment, cost of revenues (exclusive of depreciation and amortization) in the six months ended June 30, 2023 amounted to $59.9 million, up 53% from $39.2 million in the six months ended June 30, 2022. Cost of revenues as a percentage of revenues decreased to 70.2% in the first six months of 2023 from 78.4% in the prior year period, reflecting the impact of higher per-trip prices, increased number of 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.
Operating Expenses
For the six months ended June 30, 2023, the Company recorded $78.9 million of operating expenses compared to $61.7 million for the six months ended June 30, 2022, an increase of 28%. As a percentage of revenue, operating expenses increased from 27.1% in the first six months of 2022 to 33.1% in the first six months 2023. The increase of $17.2 million related primarily to a $13.0 million increase in total compensation, which includes costs for both direct and subcontracted staff, due to investments in and expansion of corporate infrastructure to support the revenue growth, as well as stock-based compensation expense; a $3.2 million increase in depreciation and amortization due to an increase in assets to support revenue growth and capitalized software amortization, as well as recently acquired companies; a $2.7 million increase in IT infrastructure, driven by the Company’s business and headcount expansion; a $2.2 million increase in insurance costs, reflecting higher headcount and expanded operations; and a $1.7 million increase in rent and utilities, relating to the Company’s ongoing geographic expansion. These increased expenses were partially offset by a $2.8 million decline in bad debt expense, as allowances for doubtful accounts were adjusted to better reflect the aging and collection history of the Company’s accounts receivable; a $0.8 million decline in commissions, in the absence of certain per-test and per-vaccination commissions that were paid in relation to certain mass COVID-19 testing and vaccination projects in the first
half of 2022; and a $2.0 million decline across various operating expense categories, including professional fees and travel and entertainment. We anticipate that operating costs over the remainder of 2023, as a percentage of total revenue, will decline from the levels seen in the first half of 2023.
For the Mobile Health segment, operating expenses in the six months ended June 30, 2023 were $17.2 million, up 16% from $14.8 million in the six months ended June 30, 2022. Operating expenses as a percentage of revenues increased to 11.2% from 8.4% in the first six months of 2022, 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 management infrastructure and the costs of developing the Company’s “on-demand” direct-to-consumer offering, as described above.
For the Transportation Services segment, operating expenses in the six months ended June 30, 2023 were $25.2 million, up 35% from $18.7 million in the six months ended June 30, 2022. Operating expenses as a percentage of revenues decreased to 29.4% for the six months ended June 30, 2023, from 37.3% for the six months ended June 30, 2022, reflecting the increased revenues in the current year period.
For the Corporate segment, which represents primarily shared services that are not contained within the entities which comprise either the Mobile Health Services or Transportation Services segments, operating expenses in the six months ended June 30, 2023 were $36.6 million, compared to $28.1 million in the six months ended June 30, 2022. The increase was driven by higher headcount, as the Company built out its corporate infrastructure, as well as significantly higher stock compensation expenses. As a percentage of total consolidated revenues, Corporate expenses amounted to approximately 15.4% of revenues in the first half of 2023, compared to 12.4% in the first half of 2022.
Interest Income/(Expense), Net
For the six months ended June 30, 2023, the Company recorded $1.3 million of net interest income compared to $37,330 million of net interest expense in the six months ended June 30, 2022. This was due to a significantly higher amount of interest earned in the six months ended June 30, 2023, due to higher rates of interest earned on balances in the Company's interest-bearing accounts, which reflected significantly higher market interest rates.
Gain/(loss) on Remeasurement of Warrant Liabilities
During the six months ended June 30, 2023, there were no gains or losses recorded relating to remeasurement of warrant liabilities, as all warrants were redeemed during the third quarter of 2022. During the six months ended June 30, 2022, the Company recorded a gain of approximately $3.0 million from the remeasurement of warrant liabilities. The warrants were marked-to-market in each reporting period, and this gain reflected the decrease in DocGo’s stock price relative to the beginning of 2022.
Gain/(Loss) on Equity Method Investment
During the six months ended June 30, 2023, the Company recorded a loss of $205,859 on equity method investments, representing its share of the losses incurred by an entity in which the Company has a minority interest. During the six months ended June 30, 2022, the Company recorded a gain of $6,469 on equity method investments, representing its share of the losses incurred by an entity in which the Company has a minority interest.
Gain/(loss) from Remeasurement of Finance Leases
During the six months ended June 30, 2023, the Company did not record a gain or lossrelating to a change in estimated remaining liabilities under the terms of its leases. During the six months ended June 30, 2022, the Company recorded a gain of approximately $1.4 million, resulting from a change in estimated remaining liabilities under the terms of its leases.
Gain/(loss) on Disposal of Fixed Assets
During the six months ended June 30, 2023, the Company recorded a loss of $153,469 on the disposal of fixed assets. During the six months ended June 30, 2022, no gain or loss was recorded on the disposal of fixed assets.
Income Tax (Expense)/Benefit
During the six months ended June 30, 2023, the Company recorded an income tax benefit of $2.5 million, compared to an income tax expense of $0.8 million in the six months ended June 30, 2022. The income tax benefit reflects a pretax loss recorded during the six months ended June 30, 2023, compared to pretax income in the prior year period. The income tax
benefit in the current year period includes income as well as state income taxes in jurisdictions the Company entered during the past year and current period.
Net Loss Attributable to Noncontrolling Interest
For the six months ended June 30, 2023, the Company had net income attributable to noncontrolling interest of approximately $2.9 million, compared to a net loss attributable to noncontrolling interest of $2.2 million for the six months ended June 30, 2022. The income compared to the prior year period loss reflected improved performance in the Company’s joint venture markets in the three months ended June 30, 2023.
Liquidity and Capital Resources
Since
Between the inception DocGo hasof 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 raisedfinancing transactions and the Business Combination to finance operations, investmentsinvest in assets, ambulance operating licensesmake acquisitions and to fund accounts receivable. The Company has also funded these activities through operating cash flows. In November 2021, uponDespite the completion of the merger between Motion Acquisition Corp. ("Motion") and Ambulnz, Inc. ("Ambulnz"),fact that the Company received proceeds of approximately $158.1 million, net of transaction expenses. However, even when the Company generatesgenerated 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 these 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.
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. FutureThe Company’s future capital requirements depend on many factors, including potential acquisitions, DocGo’sthe Company’s level of investment in technology and ongoing technology development, and rate of growth in existing markets and into new markets. Capital requirements maymight also be affected by factors outside of the Company’s control, such as interest rates, rising inflation financial institution instability or failure 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.
On November 1, 2022, the Company entered into a revolving loan and security agreement with two banks, with one bank acting as the administrative agent (the “Lenders”), with anCredit Agreement, which provides for the Revolving Facility in the initial maximum commitmentaggregate principal amount of $90,000,000.$90.0 million. The revolving facilityRevolving Facility includes the ability for the Company to request an increase to the commitment by an additional amount of up to $50,000,000,$50.0 million, though no Lenderlender (nor the Lenderslenders collectively) areis obligated to increase theirits respective commitments. Borrowings under the revolving facilityRevolving Facility bear interest at a per annum rate equal to (i) at the Company’s option, the (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin. The applicable margins are based on the Company’s consolidated net leverage ratio, adjusted on a quarterly basis. The initial applicable margins arewere 1.25% for an adjusted term SOFR loan and 0.25% for a base rate loan and will beare updated based on the Company’s consolidated net leverage ratio. The revolving facilityRevolving Facility matures on November 1, 2027. The revolving facility2027 and is secured by a first-priority lien on substantially all of the Company’s present and future personal assets and intangible assets. The revolving facilityRevolving Facility is subject to certain financial covenants, such as a net leverage ratio and interest coverage ratio, as defined in the agreement. AsCredit Agreement. On October 19, 2023, the Company drew down $25.0 million under the Revolving Facility, which amount remained outstanding as of December 31, 2023. On February 8, 2024, the Company drew down an additional $15.0 million. On February 27, 2024, the Company repaid all amounts then outstanding under the Revolving Facility. However, in March 2024, the Company once again drew down under the Revolving Facility, and there was a total of $30.0 million outstanding as of the date of the filing of this Quarterly Report on Form 10-Q, the Company has not made any draws under the facility and there are no amounts outstanding.10-Q.
Considering the foregoing, DocGo anticipates that its existing balances of cash and cash equivalents, future expected cash flows generated from ourits operations and theits available line of credit (as discussed in Note 9, “Line of Credit” tounder the unaudited Condensed Consolidated Financial Statements)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.
Capital Resources
Working Capitalcapital as of June 30,March 31, 2024 and December 31, 2023 and June 30, 2022was as follows:
| | As of June 30, | | Change $ | | Change % |
| March 31 | | | March 31 | | December 31 | | Change $ | | Change % |
$ in Millions | $ in Millions | 2023 | | 2022 | | Change $ | | Change % |
Working capital | Working capital | | | | |
Working capital | |
Working capital | |
Current assets | |
Current assets | |
Current assets | Current assets | $ | 234.4 | | | $ | 275.7 | | | $ | (41.3) | | | (15 | %) | $ | 335.1 | | | $ | | $ | 338.9 | | | $ | | $ | (3.8) | | | (1.1 | | (1.1 | %) |
Current liabilities | Current liabilities | 91.8 | | | 57.9 | | | 33.9 | | | 58 | % | Current liabilities | 160.1 | | | 170.1 | | 170.1 | | | (10.0) | | (10.0) | | | (5.9 | | (5.9 | %) |
Total working capital | Total working capital | $ | 142.6 | | | $ | 217.8 | | | $ | (75.2) | | | (35 | %) | Total working capital | $ | 175.0 | | | $ | | $ | 168.8 | | | $ | | $ | 6.2 | | | 3.7 | | 3.7 | % |
As of June 30, 2023,March 31, 2024, available cash totaled $109.2$41.2 million, which represented a decrease of $89.0$18.0 million as compared to June 30, 2022, as acquisitions madeDecember 31, 2023, reflecting a significant increase in accounts receivable during the second half of 2022 and in the first half of 2023 outweighed cash flow from operations.three months ended March 31, 2024. As of June 30, 2023,March 31, 2024, working capital amounted to $142.6$175.0 million, which represented a decreasean increase of $75.2$6.2 million as compared to June 30, 2022, primarily reflectingDecember 31, 2023, as the decreased cash balance.balance was outweighed by higher accounts receivable and a decline in accrued liabilities. Increased accounts receivable in the sixthree months ended June 30, 2023,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 increasedecline 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 the first half of 2023, which reflected the growth of the business and amountsthree months ended March 31, 2024, due to lower accrued liabilities, reflecting lower invoices and accrued liabilities in the sellercurrent period for certain expenses, such as subcontracted labor, and contingent consideration resulting from acquisitions.as the Company paid down a significant amount of its accrued liabilities during the quarter.
Cash Flows
Six Cash flows as of the three months ended June 30,March 31, 2024 and 2023 and 2022were as follows:
| | As of June 30, | | Change $ | | Change % |
| Three Months Ended March 31, | | | Three Months Ended March 31, | | Change $ | | Change % |
$ in Millions | $ in Millions | 2023 | | 2022 | | Change $ | | Change % |
Cash flow summary | Cash flow summary | | | | |
Cash flow summary | |
Cash flow summary | |
Net cash used in operating activities | |
Net cash used in operating activities | |
Net cash used in operating activities | Net cash used in operating activities | $ | (12.4) | | | $ | 30.2 | | | $ | (42.6) | | | (141 | %) | $ | (10.6) | | | $ | | $ | (23.1) | | | $ | | $ | 12.5 | | | 54.1 | | 54.1 | % |
Net cash used in investing activities | Net cash used in investing activities | (25.4) | | | (2.0) | | | (23.4) | | | (1171 | %) | Net cash used in investing activities | (1.7) | | | (1.7) | | (1.7) | | | — | | — | | | — | | — | % |
Net cash used in financing activities | Net cash used in financing activities | (3.2) | | | 1.1 | | | (4.3) | | | (390 | %) | Net cash used in financing activities | (0.9) | | | (12.0) | | (12.0) | | | 11.1 | | 11.1 | | | 92.5 | | 92.5 | % |
Effect of exchange rate changes | Effect of exchange rate changes | 0.7 | | | — | | | 0.7 | | | 100 | % | Effect of exchange rate changes | (0.1) | | | 0.2 | | 0.2 | | | (0.3) | | (0.3) | | | (150.0) | | (150.0) | % |
Net decrease in cash | Net decrease in cash | $ | (40.3) | | | $ | 29.3 | | | $ | (69.6) | | | (238 | %) | Net decrease in cash | $ | (13.3) | | | $ | | $ | (36.6) | | | $ | | $ | 23.3 | | | 63.7 | | 63.7 | % |
Operating Activities
During the sixthree months ended June 30, 2023,March 31, 2024, operating activities used $12.4$10.6 million of cash, due in part to adespite net lossincome of $2.6$10.6 million. Non-cash charges amounted to $19.4$9.5 million and included $4.7$2.5 million in depreciation of property and equipment and right-of-use assets, $2.8$1.7 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$4.0 million of stock compensation expense, a $0.2bad debt expense of $1.4 million, loss on the disposal of assets and a loss of $0.2$0.1 million from an investment that is accounted for under the equity method. These were partially offset by a non-cash$0.1 million gain on the disposal of $1.3assets 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.
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 $29.2$28.6 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.
During the six months ended June 30, 2022, operating activities provided $30.2 million of cash, aided by net income of $21.1 million. Non-cash charges amounted to $5.1 million and included $3.0 million in depreciation of property and equipment and right-of-use assets, $1.3 million from amortization of intangible assets, $1.8 million in bad debt expense primarily related to a provision for potential uncollectible accounts receivable and $3.4 million of stock compensation expense. These were partially offset by non-cash gains of $1.4 million relating to the remeasurement of finance lease liabilities and $3.0 million from the remeasurement of warrant liabilities. Changes in assets and liabilities resulted in approximately $3.9 million in additional operating cash flow, as a $4.3 million decrease in accounts receivable, a $2.1 million decrease in other assets and a $3.6 million increase in accrued liabilities outweighed the effect of a $3.2 million increase in prepaid expenses and a $2.9 million decline in accounts payable. Operating cash flow in the first half of 2022 was aided by collections of large accounts receivable from invoices generated in the fourth quarter of 2021.
$24.7 million increase in accounts receivable, a $2.6 million decrease in accounts payable, a $1.5 million decrease in accrued liabilities and a $0.2 million increase in prepaid expenses outweighed a $0.3 million reduction in other assets.
Investing Activities
During the sixthree months ended June 30, 2023,March 31, 2024, 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 in cash from the disposal of property and equipment.
During the six months ended June 30, 2022, investing activities used $2.0$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 $1.0$0.8 million, to supportslightly offset by $25,000 in proceeds from the ongoing growthdisposal of property and equipment.
During the three months ended March 31, 2023, investing activities used $1.7 million of cash and consisted of the business.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.
Financing Activities
During the sixthree months ended June 30, 2023,March 31, 2024, financing activities used $3.2$0.9 million of cash, primarilyas $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 millionin payments under the terms of a finance lease.
During the three months ended March 31, 2023, financing activities used $12.0 million of cash, due to a $2.6reduction of $11.5 million decrease in amounts due to seller, relating toas deferred payments were made for acquisitions that were completed inunder the second halfterms of 2022 and early 2023; $1.5previously-closed acquisitions; $0.8 million in payments on obligations under the terms of finance leases,leases; and $0.2$0.1 million in repayments of notes payable. These items were partially offset by $1.1$0.4 million in proceeds from the exercise of stock options.
During the six months ended June 30, 2022, financing activities provided $1.1 million of cash, due to $1.0 million in proceeds from one of the Company’s subsidiary’s revolving credit line, $2.1 million in non-controlling interest contributions and $0.7 million in proceeds from the exercise of stock options, which were partly offset by $1.4 million in payments on obligations under the terms of finance leases, $0.3 million in repayments of notes payable, a reduction of $0.9 million in amounts due to seller and $0.1 million in equity costs.
Future minimum annual maturities of notes payable as of the six months ended June 30, 2023March 31, 2024 are as follows (in $ millions)thousands):
| | Notes Payable |
2023, remaining | $ | 0.3 | |
2024 | 0.6 | |
| Notes Payable | | | Notes Payable |
2024, remaining | |
2025 | 2025 | 0.6 | |
2026 | 2026 | 0.5 | |
2027 | 0.3 | |
Thereafter | 0.1 | |
Total maturities | Total maturities | 2.3 | |
Current portion of notes payable | Current portion of notes payable | (0.7) | |
Long-term portion of notes payable | Long-term portion of notes payable | $ | 1.6 | |
Future minimum lease payments under finance leases as of the six months ended June 30, 2023March 31, 2024 are as follows (in $ millions):
| | Finance Leases |
2023, remaining | $ | 1.7 | |
2024 | 2.8 | |
| Finance Leases | | | Finance Leases |
2024, remaining | |
2025 | 2025 | 2.6 | |
2026 | 2026 | 1.8 | |
2027 | 2027 | 0.7 | |
2028 | |
Thereafter | |
Total future minimum lease payments | Total future minimum lease payments | 9.5 | |
Less effects of discounting | Less effects of discounting | (0.9) | |
Present value of future minimum lease payments | Present value of future minimum lease payments | $ | 8.6 | |
Future minimum lease payments under operating leases as of the six months ended June 30, 2023March 31, 2024 are as follows (in $ millions):
| | Operating Leases |
2023, remaining | $ | 1.5 | |
2024 | 2.8 | |
| Operating Leases | | | Operating Leases |
2024, remaining | |
2025 | 2025 | 2.8 | |
2026 | 2026 | 2.0 | |
2027 | 2027 | 1.8 | |
2028 | |
Thereafter | |
Total future minimum lease payments | Total future minimum lease payments | 10.8 | |
Less effects of discounting | Less effects of discounting | (1.2) | |
Present value of future minimum lease payments | Present value of future minimum lease payments | $ | 9.6 | |
Critical Accounting Estimates
Basis of Presentation
The Company’s unaudited Condensed Consolidated Financial Statements are presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”)GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).SEC. The unaudited Condensed Consolidated Financial Statements include the accounts and operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated upon consolidation. Noncontrolling interests (“NCI”) in the unaudited Condensed Consolidated Financial Statements represent the portion of consolidated joint ventures and a variable interest entity (“VIE”)VIEs in which the Company does not have direct equity ownership. Accounts and transactions between consolidated entities have been eliminated.
Pursuant to theThe Business Combination the merger between Motion and Ambulnz was accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”).GAAP. Under this method of accounting, Motionthe Company was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Ambulnz stock for the net assets of Motion,the Company, accompanied by a recapitalization. The net assets of Motionthe Company are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Ambulnz. The shares and corresponding capital amounts and earnings per share available for common stockholders prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio (645.1452 to 1) established in the Business Combination. Further, Ambulnz was determined to be the accounting acquirer in the transaction,Business Combination, and as such, the acquisitionBusiness Combination is considered a business combination under Accounting Standards Codification (“ASC”), TopicASC 805 Business Combinations, (“ASC 805”) and was accounted for using the acquisition method of accounting.
Principles of Consolidation
The Company’s unaudited Condensed Consolidated Financial Statements include the accounts of DocGo IncInc. and its subsidiaries. All significant intercompany transactions and balances have been eliminated in these unaudited Condensed Consolidated Financial Statements.
The Company holds a variable interestinterests in Mobile Medical Healthcare P.C. (“MD1”, formerly known as "MD1 Medical Care P.C."), which contractslegal entities that contract with physicians and other health professionals in order tothat provide services toon behalf of the Company. MD1 isThese entities are considered a VIEVIEs since it doesthey do not have sufficient equity to finance itstheir activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits—that is the primary beneficiary, meaning it has (1) the power to direct the activities of athe VIE that most significantly impacts the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of MD1its VIEs and funds and absorbs all losses of its VIEs. The Company has determined that it is the VIEprimary beneficiary of its VIEs and therefore appropriately consolidates MD1.its VIEs.
Net incomeloss for the VIECompany's VIEs was $120,217$275,905 and $186,637 for the sixthree months ended June 30, 2023.March 31, 2024 and 2023, respectively. The VIE’s total assets all of which were current assets apart from a fixed asset amounting to $5,237, amounted to $773,458$5,364,950 and $4,364,274 as of June 30, 2023.March 31, 2024 and December 31, 2023, respectively. Total liabilities allwere $6,088,439 and $4,811,857as 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.
of which were current for the VIE, was $361,516 as of June 30, 2023. The VIE’s total stockholders’ equity was $411,941 as of June 30, 2023.
Business CombinationsCombination
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 NCI,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.
Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: (1)1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or (2)2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings. For transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expenses acquisition-related costs and fees associated with business combinations.
The estimated fair value of net assets to be acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. Management uses assumptions on the basis of historical knowledge of the business and projected financial information of the target. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill represents the excess of the total purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but is tested for impairment at the reporting unit level annually on December 31 or more frequently if events or changes in circumstances indicate that it is more likely than not to be impaired. These events include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our market capitalization, as indicated by our publicly quoted share price, below our net book value.
On February 3, 2023, Ambulnz Health LLC (“Health”), commenced an assignment for the benefit of creditors (“ABC”)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 an assignee (the “Assignee”)the Assignee, who actsacted as a fiduciary for creditors and in a capacity equivalent to that of a bankruptcy trustee. The Assignee iswas responsible for liquidating the assets. Similar to a bankruptcy case, there iswas a claims process. Creditors of Health will receivereceived notice of the ABC and a proof of claim form and arewere required to submit a proof of claim in order to participate in distribution of net liquidation proceeds by the Assignee.
Based on such filing for Health, the Company impaired the goodwill assigned to that reporting unit as of December 31, 2022 by approximately $5.1 million.
Revenue Recognition
On January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), as amended.
To determine revenue recognition for contractual arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify each contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when (or as) the relevant performance obligation is
satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will be able to collect the consideration it is entitled to in exchange for the goods or services the Company provides to the customer.
The Company generates revenues from the provision of (1) TransportationMobile Health Services and (2) Transportation Services. For both Mobile Health Services. TheServices and Transportation Services, the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, thereforefulfilled. Therefore, the Company satisfies performance obligations immediately. The Company has utilized the “right to invoice” expedient, which allows an entity to recognize revenue in the amount of consideration to which the entity has the right to invoice when the amount that the Company has the right to invoice corresponds directly to the value transferred to the customer. Revenues are recorded net of an estimated contractual allowances for claims subject to contracts with responsible paying entities. The Company estimates contractual allowances at the time of billing based on contractual terms, historical collections or other arrangements. All transaction prices are fixed and determinable which includes a fixed base rate, fixed mileage rate and an evaluation of historical collections by each payor.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or its tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense.
Please see Note 2, “Summary of Significant Accounting Policies” to the unaudited Condensed Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk and Foreign Exchange Risk
Cash equivalents thatWe are subjectexposed to interest rate volatility represent our principalcertain market risk. We do not expect cash flowsrisks, including those relating to be affected to any significant degree by a sudden changechanges in market interest rates as our notes payable bear fixed interestand foreign currency exchange rates. We do not enter into investmentsinstruments for trading or speculative purposes. Additionally,
Interest Rate Risk
We are subject to interest rate risk relating to our cash equivalents and borrowings under our Revolving Facility, which bear interest at a per annum rate equal to (i) at our option, (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin. The applicable margins are based on the Company’s consolidated net leverage ratio, adjusted on a quarterly basis. The Company drew down $15,000,000 on February 8, 2024 under the Revolving Facility. On February 27, 2024, the Company has notpaid the $40,000,000 line of credit balance. On March 4, 2024, the Company drew down $15,000,000 and made any drawsan additional $15,000,000 draw on March 18, 2024. As of March 31, 2024, the outstanding balance of the line of credit was $30,000,0000. While the applicable interest rate is set for a specific term when amounts are drawn down under the facility andterms of the Revolving Facility, any subsequent draws on the Revolving Facility may be subject to a higher or lower interest rate, depending upon, among other things, the then-prevailing SOFR rate. We have not utilized interest rate hedging or other strategies in an attempt to mitigate our interest rate risk. A hypothetical 10% change in interest rates during the three months ended March 31, 2024 would have had a neutral net impact on our unaudited Condensed Consolidated Financial Statements, as of June 30, 2023, there is no amount outstanding.changes in amounts paid for interest expense would have offset changes in interest income earned on cash balances.
Foreign Exchange Risk
We operate our business primarily within the United StatesU.S. and currently execute a majority of our transactions in U.S. dollars. However, we are exposed to limited foreign exchange risk as a result of our U.K. operations. The foreign exchange gainloss amounted to $649,436$140,134 to the Company in the secondfirst quarter of 2023,2024, compared to $4,571$243,658 in the secondfirst quarter of 2022.2023. We have not utilized hedging strategies with respect to such foreign exchange exposure. This limited foreign currency translation risk is not expected to have a material impact on our consolidated financial statements. A hypothetical 10% change in the applicable foreign exchange rate during the three months ended March 31, 2024 would have resulted in a change in total revenues of approximately 0.6% and a change in total assets of approximately 0.9%.
Concentrations of Risk and Significant Clients
Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash, and cash equivalents, short-term investmentsrestricted cash and accounts receivable. Although we deposit our cash with multiple financial institutions in the U.S.United States and in foreign countries, our deposits, at times, may exceed federally insured limits. We do not believe we are exposed to significant credit risk due to the financial strength of the depository institutions in which the funds are held.
TheWith respect to accounts receivable, the Company had one customer that accounted for approximately 36%39% of salesrevenues and 36% of net accounts receivable for the three months ended June 30, 2023 and one customer accounted for approximately 41% of sales and 36% of net accounts receivable, for the six months ended June 30, 2023.
The Company had one customer that accounted for approximately 29% of sales and 15%34% of net accounts receivable and another customer that accounted for 14%32% of salesrevenues and 12%46% of net accounts receivablesreceivable for the three months ended June 30, 2022.March 31, 2024. The Company had one customer that accounted for approximately 30%46% of salesrevenues and 15% of net accounts receivable,
and another customer that accounted for 17% of sales and 12%62% of net accounts receivable for the sixthree months ended June 30, 2022.March 31, 2023. We perform ongoing evaluations of customers’ financial condition, creditworthiness and payment performance. Based on these evaluations, we consider whether or not the accounts receivable exposure to any specific customer is within an acceptable range for that customer.
Item 4. Controls and Procedures
Management’s Evaluation of Disclosure Controls and Procedures
Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report,Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ActAct) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2023March 31, 2024 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We and other participants in the healthcare industry are subject to legal proceedings, claims and litigation arising in the ordinary course of our business. DescriptionsIn addition to the proceeding below, descriptions of certain legal proceedings to which we are a party are contained in Note 19, “Legal Proceedings” of the Notes to our unaudited Condensed Consolidated Financial Statements.Statements and are incorporated herein.
FromIn addition, from time to time, in the ordinary course of business and like others in our industry, we receive requests for information from government agencies in connection with their regulatory or investigational authority. These requests can include subpoenas or demand letters for documents to assist the government in audits or investigations. We review such requests and notices and take what we believe to be appropriate action. We have been subject to certain requests for information and investigations in the past and could be subject to such requests for information and investigations in the future.
Item 1A. Risk Factors
Factors that could materially and adversely affect our business, financial condition and/or results of operations are described in the Annual Report on Form 10-K for the year ended December 31, 2022.2023 (the “2023 Form 10-K”). Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business, financial condition and/or results of operations. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our most recent Annual Report onthe 2023 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
On April 5, 2023, the Company purchased the remaining interest in Ambulnz-FMC North America, LLC (“FMC NA”) for $7,000,000. In connection with the transaction, the Company issued $3,000,000 worth of DocGo common stock, being 360,145 shares, in a private placement transaction. The remaining $4,000,000 will be paid in cash. As a result of this transaction, the Company now owns 100% of FMC NA.Share Repurchases
The foregoing transaction did not involve any underwriters, underwriting discounts or commissions, or any public offering. UnderOn January 31, 2024, the termsCompany's Board of Directors authorized the agreement,Repurchase Program, pursuant to which the Company issued and sold the shares of DocGo common stock in a private placement to one accredited investor, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company relied on this exemption from registration based in part as the accredited investor was aware of the terms of the transaction, the securities issued contained restrictive legends regarding resale and transfer, and the transaction was not publicly solicited or advertised.
Share Repurchases
On May 24, 2022, the Company was authorized tomay purchase up to $40 million of the Company’s common stock under a share repurchase program (the “Program”). During the second and fourth quarter of 2022, the Company repurchased 536,839$36,000,000 in shares of its common stock for $3,731,712. These shares were subsequently cancelled. There were no shares repurchasedCommon Stock during the first six months of 2023.a six-month period ending July 30, 2024. The Repurchase Program does not oblige the Company to acquire anyrepurchase a specific number of shares and will expire on November 24, 2023. shares.
Under the terms of the Repurchase Program, the Company may purchase shares may be repurchased usingof Common Stock on a variety of methods, includingdiscretionary basis from time to time through open market repurchases or privately negotiated and/transactions or open market transactions,through other means, including under plans complying withby entering into Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as part oftrading plans or accelerated share repurchases, block tradesrepurchase programs, in each case, during an “open window” and other methods. when the Company does not possess material non-public information.
The timing, manner, price and amount of any common stock repurchasesshares repurchased under the Repurchase Program are determined by the Company in its discretion andwill depend on a variety of factors, including legalstock price, trading volume, market conditions, corporate and regulatory requirements price and economicother general business considerations. The Repurchase Program may be modified, suspended or discontinued at any time without prior notice.
Repurchases under the Repurchase Program may be funded from the Company’s existing cash and market conditions.cash equivalents, future cash flow or proceeds of borrowings or debt offerings. As of March 31, 2024, $31.1 million remained available for share repurchases pursuant to the Repurchase Program.
Information regarding shares of Common Stock repurchased during the three months ended March 31, 2024 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Month | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans | | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans |
January 1 through 31, 2024 | | — | | | $ | — | | | — | | | $ | 36,000,000 | |
February 1 through 29, 2024 | | — | | | $ | — | | | — | | | $ | 36,000,000 | |
March 1 through 31, 2024 | | 1,255,614 | | | $ | 3.86 | | | 1,255,614 | | | $ | 31,147,554 | |
Total | | 1,255,614 | | | $ | 3.86 | | | 1,255,614 | | | $ | 31,147,554 | |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(c)(b) Trading Plans
In the second quarterthree months ended March 31, 2024, none of 2023,our directors or officers (as defined in Rule 16a-1 under the followingExchange Act) adopted, modified or terminated a “Rule 10b5-1 trading plans thatarrangement” or “non-Rule 105b-1 trading arrangement” (as those terms are required to be disclosed underdefined in Item 408(a)408 of Regulation S-K were adopted or terminated:
| | | | | | | | | | | | | | | | | |
Name | Title | Date Plan Adopted / Terminated | Duration of Plan | Shares to be Purchased or Sold | Intended to Satisfy Rule 10b5-1(c)? |
Anthony Capone | Chief Executive Officer | Adopted May 15, 2023 | September 1, 2023 to August 1, 2024 | Sell 24,000 | Yes |
Lee Bienstock | President & Chief Operating Officer | Adopted May 17, 2023 | August 16, 2023 to July 19, 2024 | Sell 20,000 | Yes |
Andre Oberholzer | Treasurer & EVP of Capital Markets and Strategy | Adopted June 5, 2023 | September 4, 2023 to January 31, 2024 | Sell 550,000 | Yes |
Ely Tendler | Director, General Counsel & Secretary | Adopted May 23, 2023 | August 22, 2023 to December 31, 2023 | Sell 30,000 | Yes |
S-K).Item 6. Exhibits
| | | | | | | | |
Exhibit Number | | Description |
3.1 | | |
3.2 | | |
10.1 | | |
10.1*10.2 | | |
10.3* | | |
31.1* | | |
31.2* | | |
32.1** | | |
32.2** | | |
32.2** | | |
101.INS* | | Inline XBRL Instance DocumentDocument. |
101.SCH* | | Inline XBRL Taxonomy Extension Schema DocumentDocument. |
101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase DocumentDocument. |
101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase DocumentDocument. |
101.LAB* | | Inline XBRL Taxonomy Extension Label Linkbase DocumentDocument. |
101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase DocumentDocument. |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* Filed herewith.
** Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | |
| DocGo Inc. |
| | |
Date: AugustMay 8, 20232024 | By: | /s/ Anthony CaponeLee Bienstock |
| | Anthony CaponeLee Bienstock |
| | Chief Executive Officer |
| | | | | | | | |
| | |
Date: AugustMay 8, 20232024 | By: | /s/ Norman Rosenberg |
| | Norman Rosenberg |
| | Chief Financial Officer and Treasurer |