What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-08 compared with 2022-08-09 · 644 added, 568 removed, 168 unchanged (88% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context requires otherwise, references

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business and operations of DocGo Inc.

The following discussion and analysis should be read in conjunction with DocGo’s Condensed

Consolidated Financial Statements and related notes thereto included in this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in conjunction with DocGo’s Unaudited

Condensed Consolidated Financial Statements and related notes thereto included in this Quarterly Report on Form 10-Q.

In addition to historical

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percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in DocGo’s

Condensed Consolidated Financial Statements or in the associated 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, and Section

21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding, among other things, the plans, strategies

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 or expectations.

Generally, statements

that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results

of operations, are forward-looking statements.

These statements may be preceded by, followed by or include the words “believes,”

“estimates,” “expects,” “projects,” “forecasts,” “may,” “will,”

“should,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends”

or similar expressions.

Unaudited Condensed Consolidated Financial Statements or in the associated notes.

Certain other amounts that appear in this section may

similarly not sum due to rounding.

Note Regarding Forward-Looking Statements

Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as

amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding, among other

things, the plans, strategies 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

or expectations.

Generally, statements that are not historical facts, including statements concerning possible or assumed future actions,

business strategies, events or results of operations, are forward-looking statements.

These statements may be preceded by, followed by

or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,”

“may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,”

“intends” or similar expressions.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions.

Additional information

regarding the risks and uncertainties and other important factors that could cause actual results to differ materially from those in the

forward-looking statements is set forth under the heading “Risk Factors” in Part I, Item 1A.

in DocGo’s Annual Report

on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on March

15, 2022 (the “2021 Form 10-K”), and may be updated in this and other subsequent Quarterly Reports on Form 10-Q.

Forward-looking

statements are not guarantees of future performance and speak only as of the date hereof.

We undertake no obligation to update or revise

publicly any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.

DocGo, which was originally

incorporated in 2015, is a healthcare transportation and mobile services company that uses proprietary dispatch and communication technology

to provide quality healthcare transportation and mobile, in-person medical treatment directly to patients in the comfort of their

homes, workplaces and other non-traditional locations, in major metropolitan cities in the U.S.

Additional information regarding the risks and uncertainties and other important factors that could cause actual results to differ materially

from those in the forward-looking statements is set forth under the heading “Risk Factors” in Part I, Item 1A.

Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “SEC”)

on March 15, 2022 (the “2021 Form 10-K”), and may be updated in this and other subsequent Quarterly Reports on Form 10-Q.

Forward-looking statements are not guarantees of future performance and speak only as of the date hereof.

We undertake no obligation

to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise, except

as required by law.

DocGo incorporated in

2015, is a healthcare transportation and mobile services company that uses proprietary dispatch and communication technology to provide

quality healthcare transportation and mobile, in-person medical treatment directly to patients in the comfort of their homes, workplaces

and other non-traditional locations, in major metropolitan cities in the U.S.

Company derives revenue primarily from its two operating segments:

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The services offered by this segment encompass both emergency response and non-emergency ambulance transport services.

Net revenue from Transportation Services is derived from the transportation of patients based on billings to third-party payors and healthcare facilities.

revenue from Transportation Services is derived from the transportation of patients based on billings to third-party payors and healthcare

Mobile Health Services:

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which include on-site healthcare support at sporting events and concerts.

Note 10, “Business Segment Information” to the Condensed Consolidated Financial Statements for additional information regarding

DocGo’s segments.

the three months ended June 30, 2022, the Company recorded net income of $11.8 million, compared to net income of $0.1 million in the

three months ended June 30, 2021.

For the six months ended

June 30, 2022, the Company recorded net income of $21.1 million, compared to a net loss of $1.9 million in the six months ended June 30,

The spread of COVID-19 and the related shutdowns

and restrictions had a mixed impact on our business.

In the ambulance transportation business, which comprises of, non-emergency medical

transport, the Company saw a decline in volumes from historical and expected levels, as elective surgeries and other non-emergency surgical

See Note 10, “Business

Segment Information” to the Unaudited Condensed Consolidated Financial Statements for additional information regarding DocGo’s

For the three months ended September 30, 2022, the Company recorded net

income of $2.5 million, compared to net income of $0.8 million in the three months ended September 30, 2021.

For the nine months ended September 30, 2022, the Company recorded net

income of $23.6 million, compared to a net loss of $1.1 million in the nine months ended September 30, 2021.

The spread of COVID-19 and the related shutdowns and restrictions

had a mixed impact on our business.

In the ambulance transportation business, which comprises primarily of non-emergency medical

transport, the Company initially saw a decline in volumes from historical and expected levels, as elective surgeries and other non-emergency surgical

procedures were postponed.

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events were cancelled or had a significantly restricted (or entirely eliminated) number of permitted attendees.

Both ambulance transports

and event-related revenues have since recovered to pre-COVID levels or higher.

There are two areas where

the Company experienced positive business impacts from COVID-19.

In April and May 2020, the Company participated in an emergency

project with Federal Emergency Management Agency in the New York City area.

This engagement resulted in incremental transportation

revenue that partially offset some of the lost non-emergency transport revenues.

In addition, in response to the need for widespread

COVID-19 testing and available EMTs and paramedics, the Company expanded its operations to include Rapid Reliable Testing (“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 business segment.

Mobile Health generated approximately $87.3 and $177.4 million in revenue in the three and six

months ended June 30, 2022, respectively, as compared to $33.2 and $63.9 million in the three and six months ended June 30, 2021, respectively.

During 2020 and the early

part of 2021, the Company continued to operate with several back-office employees working remotely.

To date, the Company has not

witnessed any degradation in productivity from these employees, the large majority of whom have now returned to their respective offices,

and our operations have proceeded without major interruption.

By early 2021, nearly all remote employees had returned to work in their

respective offices and other locations.

DocGo also utilized several government programs in 2020 related to the pandemic, receiving approximately

$1.0 million in payments through the Public Health and Social Services Emergency Fund authorized under the Coronavirus Aid, Relief

and Economic Security Act and related legislation as well as various state and local programs, net of amounts that will be repaid.

also received accelerated Medicare payments of approximately $2.4 million that were repaid in 2022.

Ambulance transports and

event-related revenues have both since recovered to pre-COVID levels or higher.

are two areas where the Company experienced positive business impacts from COVID-19.

In April and May 2020, the Company participated

in an emergency project with Federal Emergency Management Agency in the New York City area.

This engagement resulted in incremental

transportation revenue that partially offset some of the lost non-emergency transport revenues.

In addition, in response to the

need for widespread COVID-19 testing and available EMTs and paramedics, the Company expanded its operations to include Rapid Reliable

Testing (“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 business segment.

Mobile Health generated approximately $76.6 and $254.1 million

in revenue in the three and nine months ended September 30, 2022, respectively, as compared to $67.9 and $131.7 million in the three

and nine months ended September 30, 2021, respectively.

2020 and the early part of 2021, the Company continued to operate with several back-office employees working remotely.

the Company has not witnessed any degradation in productivity from these employees, the large majority of whom have now returned to their

respective offices, and our operations have proceeded without major interruption.

By early 2021, nearly all remote employees had returned

to work in their respective offices and other locations.

DocGo also utilized several government programs in 2020 related to the pandemic,

receiving approximately $1.0 million in payments through the Public Health and Social Services Emergency Fund authorized under the

Coronavirus Aid, Relief and Economic Security Act and related legislation as well as various state and local programs, net of amounts

that will be repaid.

DocGo also received accelerated Medicare payments of approximately $2.4 million that were repaid in 2022.

While it is very difficult

to accurately predict the future direction of the effects of the COVID-19 pandemic, and the related impact on medical transportation

to accurately predict the future direction of the effects of COVID-19 or other pandemics, and the related impact on medical transportation

levels, the revenue from the Transportation Services segment during 2021 exceeded that of 2020 by approximately 33%.

Since the beginning

of 2021, trip volumes in most of our markets have started to return to more normal historical levels, and this trend has continued into

2022 The Company generated, during 2021, COVID-19 testing revenue, included in its Mobile Health services segment, above the levels

projected, and this persisted in the second quarter of 2022.

Given the nature of the Company’s contracts with most of its customers,

which include multiple procedures for which the Company is paid per hours worked, per vehicles and related equipment utilized and on a

per-procedure basis, it is difficult to determine the revenues that are attributable to COVID-19 testing.

However, the Company estimates

that COVID-19 testing revenue in the three and six months ended June 30, 2022 amounted to approximately $28 million and $66 million, respectively.

of 2021, trip volumes in most of our markets have returned to more normal historical levels, and this trend has continued throughout 2022.

The Company generated, during 2021, COVID-19 testing revenue, included in its Mobile Health services segment, above the levels projected,

and this persisted through the second quarter of 2022.

However, as expected, COVID-19 testing revenues declined in the third quarter of

2022 and are expected to remain at these lower levels for the foreseeable future.

Given the nature of the Company’s contracts with

most of its customers, which include multiple procedures for which the Company is paid per hours worked, per vehicles and related equipment

utilized and on a per-procedure basis (such procedures including both testing and several other procedures), it is difficult to determine

the revenues that are directly attributable to COVID-19 testing.

However, the Company estimates that COVID-19 testing revenue will continue

to account for a declining proportion of Mobile Health segment and overall consolidated revenues over the remainder of 2022 and into 2023.

In a broader, strategic sense, the consumer focus on Mobile Health services and the formation of RRT, and its emergence as a significant

contributor to overall revenues, have accelerated the diversification in the Company’s business by more rapid expansion of the Mobile

Health segment.

Company’s current business plan assumes gradual recovery of industry-wide transportation volumes to historical levels, plus an

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.

However, given the unpredictable, unprecedented, and fluid nature of the pandemic and its economic consequences,

we are unable to predict the duration and extent to which the pandemic and its related positive and negative impacts will affect our

business, financial condition, and results of operations in future periods.

Health segment, which has now become our larger operating segment, both in terms of revenues and personnel.

Company’s current business plan assumes continued recovery of industry-wide transportation volumes to historical levels and beyond,

plus an 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.

However, given the unpredictable, unprecedented, and fluid nature of the pandemic

and its economic consequences, we are unable to predict the duration and extent to which the pandemic and its related positive and negative

impacts will affect our business, financial condition, and results of operations in future periods.

Affecting Our Results of Operations

operating results and financial performance are influenced by a variety of factors, including, among others, obtaining operating licenses,

acquisitions, conditions in the healthcare transportation and mobile health services markets and economic conditions generally, availability

of healthcare professionals, changes in the cost of labor, and production schedules of our suppliers.

Some of the more important factors

are briefly discussed below.

Future revenue growth and improvement in operating results will be largely contingent on DocGo’s ability

to penetrate new markets and further penetrate existing markets, which is subject to a number of uncertainties, many of which are beyond

DocGo’s control.

Our operating results

and financial performance are influenced by a variety of factors, including, among others, obtaining operating licenses, acquisitions,

conditions in the healthcare transportation and mobile health services markets and economic conditions, availability of healthcare professionals,

changes in the cost of labor, and production schedules of our suppliers.

Some of the more important factors are briefly discussed below.

Future revenue growth and improvement in operating results will be largely contingent on DocGo’s ability to penetrate new markets

and further penetrate existing markets, which is subject to a number of uncertainties, many of which are beyond DocGo’s control.

The COVID-19 pandemic has also significantly impacted DocGo’s business, as discussed above.

While the direct impact of the

pandemic itself is waning, other impacts, such as supply chain disruptions and the cost and availability of labor are expected to persist.

has historically pursued a strategy of applying for ambulance operating licenses in the states, counties and cities, identified for future

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companies that may help drive revenue, profitability, cash flow and stockholder value.

DocGo did not complete any acquisitions during

the six months ended June 30, 2022.

During the 12 months ended December 31, 2021, DocGo completed one acquisition, for a purchase

price of $2.3 million, which contributed approximately $0.3 million to 2021 revenues.

During the nine months ended September 30, 2022,

DocGo completed three acquisitions, for an aggregate payment of $34.1 million, excluding $1.3 million held in escrow.

During the 12 months ended December 31, 2021, DocGo completed one acquisition, for a purchase price of

$2.3 million.

On July 6, 2022, the Company acquired Government

Medical Services, LLC (“GMS”) in exchange for $20.3 million in cash.

GMS was engaged in the business of providing licensed healthcare

We believe this acquisition will allow us to increase our presence in that market.

We are currently in the process of finalizing

the accounting for this transaction and expect to complete our preliminary allocation of the purchase consideration to the asset acquired

and liabilities assumed by the end of the third quarter of 2022.

GMS is in the business of providing licensed healthcare

We believe this acquisition will allow us to increase our presence in that market, while giving us improved access to governmental

and municipal contracts.

We have completed our preliminary allocation of the purchase consideration to the asset acquired and liabilities

assumed as of the end of the third quarter of 2022.

On July 13, 2022, the Company acquired Exceptional

Medical Transportation, LLC (“Exceptional”) in exchange for $6.4 million in cash.

Exceptional was in the business of providing

medical transportation services.

We believe this acquisition will allow us to increase our presence in that market.

We are currently in

the process of finalizing the accounting for this transaction and expect to complete our preliminary allocation of the purchase consideration

to the assets acquired and liabilities assumed by the end of the third quarter of 2022.

Services Market

transportation services market is highly dependent on patients requiring transportation after surgeries and other medical procedures

and treatments.

During the pandemic, DocGo experienced a decrease in transportation volumes as a result of fewer elective surgeries.

However, the Company was able to reallocate assets to locations where demand increased as a result of the pandemic.

Economic Conditions in the Markets In Which We Operate

changes both nationally and locally in our markets may impact our financial performance.

Unfavorable changes in demographics, health

care coverage of transportation and mobile health services, interest rates, ambulance manufacturing, a weakening of the national economy

or of any regional or local economy in which we operate and other factors beyond our control could adversely affect our business.

Volumes and Average Trip Price

“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,

it is the best 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.

average trip price is calculated by dividing the aggregate revenue from completed transports (“trips”) by the total number

of transports and is an important indicator of the effective rate at which the Company is being compensated for its provision of Transportation

generated from programs under which DocGo is paid a fixed rate for the use of a fully staffed and equipped ambulance do not factor in

the trip counts or average trip prices mentioned above.

Ability to Control Expenses

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.

our proprietary technology to drive improvements in productivity per transport.

We regularly analyze our workforce productivity to achieve

the optimum, cost-efficient labor mix for our locations.

in April 2021, the inflation rate in the US, as measured by the Consumer Price Index (CPI) has steadily increased.

In 2019, the inflation

rate was approximately 1.8%, while it dropped to approximately 1.2% in 2020.

These data are reported monthly, showing year-over-year

changes in prices across a basket of goods and services.

For 2021, inflation increased from the 1.4%-2.6% range in the first quarter,

to 4.2% in April, and was in the 5.0% area through the end of the third quarter of 2021, before increasing to the 6.0%-7.0% range in

the fourth quarter.

For the full year, the inflation rate was 4.7% in 2021, the highest annual rate since the 5.4% rate recorded in 1990.

The inflation rate continued to increase throughout the first half of 2022, reaching approximately 9.1% in June 2022.

The increased inflation

rate has had an impact on the Company’s expenses in several areas, including wages, fuel and medical and other supplies.

had the impact of compressing gross profit margins, as the Company is generally unable to pass these higher costs on to its customers,

Medical Transportation, LLC (“Exceptional”) in exchange for $6.4 million in cash paid at closing, plus $1.3 million held in

Exceptional is in the business of providing medical transportation services in New Jersey.

We believe this acquisition will allow

us to increase our presence in that market.

We have completed our preliminary allocation of the purchase consideration to the assets acquired

and liabilities assumed as of the end of the third quarter of 2022.

On August 9, 2022, the Company acquired Ryan Brothers

Ambulance Inc.

(“Ryan Brothers”), in exchange for $7.4 million of cash (and a total of $4 million in future contingent consideration).

Ryan Brothers is in the business of providing medical transportation services in Wisconsin.

We believe this acquisition will allow us

to increase our presence in that market.

We have completed our preliminary allocation of the purchase consideration to the assets acquired

and liabilities assumed as of the end of the third quarter of 2022.

Healthcare Services Market

The transportation services market is highly dependent

on patients requiring transportation after surgeries and other medical procedures and treatments.

During the pandemic, DocGo experienced

a decrease in transportation volumes as a result of fewer elective surgeries.

However, the Company was able to reallocate assets to locations

where demand increased as a result of the pandemic.

Overall Economic Conditions

in the Markets In Which We Operate

Economic changes both nationally and locally in

our markets may impact our financial performance.

Unfavorable changes in demographics, health care coverage of transportation and mobile

health services, interest rates, ambulance manufacturing, a weakening of the national economy or of any regional or local economy in which

we operate and other factors beyond our control could adversely affect our business.

Trip Volumes and Average

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.

does not include instances where a trip is ordered and subsequently either canceled (by the customer) or declined (by the Company).

trip volume represents the most basic unit of transportation service provided by the Company, it is the best 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”) by the total number of transports 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 DocGo

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.

Our Ability to Control

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.

We regularly analyze our workforce productivity to achieve the optimum, cost-efficient labor mix for our locations.

Beginning in April 2021, the inflation rate in

the US, as measured by the Consumer Price Index (CPI) has steadily increased.

In 2019, the inflation rate was approximately 1.8%, while

it dropped to approximately 1.2% in 2020.

This data is reported monthly, showing year-over-year changes in prices across a basket of goods

and services.

For 2021, inflation increased from the 1.4%-2.6% range in the first quarter, to 4.2% in April, and was in the 5.0%-6.0%

range through the end of the third quarter of 2021, before increasing to the 6.0%-7.0% range in the fourth quarter.

For the full year,

the inflation rate was 4.7% in 2021, the highest annual rate since the 5.4% rate recorded in 1990.

The inflation rate continued to increase

throughout the first nine months of 2022, reaching approximately 9.1% in June 2022 and amounting to 8.2% in September 2022.

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.

Looking to the second half 2022, we anticipate a moderation of the inflation rate when compared to the

first half of the year but expect that inflation will remain above the levels seen in the previous 10 years, when the annual inflation

rate ranged from 0.1% to 2.4%.

If inflation is above the levels that the Company anticipates in 2022, gross margins could be below plan

and our business, operating results and cash flows may be adversely affected.

in R&D and Enhancing Our Customer Experience

performance is dependent on the investments we make in research and development, including our ability to attract and retain highly skilled

research and development personnel.

We intend to continually develop and introduce innovative new software services, integrate 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 likely be adversely affected.

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.

of Results of Operations

business consists of two reportable segments — Transportation Services and Mobile Health services.

The Company evaluates

the performance of both segments based primarily on results of its operations.

Accordingly, other income and expenses not included in

results from operations are only included in the discussion of consolidated results of operations.

Company’s revenue consists of services provided by its ambulance Transportation Services segment and its Mobile Health segment.

of revenues consists primarily of revenue generating wages paid to employees, vehicle insurance costs (including insurance premiums and

costs incurred under the insurance deductibles), maintenance, and fuel related to Transportation Services, and laboratory fees, facility

rent, medical supplies and subcontractors.

We expect cost of revenue to continue to rise in proportion to the expected increase in revenue.

In an attempt to dampen inflation, the U.S.

Federal Reserve has already implemented six interest rate

increases in 2022, raising its benchmark rate (the “federal funds rate”) from near 0.00% at the beginning of the year to the

current level of 3.75%-4.00%.

The federal funds rate was raised in March, May, June, July, September and November, with the last four

rate increases at 0.75% each.

Looking to the fourth quarter of 2022 and into 2023, we anticipate a moderation of the inflation rate when

compared to the first half of the year, as a result of these recent rate increases but expect that inflation will remain well above the

levels seen in the previous 10 years, when the annual inflation rate ranged from 0.1% to 2.4%, and above the Federal Reserve’s “target”

inflation rate of 2.0%.

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.

Investing in R&D

and Enhancing Our Customer Experience

Our performance is dependent on the investments

we make in research and development, including our ability to attract and retain highly skilled research and development personnel.

intend to continually develop and introduce innovative new software services, integrate 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

likely be adversely affected.

Regulatory Environment

DocGo 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.

Components of Results

of Operations

Our business consists of two reportable segments — Transportation

Services and Mobile Health services.

The Company evaluates the performance of both segments based primarily on results of its operations.

Accordingly, other income and expenses not included in results from operations are only included in the discussion of consolidated results

of operations.

The Company’s revenue consists of services

provided by its ambulance Transportation Services segment and its Mobile Health segment.

Cost of Revenues

Cost of revenues consists primarily of revenue

generating wages paid to employees, vehicle insurance costs (including insurance premiums and costs incurred under the insurance deductibles),

maintenance, and fuel related to Transportation Services, and laboratory fees, facility rent, medical supplies and subcontractors.

expect cost of revenue to continue to rise in proportion to the expected increase in revenue.

Operating Expenses

General and Administrative

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 scale up headcount with the growth of our

business, and as a result of operating as a public company, including compliance with SEC rules and regulations, audit, additional insurance

expenses, investor relations activities, and other administrative and professional services.

and Amortization

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.

General and administrative expense consists primarily

of salaries, bad debt expense, insurance expense, consultant fees, and professional fees for accounting and legal services.

our general and administrative expense to increase as we continue to scale up headcount with the growth of our business, and as a result

of operating as a public company, including compliance with SEC rules and regulations, audit, additional insurance expenses (such as Directors

and Officers insurance), investor relations activities, and other administrative and professional services.

Depreciation and Amortization

DocGo 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

and regulatory expenses include legal fees, consulting fees related to healthcare compliance, claims processing fees and legal settlements.

Legal and regulatory

expenses include legal fees, consulting fees related to healthcare compliance, claims processing fees and legal settlements.

Technology and Development

and development expense, net of capitalization, consists primarily of cost incurred in the design and development of DocGo’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 platform and drive

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.

Technology and development

expense, net of capitalization, consists primarily of cost incurred in the design and development of DocGo’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 platform and drive 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

sales 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.

We expect that our sales and marketing expenses will continue

to increase over time as we increase our marketing activities, grow our domestic and international operations, and continue to build

brand awareness.

expense consists primarily of interest on our outstanding borrowings under our outstanding notes payable and financing obligations.

of Operations

Comparison of the three months ended June 30, 2022 and 2021

Our sales 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.

We expect that our sales and marketing expenses will continue to increase over time

as we increase our marketing activities, grow our domestic and international operations, and continue to build brand awareness.

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, lines of credit and financing obligations.

Results of Operations

Comparison of the three months ended September 30, 2022 and 2021

Three Months Ended

September 30,

$ in Millions

12 unchanged sentences

Gain (loss) on initial equity method investments

Gain on remeasurement of finance leases

Gain (loss) from Lease Accounting

Loss on disposal of fixed assets

7 unchanged sentences

and Subsidiaries

the three months ended June 30, 2022, total revenues were $109.5 million, an increase of $47.3 million, or 76%, from the total revenues

recorded in the three months ended June 30, 2021.

Transportation

For the three months ended June 30, 2022, Transportation

Services revenue totaled $22.2 million and decreased by $6.7 million, or 23%, as compared with the three months ended June 30, 2021.

decrease in total transportation services revenue reflected a decline in project-based “standby” revenue, as these projects,

which involved emergency deployments for different municipal entities and which began during the first half of 2021, gradually wound down

during the second half of 2021.

Emergency deployment revenue amounted to $2.0 million in the three months ended June 30, 2022, compared

to $10.2 million in the same period in 2021.

Excluding these revenues from both periods, core Transportation Services revenue increased

by approximately 8% during the three months ended June 30, 2022, when compared with the three months ended June 30, 2021.

This increase

was due to increases in both transportation trip volumes and the average price per trip.

Volumes increased by approximately 5%, from 45,592

trips for the three months ended June 30, 2021, to 47,673 trips for the three months ended June 30, 2022.

The increase in trip volumes

is due to a combination of growth in the customer base in certain core markets and entry into new markets in 2021 and early 2022.

average trip price increased from $305 in the three months ended June 30, 2021, to $360 in the three months ended June 30, 2022.

in the average trip price in 2022 reflected a shift in mix toward higher-priced transports, as well as a shift in the customer (payer)

mix towards higher-priced transports.

For the three months ended September 30, 2022,

total revenues were $104.3 million, an increase of $18.5 million, or 22%, from the total revenues recorded in the three months ended September

Transportation Services

For the three months ended September 30, 2022,

Transportation Services revenue totaled $27.7 million and increased by $9.8 million, or 55%, as compared with the three months ended September

The increase in transportation services revenue reflected higher trip volumes and average trip prices.

Volumes increased by

approximately 29%, from 45,532 trips for the three months ended September 30, 2021, to 58,751 trips for the three months ended September

The increase in trip volumes is 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 third quarter of 2022.

Our average trip price increased from $303 in the three months

ended September 30, 2021, to $374 in the three months ended September 30, 2022.

The increase in the average trip price in 2022 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 a 5.1% increase in the average Medicare reimbursement

rate for ambulance transports.

Transportation Services revenues were also driven higher in the second quarter of 2022 by a $0.4 million

increase in revenues generated from programs under which the Company is paid a daily or hourly rate for the use of a fully staffed and

equipped ambulance.

These services do not factor in the trip counts or average trip prices mentioned above.

the three months ended June 30, 2022, Mobile Health revenue totaled $87.3 million, an increase of $54.1 million, or 163%, as compared

with the three months ended June 30, 2021.

This significant increase was mainly due to the expansion of the services offered by this

segment, particularly with respect to COVID-19 related testing and vaccination and other healthcare services revenues included in the

Mobile Health segment.

This expansion accelerated through 2021 and into 2022 as the Company increased its customer base, primarily in

the municipal and cruise line customer segments, and its geographic reach, while extending several large customer contracts and introducing

a broader range of services.

the three months ended June 30, 2022, total cost of revenue (exclusive of depreciation and amortization) increased by 71%, as compared

to the three months ended June 30, 2021, while revenue increased by approximately 76%.

Cost of revenue as a percentage of revenue decreased

to 64.1% in the second quarter of 2022 from 66.0% in the second quarter of 2021.

In October 2022, the Centers for Medicare and Medicaid Services (CMS) announced that the Medicare ambulance

fee schedule would be increasing by a further 8.7%, effective January 1, 2023.

Mobile Health

For the three months ended September 30, 2022, Mobile Health revenue

totaled $76.6 million, an increase of $8.7 million, or 13%, as compared with the three months ended September 30, 2021.

This increase

was mainly due to the expansion of the services offered by this segment.

This expansion accelerated through 2021 and into 2022 as the

Company increased its customer base, primarily in the municipal and cruise line customer segments, and its geographic reach, while extending

several large customer contracts and introducing a broader range of services.

Compared to the prior year period, the third quarter of

2022 featured significantly less COVID-19 testing revenue, which was outweighed by the substantial increase in other Mobile Health services.

Cost of Revenue

For the three months ended September 30, 2022,

total cost of revenue (exclusive of depreciation and amortization) increased by 19%, as compared to the three months ended September 30,

2021, while revenue increased by approximately 22%.

Cost of revenue as a percentage of revenue decreased to 68.3% in the third quarter

of 2022 from 69.9% in the third quarter of 2021.

In absolute dollar terms, total cost of revenue

in the three months ended June 30, 2022 increased by $29.2 million, compared to the same period in 2021.

in the three months ended September 30, 2022 increased by $11.3 million, compared to the same period in 2021.

This was primarily attributable

to a $22.7 million increase in total compensation, due to higher headcount for both the Transportation Services and Mobile Health segments

a $9.0 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, temporarily causing the Company to rely increasingly on subcontracted

a $1.9 million increase in medical supplies, due to the purchase of COVID-19 test kits and the need for increased personal protective

equipment (“PPE”) and related supplies, a $1.7 million increase in vehicle costs, driven by a continued increase in the Company’s

vehicle fleet and higher fuel and maintenance costs, as well as costs incurred to rent vehicles to provide Mobile Health services;

million increase in travel costs, relating to field personnel and other clinicians who traveled out of their home regions to provide Mobile

Health services;

a $0.4 million increase in facilities and related costs;

and an approximately $1.1 million in increases across a variety

of other cost of revenue categories relating to the Company’s increased scale and geographic presence.

These items were partially

offset by a $5.0 million decrease in lab fees related to COVID-19 testing activity, reflecting lower per-test lab fees and a shift toward

and higher average hourly wages;

a $2.8 million increase in vehicle costs, driven by a continued increase in the Company’s vehicle

fleet and higher fuel and maintenance costs, as well as costs incurred to rent vehicles to provide Mobile Health services;

a $0.5 million

increase in facilities and related costs;

and approximately $0.4 million in increases across a variety of other cost of revenue categories

relating to the Company’s increased scale and geographic presence.

These items were partially offset by a $9.1 million decrease

in lab fees related to COVID-19 testing activity, reflecting lower reduced testing activity, lower per-test lab fees and a shift toward

a $5.3 million decrease in subcontracted labor, driven mostly by the Mobile Health segment, where the Company continues to

transition away from external labor sources towards its own hired personnel;

a $0.4 million decline in medical supplies, reflecting a

decline in COVID-19 testing activity and improved sourcing of various supplies and a $0.3 million decline in travel costs, as there were

fewer field personnel and other clinicians who traveled out of their home regions to provide Mobile Health services.

For the Transportation Services segment, cost

of revenues (exclusive of depreciation and amortization) in the three months ended June 30, 2022 amounted to $17.7 million, up $0.4 million,

or 2.3%, from the three months ended June 30, 2021.

Cost of revenues as a percentage of revenues increased to 80% from 60% in prior year

quarter, due to the decline in higher-margin, project-based standby revenue, combined with the impact of higher hourly wages in certain

markets and increased overtime for field employees, and increased fuel costs, as described above.

of revenues (exclusive of depreciation and amortization) in the three months ended September 30, 2022 amounted to $21.3 million, up $4.6

million, or 28%, from the three months ended September 30, 2021.

Cost of revenues as a percentage of revenues decreased to 76.8% from

92.9% in prior year quarter, due to increased volumes and higher average trip prices, as described above, combined with lower average

hourly wages, as recent market wage pressures began to subside, and as the Company more effectively managed its staff to reduce overtime

hours for field employees.

These factors outweighed the effects of increased fuel costs.

Gasoline prices moderated somewhat during the

third quarter, as compared to the levels witnessed in the second quarter of 2022, but remained well above the levels of the second quarter

We anticipate that fuel prices will remain at elevated levels for the remainder of 2022.

For the Mobile Health segment, cost of revenues

(exclusive of depreciation and amortization) in the three months ended June 30, 2022 amounted to $52.5 million up 120% from $23.9 million

in the three months ended June 30, 2021.

Cost of revenues as a percentage of revenues decreased to 60.1% from 72.0%, due to the increase

in revenues, lower average per-test lab fees and the continued shift away from higher-cost subcontracted labor toward Company personnel

in the first half of 2022, which outweighed significant increases in medical and general supply costs, as described above.

(exclusive of depreciation and amortization) in the three months ended September 30, 2022 amounted to $50.0 million up 15% from $43.4

million in the three months ended September 30, 2021.

Cost of revenues as a percentage of revenues increased to 65.2% from 63.9%, despite

the increase in revenues and the continued shift away from higher-cost subcontracted labor toward Company personnel during 2022, reflecting

higher compensation costs associated with some of the Company’s newer projects.

Operating Expenses

For the three months ended June 30, 2022, the

Company recorded $31.8 million of operating expenses compared to $20.9 million for the three months ended June 30, 2021, an increase of

As a percentage of revenue, operating expenses declined from 33.6% in the second quarter of 2021 to 29.0% in the second quarter of

2022, due primarily to the significant increase in overall revenues described above, coupled with the semi-fixed nature of the cost of

corporate infrastructure.

The increase of $10.9 million related primarily to a $5.3 million increase in payroll due to investments in

and expansion of corporate infrastructure to support revenue growth;

a $2.8 million increase in legal, accounting and other professional

fees related to increased revenue and related contract generation, directors and officers’ insurance and SEC filing-related costs;

a $0.9 increase in subcontractor costs, reflecting the Company’s increasing administrative needs;

a $0.1 million increase in depreciation

and amortization due to an increase in assets to support revenue growth and capitalized software amortization;

a $0.3 million increase

in office-related expenses, due to the Company’s ongoing growth and geographic expansion;

a $0.3 million increase in IT infrastructure,

driven by the Company’s business and headcount expansion;

a $0.1 million increase in bad debt expense;

and a $1.1 million increase

across various other operating expense categories, driven primarily by the Company’s ongoing growth.

For the three months ended September 30, 2022, the

Company recorded $28.8 million of operating expenses compared to $24.4 million for the three months ended September 30, 2021, an increase

As a percentage of revenue, operating expenses declined from 28.3% in the third quarter of 2021 to 27.7% in the third quarter

of 2022, due primarily to the increase in overall revenues described above, coupled with the semi-fixed nature of the cost of corporate

infrastructure.

The increase of $4.4 million related primarily to a $2.0 million increase in legal, accounting and other professional

fees related to increased revenue and related contract generation and SEC filing-related costs;

a $1.2 million increase in insurance costs

reflecting the growth and expansion of the Company, as well as the inclusion of directors and officers (D&O) insurance;

a $1.1 million

increase in depreciation and amortization due to an increase in assets to support revenue growth and capitalized software amortization,

including from recently acquired companies;

a $0.3 million increase in office-related expenses, due to the Company’s ongoing growth

and geographic expansion;

a $0.6 million increase in IT infrastructure, driven by the Company’s business and headcount expansion.

These items were partially offset by a $0.8 million decline in total compensation, which includes salaries, benefits, bonuses and commissions

for both direct and subcontracted labor, reflecting savings from the outsourcing of certain administrative functions.

The Company anticipates

that operating expenses will continue to increase in line with the Company’s revenue growth remain in the range of 25%-30% of revenue

in the coming quarters.

For the Transportation Services segment, operating

expenses in the three months ended June 30, 2022 were $23.9 million, up $12.0 million, or 101%, from the three months ended June 30, 2021.

Operating expenses as a percentage of revenues increased to 107.7% from 41.2% for the three months ended June 30, 2021, due primarily

to a significant increase in corporate infrastructure, all of which is allocated to the Transportation Services segment.

The increased

operating expenses, in dollar terms, in the three and six months ended June 30, 2022, primarily reflected higher costs for payroll, travel

and entertainment, professional fees and depreciation, as described above.

For the Mobile Health segment, operating expenses in the three months

ended June 30, 2022 were $7.9 million, down 6.0% from operating expenses of $8.4 million in the three months ended June 30, 2021.

expenses as a percentage of revenues decreased to 9.1% from 25.3% in the second quarter of 2021, reflecting the rapid rate of increase

in Mobile Health revenues.

Significant expenditures were made in both periods in the expansion of services and geographic areas of operation,

as well as the buildout of the Mobile Health management infrastructure.

The prior year’s quarter featured significant start-up costs

for projects that began to generate revenues during the second half of 2021 and into 2022.

expenses in the three months ended September 30, 2022 were $10.6 million, down $2.2 million, or 17%, from the three months ended September

Operating expenses as a percentage of revenues decreased to 38.6% from 71.3% for the three months ended September 30, 2021,

reflecting the increase in revenues and overhead cost-cutting activities undertaken during the earlier part of 2022, as well as lower

insurance costs, due to the establishment earlier this year of the Company’s captive insurance program.

For the Mobile Health segment, operating expenses

in the three months ended September 30, 2022 were $18.2 million, up 56% from operating expenses of $12.8 million in the three months ended

September 30, 2021.

Operating expenses as a percentage of revenues increased to 23.8% from 17.2% in the third quarter of 2021, despite

the increase in Mobile Health revenues, reflecting significant expenditures that were made in the 2022 period 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.

Interest Income/(Expense), Net

For the three months ended June 30, 2022, the

Company recorded $98,276 of net interest income compared to $130,129 of net interest expense in the three months ended June 30, 2021.

This was due to a significantly higher amount of interest earned in the second quarter of 2022, resulting from an increase in the Company’s

cash balances in income-bearing accounts, coupled with higher rates of interest earned on balances in these accounts.

For the three months ended September 30, 2022,

the Company recorded $0.3 million of net interest income compared to $0.3 million of net interest expense in the three months ended September

This was due to a significantly higher amount of interest earned in the third quarter of 2022, resulting from an increase in

the Company’s cash balances in interest-bearing accounts, coupled with higher rates of interest earned on balances in these accounts.

Gain from PPP Loan Forgiveness

During the three months ended September 30, 2021,

the Company recorded a gain of $142,667 due to the forgiveness of a loan that one of its subsidiaries had obtained via the government’s

Paycheck Protection Program (PPP) in 2020.

No gain from loan forgiveness was recorded during the three months ended September 30, 2022.

Gain/(loss) on Remeasurement of Warrant Liabilities

During the three months ended June 30, 2022, the

Company recorded a gain of approximately $3.0 million from the remeasurement of warrant liabilities.

During the three months ended September 30, 2022,

the Company recorded a loss of approximately $1.8 million from the remeasurement of warrant liabilities.

The warrants are marked-to-market

in each reporting period, and this gain reflected the decline in DocGo’s stock price relative to the beginning of the period.

gain or loss was recorded in relation to the remeasurement of warrant liabilities in the same period in 2021.

in each reporting period, and this loss reflected the increase in DocGo’s stock price relative to the beginning of the period.

were no warrant liabilities in the same period in 2021.

On August 15, 2022, the Company announced the redemption of all of its outstanding

warrants under the Warrant Agreement, dated as of October 14, 2020, by and between Motion Acquisition Corp.

(“Motion”) and

Continental Stock Transfer & Trust Company, as warrant agent, as part of the units sold in Motion’s initial public offering,

on the redemption date of September 16, 2022 (the “Redemption Date”).

Warrants surrendered for exercise on a cashless basis

resulted in the issuance of 1,406,371 shares.

A total of 68,514 warrants were not surrendered on the Redemption Date and were redeemed

for $0.10 per warrant.

Gain/(Loss) on Equity Method Investment

During the three months ended June 30, 2022, the

Company recorded a gain of $89,810, representing its share of the losses incurred by an entity in which the Company has a minority interest,

which is accounted for under the equity method.

This investment was made in the second half of 2021, and as such, no gain or loss was

recorded in relation to an equity method investment in the same period in 2021.

Gain/(loss) from Remeasurement of Finance

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

No such gain or loss was recorded in the same period in 2021.

During the three months ended September 30, 2022,

the Company recorded a gain of $93,371, representing its share of the losses incurred by an entity in which the Company has a minority

interest, which is accounted for under the equity method.

This investment was made in the fourth quarter of 2021, and as such, no gain

or loss was recorded in relation to an equity method investment in the same period in 2021.

Income Tax (Expense)/Benefit

During the three months ended

June 30, 2022, the Company recorded income tax expense of $321,660, compared to an income tax benefit of $1,107 in the three months ended

June 30, 2021.

The increase in income tax expense resulted from the higher level of pretax income as well as state income taxes in jurisdictions

the Company entered during the past year.

During the three months ended September 30, 2022,

the Company recorded income tax expense of $0.4 million, compared to an income tax expense of $0.6 million in the three months ended September

Noncontrolling Interest

For the three months ended June 30, 2022, the

Company had a net loss attributable to noncontrolling interest of approximately $1.0 million, compared to a net gain attributable to noncontrolling

interest of $1.7 million for the three months ended June 30, 2021.

The loss reflected ongoing investments in new markets that were entered

into during 2021 and the first quarter of 2022.

For the three months ended September 30, 2022,

the Company had a net loss attributable to noncontrolling interest of approximately $0.7 million, compared to a net loss attributable

to noncontrolling interest of $2.7 million for the three months ended September 30, 2021.

The loss reflected ongoing investments in new

markets that were entered into during 2021 and 2022, partially offset by income generated by other markets.

Comparison of the

six months ended June 30, 2022 and 2021

Six Months Ended

nine months ended September 30, 2022 and 2021

Nine Months Ended

September 30,

$ in Millions

13 unchanged sentences

Gain on remeasurement of finance leases

Loss on disposal of fixed assets

Gain/(loss) on disposal of fixed assets

Other income (loss)

6 unchanged sentences

and Subsidiaries

For the six months ended June 30, 2022,

total revenues were $227.4 million, an increase of $115.8 million, or 104%, from the total revenues recorded in the six months ended June

For the nine months ended September 30, 2022,

total revenues were $331.7 million, an increase of $134.3 million, or 68%, from the total revenues recorded in the nine months ended September

Transportation Services

For the six months ended June 30, 2022,

Transportation Services revenue totaled $50.0 million, an increase of $2.3 million, or 4.8%, as compared with the six months ended

June 30, 2021.

For the nine months ended September 30, 2022,

Transportation Services revenue totaled $77.6 million, an increase of $12.0 million, or 18%, as compared with the nine months ended September

This increase was due to a rise in both transportation trip volumes and the average price per trip.

Volumes increased

by approximately 5%, from 91,604 trips for the six months ended June 30, 2021, to 96,260 trips for the six months ended June 30,

The increase in trip volumes is due to a combination of growth in the customer base in certain core markets and entry into new

markets in 2021 and early 2022.

Average trip price increased from $294 in the six months ended June 30, 2021, to $357 the six months

ended June 30, 2022.

The increase in the average trip price in the 2022 period was due to a shift in mix toward higher-priced

transports, as well as a shift in the customer (payer) mix towards higher-priced transports.

The average trip price also benefited

from a 5.1% increase in the average Medicare reimbursement rate for ambulance transports.

The increase in trip-based Transportation

Services revenues were largely offset by a decline in project-based “standby” revenue, as these projects, which involved

emergency deployments for different municipal entities and which began during the first half of 2021, gradually wound down during

the second quarter of 2022.

Emergency deployment revenue amounted to $10.3 million in the six months ended June 30, 2022, compared

to $12.3 million in the first six months of 2021.

Excluding these revenues from both periods, core Transportation Services revenue

increased by approximately 12.1% in the six months ended June 30, 2022, when compared with the six months ended June 30, 2021.

Transportation Services revenues were also driven higher in the first six months of 2022 by a $1.5 million increase in revenues

generated from programs under which the Company is paid a daily or hourly rate for the use of a fully staffed and equipped

These services do not factor in the trip counts or average trip prices mentioned above.

Volumes increased by approximately

13%, from 137,136 trips for the nine months ended September 30, 2021, to 154,534 trips for the nine months ended September 30, 2022.

increase in trip volumes is due to a combination of growth in the customer base in certain core markets and entry into new markets in

2022, as well as acquisitions made during the third quarter of 2022.

Average trip price increased from $297 in the nine months ended September

30, 2021, to $362 the nine months ended September 30, 2022.

The increase in the average trip price in the 2022 period was due to 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 a 5.1% increase in the average Medicare reimbursement

rate for ambulance transports.

Mobile Health

For the six months ended June 30, 2022, Mobile

Health revenue totaled $177.4 million, an increase of $113.5 million, or 178%, as compared with the six months ended June 30, 2021.

significant increase was mainly due to the expansion of the services offered by this segment, particularly with respect to COVID-19 related

testing and vaccination and other healthcare services revenues included in the Mobile Health segment.

This expansion accelerated through

2021 and into 2022 as the Company increased its customer base and geographic reach, while extending several large customer contracts and

introducing a broader range of services.

For the nine months ended September 30, 2022,

Mobile Health revenue totaled $254.1 million, an increase of $122.3 million, or 93%, as compared with the nine months ended September

This significant increase was mainly due to the expansion of the services offered by this segment, particularly with respect

to COVID-19 related testing and vaccination and other healthcare services revenues included in the Mobile Health segment.

This expansion

accelerated through 2021 and into 2022 as the Company increased its customer base and geographic reach, while extending several large

customer contracts and introducing a broader range of services.

However, during the third quarter of 2022, COVID-19 testing revenue declined

significantly, as expected, but these declines were outweighed by an expansion of the Company’s Mobile Health customer base and

broadening of the range of services provided.

Cost of Revenue

For the six months ended June

30, 2022, total cost of revenue (exclusive of depreciation and amortization) increased by 93% as compared to the six months ended June

For the nine months ended September 30, 2022,

total cost of revenue (exclusive of depreciation and amortization) increased by 60% as compared to the nine months ended September 30,

2021, while revenue increased by approximately 68%.

Cost of revenue as a percentage of revenue decreased to 65.2% in the first six

months of 2022 from 68.9% in the first six months of 2021.

Cost of revenue as a percentage of revenue decreased to 66.1% in the first nine months

of 2022 from 69.4% in the first nine months of 2021.

In absolute dollar terms, total cost of revenue

in the six months ended June 30, 2022 increased by $71.3 million from the prior year period.

This was primarily attributable to an $29.8

million increase in total compensation, reflecting higher headcount for both the Transportation Services and Mobile Health segments;

$31.6 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, temporarily causing the Company to rely increasingly on subcontracted

a $8.4 million increase in medical supplies, due to the purchase of COVID-19 test kits and the need for increased PPE and related

supplies, and the increased cost thereof as a result of increased demand during the pandemic;

a $4.8 million increase in vehicle costs,

driven by a continued increase in the Company’s vehicle fleet and higher fuel and maintenance costs;

a $0.6 million increase in

facilities and related expenses, due to the Company’s geographic expansion;

a $0.2 million increase in communications costs, driven

by the increased number of Company employees operating in the field;

a $2.4 million increase in travel expenses, relating to field personnel

and other clinicians who traveled out of their home regions to provide Mobile Health services;

a $2.3 million increase in insurance expenses,

reflecting an increase in loss reserves, commensurate with the increase in the Company’s business, headcount and vehicle fleet;

and an increase of $0.6 million distributed among a variety of other cost of revenue items.

These items were partially offset by a $9.4

million decrease in lab fees related to COVID-19 testing activity, reflecting lower per-test lab fees, and a shift toward rapid tests.

in the nine months ended September 30, 2022 increased by $82.3 million from the prior year period.

This was primarily attributable to

a $52.5 million increase in total compensation, reflecting higher headcount for both the Transportation Services and Mobile Health segments,

coupled with higher average hourly wages;

a $26.3 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, temporarily causing

the Company to rely increasingly on subcontracted labor, particularly in the first six months of 2022;

an $8.0 million increase in medical

supplies, due to the purchase of COVID-19 test kits and the need for increased PPE and related supplies, and the increased cost thereof

as a result of increased demand during the pandemic;

a $9.9 million increase in vehicle costs, driven by a continued increase in the Company’s

vehicle fleet and higher fuel and maintenance costs;

a $1.1 million increase in facilities and related expenses, due to the Company’s

geographic expansion;

a $2.1 million increase in travel expenses, relating to field personnel and other clinicians who traveled out of

their home regions to provide Mobile Health services;

and an increase of $0.9 million distributed among a variety of other cost of revenue

These items were partially offset by an $18.5 million decrease in lab fees related to COVID-19 testing activity, reflecting lower

per-test lab fees, and a shift toward rapid tests.

For the Transportation Services segment, cost

of revenues (exclusive of depreciation and amortization) in the six months ended June 30, 2022 amounted to $ 39.2 million, up $7.2 million,

or 22.5%, from the six months ended June 30, 2021.

Cost of revenues as a percentage of revenues increased to 78.4% in the first six months

of 2022 from 67.1% in the prior year period, due to the decline in higher-margin, project-based standby revenue, combined with the impact

of higher hourly wages in certain markets and increased overtime for field employees, and increased fuel costs, as described above.

of revenues (exclusive of depreciation and amortization) in the nine months ended September 30, 2022 amounted to $ 60.4 million, up $11.8

million, or 24.4%, from the nine months ended September 30, 2021.

Cost of revenues as a percentage of revenues increased to 77.8% in the

first nine months of 2022 from 74.1% in the prior year period, due to the decline in higher-margin, project-based standby revenue, combined

with the impact of higher hourly wages in certain markets and increased overtime for field employees during the first half of 2022 and

increased fuel costs, as described above.

For the Mobile Health segment, cost of revenues

(exclusive of depreciation and amortization) in the six months ended June 30, 2022 amounted to $109.0 million, up 142%, from $ 45.1 million

in the six months ended June 30, 2021.

Cost of revenues as a percentage of revenues decreased to 61.4% from 70.6%, due to the increase

in revenues, lower average per-test lab fees and the increased number of higher-margin, hourly-based programs in the first half of 2022,

which outweighed the increased use of higher cost subcontracted labor and significant increases in medical and general supply costs, as

described above.

(exclusive of depreciation and amortization) in the nine months ended September 30, 2022 amounted to $159.0 million, up 79.7%, from $

88.5 million in the nine months ended September 30, 2021.

Cost of revenues as a percentage of revenues decreased to 62.6% from 67.1%,

due to the increase in revenues, lower average per-test lab fees and the increased number of higher-margin, hourly-based programs in the

first half of 2022, which outweighed the increased use of higher cost subcontracted labor and significant increases in medical and general

supply costs, as described above.

During the third quarter of 2022, subcontracted labor costs declined, reflecting the ongoing transition

of the company’s human resources base to Company-employed staff, reducing the reliance on higher-cost subcontracted labor.

Operating Expenses

For the six months ended June 30, 2022, the Company recorded $61.7

million of operating expenses compared to $36.3 million for the six months ended June 30, 2021, an increase of 70.0%.

As a percentage

of revenue, operating expenses decreased from 32.5% in the first six months of 2021 to 27.1% in the first six months 2022, due primarily

to the significant increase in overall revenues described above, coupled with the semi-fixed nature of the cost of corporate infrastructure.

The increase of $25.3 million related primarily to a $15.2 million increase in payroll due to investments in and expansion of corporate

infrastructure to support the revenue growth;

a $0.4 million increase in travel and entertainment expenses, reflecting both the growth

of the overall employee base, as well as increased business development related activities for both the Transportation Services and Mobile

Health segments;

a $0.7 million increase in depreciation and amortization due to an increase in assets to support revenue growth and capitalized

software amortization;

a $3.9 million increase in legal, accounting and other professional fees related to increased revenue and related

contract generation, directors and officers’ insurance and SEC filing-related costs;

a $0.9 million increase in office-related expenses,

owing to the Company’s ongoing growth and geographic expansion;

a $0.9 million increase in IT infrastructure, driven by the Company’s

business and headcount expansion;

a $0.3 million increase in marketing expenses, primarily owing to the ongoing expansion of Mobile Health

a $0.6 million increase in bad debt expense, in line with the increase in overall revenues during the period;

For the nine months ended September 30, 2022,

the Company recorded $90.5 million of operating expenses compared to $60.5 million for the nine months ended September 30, 2021, an increase

As a percentage of revenue, operating expenses decreased from 30.6% in the first nine months of 2021 to 27.3% in the first nine

months 2022, due primarily to the significant increase in overall revenues described above, coupled with the semi-fixed nature of the

cost of corporate infrastructure.

The increase of $30.0 million related primarily to a $16.7 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;

a $0.8 million increase in travel and entertainment expenses, reflecting both the growth of the overall employee base,

as well as increased business development related activities for both the Transportation Services and Mobile Health segments;

a $1.9 million

increase in subcontractor expenses, in line with the expanding administrative needs of the Company;

and approximately $1.3 million in

other increases spread across a variety of other operating expense lines.

For the Transportation Services segment, operating expenses in the

six months ended June 30, 2022 were $39.6 million, up $19.1 million, or 92.6%, from the six months ended June 30, 2021.

Operating expenses

as a percentage of revenues increased to 79.1% from 43.1% for the six months ended June 30, 2021, despite the increase in Transportation

Services revenues, due to a significant increase in corporate infrastructure, all of which is allocated to the Transportation Services

The increased operating expenses, in dollar terms, in the six months ended June 30, 2022 primarily reflected higher costs for

payroll, travel and entertainment, professional fees and depreciation, as described above.

For the Mobile Health segment, operating

expenses in the six months ended June 30, 2022 were $22.1 million, up 42.5%, from operating expenses of $15.5 million in the six

months ended June 30, 2021.

Operating expenses as a percentage of revenues decreased to 12.4% from 24.2% in the first half of 2021,

despite significant expenditures made in the expansion of services and geographic areas of operation, as well as the buildout of the

Mobile Health management infrastructure throughout 2021 and the early part of 2022, due to the faster rate of increase in Mobile

Health revenues.

The increased operating expenses, in dollar terms, in 2021 were primarily driven by higher costs for payroll,

subcontracted labor costs, travel and entertainment, marketing and IT infrastructure, and facilities costs, as described above.

six months ended June 30, 2021 featured significant start-up costs for projects that began to generate revenues during the second

half of 2021 and into 2022.

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 $5.8 million increase in legal, accounting and other professional fees related to increased

revenue and related contract generation and SEC filing-related costs;

a $0.9 million increase in office-related expenses, owing to the

Company’s ongoing growth and geographic expansion;

a $1.5 million increase in IT infrastructure, driven by the Company’s business

and headcount expansion;

a $0.4 million increase in marketing expenses, primarily owing to the ongoing expansion of Mobile Health services;

a $0.6 million increase in bad debt expense, in line with the increase in overall revenues during the period;

and approximately $1.4 million

in other increases spread across a variety of other operating expense lines.

For the Transportation Services segment, operating

expenses in the nine months ended September 30, 2022 were $50.2 million, up $16.9 million, or 50.8%, from the nine months ended September

Operating expenses as a percentage of revenues increased to 64.6% from 50.8% for the nine months ended September 30, 2021, despite

the increase in Transportation Services revenues, due to a significant increase in corporate infrastructure, the bulk of which is allocated

to the Transportation Services segment.

The increased operating expenses, in dollar terms, in the nine months ended September 30, 2022

primarily reflected higher costs for payroll, travel and entertainment, professional fees and depreciation, as described above.

For the Mobile Health segment, operating expenses

in the nine months ended September 30, 2022 were $40.3 million, up 48.2%, from operating expenses of $27.2 million in the nine months

ended September 30, 2021.

Operating expenses as a percentage of revenues decreased to 15.9% from 20.6% in the first nine months of 2021,

despite significant expenditures made in the expansion of services and geographic areas of operation, as well as the buildout of the Mobile

Health management infrastructure throughout 2021 and the first nine months of 2022, due to the faster rate of increase in Mobile Health

The increased operating expenses, in dollar terms, in 2022 were primarily driven by higher costs for payroll, subcontracted

labor costs, travel and entertainment, marketing and IT infrastructure, and facilities costs, as described above.

Interest Income/(Expense), Net

For the six months ended June 30, 2022, the Company recorded $37,330

of net interest expense compared to $245,138 of net interest expense in the six months ended June 30, 2021.

The decline in net interest

expense was due to a significantly higher amount of interest earned in the first six months of 2022, resulting from an increase in the

Company’s cash balances in income-bearing accounts, coupled with higher rates of interest earned on balances in these accounts.

This was partially offset by an increase in payments made for leased vehicles, as the Company’s fleet expanded.

For the nine months ended September 30, 2022,

the Company recorded $0.3 million of net interest income compared to $0.5 million of net interest expense in the nine months ended September

The shift from net interest expense in the prior year period to interest income in the current year period was due to a significantly

higher amount of interest earned in the first nine months of 2022, resulting from an increase in the Company’s cash balances in

interest-bearing accounts, coupled with higher rates of interest earned on balances in these accounts.

This was partially offset by an

increase in payments made for new leased vehicles, as the Company’s fleet expanded.

Gain from PPP Loan Forgiveness

During the nine months ended September 30, 2021,

the Company recorded a gain of $142,667 due to the forgiveness of a loan that one of its subsidiaries had obtained via the government’s

Paycheck Protection Program (PPP) in 2020.

No gain from loan forgiveness was recorded during the three months ended September 30, 2022.

Gain/(loss) on Remeasurement of Warrant Liabilities

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 are marked-to-market in each reporting period,

and this gain was due to the decline in DocGo’s stock price relative to the beginning of the period.

No gain or loss was recorded

in relation to the remeasurement of warrant liabilities in the prior year period.

Gain/(loss) from Remeasurement of Finance

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

During the nine months ended September 30, 2022,

the Company recorded a gain of approximately $1.1 million from the remeasurement of warrant liabilities.

The warrants are marked-to-market

in each reporting period, and this gain was due to the decline in DocGo’s stock price relative to the beginning of the period.

warrant liabilities were outstanding in the prior year period.

Gain/(Loss) on Equity Method Investment

During the three months ended September 30, 2022,

the Company recorded a gain of $99,840, representing its share of the losses incurred by an entity in which the Company has a minority

interest, which is accounted for under the equity method.

This investment was made in the fourth quarter of 2021, and as such, no gain

or loss was recorded in relation to an equity method investment in the same period in 2021.

Gain/(loss) from Remeasurement of Finance Leases

During the nine months ended September 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.

No such gain or loss was recorded in the prior year period.

Gain/(loss) on Disposal of Fixed Assets

During the nine months ended September 30, 2021,

the Company recorded a loss of $27,730 on the disposal of fixed assets.

During the nine months ended September 30, 2022, the Company recorded

a gain of $42,667 on the disposal of fixed assets.

Income Tax (Expense)/Benefit

During the six months ended

June 30, 2022, the Company recorded income tax expense of $761,839, compared to an income tax expense of $8,923 in the six months ended

June 30, 2021.

During the nine months ended September 30, 2022,

the Company recorded income tax expense of $1.2 million, compared to an income tax expense of $0.6 million in the nine months ended September

The increase in income tax expense resulted from the higher level of pretax income as well as state income taxes in jurisdictions

1 unchanged sentence

Noncontrolling Interest

For the six months ended June 30, 2022, the Company had net loss attributable

to noncontrolling interest of approximately $ 2.2 million, compared to a net gain attributable to noncontrolling interest of $1.4 million

for the six months ended June 30, 2021.

The loss in the first six months of 2022 reflected ongoing investments in new markets that were

entered into during 2021 and early 2022.

For the nine months ended September 30, 2022, the

Company had net loss attributable to noncontrolling interest of approximately $ 2.9 million, compared to a net loss attributable to noncontrolling

interest of $1.3 million for the nine months ended September 30, 2021.

The increased loss in the first nine months of 2022 reflected ongoing

investments in new markets that were entered into during 2021 and 2022.

Liquidity and Capital Resources

Since inception, DocGo has

completed three equity financing transactions that served as the Company’s principal source of liquidity, with minimal debt incurred.

Generally, the Company utilized equity raised to finance operations during its development phase, investments in assets, ambulance operating

licenses and funding working capital.

Since inception, DocGo has completed three equity

financing transactions that served as the Company’s principal source of liquidity, with minimal debt incurred.

Generally, the Company

utilized equity raised to finance operations during its development phase, investments in assets, ambulance operating licenses and funding

working capital.

The Company has also funded these activities through operating cashflows.

In November 2021, upon

the completion of the merger between Motion Acquisition Corp.

and Ambulnz, Inc., the Company received proceeds of approximately $158.1

million, net of transaction expenses.

Although the Company generated positive net income in the three and six months ended June 30, 2022,

operating cash flows may not be 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 Company using existing

cash balances to fund these working capital needs.

The Company’s 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.

Future capital requirements depend

on many factors, including potential acquisitions, our level of investment in technology, and rate of growth in existing and into new

The cost of ongoing technology development is another factor that is considered.

Capital requirements might also be affected

by factors which the Company cannot control, such as interest rates, and other monetary and fiscal policy changes to the manner in which

the Company currently operates.

Additionally, as the impact of the COVID-19 on the economy and operations evolves, the Company will continuously

assess its liquidity needs.

In November 2021, upon the completion of the

merger between Motion Acquisition Corp.

and Ambulnz, Inc., the Company received proceeds of approximately $158.1 million, net of transaction

Although the Company generated positive net income in the three and nine months ended September 30, 2022, operating cash flows

may not be 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 Company using existing cash balances to fund these

working capital needs.

The Company’s 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.

As the Company’s customer base increasingly features large

municipal entities, who tend to demand longer payment terms than do other customer segments, the Company’s working capital requirements

are expected to increase.

In addition, the Company might seek to take advantage of opportunities to secure favorable pricing for supplies

and services from its vendors by agreeing to shorter payment terms, or prepaying.

Future capital requirements depend on many factors,

including potential acquisitions, our level of investment in technology, and rate of growth in existing and into new markets.

of ongoing technology development is another factor that is considered.

Capital requirements might also be affected by factors which the

Company cannot control, such as interest rates, and other monetary and fiscal policy changes to the manner in which the Company currently

Additionally, as the impact of the COVID-19 pandemic on the economy and operations evolves, the Company will continuously assess

its liquidity needs.

If the Company’s growth rate is higher than is currently anticipated, resulting in greater-than-anticipated

capital requirements, the Company might need or choose to raise additional capital through debt or equity financings.

Considering the foregoing,

DocGo anticipates that existing balances of cash and cash equivalents, future expected cash flows generated from our operations and an

available line of credit (as discussed in Note 8, “Line of Credit” to the Condensed Consolidated Financial Statements) will

be sufficient to satisfy operating requirements for at least the next twelve months.

capital requirements, the Company may need or choose to raise additional capital through debt or equity financings.

On November 1, 2022, subsequent to the end of the third quarter of

2022, the Company entered into a revolving loan and security agreement with two banks, with one bank as the administrative agent (the

“Lenders”), with a maximum revolving advance amount of $90,000,000.

The revolving facility includes the ability for the Company

to request an increase to the commitment by an additional up to $50,000,000, though no Lender (nor the Lenders collectively) are obligated

to increase their respective commitments.

Borrowings under the revolving 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 are 1.25%

for an adjusted term SOFR loan and 0.25% for a base rate loan and will be updated based on the consolidated net leverage ratio reported

in the compliance certificate.

The revolving facility matures on the five-year anniversary of the closing date, November 1, 2027.

revolving 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 facility is subject to certain financial covenants such as a net leverage ratio and interest coverage

ratio, as defined in the agreement.

The Company has not made any draws under the facility and there is no amount outstanding.

Considering the foregoing, DocGo anticipates that

existing balances of cash and cash equivalents, future expected cash flows generated from our operations and an available line of credit

(as discussed in Note 8, “Line of Credit” and Note 20 “Subsequent Events” to the Unaudited Condensed Consolidated

Financial Statements) will be sufficient to satisfy operating requirements for at least the next twelve months.

Capital Resources

Comparison as of June 30, 2022 and 2021

As of June 30,

Working Capital as of September 30, 2022 and 2021

As of September 30,

$ in Millions

3 unchanged sentences

Total working capital

As of June 30, 2022, available

cash totaled $198.1 million, which represented an increase of $165.0 million as compared to June 30, 2021, reflecting the receipt of the

proceeds from the merger described above, as well as positive cash flow.

As of June 30, 2022, working capital amounted to $217.8 million,

which represented an increase of $186.8 million as compared to June 30, 2021, primarily reflecting the increased cash balance.

accounts receivable, reflecting the growth of the business in the second half of 2021 and the first half of 2022, were partially offset

by increases in current liabilities, which reflected the growth of the business and resulted from extended payment terms from vendors.

Six months ended June 30, 2022 and 2021

As of June 30,

As of September 30, 2022, available cash totaled

$169.6 million, which represented an increase of $130.0 million as compared to September 30, 2021, reflecting the receipt of the proceeds

from the merger described above, as well as positive cash flow generated by operations, partially offset by cash used for acquisitions

in the third quarter of 2022.

As of September 30, 2022, working capital amounted to $180.9 million, which represented an increase of $151.1

million as compared to September 30, 2021, primarily reflecting the increased cash balance.

Increased accounts receivable, reflecting

the growth of the business in the second half of 2021 and the first nine months of 2022, were partially offset by increases in current

liabilities, which reflected the growth of the business and resulted from extended payment terms from vendors.

Nine months ended September 30, 2022 and 2021

As of September 30,

$ in Millions

6 unchanged sentences

Operating Activities

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.

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.

cash flow in the first half of 2022 was aided by collections of large accounts receivable from invoices generated in the fourth quarter

During the six months ended

June 30, 2021, operating activities used $1.1 million of cash and primarily resulted from a net loss of $1.9 million and changes in assets

and liabilities, which were partially offset by non-cash charges of $5.5 million.

The non-cash items included $1.2 million of bad debt

expense primarily related to a provision for potential uncollectible accounts receivable, $2.6 million resulting from the depreciation

of property and equipment and right-of-use assets, $0.9 million from amortization of intangible assets, and $0.8 million of stock compensation

Changes in assets and liabilities resulted in approximately $4.8 million in negative operating cash flow and were primarily driven

by a $17.4 million increase in accounts receivable and a $2.4 million increase in prepaid expenses and other current assets, which were

partially offset by a $2.8 million increase in accounts payable and a $12.2 million increase in accrued expenses.

During the nine months ended September 30, 2022,

operating activities provided $37.6 million of cash, aided by net income of $23.6 million.

Non-cash charges amounted to $11.9 million

and included $5.0 million in depreciation of property and equipment and right-of-use assets, $2.2 million from amortization of intangible

assets, $2.7 million in bad debt expense primarily related to a provision for potential uncollectible accounts receivable and $4.6 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, $1.1 million from the remeasurement of warrant liabilities and a gain of $0.1 from an investment that is accounted

for under the equity method.

Changes in assets and liabilities resulted in approximately $2.1 million in increase to operating cash flow,

as a $2.9 million decrease in accounts receivable, a $0.9 million decrease in other assets and a $2.6 million increase in accrued liabilities

outweighed the effect of a $0.3 million increase in prepaid expenses and a $4.0 million decline in accounts payable..

During the nine months ended September 30, 2021,

operating activities provided $6.9 million of cash, despite a net loss of $1.1 million.

Non-cash charges amounted to $8.8 million and

included $4.1 million resulting from the depreciation of property and equipment and right-of-use assets, $1.4 million from amortization

of intangible assets, $1.2 million of stock compensation expense, $2.2 million of bad debt expense primarily related to a provision for

potential uncollectible accounts receivable, partially offset by a non-cash gain of $0.1 million from the forgiveness of a PPP loan.

in assets and liabilities resulted in approximately $0.8 million in negative operating cash flow and were primarily driven by a $28.8

million increase in accounts receivable and a $4.5 million increase in prepaid expenses and other current assets, as well as a $1.8 million

increase in other assets, which were partially offset by a $9.4 million increase in accounts payable and a $24.9 million increase in accrued

Investing Activities

During the six months ended

June 30, 2022, investing activities used $2.0 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 million to support the ongoing growth of the business.

During the six months ended

June 30, 2021, investing activities used $3.6 million of cash and primarily consisted of the acquisition of property and equipment totaling

$2.6 million and the acquisition of intangibles in the amount of $1.0 million to support growth of new transportation and mobile health

During the nine months ended September 30, 2022,

investing activities used $37.8 million of cash and consisted of the acquisition of property and equipment totaling approximately $2.0

million, the acquisition of intangibles in the amount of $2.0 million and $33.8 million in the acquisition of businesses, primarily relating

to acquisitions the Company completed in the third quarter of 2022.

During the nine months ended September 30, 2021,

investing activities used $4.4 million of cash and primarily consisted of the acquisition of property and equipment totaling $2.8 million

and the acquisition of intangibles in the amount of $1.6 million to support growth of new transportation and mobile health markets.

Financing Activities

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.

During the six months ended June 30, 2021, financing

activities provided $7.1 million of cash, including $8.0 million in proceeds from the Company’s revolving credit line and $0.3 million

During the nine months ended September 30, 2022,

financing provided $0.7 million, including $2.0 million in non-controlling interest contributions, $1.9 million in proceeds from the exercise

of stock options and proceeds of $1.0 million from a revolving credit line.

These factors were partially offset by a $1.0 million decrease

in amounts due to seller, $0.6 million in repayments of notes payable, $0.5 million in common stock repurchased, and $2.1 in payments

on obligations under the terms of finance leases.

During the nine months ended September 30, 2021, financing

activities provided $6.0 million of cash, primarily due to proceeds of $8.0 million from a revolving credit line, as well as $0.3 million

in non-controlling interest contributions.

These were partially offset by $0.9 million in payments on obligations under the terms of finance

leases and $0.3 in repayments of notes payable.

Future minimum annual maturities

of notes payable as of the six months ended June 30, 2022 are as follows:

These factors were partially offset by $1.8 million in payments on obligations under the terms

of finance leases and $0.5 in repayments of notes payable.

Future minimum annual maturities of notes payable as of the nine months

ended September 30, 2022 are as follows:

2022, remaining

2 unchanged sentences

Long-term portion of notes payable

Future minimum lease payments

under operating leases as of the six months ended June 30, 2022, and for the following five fiscal years and thereafter are as follows:

Future minimum lease payments under finance leases

as of the nine months ended September 30, 2022, and for the following five fiscal years and thereafter are as follows:

2022, remaining

3 unchanged sentences

Present value of future minimum lease payments

Future minimum lease payments

under finance leases as of the six months ended June 30, 2022, and for the following five fiscal years and thereafter are as follows:

Future minimum lease payments under operating

leases as of the nine months ended September 30, 2022, and for the following five fiscal years and thereafter are as follows:

2022, remaining

4 unchanged sentences

Share Repurchases

On May 24, 2022, the Board approved a share repurchase program to purchase

up to $40 million of the Company’s common stock (the “Program”).

The Program does not obligate the Company to acquire

any specific number of shares and will expire on November 24, 2023, and the Program may be suspended, extended, modified or discontinued

Under the Program, repurchases can be made using a variety of methods, which may include open market purchases, block trades,

privately negotiated transactions and/or a non-discretionary trading plan, all in compliance with the rules of the SEC and other applicable

legal requirements.

The timing, manner, price and amount of any common stock repurchases under the Program are determined by the Company

in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions.

30, 2022, $39.5 million remained available for share repurchases pursuant to the Program.

The following table shows the share repurchase

activity for the three months ended June 30, 2022:

April 1 through 30, 2022

May 1 through 31, 2022

June 1 through 30, 2022

On May 24, 2022, the Board approved a share repurchase

program to purchase up to $40 million of the Company’s common stock (the “Program”).

The Program does not obligate the

Company to acquire any specific number of shares and will expire on November 24, 2023, and the Program may be suspended, extended, modified

or discontinued at any time.

Under the Program, repurchases can be made using a variety of methods, which may include open market purchases,

block trades, privately negotiated transactions and/or a non-discretionary trading plan, all in compliance with the rules of the SEC and

other applicable legal requirements.

The timing, manner, price and amount of any common stock repurchases under the Program are determined

by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions.

As of September 30, 2022, $39.5 million remained available for share repurchases pursuant to the Program.

No shares were repurchased by

the Company during the three months ended September 30, 2022.

Critical Accounting Estimates

For a discussion of our critical accounting policies, refer to the

section entitled “Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2021.

For a discussion of our

critical accounting policies, refer to the section entitled “Critical Accounting Policies” in our Annual Report on Form 10-K

for the year ended December 31, 2021.

Quantitative and Qualitative Disclosures about Market Risk

are a smaller reporting company, as defined by Rule 12b-2 under the Exchange Act and in Item 10(f)(1) of Regulation S-K, and are not required

smaller reporting company, as defined by Rule 12b-2 under the Exchange Act and in Item 10(f)(1) of Regulation S-K, and are not required

to provide the information under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis