What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-06 · 189 added, 305 removed, 239 unchanged (67% of the section changed)

18 unchanged sentences

Forward-looking statements include, but are not limited to, statements concerning our possible or assumed future actions;

business strategies;

business strategies, plans and goals;

future events;

3 unchanged sentences

results of operations;

objectives and intentions with respect to future operations, services and products, including our transition to non-COVID related services;

geographic expansion;

objectives and intentions with respect to future operations, services and products, including our geographic expansion;

our margin normalization initiative;

4 unchanged sentences

cash position;

share repurchase program;

our share repurchase program;

expected impacts of macroeconomic factors, including inflationary pressures, general economic slowdown or a recession, rising interest rates, foreign exchange rate volatility, changes in monetary pressure, financial institution instability or the prospect of a shutdown of the U.S.

1 unchanged sentence

potential changes in federal, state or local government policies regarding immigration and asylum seekers;

expected impacts of geopolitical instability, including the conflict in Ukraine, conflict in Israel and surrounding areas and rising tensions between China mainland and Taiwan;

expected impacts of geopolitical instability, including the conflict in Ukraine, conflict in Israel and surrounding areas and rising tensions between mainland China and Taiwan;

our competitive position and opportunities, including our ability to realize the benefits from our operating model;

3 unchanged sentences

the impact of legal proceedings and compliance risk;

the impact on our business and reputation in the event of information technology system failures, network disruptions, cyber-attacks, or losses or unauthorized access to, or release of, confidential information;

the impact on our business and reputation in the event of information technology system failures, network disruptions, cybersecurity incidents or losses or unauthorized access to, or release of, confidential information;

the ability of the Company to comply with laws and regulations regarding data privacy and protection;

2 unchanged sentences

New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q.

The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results or outcomes could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.

These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q, and, while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete.

Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of,

all relevant information.

Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information.

These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

1 unchanged sentence

We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as and to the extent required by law.

We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.

Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

The Company is a healthcare transportation and mobile services company that uses proprietary dispatch and communication technology to help provide quality healthcare transportation and mobile, in-person medical treatment directly to patients in major metropolitan cities in the U.S.

DocGo is a mobile healthcare services company that uses proprietary dispatch and communication technology to help provide (i) quality mobile, in-person medical treatment directly to patients in the comfort of their homes, workplaces and other non-traditional locations;

and (ii) medical transportation in major metropolitan cities in the United States and the United Kingdom.

The Company derives revenue primarily from two operating segments:

• Mobile Health Services:

The services offered by this segment include services performed at homes and offices, testing and vaccinations, and event services such as on-site healthcare support at sporting events and concerts.

There is also an emphasis on providing total care management solutions to large population groups, which include healthcare services as well as ancillary services, such as shelter.

The services offered by this segment include a wide variety of healthcare services performed at homes, offices and other locations and event services such as on-site healthcare support at sporting events and concerts.

This segment also provides total care management solutions to large, typically underserved population groups, primarily through arrangements with municipalities, which include healthcare services as well as ancillary services, such as shelter.

• Transportation Services:

2 unchanged sentences

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

In addition, beginning with the first quarter of 2023, the Company began reporting in three operating segments, adding a Corporate segment to allow for analysis of shared services and personnel that support both the Transportation Services and Mobile Health Services segments.

Previously, these costs had been allocated almost entirely to the Transportation Services segment.

All of the Company’s revenues and costs of goods sold continue to be reported within the Transportation Services and Mobile Health Services segments.

The Corporate segment contains operating expenses such as information technology costs, certain insurance costs and the compensation costs of senior and executive leadership.

The segment reporting for the prior-year period has been adjusted to conform to the new methodology, for the purposes of allowing for a clearer analysis of year-over-year performance.

See Note 11, “Business Segment Information” to the unaudited Condensed Consolidated Financial Statements for additional information regarding the Company’s segments and “Operating Expenses” below.

For the three months ended September 30, 2023, the Company recorded net income of $4.6 million, compared to net income of $2.5 million in the three months ended September 30, 2022.

For the nine months ended September 30, 2023, the Company recorded net income of $2.1 million, compared to net income of $23.6 million in the nine months ended September 30, 2022.

The spread of COVID-19 and the related shutdowns and restrictions had a mixed impact on the Company’s business.

In the ambulance transportation business, which predominantly comprises non-emergency medical transportation, the Company initially saw a decline in volumes from historical and expected levels, as elective surgeries and other procedures were postponed.

In some of the Company’s larger markets, such as New York and California, there were declines in trip volume.

In addition, the Company experienced lost revenues associated with sporting, concerts and other events, as those events were cancelled or significantly restricted (or entirely eliminated) the number of permitted attendees.

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

There were two areas in which the Company initially experienced positive business impacts from COVID-19.

In April and May 2020, the Company participated in an emergency project with FEMA in the New York City area.

This engagement resulted in incremental transportation revenue.

In addition, in response to the need for widespread COVID-19 testing, EMTs and paramedics, the Company formed a new subsidiary, 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 Services segment.

As COVID-19 testing activity slowed to account for a minor portion of the Company’s revenues, RRT expanded its services beyond COVID-19 testing to a wide variety of tests, vaccinations and other procedures.

The Company’s current business plan assumes increased demand for Mobile Health Services, a demand that was accelerated by the pandemic, but which is also being driven by longer-term secular factors, such as the increasing desire on the part of patients to receive treatments outside of traditional settings, such as doctor’s offices and hospitals.

For the three months ended March 31, 2024, the Company recorded net income of $10.6 million, compared to net loss of $3.9 million in the three months ended March 31, 2023.

Factors Affecting Our Results of Operations

Our operating results and financial performance are influenced by a variety of factors, including, among others, our ability to obtain or maintain operating licenses;

the success of our acquisition strategy;

Our operating results and financial performance are influenced by a variety of factors, including, among others, our ability to establish, maintain and grow customer relationships;

our ability to execute projects to the satisfaction of our customers;

conditions in the healthcare transportation and mobile health services markets;

changes in government spending on healthcare and other social services;

availability of healthcare professionals and other personnel;

changes in the cost of labor;

our competitive environment;

1 unchanged sentence

federal government;

availability of healthcare professionals and other personnel;

changes in the cost of labor;

and production schedules of our suppliers.

production schedules of our suppliers;

our ability to obtain or maintain operating licenses;

and the success of our acquisition strategy.

Some of these key factors are briefly discussed below.

Future revenue growth and improvement in operating results will be largely contingent on our ability to penetrate new markets, to further penetrate existing markets and to successfully bid on contracts, which are subject to a number of uncertainties, many of which are beyond our control.

Operating Licenses

We have historically pursued a strategy of applying for ambulance operating licenses in the states, counties and cities we have identified for future new market entry.

The approval of a new operating license may take an extended period of time.

We aim to reduce this risk through our acquisition strategy, pursuant to which we identify businesses and/or underlying licenses in these new markets that may be for sale.

Historically, we have pursued an acquisition strategy to obtain ambulance operating licenses from small operators or to obtain enhanced capabilities to offer Mobile Health Services.

Future acquisitions may also include larger companies that may help drive revenue, profitability, cash flow and stockholder value.

During the nine months ended September 30, 2023, the Company completed two acquisitions for an aggregate purchase price of $32.8 million.

During the nine months ended September 30, 2022, the Company completed three acquisitions for an aggregate purchase price of $34.1 million, excluding $1.3 million held in escrow.

Future revenue growth and improvement in operating results will be largely contingent on our ability to penetrate new markets and further penetrate existing markets, which is subject to a number of uncertainties, many of which are beyond our control.

Healthcare Services Market

The Mobile Health Services market is dependent on several factors, including increased patient acceptance of services that are provided outside of traditional health care facilities, such as in homes, businesses or other designated locations;

The Mobile Health Services market is dependent on several factors, including increased patient acceptance of services that are provided outside of traditional healthcare facilities, such as in homes, businesses or other designated locations;

healthcare coverage of the various Mobile Health Services;

4 unchanged sentences

The Company primarily focuses on the non-emergency medical transport market, which includes services that are provided to patients who need assistance getting to and from medical appointments.

Key drivers of this market are the increase in chronic conditions and the number of elective surgeries as well as the ongoing aging of the population, as the older demographics tend to be much more frequent consumers of medical transportation services.

The market will also grow if hospitals and other healthcare facilities continue to outsource more of their transportation needs to independent providers, such as the Company.

Key drivers of this market are the increase in chronic conditions and the number of elective surgeries as well as the ongoing

aging of the population, as the older demographics tend to be much more frequent consumers of medical transportation services.

The market will also grow if hospitals and other healthcare facilities continue to outsource more of their transportation needs to independent providers, such as the Company, allowing these facilities to concentrate their efforts on their core competencies.

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 Services and Mobile Health Services, interest rates, or ambulance manufacturing;

Unfavorable changes in demographics, healthcare coverage of Mobile Health Services and Transportation Services, interest rates, inflation rates or 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 Trip Price

A “trip” is defined as an instance where the Company completes the transportation of a patient to a specific destination, for which we are able to charge a fee.

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

As trip volume represents the most basic unit of transportation service provided by the Company, the Company believes it is a good measure of the level of demand for the Company’s Transportation Services and is used by management to monitor and manage the scale of the business.

The average trip price is calculated by dividing the aggregate revenue from the total number of trips by the total number of trips 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 the Company is paid a fixed hourly or daily rate for the use of a fully staffed and equipped ambulance do not factor in the trip counts or average trip prices mentioned above.

We expect these fixed rate, “leased hour” programs to account for an increasing proportion of the Transportation Services segment’s revenues in the future.

Our Ability to Control Expenses

5 unchanged sentences

This involves managing the mix of company-employed labor and subcontracted labor as well as full-time and part-time employees.

Since 2021, the inflation rate in the U.S., as measured by the Consumer Price Index, has generally trended higher.

The inflation rate in the United States, as measured by the Consumer Price Index, has generally trended up since early 2021.

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

Though the inflation rate moderated in the first nine months of 2023, reaching an annualized level of 3.7% in September, it remains above historical averages.

Though the inflation rate declined to 4.1% in 2023 from 8.0% in 2022, it remains above historical averages.

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

1 unchanged sentence

In a continued attempt to dampen inflation, the U.S.

Federal Reserve implemented four interest rate hikes to date in 2023, raising its benchmark rate to the current level of 5.25-5.50% as of the date of the filing of this Quarterly Report on Form 10-Q.

Looking to the remainder of 2023, we anticipate a continued moderation of the inflation rate when compared to the levels seen in 2022, as a result of these recent interest rate hikes and additional potential rate hikes, but expect inflation to remain above the levels seen in the previous 10 years.

Federal Reserve implemented four interest rate hikes in 2023, raising its benchmark rate to the current level of 5.25-5.50%, which remained unchanged as of the date of the filing of this Quarterly Report on Form 10-Q.

Inflation has remained elevated to this point in 2024, with a rate of 3.5% being recorded for March, but looking to the remainder of 2024, we anticipate a continued moderation of the inflation rate.

If inflation is above the levels that the Company anticipates, gross margins could be below plan and our business, operating results and cash flows may be adversely affected.

Trip Volumes and Average Trip Price

A “trip” is defined as an instance where the Company completes the transportation of a patient to a specific destination, for which we are able to charge a fee.

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

We expect these fixed rate, “leased hour” programs to continue to account for an increasing proportion of the Transportation Services segment’s revenues in the future.

Historically, we have pursued an acquisition strategy to obtain enhanced capabilities or licenses to offer Mobile Health Services or Transportation Services.

Future acquisitions may also include companies that may help drive revenue, profitability, cash flow and stockholder value.

During the three months ended March 31, 2024, the Company did not complete any acquisitions.

During the three months ended March 31, 2023, the Company completed one acquisition for an aggregate purchase price of $25.8 million.

Investing in R&D and Enhancing Our Customer Experience

6 unchanged sentences

In the event that any such change occurs, compliance with new laws and regulations may significantly affect the Company’s operations and cost of doing business.

Government Contracts

In recent years, the Company’s government contract work has represented a substantial portion of its overall revenue, and maintaining and continuing to grow this revenues stream is an important part of the Company’s growth strategy.

However, government contract work is subject to risks and uncertainties.

For example, starting in the second quarter of 2023, the Company began providing services to the recent migrant population in New York City and in upstate New York.

Some of these services were provided pursuant to a contract with an ending date during the second quarter of 2024.

A portion of that contract has been extended through December 31, 2024, while other services are expected to wind down, beginning in the second quarter of 2024.

While the specific timing and the rate of the wind-down of services is still uncertain, the Company expects that the revenues from these projects will be somewhat lower in the second half of 2024 than in the first half of the year.

In addition, government contract work subjects the Company to government audits, investigations and proceedings, which could lead to the Company to being barred from government work or subjected to fines if it is determined that a statute, rule, regulation, policy or contractual provision has been violated.

Audits can also lead to adjustments to the amount of contract costs that the Company believes are reimbursable or to the ultimate amount the Company may be paid under the agreement.

Furthermore, a loss of government contract work, if not offset by revenues from new or other existing customers, could have a material adverse effect on the Company’s business, financial condition, and results of operations.

Components of Results of Operations

Our business consists of three reportable segments — Mobile Health Services, Transportation Services and Corporate.

All revenue and cost of goods sold are contained within the Mobile Health Services and Transportation Services segments.

Accordingly, revenues and cost of goods sold are discussed below on a consolidated level and are also broken down

between Mobile Health Services and Transportation Services.

All revenues and cost of revenues are contained within the Mobile Health Services and Transportation Services segments.

Accordingly, revenues and cost of revenues are discussed below on a consolidated level and are also broken down between Mobile Health Services and Transportation Services.

Operating expenses are discussed on a consolidated level and broken down among all three segments.

1 unchanged sentence

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

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

The Company’s revenues consist of services provided by its Mobile Health Services segment and its Transportation Services 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, fuel, laboratory fees, facility rent, medical supplies and subcontractors.

We expect cost of revenues to continue to rise along with the expected increase in revenue.

Cost of revenues consists primarily of revenues generating wages paid to employees, fees paid to subcontractors, medical supplies, vehicle insurance costs (including insurance premiums and costs incurred under the insurance deductibles), maintenance, fuel and facility rent.

We expect cost of revenues to continue to rise as we grow our business.

Operating Expenses

6 unchanged sentences

Legal and Regulatory Expenses

Legal 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 and legal settlements.

Technology and Development Expenses

Technology and development expense, net of capitalization consists primarily of costs incurred in the design and development of the Company’s proprietary technology, third-party software and technologies.

We expect technology and development expense to increase in future periods to support our growth, including our intent to continue investing in the optimization, accuracy and reliability of our 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 choose to make more significant investments, particularly when entering new business lines or customer sales channels.

Sales, Advertising and Marketing Expenses

Our sales, advertising and marketing expenses consist of costs directly associated with our sales and marketing activities, which primarily include sales commissions, marketing programs, trade shows, and promotional materials.

We expect our sales and marketing expenses to continue to increase over time as we increase our marketing activities, grow our domestic and international operations, and continue to build brand awareness.

We expect our sales, advertising and marketing expenses to continue to increase over time as we increase our marketing activities, grow our domestic and international operations and continue to build brand awareness.

Interest Expense

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

Interest expense consists primarily of interest on our outstanding borrowings under our outstanding notes payable and financing obligations, including our Revolving Facility.

Results of Operations

Comparison of the Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30, Change

Comparison of the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31, Change

$ in Millions 2024 2023

Actual Results % of Total Revenue Actual Results % of Total Revenue

Actual Results % of Total Revenues Actual Results % of Total Revenues

Revenues, net $ 192.1 100.0 % $ 113.0 100.0 % $ 79.1 70.0 %

Cost of revenues 131.5 70.5 % 71.3 68.3 % 60.2 84.4 %

Cost of revenues (exclusive of depreciation and amortization, which is shown separately below) 124.8 65.0 % 81.2 71.9 % 43.6 53.7 %

Operating expenses:

5 unchanged sentences

Total expenses 176.2 91.7 % 119.8 106.0 % 56.4 47.1 %

Income from operations 8.8 4.7 % 4.2 4.0 % 4.6

Other income (expenses):

Interest income, net 0.3 0.2 % 0.3 0.3 % — — %

(Loss) on remeasurement of warrant liabilities — — % (1.8) (1.8) % 1.8

Change in fair value of contingent liability 0.2 0.1 % — — % 0.2

(Loss) gain on equity method investments (0.1) (0.1) % 0.1 0.1 % (0.2)

Gain on remeasurement of finance leases — — % — — % —

(Loss) gain on disposal of fixed assets — — % 0.1 0.1 % (0.1)

Income (loss) from operations 15.9 8.3 % (6.8) (6.0) % 22.7 333.8 %

Other income (expense):

Interest (expense) income, net (0.4) (0.2) % 0.8 0.7 % (1.2) (150.0) %

Change in fair value of contingent liability — — % — — % — — %

Loss on equity method investments (0.1) (0.1) % (0.1) (0.1) % — — %

Loss on remeasurement of operating and finance leases — — % — — % — — %

Gain (loss) on disposal of fixed assets 0.1 0.1 % (0.1) (0.1) % 0.2 200.0 %

Other income 0.2 0.1 % 0.2 0.2 % — — %

Total other income (expense) (0.2) (0.1) % 0.8 0.7 % (1.0) (125.0) %

Net income before income tax provision 9.2 4.9 % 2.9 2.7 % 6.3

Income tax (provision) (4.5) (2.4) % (0.4) (0.4) % -4.1

Net income 4.7 2.5 % 2.5 2.4 % 2.1

Net income (loss) before income tax provision 15.7 8.2 % (6.0) (5.3) % 21.7 361.7 %

(Provision for) benefit from income taxes (5.1) (2.7) % 2.1 1.9 % (7.2) (342.9) %

Net income (loss) 10.6 5.5 % (3.9) (3.5) % 14.5 371.8 %

Net loss attributable to noncontrolling interests (0.6) (0.3) % (0.5) (0.4) % (0.1) (20.0) %

Net income attributable to stockholders of DocGo Inc.

Net income (loss) attributable to stockholders of DocGo Inc.

and Subsidiaries $ 11.2 5.8 % $ (3.4) (3.0) % $ 14.6 429.4 %

For the three months ended September 30, 2023, total revenue was $186.6 million, an increase of $82.3 million, or 78.9%, compared to the three months ended September 30, 2022.

For the three months ended March 31, 2024, total revenues were $192.1 million, an increase of $79.1 million, or 70.0%, compared to the three months ended March 31, 2023.

Mobile Health Services

For the three months ended September 30, 2023, Mobile Health Services revenue totaled $139.3 million, an increase of $62.7 million, or 81.8%, compared to the three months ended September 30, 2022.

The increase in revenue was primarily due to an expansion in services offered by the Mobile Health Services segment, particularly in the government customer sector.

This expansion accelerated during the nine months ended September 30, 2023 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 three months ended March 31, 2024, Mobile Health Services revenues were $143.9 million, an increase of $71.0 million, or 97.3%, compared to the three months ended March 31, 2023.

The increase in revenues was primarily due to an expansion in services offered by the Mobile Health Services segment, particularly in the government customer sector.

Specifically, starting in the second quarter of 2023, the Company began providing services to the recent migrant population in New York City and in upstate New York.

These projects, which included both medical and non-medical services, such as shelter and security, expanded throughout the second half of 2023 and into the first quarter of 2024.

However, some of these services were provided pursuant to a contract with an ending date during the second quarter of 2024.

A portion of that contract has been extended through December 31, 2024, while other services are expected to wind down, beginning in the second quarter of 2024.

Transportation Services

For the three months ended September 30, 2023, Transportation Services revenue totaled $47.2 million, an increase of $19.5 million, or 70.6%, compared to the three months ended September 30, 2022.

The increase in Transportation Services revenue reflected higher trip volumes and average trip prices.

Volumes increased by approximately 9.4%, from 58,751 trips for the three months ended September 30, 2022, to 64,321 trips for the three months ended September 30, 2023.

The increase in trip volumes was due to a combination of growth in the Company's customer base in certain core markets and acquisitions made during the first nine months of 2022.

Our average trip price increased from $374 in the three months ended September 30, 2022 to $409 in the three months ended September 30, 2023.

The increase in the average trip price in 2023 reflected a shift in mix toward higher-priced transports with existing customers, as well as the acquisition of licenses to provide higher acuity transports that earn higher prices per trip.

The average trip price also benefited from an 8.7% increase in the average Medicare reimbursement rate for ambulance transports.

For the three months ended March 31, 2024, Transportation Services revenues were $48.2 million, an increase of $8.2 million, or 20.2%, compared to the three months ended March 31, 2023.

This increase was due to a 20% increase in trip volumes, to 69,977 trips in the three months ended March 31, 2024, from 58,176 trips for the three months ended March 31, 2023.

The increase in trip volumes was due to a combination of growth in the Company's customer base in certain core markets and increased volumes with existing customers.

Our average trip price declined to $400 in the three months ended March 31, 2024, from $415 in the three months ended March 31, 2023.

The decline in the average trip price in the 2024 period reflected a shift in mix toward lower-priced transports when compared to the first quarter of 2023.

However, the average trip price remains well above the levels of early 2022, reflecting a shift in mix toward higher-priced transports with existing customers, as well as the acquisition of licenses to provide higher acuity transports that earn higher prices per trip.

Cost of Revenues

For the three months ended September 30, 2023, total cost of revenue (exclusive of depreciation and amortization) increased by 84.4% compared to the three months ended September 30, 2022, while revenue increased by approximately 78.8%.

Cost of revenue as a percentage of revenue increased to 70.5% in the three months ended September 30, 2023 from 68.3% in the three months ended September 30, 2022.

In absolute dollar terms, total cost of revenue in the three months ended September 30, 2023 increased by $60.2 million compared to the same period in 2022.

This increase was primarily attributable to a $6.3 million increase in total compensation, due to higher headcount for both the Transportation Services and Mobile Health Services segments;

a $35.7 million increase in subcontracted labor costs, primarily driven by new projects in both segments that required more personnel than the Company was able to initially provide through its existing staff;

For the three months ended March 31, 2024, total cost of revenues (exclusive of depreciation and amortization) increased by 53.7% compared to the three months ended March 31, 2023, while revenues increased by approximately 70.0%.

Cost of revenues as a percentage of revenues decreased to 65.0% in the three months ended March 31, 2024 from 71.9% in the three months ended March 31, 2023.

Total cost of revenues in the three months ended March 31, 2024 increased by $43.6 million compared to the same period in 2023.

This increase was primarily attributable to a $7.6 million increase in total compensation, due to higher headcount for both the Mobile Health Services and Transportation Services segments;

a $20.5 million increase in subcontracted labor costs, primarily driven by projects in both segments that required more personnel than the Company was able to initially provide through its existing staff;

a $12.0 million increase in medical and related supplies;

1 unchanged sentence

and a $4.3 million net increase in other cost of revenues categories.

These items were partially offset by a $1.0 million decline in vehicle costs, as the Company exited certain rental agreements.

For the Mobile Health Services segment, cost of revenue (exclusive of depreciation and amortization) in the three months ended September 30, 2023 amounted to $99.3 million, up 98.6% from $50.0 million in the three months ended September 30, 2022.

Cost of revenue as a percentage of revenue increased to 71.2%% from 65.2% in the prior year period, despite a significant increase in revenue, reflecting higher compensation expenses as a result of headcount growth, significantly higher subcontracted labor costs and increased costs for medical supplies.

For the Transportation Services segment, cost of revenue (exclusive of depreciation and amortization) in the three months ended September 30, 2023 amounted to $32.2 million, up 51.2% from $21.3 million in the three months ended September 30, 2022.

Cost of revenue as a percentage of revenues decreased to 68.3% from 76.8% in the prior year quarter, reflecting the impact of higher per-trip prices, increased revenues from standby contracts (for which we are paid a daily or hourly rate) and the overall increase in revenue, as well as a decline in the average fuel price.

These items were partially offset by a $1.9 million decline in vehicle costs, as the Company exited certain rental agreements during 2023.

For the Mobile Health Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended March 31, 2024 amounted to $92.9 million, up 76.3% from $52.7 million in the three months ended March 31, 2023.

Cost of revenues as a percentage of revenues decreased to 64.5% from 72.3% in the prior year period, due to a significant increase in revenues, and in the absence of certain project ramp-up costs, in the form of higher overtime rates and a greater proportion of subcontracted labor, that were recorded in the prior year period.

For the Transportation Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended March 31, 2024 amounted to $31.9 million, up 11.9% from $28.5 million in the three months ended March 31, 2023.

Cost of revenues as a percentage of revenues decreased to 66.3% from 71.1% in the prior year quarter, reflecting the impact of increased revenues from standby contracts (for which we are paid a daily or hourly rate) and the overall increase in revenue, as well as a decline in the average fuel price.

Operating Expenses

For the three months ended September 30, 2023, the Company recorded $46.4 million of operating expenses compared to $28.9 million for the three months ended September 30, 2022, an increase of 60.7%.

As a percentage of revenue, operating expenses decreased from 27.7% in the third quarter of 2022 to 24.9% in the third quarter of 2023, reflecting the increase in revenues described above.

The increase of $17.5 million of operating expenses related primarily to an $8.3 million increase in total compensation due to investments in and expansion of corporate overhead to support revenue growth, partially driven by higher stock compensation expense;

a $1.5 million increase in depreciation and amortization due to an increase in assets to support revenue growth, capitalized software amortization and assets that were added as part of acquisitions that the Company completed in the second half of 2022 and the second quarter of 2023;

a $1.5 million increase in commissions related to both Mobile Health Services and Transportation Services projects;

For the three months ended March 31, 2024, the Company recorded $51.4 million of operating expenses compared to $38.7 million for the three months ended March 31, 2023, an increase of 32.8%.

As a percentage of revenue, operating expenses decreased from 34.3% in the first quarter of 2023 to 26.8% in the first quarter of 2024, reflecting the increase in revenues

described above.

The increase of $12.7 million of operating expenses related primarily to a $0.6 million increase in depreciation and amortization due to an increase in assets to support revenue growth, capitalized software amortization and assets that were added as part of acquisitions that the Company completed during 2023;

a $0.9 million increase in insurance costs, primarily being driven by the Mobile Health segment;

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

a $0.7 million increase in professional fees, including higher audit fees resulting from the growth of the business;

a $3.3 million increase in bad debt expense, reflecting the growth of the business and related increase in accounts receivable;

and a net $6.6 million increase spread across a variety of other operating expense categories.

The Company anticipates that operating expenses will continue to decline as a percentage of revenue from the levels seen in the first three quarters of 2023.

For the Mobile Health Services segment, operating expenses in the three months ended September 30, 2023 were $19.0 million, up from $8.7 million in the three months ended September 30, 2022.

Operating expenses as a percentage of revenue increased to 13.4% in the third quarter of 2023, from 11.4% in the third quarter of 2022, reflecting significant expenditures that have been made in recent quarters in the expansion of services and geographic areas of operation, as well as the continued buildout of the Mobile Health Services management infrastructure.

For the Transportation Services segment, operating expenses in the three months ended September 30, 2023 were $14.5 million, compared to $10.3 million in the three months ended September 30, 2022.

Operating expenses as a percentage of revenue decreased to 30.6% for the three months ended September 30, 2023 from 37.2% in the three months ended September 30, 2022, reflecting the increased revenue in the current year period.

For the Corporate segment, which represents primarily shared services that are not contained within the entities included in either the Mobile Health Services or Transportation Services segments, operating expenses in the three months ended September 30, 2023 were $12.9 million, compared to $9.9 million in the three months ended September 30, 2022.

Corporate expenses amounted to approximately 6.9% of total consolidated revenues in the third quarter of 2023, compared to 9.5% in the third quarter of 2022, reflecting the significant increase in total consolidated revenues.

Interest Income, Net

For the three months ended September 30, 2023, the Company recorded $0.3 million of interest income, net compared to $0.3 million of interest income, net in the three months ended September 30, 2022.

Higher rates of interest were earned on balances in the Company’s interest-bearing accounts in the three months ended September 30, 2023, offsetting the impact of a decline in average cash balances when compared to the three months ended September 30, 2022.

(Loss) on Remeasurement of Warrant Liabilities

During the three months ended September 30, 2023, there were no gains or losses recorded relating to remeasurement of warrant liabilities, as all warrants were redeemed during the third quarter of 2022.

During the three months ended September 30, 2022, the Company recorded a loss of approximately $1.8 million from the remeasurement of warrant liabilities.

The warrants were marked-to-market in each reporting period, and this loss reflected the increase in the Company’s stock price relative to the beginning of the third quarter of 2022.

Change in Fair Value of Contingent Liability

During the three months ended September 30, 2023, the Company recorded a change in fair value of contingent consideration of $0.2 million.

There was no related change in fair value recorded in the three months ended September 30, 2022.

(Loss) Gain on Equity Method Investments

During the three months ended September 30, 2023, the Company recorded a loss on equity method investments of $0.1 million representing its share of the losses incurred by an entity in which the Company has a minority interest.

During the three months ended September 30, 2022, the Company recorded a gain on equity method investments of $0.1 million.

Gain on Remeasurement of Finance Leases

During the three months ended September 30, 2023 and 2022, there were no gains or losses recorded relating to remeasurement of finance leases.

(Loss) Gain on Disposal of Fixed Assets

During the three months ended September 30, 2023, the Company recorded a loss on the disposal of fixed assets of $9,983, compared to a gain on the disposal of fixed assets of $42,667 during the three months ended September 30, 2022.

Income Tax (Provision)

During the three months ended September 30, 2023, the Company recorded an income tax provision of $4.5 million, compared to an income tax provision of $0.4 million in the three months ended September 30, 2022.

The increased tax expense was due to higher pretax income in the 2023 period.

Net (Loss) Income Attributable to Noncontrolling Interests

For the three months ended September 30, 2023, the Company had net loss attributable to noncontrolling interests of approximately $0.1 million, compared to a net loss attributable to noncontrolling interests of approximately $0.7 million for the three months ended September 30, 2022, which reflected improved performance in the Company’s joint venture markets in the three months ended September 30, 2023.

Comparison of the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended

September 30, Change

$ in Millions 2023 2022

Actual Results % of Total Revenue Actual Results % of Total Revenue

Revenues, net $ 425.0 100.0 % $ 331.7 100.0 % $ 93.3 28.1 %

Cost of revenues 296.3 69.7 % 219.4 66.1 % 76.9 35.1 %

Operating expenses:

General and administrative 93.6 22.0 % 70.7 21.3 % 22.9 32.4 %

Depreciation and amortization 11.8 2.8 % 7.3 2.2 % 4.5 61.6 %

Legal and regulatory 9.6 2.3 % 6.6 2.0 % 3.0 45.5 %

Technology and development 7.7 1.8 % 3.7 1.1 % 4.0 108.1 %

Sales, advertising and marketing 2.6 0.6 % 2.3 0.7 % 0.3 13.0 %

Total expenses $ 421.6 99.2 % 310.0 93.4 % 111.6 36.0 %

Income from operations $ 3.4 0.8 % $ 21.8 6.6 % (18.4)

Other income (expenses):

Interest income, net 1.7 0.4 % 0.3 0.1 % 1.4 466.7 %

(Loss) gain on remeasurement of warrant liabilities — — % 1.1 0.3 % (1.1)

Change in fair value of contingent liability 0.2 — % — 0.3 % 0.2

(Loss) gain on equity method investments (0.3) (0.1) % 0.1 — % (0.4)

Gain on remeasurement of finance leases — — % 1.4 0.4 % (1.4)

(Loss) gain on disposal of fixed assets (0.2) — % 0.1 — % (0.3)

Other income (expense) (0.7) (0.2) % — — % (0.7)

Total other income (expense) 0.7 0.2 % 3.0 0.9 % (2.3) (76.7 %)

Net income before income tax provision 4.1 1.0 % 24.8 7.5 % (20.7)

Income tax (provision) (2.0) (0.5) % (1.2) — % (0.8)

Net income 2.1 0.5 % 23.6 7.1 % (21.5)

Net income (loss) attributable to noncontrolling interests 2.8 0.7 % (2.9) (0.9) % 5.7 196.6 %

Net income attributable to stockholders of DocGo Inc.

and Subsidiaries $ (0.7) (0.2) % $ 26.5 8.0 % $ (27.2)

For the nine months ended September 30, 2023, total revenue was $425.0 million, an increase of $93.3 million, or 28.1%, from the total revenue recorded in the nine months ended September 30, 2022.

Mobile Health Services

For the nine months ended September 30, 2023, Mobile Health Services revenue totaled $292.4 million, an increase of $38.3 million, or 15.1%, compared to the nine months ended September 30, 2022.

The increase in revenue was due to an expansion in services offered by the Mobile Health Services segment, particularly in the government customer sector.

This expansion has accelerated through the first nine months of 2023 as the Company increased its customer base and geographic reach, while extending several large customer contracts and introducing a broader range of services.

This outweighed a significant decline in COVID-19 related mass testing services and related revenue when compared to the prior year period.

The Company estimates that revenue from mass COVID-19 testing programs amounted to approximately $3.0 million in the first nine months of 2023, compared to approximately $74.0 million in the first nine months of 2022.

Transportation Services

For the nine months ended September 30, 2023, Transportation Services revenue totaled $132.7 million, an increase of $55.0 million, or 70.9% compared to the nine months ended September 30, 2022.

This increase was due to an increase in both trip volumes and the average price per trip.

Trip volumes increased by approximately 20%, from 154,534 trips for the nine months ended September 30, 2022 to 185,404 trips for the nine months ended September 30, 2023.

The increase in trip volumes was due to a combination of growth in the Company’s customer base in certain core markets and acquisitions made during the second half of 2022 and second quarter of 2023.

Our average trip price increased from $362 in the nine months ended September 30, 2022 to $405 in the nine months ended September 30, 2023.

The average trip price also benefited from an 8.7% increase in the average Medicare reimbursement rate for ambulance transports.

Cost of Revenues

For the nine months ended September 30, 2023, total cost of revenue (exclusive of depreciation and amortization) increased by 35.1% compared to the nine months ended September 30, 2022, while revenue increased by approximately 28.1%.

Cost of revenue as a percentage of revenue increased to 69.7% in the nine months ended September 30, 2023 from 66.1% in the nine months ended September 30, 2022.

In absolute dollar terms, total cost of revenue in the nine months ended September 30, 2023 increased by $76.9 million from the prior year period.

This was primarily attributable to a $32.3 million increase in total compensation, reflecting higher headcount for both the Transportation Services and Mobile Health Services segments;

a $40.2 million increase in subcontracted labor, driven primarily by the Mobile Health Services segment, where revenue increases outpaced the Company’s ability to service such revenue solely with internal resources, as well as certain projects which required more specialized personnel;

and a $4.8 million increase in medical and related supplies.

These increases were slightly offset by a net decrease of $0.5 million in expenses across a variety of other cost of revenues categories.

For the Mobile Health Services segment, cost of revenue (exclusive of depreciation and amortization) in the nine months ended September 30, 2023 amounted to $204.1 million, up $45.2 million, or 29%, from the nine months ended September 30, 2022.

Cost of revenue as a percentage of revenue increased to 69.8% in the nine months ended September 30, 2023 from 62.6% in the nine months ended September 30, 2022, despite a significant increase in revenues, reflecting higher compensation expenses as a result of headcount growth, significantly higher subcontracted labor costs and increased costs for medical supplies, which outweighed the impact of reduced lab fees and supplies costs due to the significant decline in COVID testing.

For the Transportation Services segment, cost of revenue (exclusive of depreciation and amortization) in the nine months ended September 30, 2023 amounted to $92.2 million, up $31.8 million, or 53%, from the nine months ended September 30, 2022.

Cost of revenue as a percentage of revenues decreased to 69.5% in the nine months ended September 30, 2023 from 77.8% in the prior year period, reflecting the impact of higher per-trip prices, increased number of standby contracts (for which we are paid a daily or hourly rate) and the overall increase in revenue, as well as a decline in the average fuel price.

Operating Expenses

For the nine months ended September 30, 2023, the Company recorded $125.3 million of operating expenses compared to $90.6 million for the nine months ended September 30, 2022, an increase of 38.4%.

As a percentage of revenue, operating expenses increased from 27.3% in the nine months ended September 30, 2022 to 29.5% in the nine months ended September 30, 2023.

The increase of $34.4 million related primarily to a $21.3 million increase in total compensation,

which included costs for both directly employed and subcontracted staff due to investments in and expansion of corporate infrastructure to support the revenue growth, as well as an increase in stock-based compensation expense;

a $4.7 million increase in depreciation and amortization due to an increase in assets to support revenue growth and capitalized software amortization, as well as recently acquired companies;

a $3.5 million increase in IT infrastructure, driven by the Company’s business and headcount expansion;

a $2.2 million increase in insurance costs, reflecting higher headcount and expanded operations;

a $2.0 million increase in rent and utilities relating to the Company’s ongoing geographic expansion;

and a $3.1 million net increase across a variety of expense categories.

These increased expenses were partially offset by a $2.4 million decrease in bad debt expense, as allowances for doubtful accounts were adjusted to better reflect the aging and collection history of the Company’s accounts receivable.

We anticipate that operating costs over the remainder of 2023, as a percentage of total revenue, will decline from the levels seen in the nine months ended September 30, 2023.

For the Mobile Health Services segment, operating expenses in the nine months ended September 30, 2023 were $35.8 million, up 52% from $23.5 million in the nine months ended September 30, 2022.

Operating expenses as a percentage of revenues increased to 12.3% in the nine months ended September 30, 2023 from 9.3% in the nine months ended September 30, 2022, reflecting significant expenditures that were made in the nine months ended September 30, 2023 related to the expansion of services and geographic areas of operation, as well as the continued buildout of the Mobile Health Services management infrastructure and the costs of developing the Company’s “on-demand” direct-to-consumer offering.

For the Transportation Services segment, operating expenses in the nine months ended September 30, 2023 were $39.6 million, up 37% from $28.9 million in the nine months ended September 30, 2022.

Operating expenses as a percentage of revenues decreased to 29.9% for the nine months ended September 30, 2023 from 37.3% for the nine months ended September 30, 2022, reflecting the increased revenues in the current year period.

For the Corporate segment, which represents primarily shared services that are not contained within the entities included in either the Mobile Health Services or Transportation Services segments, operating expenses in the nine months ended September 30, 2023 were $49.6 million, compared to $38.1 million in the nine months ended September 30, 2022.

The increase was driven by higher headcount as the Company built out its corporate infrastructure, as well as significantly higher stock compensation expenses.

As a percentage of total consolidated revenues, Corporate expenses amounted to approximately 11.7% of revenues in the nine months ended September 30, 2023, compared to 11.5% in the nine months ended September 30, 2022.

Interest Income, Net

For the nine months ended September 30, 2023, the Company recorded $1.7 million of interest income, net compared to $0.3 million of interest income, net in the nine months ended September 30, 2022.

This increase was primarily due to higher rates of interest earned on balances in the Company's interest-bearing accounts in the nine months ended September 30, 2023, which reflected significantly higher market interest rates.

(Loss) Gain on Remeasurement of Warrant Liabilities

During the nine months ended September 30, 2023, there were no gains or losses recorded relating to remeasurement of warrant liabilities, as all warrants were redeemed during the third quarter of 2022.

During the 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 the Company’s stock price relative to the beginning of the period.

Change in Fair Value of Contingent Liability

During the nine months ended September 30, 2023, the Company recorded a change in fair value of contingent consideration of $0.2 million.

No change in fair value was recorded during the nine months ended September 30, 2022.

(Loss) Gain on Equity Method Investments

During the nine months ended September 30, 2023, the Company recorded a loss of $0.3 million on equity method investments, representing its share of the losses incurred by an entity in which the Company has a minority interest.

During the nine months ended September 30, 2022, the Company recorded a gain on equity method investments of approximately $0.1 million.

Gain on Remeasurement of Finance Leases

During the nine months ended September 30, 2023, the Company did not record a gain or loss relating to a change in

estimated remaining liabilities under the terms of its 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.

(Loss) Gain on Disposal of Fixed Assets

During the nine months ended September 30, 2023, the Company recorded a loss of $0.2 million 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 (Provision)

During the nine months ended September 30, 2023, the Company recorded an income tax provision of $2.0 million, compared to an income tax provision of $1.2 million in the nine months ended September 30, 2022.

Net Income (Loss) Attributable to Noncontrolling Interests

For the nine months ended September 30, 2023, the Company had net income attributable to noncontrolling interests of approximately $2.8 million, compared to a net loss attributable to noncontrolling interests of $2.9 million for the nine months ended September 30, 2022.

The income compared to the prior year period loss reflected improved performance in the Company’s joint venture markets in the nine months ended September 30, 2023.

The Company anticipates that operating expenses will continue to fluctuate based upon the levels of revenues that are generated.

For the Mobile Health Services segment, operating expenses in the three months ended March 31, 2024 were $18.9 million, up from $7.2 million in the three months ended March 31, 2023.

Operating expenses as a percentage of revenues increased to 13.1% in the first quarter of 2024, from 9.8% in the first quarter of 2023, reflecting significant expenditures that have been made in recent quarters in the expansion of services and geographic areas of operation, as well as the continued buildout of the Mobile Health Services management infrastructure.

For the Transportation Services segment, operating expenses in the three months ended March 31, 2024 were $15.2 million, compared to $10.5 million in the three months ended March 31, 2023.

Operating expenses as a percentage of revenues increased to 31.5% for the three months ended March 31, 2024 from 26.1% in the three months ended March 31, 2023, despite the increased revenues in the current year period, reflecting increases in non-field headcount, such as dispatch and back office departments, as well as higher insurance costs, due to a larger vehicle fleet.

For the Corporate segment, which represents primarily shared services that are not contained within the entities included in either the Mobile Health Services or Transportation Services segments, operating expenses in the three months ended March 31, 2024 were $17.3 million, compared to $21.1 million in the three months ended March 31, 2023.

Corporate expenses amounted to approximately 9.0% of total consolidated revenues in the first quarter of 2024, compared to 18.7% in the first quarter of 2023, reflecting the significant increase in total consolidated revenues as well as some corporate expense reduction programs implemented at the end of 2023 and in early 2024.

Interest (expense) income, net

For the three months ended March 31, 2024, the Company recorded $0.4 million of interest expense, net compared to $0.8 million of interest income, net in the three months ended March 31, 2023.

Interest expenses on borrowings under the Company's revolving credit line outweighed interest earned on balances in the Company’s interest-bearing accounts in the three months ended March 31, 2024, while average cash balances in these accounts were also lower when compared to the three months ended March 31, 2024.

Loss on equity method investments

During the three months ended March 31, 2024, the Company recorded a loss on equity method investments of $0.1 million representing its share of the losses incurred by an entity in which the Company has a minority interest.

During the three months ended March 31, 2023, the Company also recorded a loss on equity method investments of $0.1 million.

Gain (loss) on disposal of fixed assets

During the three months ended March 31, 2024, the Company recorded a gain on the disposal of fixed assets of $0.1 million, compared to a loss on the disposal of fixed assets of $0.1 million during the three months ended March 31, 2023.

(Provision for) benefit from income taxes

During the three months ended March 31, 2024, the Company recorded an income tax provision of $5.1 million, compared to an income tax benefit of $2.1 million in the three months ended March 31, 2023.

The increased tax expense in the 2024 period was due to the recording of pretax income in the 2024 period, as compared to a pretax loss in the 2023 period.

Net loss attributable to noncontrolling interests

For the three months ended March 31, 2024, the Company had net loss attributable to noncontrolling interests of approximately $0.6 million, compared to a net loss attributable to noncontrolling interests of approximately $0.5 million for the three months ended March 31, 2023.

Liquidity and Capital Resources

Since inception and prior to the Business Combination, the Company completed three equity financing transactions as its principal source of liquidity.

Between the inception of DocGo’s wholly owned subsidiary Ambulnz and the Business Combination, Ambulnz completed three equity financing transactions as its principal source of liquidity.

In November 2021, upon the completion of the Business Combination and the PIPE Financing, the Company received proceeds of approximately $158.1 million, net of transaction expenses.

Generally, the Company has utilized proceeds from the financing transactions and the Business Combination to finance operations, invest in assets, acquire ambulance operating licenses and fund accounts receivable.

Generally, the Company has utilized proceeds from the equity financing transactions and the Business Combination to finance operations, invest in assets, make acquisitions and fund accounts receivable.

The Company has also funded these activities through operating cash flows.

However, even when the Company generates positive net income, operating cash flows are not always sufficient to meet immediate obligations arising from current operations.

Despite the fact that the Company generated positive net income for the three months ended March 31, 2024, operating cash flows are not always sufficient to meet immediate obligations arising from current operations.

For example, as the business has grown, the Company’s expenditures for human capital and supplies has expanded accordingly, and the timing of the payments for payroll and to associated vendors, compared to the timing of receipts of cash from customers, frequently results in the need to use existing cash balances to fund 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.

The Company’s future capital requirements also depend on many factors, including potential acquisitions, the Company’s level of investment in technology and ongoing technology development, and rate of growth in existing markets and into new markets.

Capital requirements may also be affected by factors outside of the Company’s control, such as interest rates, rising inflation, financial institution instability or failure and other monetary and fiscal policy changes to the manner in which the Company currently operates.

During the three months ended March 31, 2024, as a greater proportion of the Company’s overall revenues were generated through services provided to municipal customers with long payment cycles, and expenditures made by the Company to allow for the provision of these services were substantial, operating cash flows were not sufficient to meet these demands for working capital, leading to a continued decline in the Company’s cash balances.

As these invoices are collected, the Company expects cash flows to be sufficient for near term working capital needs.

The Company’s future working capital needs depend on many factors, including the overall growth of the Company and the various payment terms that are negotiated with customers and vendors.

The Company’s future capital requirements depend on many factors, including potential acquisitions, the Company’s level of investment in technology and ongoing technology development, and rate of growth in existing markets and into new markets.

Capital requirements might also be affected by factors outside of the Company’s control, such as interest rates, rising inflation and other monetary and fiscal policy changes to the manner in which the Company currently operates.

If the Company’s growth rate is higher than is currently anticipated, resulting in greater-than-anticipated capital requirements, the Company might need to, or choose to, raise additional capital through debt or equity financings.

This last factor has been evident at different times during the second half of 2023 and the first quarter of 2024, leading to a draw down in the Company’s credit line during the fourth quarter of 2023 and the first quarter of 2024, as described below.

On November 1, 2022, the Company entered into the Credit Agreement, which provides for the Revolving Facility in the initial aggregate principal amount of $90.0 million.

2 unchanged sentences

The applicable margins are based on the Company’s consolidated net leverage ratio, adjusted on a quarterly basis.

The initial applicable margins are 1.25% for an adjusted term SOFR loan and 0.25% for a base rate loan and will be updated based on the Company’s consolidated net leverage ratio.

The initial applicable margins were 1.25% for an adjusted term SOFR loan and 0.25% for a base rate loan and are updated based on the Company’s consolidated net leverage ratio.

The Revolving Facility matures on November 1, 2027 and is secured by a first-priority lien on substantially all of the Company’s present and future personal assets and intangible assets.

The Revolving Facility is subject to certain financial covenants, such as a net leverage ratio and interest coverage ratio, as defined in the Credit Agreement.

On October 19, 2023, the Company drew down $25 million under the Revolving Facility, and this amount remains outstanding as of the date of the filing of this Quarterly Report on Form 10-Q.

Considering the foregoing, the Company anticipates that existing balances of cash and cash equivalents, future expected cash flows generated from our operations and the remaining available line of credit under the Revolving Facility will be sufficient to satisfy operating requirements for at least the next twelve months.

On October 19, 2023, the Company drew down $25.0 million under the Revolving Facility, which amount remained outstanding as of December 31, 2023.

On February 8, 2024, the Company drew down an additional $15.0 million.

On February 27, 2024, the Company repaid all amounts then outstanding under the Revolving Facility.

However, in March 2024, the Company once again drew down under the Revolving Facility, and there was a total of $30.0 million outstanding as of the date of this Quarterly Report on Form 10-Q.

Considering the foregoing, DocGo anticipates that its existing balances of cash and cash equivalents, future expected cash flows generated from its operations and its available line of credit under the Revolving Facility will be sufficient to satisfy operating requirements for at least the next twelve months.

Looking beyond the next twelve months, DocGo anticipates that expected future cash flows, its available line of credit and proceeds from potential additional financings will be sufficient to satisfy any operating and potential investing requirements.

Capital Resources

Working capital as of September 30, 2023 and December 31, 2022 was as follows:

September 30 December 31 Change

Working capital as of March 31, 2024 and December 31, 2023 was as follows:

March 31 December 31 Change

$ in Millions 2024 2023

3 unchanged sentences

Total working capital $ 175.0 $ 168.8 $ 6.2 3.7 %

As of September 30, 2023, available cash totaled $52.9 million, which represented a decrease of $104.4 million compared to December 31, 2022, reflecting a significant increase in accounts receivable and acquisitions made during the nine months ended September 30, 2023.

As of September 30, 2023, working capital amounted to $154.0 million, which represented a decrease of $17.0 million compared to December 31, 2022, primarily reflecting the decreased cash balance.

Increased accounts receivable in the nine months ended September 30, 2023, which reflected the growth of the business and a shift towards higher credit quality customers who have longer payment terms, partially offset by the decline in cash, resulting in a decline in current assets as of September 30, 2023 compared to December 31, 2022.

However, this was outweighed by the increase in current liabilities in the nine months ended September 30, 2023 due to higher accrued liabilities, reflecting the growth of the business and higher amounts of contingent consideration resulting from acquisitions.

Cash flows as of the nine months ended September 30, 2023 and 2022 were as follows:

As of September 30, Change

As of March 31, 2024, available cash totaled $41.2 million, which represented a decrease of $18.0 million compared to December 31, 2023, reflecting a significant increase in accounts receivable during the three months ended March 31, 2024.

As of March 31, 2024, working capital amounted to $175.0 million, which represented an increase of $6.2 million compared to December 31, 2023, as the decreased cash balance was outweighed by higher accounts receivable and a decline in accrued liabilities.

Increased accounts receivable in the three months ended March 31, 2024, which reflected the growth of the business and a shift towards higher credit quality customers who have longer payment terms, were outweighed by the decline in cash and a reduction in prepaid expenses and other assets, resulting in a small decline in current assets as of March 31, 2024 compared to December 31, 2023.

However, this was outweighed by the decline in current liabilities in the three months ended March 31, 2024, due to lower accrued liabilities, reflecting lower invoices and accrued liabilities in the current period for certain expenses, such as subcontracted labor, and as the Company paid down a significant amount of its accrued liabilities during the quarter.

Cash flows as of the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

March 31, Change

$ in Millions 2024 2023

Cash flow summary

Net cash (used in) provided by operating activities $ (58.3) $ 37.6 $ (95.9) (255.1 %)

Net cash used in operating activities $ (10.6) $ (23.1) $ 12.5 54.1 %

Net cash used in investing activities (1.7) (1.7) — — %

Net cash (used in) provided by financing activities (11.9) 0.7 (12.6) (1794.1 %)

Net cash used in financing activities (0.9) (12.0) 11.1 92.5 %

Effect of exchange rate changes (0.1) 0.2 (0.3) (150.0) %

Net (decrease) increase in cash $ (96.9) $ 0.2 $ (97.1) (48526.6 %)

Net decrease in cash $ (13.3) $ (36.6) $ 23.3 63.7 %

Operating Activities

During the nine months ended September 30, 2023, operating activities used $58.3 million of cash, despite net income of $2.1 million.

Non-cash charges amounted to $28.1 million and included $7.5 million in depreciation of property and equipment and right-of-use assets, $4.3 million from amortization of intangible assets, $15.2 million of stock compensation expense, a $0.2 million loss on the disposal of assets and a loss of $0.3 million from an investment that is accounted for under the equity method, and $1.0 million in deferred taxes.

These were partially offset by a $0.3 million reduction in bad debt expense, and a non-cash gain of $0.2 million resulting from a reduction in the fair value of contingent consideration.

Changes in assets and liabilities resulted in approximately $88.4 million in negative operating cash flow, as a $103.5 million increase in accounts receivable, reflecting the growth of the business and primarily driven by an increased amount of business with municipalities, which tend to have longer payment cycles;

a $12.6 million decrease in accounts payable, and a $0.3 million increase in prepaid expenses and other current assets, partially offset by a $27.3 million increase in accrued liabilities and a $0.7 million decline in other assets.

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 million from an investment that is accounted for under the equity method.

Changes in assets and liabilities resulted in an approximately $2.1 million 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 three months ended March 31, 2024, operating activities used $10.6 million of cash, despite net income of $10.6 million.

Non-cash charges amounted to $9.5 million and included $2.5 million in depreciation of property and equipment and right-of-use assets, $1.7 million from amortization of intangible assets, $4.0 million of stock compensation expense, bad debt expense of $1.4 million, and a loss of $0.1 million from an investment that is accounted for under the equity method.

These were partially offset by a $0.1 million gain on the disposal of assets and $0.1 million in deferred taxes.

Changes in assets and liabilities resulted in approximately $30.7 million in negative operating cash flow, as a $22.4 million increase in accounts receivable, primarily driven by an increased amount of business with municipalities, which tend to have longer payment cycles, a $20.7 million decrease in accrued liabilities, due to payment of certain payables, and a $0.1 million increase in other assets were partially offset by a $5.8 million increase in accounts payable and a $6.7 million decrease in prepaid expenses and other current assets.

During the three months ended March 31, 2023, operating activities used $23.1 million of cash, driven by a net loss of $3.9 million.

Non-cash charges amounted to $9.4 million and included $2.3 million in depreciation of property and equipment and right-of-use assets, $1.4 million from amortization of intangible assets, $8.5 million of stock compensation expense and a $0.1 million loss on an equity investment.

These were partially offset by a $1.9 million reduction in bad debt expense related to an adjustment in the provision for potential uncollectible accounts receivable and a $1.0 million gain from a deferred tax asset.

Changes in assets and liabilities resulted in approximately $28.6 million in negative cash flow, as a

$24.7 million increase in accounts receivable, a $2.6 million decrease in accounts payable, a $1.5 million decrease in accrued liabilities and a $0.2 million increase in prepaid expenses outweighed a $0.3 million reduction in other assets.

Investing Activities

During the nine months ended September 30, 2023, investing activities used $26.9 million of cash and consisted of the acquisition of property and equipment totaling approximately $4.4 million, the acquisition of intangibles in the amount of $2.5 million, the acquisition of businesses in the amount of $20.2 million, and an equity method investment in the amount of $0.2 million, partially offset by $0.3 million in cash proceeds from the disposal of property and equipment.

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 the acquisition of businesses in the amount of $33.8 million, primarily relating to acquisitions the Company completed in the third quarter of 2022.

During the three months ended March 31, 2024, investing activities used $1.7 million of cash and consisted of the acquisition of property and equipment totaling approximately $1.0 million and the acquisition of intangibles in the amount of $0.8 million, slightly offset by $25,000 in proceeds from the disposal of property and equipment.

During the three months ended March 31, 2023, investing activities used $1.7 million of cash and consisted of the acquisition of property and equipment totaling $2.0 million and the acquisition of intangibles in the amount of $1.4 million, partially offset by $1.6 million in cash added via an acquisition and $0.1 million in proceeds from the disposal of property and equipment.

Financing Activities

During the nine months ended September 30, 2023, financing activities used $11.9 million of cash, primarily due to a $8.4 million decrease in amounts due to seller, relating to payments made for acquisitions that were completed in the second half of 2022 and second quarter of 2023;

$2.3 million in payments on obligations under the terms of finance leases;

$2.2 million in payments for taxes related to shares withheld for employee taxes;

During the three months ended March 31, 2024, financing activities used $0.9 million of cash, as $45.0 million in proceeds from the Company’s Revolving Facility were mostly offset by $40.0 million in repayments of the Revolving Facility.

In addition, the Company spent approximately $4.9 million on its share repurchase program and $1.0 million in payments under the terms of a finance lease.

During the three months ended March 31, 2023, financing activities used $12.0 million of cash, due to a reduction of $11.5 million in amounts due to seller, as deferred payments were made under the terms of previously-closed acquisitions;

$0.8 million in payments under the terms of finance leases;

and $0.1 million in repayments of notes payable.

These amounts were partially offset by $1.5 million in proceeds from the exercise of stock options.

During the nine months ended September 30, 2022, financing activities provided $0.7 million of cash, and primarily included $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 million in payments on obligations under the terms of finance leases.

Future minimum annual maturities of notes payable as of the nine months ended September 30, 2023 are as follows (in millions):

These items were partially offset by $0.4 million in proceeds from the exercise of stock options.

Future minimum annual maturities of notes payable as of March 31, 2024 are as follows (in thousands):

Notes Payable

2024, remaining $ 20.0

Thereafter 0.2

Total maturities 60.1

1 unchanged sentence

Long-term portion of notes payable $ 33.7

Future minimum lease payments under finance leases as of the nine months ended September 30, 2023 are as follows (in millions):

Future minimum lease payments under finance leases as of March 31, 2024 are as follows (in millions):

Finance Leases

4 unchanged sentences

Present value of future minimum lease payments $ 12.6

Future minimum lease payments under operating leases as of the nine months ended September 30, 2023 are as follows (in millions):

Future minimum lease payments under operating leases as of March 31, 2024 are as follows (in millions):

2024, remaining $ 2.5

9 unchanged sentences

All intercompany accounts and transactions are eliminated upon consolidation.

NCI in the unaudited Condensed Consolidated Financial Statements represent the portion of consolidated joint ventures and a VIE in which the Company does not have direct equity ownership.

Noncontrolling interests in the unaudited Condensed Consolidated Financial Statements represent the portion of consolidated joint ventures and VIEs in which the Company does not have direct equity ownership.

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S.

9 unchanged sentences

All significant intercompany transactions and balances have been eliminated in these unaudited Condensed Consolidated Financial Statements.

The Company holds a variable interest in MD1, which contracts with physicians and other health professionals in order to provide services to the Company.

MD1 is considered a VIE since it does not have sufficient equity to finance its activities without additional subordinated financial support.

An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits).

The Company has the power and rights to control all activities of MD1 and funds and absorbs all losses of MD1 and therefore appropriately consolidates MD1 as a VIE.

Net income for MD1 was $16,839 for the nine months ended September 30, 2023.

MD1’s total assets, all of which were current assets apart from other assets amounting to $15,248, amounted to $0.6 million as of September 30, 2023.

Total liabilities, all of which were current for MD1, were $0.5 million as of September 30, 2023.

MD1’s total stockholders’ equity was $0.2 million as of September 30, 2023.

The Company holds variable interests in legal entities that contract with physicians and other health professionals that provide services on behalf of the Company.

These entities are considered VIEs since they do not have sufficient equity to finance their activities without additional subordinated financial support.

An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it is the primary beneficiary, meaning it has (1) the power to direct the activities of the VIE that most significantly impacts the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits).

The Company has the power and rights to control all activities of its VIEs and funds and absorbs all losses of its VIEs.

The Company has determined that it is the primary beneficiary of its VIEs and therefore appropriately consolidates its VIEs.

Net loss for the Company's VIEs was $275,905 and $186,637 for the three months ended March 31, 2024 and 2023, respectively.

The total assets amounted to $5,364,950 and $4,364,274 as of March 31, 2024 and December 31, 2023, respectively.

Total liabilities were $6,088,439 and $4,811,857 as of March 31, 2024 and December 31, 2023, respectively.

The Company's VIEs' total stockholders’ deficit was $723,489 and $447,583 as of March 31, 2024 and December 31, 2023, respectively.

Business Combination

The Company accounts for its business combinations under the provisions of ASC 805-10, which requires that the acquisition method of accounting be used for all business combinations.

Assets acquired and liabilities assumed, including NCI, are recorded at the date of acquisition at their respective fair values.

The Company accounts for its business combinations under the provisions of ASC 805-10, Business Combinations (“ASC 805-10”), which requires that the acquisition method of accounting be used for all business combinations.

Assets acquired and liabilities assumed, including noncontrolling interests, are recorded at the date of acquisition at their respective fair values.

ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill.

25 unchanged sentences

Revenue Recognition

On January 1, 2019, the Company adopted ASC 606.

On January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), as amended.

To determine revenue recognition for contractual arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

5 unchanged sentences

The Company only applies the five-step model to contracts when it is probable that the Company will be able to collect the consideration it is entitled to in exchange for the goods or services the Company provides to the customer.

The Company generates revenues from the provision of (1) Transportation Services and (2) Mobile Health Services.

For both Transportation and Mobile Health Services, the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled.

The Company generates revenues from the provision of (1) Mobile Health Services and (2) Transportation Services.

For both Mobile Health Services and Transportation Services, the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled.

Therefore, the Company satisfies performance obligations immediately.

The Company has utilized the “right to invoice” expedient.

which allows an entity to recognize revenue in the amount of consideration to which the entity has the right to invoice when the amount that the Company has the right to invoice corresponds directly to the value transferred to the customer.

The Company has utilized the “right to invoice” expedient, which allows an entity to recognize revenue in the amount of consideration to which the entity has the right to invoice when the amount that the Company has the right to invoice corresponds directly to the value transferred to the customer.

Revenues are recorded net of an estimated contractual allowances for claims subject to contracts with responsible paying entities.

1 unchanged sentence

All transaction prices are fixed and determinable which includes a fixed base rate, fixed mileage rate and an evaluation of historical collections by each payor.

Income taxes are recorded in accordance with ASC 740, which provides for deferred taxes using an asset and liability approach.

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or its tax returns.

7 unchanged sentences

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