What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-07 · 200 added, 170 removed, 361 unchanged (51% of the section changed)

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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 and Section 21E of the Exchange Act regarding, among other things, the plans, strategies, outcomes and prospects, both business and financial, of the Company.

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) , and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), regarding, among other things, the plans, strategies, outcomes and prospects, both business and financial, of the Company.

These statements are based on the beliefs and assumptions of our management.

Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions, outcomes, results or expectations.

Forward-looking statements are inherently subject to substantial risks, uncertainties and assumptions, many of which are beyond our control, and which may cause our actual results or outcomes, or the timing of our results or outcomes, to differ materially from those contained in our forward-looking statements.

Accordingly, you should not place undue reliance on such statements.

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future events;

future revenues or performance;

future results of operations, including revenues, expenses or performance;

financing needs;

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

new and existing contracts;

the provision of services under existing contracts, including winding down of migrant-related services;

M&A activity;

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leadership transitions;

cash position;

cash position and liquidity;

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.

federal government;

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

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

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

expected impacts of macroeconomic factors, including inflationary pressures and the interest rate environment;

our competitive position and opportunities, including our ability to realize the benefits from our operating model and conditions in the healthcare services market;

our ability to improve gross margins;

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

and any statements or assumptions underlying the foregoing.

In some cases, these statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “might,” “will,” “should,” “could,” “can,” “would,” “design,” “potential,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends” or the negative of these terms or similar expressions.

including, but not limited to the following:

impacts related to accelerated wind down of migrant-related services;

our ability to expand our programs with insurance partners, hospital systems, municipalities and other strategic partners;

our ability to successfully implement our business strategy, including delivering value to shareholders via buybacks, funding new strategic relationships and potentially repaying our line of credit;

our ability to establish, maintain and grow customer relationships;

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

our ability to grow demand for our care gap closure programs and our cash balances;

our reliance on and ability to maintain our contractual relationships with our healthcare provider partners and clients;

our ability to compete effectively in a highly competitive industry, including conditions in the healthcare transportation and mobile health services markets;

our ability to maintain existing contracts;

our reliance on government contracts, including changes in government spending on healthcare and other social services;

recent revenue growth derived from a small number of large customers;

our ability to effectively manage our growth;

our financial performance and future prospects;

our ability to deliver on our business strategies or models, plans and goals;

our ability to expand geographically;

M&A activity and success of our acquisition strategy;

our ability to retain our workforce and management personnel and successfully manage leadership transitions;

the availability of healthcare professionals and other personnel;

changes in the cost of labor;

our ability to collect on customer receivables;

our ability to maintain our cash position;

risks associated with our share repurchase program;

overall macroeconomic and geopolitical conditions, including the interest rate environment, the inflationary environment, the potential recessionary environment, regional conflict and tensions, financial institution instability and the prospect of a shutdown of the U.S.

federal government;

production schedules of our suppliers;

our ability to obtain or maintain operating licenses;

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

expected impacts of geopolitical instability;

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

our ability to improve gross margins;

our ability to implement and deliver on cost-containment measures and ongoing cost rationalization initiatives;

legislative and regulatory actions;

the impact of legal proceedings and compliance risk;

volatility of our stock price;

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

our ability to comply with laws and regulations regarding data privacy and protection and other risk factors that are described herein, as well as the risks discussed in Item 1A “Risk Factors” of Part I in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and that are otherwise described or updated from time to time in our filings with the SEC.

Moreover, we operate in a very competitive and rapidly changing environment.

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

For the three months ended June 30, 2024, the Company recorded net income of $5.8 million, compared to net income of $1.3 million in the three months ended June 30, 2023.

For the six months ended June 30, 2024, the Company recorded net income of $16.5 million, compared to net loss of $2.6 million in the six months ended June 30, 2023.

For the three months ended September 30, 2024, the Company recorded net income of $4.5 million, compared to net income of $4.6 million in the three months ended September 30, 2023.

For the nine months ended September 30, 2024, the Company recorded net income of $21.0 million, compared to net income of $2.1 million in the nine months ended September 30, 2023.

Factors Affecting Our Results of Operations

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our competitive environment;

overall macroeconomic and geopolitical conditions, including rising interest rates, the inflationary environment, the potential recessionary environment, regional conflict and tensions, financial institution instability and the prospect of a shutdown of the U.S.

federal government;

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These programs have increased in number, scale and scope since the beginning of COVID-19.

While COVID-19 testing and vaccination programs have been scaled back from their levels at the pandemic’s peak, there have been expansions of these population health programs into other areas, such as the provision of healthcare and related services to recent migrants and asylum seekers.

While COVID-19 testing and vaccination programs have been dramatically scaled back from their levels at the pandemic’s peak, there have been expansions of these population health programs into other areas, such as the provision of healthcare and related services to recent migrants and asylum seekers.

The Transportation Services market is highly dependent on patients requiring transportation after surgeries and other medical procedures and treatments.

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

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

The inflation rate in the United States, as measured by the Consumer Price Index, has moderated in 2024, after trending up since early 2021.

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

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

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

Through the first nine months of 2024, the inflation rate has been 3.1%, lower than the 4.1% rate in 2023, 8.0% in 2022 and 4.7% in 2021.

As the inflation rate has moderated and there have been emerging signs of a pending economic

slowdown, the U.S.

Federal Reserve implemented an interest rate cut of 0.50%, lowering its benchmark rate to the current level of 4.75%-5.00%, after implementing four interest rate hikes in 2023.

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

This has had the impact of compressing gross profit margins, as the Company is generally unable to pass these higher costs on to its customers, particularly in the short term.

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

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

Inflation has moderated in the first half of 2024, with a rate of 3.0% being recorded for June.

Looking to the remainder of 2024, we anticipate a continued moderation of the inflation rate, with an interest rate cut now being viewed as a possibility before the end of the year.

Looking to the remainder of 2024, we anticipate that the inflation rate will continue to be moderate, with additional interest rate cuts a possibility before the end of the year.

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.

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

During the six months ended June 30, 2024, the Company did not complete any acquisitions.

During the six months ended June 30, 2023, the Company completed three acquisitions for an aggregate purchase price of $34.2 million.

During the nine months ended September 30, 2024, the Company did not complete any acquisitions.

During the nine months ended September 30, 2023, the Company completed three acquisitions for an aggregate purchase price of $34.2 million.

Investing in R&D and Enhancing Our Customer Experience

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A portion of that contract has been extended through December 31, 2024, while other services began to wind down in May 2024.

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

While the exact timing of the wind-down of the remaining services is still subject to change, the wind-down of sites in both New York City and in upstate New York is well underway and the Company expects that the revenues from these migrant-

related projects will be significantly lower in the final three months of 2024 than they were in any of the first three quarters 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.

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Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Change

Comparison of the Three Months Ended September 30, 2024 and 2023

Three Months Ended September 30, Change

$ in Millions 2024 2023

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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) % 0.1 100.0 %

(Loss) gain on remeasurement of operating and finance leases — — % — — % — — %

Loss on disposal of fixed assets — — % — — % — — %

Other income (expense) (0.4) (0.3) % — — % (0.4) (100.0) %

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Net income before income tax provision 9.0 6.5 % 9.2 4.9 % (0.2) (2.2) %

(Provision for) benefit from income taxes (3.7) (2.2) % 0.3 0.2 % (4.0) (1333.3) %

Provision for income taxes (4.5) (3.2) % (4.5) (2.4) % — — %

Net income 4.5 3.2 % 4.7 2.5 % (0.2) (4.3) %

Net income (loss) attributable to noncontrolling interests (0.7) (0.4) % 3.3 2.6 % (4.0) (121.2) %

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

Net loss attributable to noncontrolling interests (1.0) (0.7) % (0.1) (0.1) % (0.9) (900.0) %

Net income attributable to stockholders of DocGo Inc.

and Subsidiaries $ 5.5 4.0 % $ 4.8 2.6 % $ 0.7 14.6 %

For the three months ended June 30, 2024, total revenues were $164.9 million, an increase of $39.4 million, or 31.4%, compared to the three months ended June 30, 2023.

For the three months ended September 30, 2024, total revenues were $138.7 million, a decrease of $47.9 million, or 25.7%, compared to the three months ended September 30, 2023.

Mobile Health Services

For the three months ended June 30, 2024, Mobile Health Services revenues were $116.7 million, an increase of $36.7 million, or 45.8%, compared to the three months ended June 30, 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 recently arrived 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.

For the three months ended September 30, 2024, Mobile Health Services revenues were $90.7 million, a decrease of $48.6 million, or 34.9%, compared to the three months ended September 30, 2023.

The decline in revenues was due to the ongoing wind-down of migrant-related services, which had ramped up sharply in the third quarter of 2023 and peaked in the first quarter of 2024.

Starting in the second quarter of 2023, the Company began providing services to the recently arrived 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 third and fourth quarters 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 began to wind down in May 2024.

As such, while we expect to launch new Mobile Health Services projects during the second half of the year, these will be outweighed by a decline in revenues from migrant-related projects and we expect that overall Mobile Health Services revenues will be lower in the second half of 2024 than in the first half of the year.

While the exact timing of the wind-down of the remaining services is still subject to change, this process is well underway and the Company expects that the revenues from these migrant-related projects will be lower in the final three months of 2024 than in the final three months of 2023.

As such, while we expect to launch new Mobile Health Services projects during the fourth quarter, these are expected be outweighed by a decline in revenues from migrant-related projects and we expect that overall Mobile Health Services revenues will be significantly lower in the fourth quarter of 2024 than in the fourth quarter of 2023.

Transportation Services

For the three months ended June 30, 2024, Transportation Services revenues were $48.2 million, an increase of $2.8 million, or 6.1%, compared to the three months ended June 30, 2023.

This increase was due to a 17.2% increase in trip volumes, to 73,722 trips in the three months ended June 30, 2024, from 62,907 trips for the three months ended June 30, 2023.

For the three months ended September 30, 2024, Transportation Services revenues were $48.0 million, an increase of $0.8 million, or 1.7%, compared to the three months ended September 30, 2023.

This increase was due to an 8.5% increase in trip volumes, to 69,776 trips in the three months ended September 30, 2024, from 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 increased volumes with existing customers.

Our average trip price increased to $393 in the three months ended June 30, 2024, from $390 in the three months ended June 30, 2023.

Our average trip price decreased to $404 in the three months ended September 30, 2024, from $409 in the three months ended September 30, 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 same period in 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 June 30, 2024, total cost of revenues (exclusive of depreciation and amortization) increased by 30.5% compared to the three months ended June 30, 2023, while revenues increased by approximately 31.4%.

Cost of revenues as a percentage of revenues decreased to 66.2% in the three months ended June 30, 2024 from 66.6% in the three months ended June 30, 2023.

Total cost of revenues in the three months ended June 30, 2024 increased by $25.5 million compared to the same period in 2023.

This increase was primarily attributable to a $0.7 million increase in total compensation, due to higher headcount for both the Mobile Health Services and Transportation Services segments;

a $13.4 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 $4.9 million increase in medical and related supplies;

a $2.8 million increase in lab fees;

a $2.2 million increase in vehicle costs;

For the three months ended September 30, 2024, total cost of revenues (exclusive of depreciation and amortization) decreased by 32.5% compared to the three months ended September 30, 2023, while revenues decreased by approximately 25.7%.

Cost of revenues as a percentage of revenues decreased to 64.0% in the three months ended September 30, 2024 from 70.5% in the three months ended September 30, 2023.

Total cost of revenues in the three months ended September 30, 2024 decreased by $42.7 million compared to the same period in 2023.

This decrease was primarily attributable to an $8.2 million decrease in total compensation, a $21.1 million decline in subcontracted labor costs and a $10.7 million decline in medical and related supplies, all of which were driven by the Mobile Health Services segment, due to the ongoing wind-down of migrant-related projects during the quarter;

a $2.8 million decrease in lab fees;

and a $0.1 million net increase in other cost of revenues categories.

For the Mobile Health Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended June 30, 2024 amounted to $74.9 million, up 43.8% from $52.1 million in the three months ended June 30, 2023.

Cost of revenues as a percentage of revenues decreased to 64.2% from 65.1% in the prior year period, due to a significant increase in revenues and 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 June 30, 2024 amounted to $34.2 million, up 8.6% from $31.5 million in the three months ended June 30, 2023.

Cost of revenues as a percentage of revenues increased to 71.0% from 69.3% in the prior year quarter, as the increase in cost of revenues outpaced the increase in revenues.

Total compensation remained largely unchanged year-over-year, but there were higher costs for subcontractors and vehicles in the second quarter of 2024 due to a larger number of ambulance trips that were completed by subcontractors in instances where the Company did not have sufficient personnel capacity to provide the requested services, and due to an increase in the size of the vehicle fleet.

For the Mobile Health Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended September 30, 2024 amounted to $55.5 million, down 44.1% from $99.3 million in the three months ended September 30, 2023.

Cost of revenues as a percentage of revenues decreased to 61.2% from 71.2% in the prior year period, despite the decline in Mobile Health Services revenues, due to the absence of certain project ramp-up costs in the form of higher overtime rates and a greater proportion of higher-cost 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 September 30, 2024 amounted to $33.3 million, up 3.4% from $32.2 million in the three months ended September 30, 2023.

Cost of revenues as a percentage of revenues increased to 69.4% from 68.3% in the prior year quarter,

as the increase in cost of revenues outpaced the small increase in revenues.

Total compensation increased by 4% year-over-year, reflecting increased field headcount, as the Company seeks to reduce its reliance on subcontractors.

Costs for subcontractors were essentially unchanged from the prior year period, but declined from the levels recorded in the second quarter of 2024, reflecting a planned reduction in the number of ambulance trips that were completed by subcontractors in instances where the Company previously did not have sufficient personnel capacity to provide the requested services.

Operating expenses

For the three months ended June 30, 2024, the Company recorded $45.7 million of operating expenses compared to $40.3 million for the three months ended June 30, 2023, an increase of 13.4%.

As a percentage of revenue, operating expenses decreased from 32.1% in the second quarter of 2023 to 27.7% in the second quarter of 2024, reflecting the increase in revenues described above.

The increase of $5.4 million of operating expenses related primarily to a $0.5 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 during 2023;

a $0.1 million increase in IT infrastructure, driven by the Company’s business and headcount expansion and acquisitions;

a $1.4 million increase in professional fees, including higher audit fees resulting from the growth of the business;

a $0.5 million increase in bad debt expense, reflecting the growth of the business and related increase in accounts receivable;

and a net $2.9 million increase spread across a variety of other operating expense categories.

For the three months ended September 30, 2024, the Company recorded $39.8 million of operating expenses compared to $46.4 million for the three months ended September 30, 2023, a decrease of 14.2%.

As a percentage of revenue, operating expenses increased from 24.9% in the third quarter of 2023 to 28.7% in the third quarter of 2024, reflecting the decrease in revenues described above.

The decrease of $6.6 million of operating expenses related to a $2.7 million decline in total compensation, a $1.1 million decline in commissions, and a $4.7 million decrease in travel-related expenses, all due to the ongoing wind-down of the Mobile Health Services segment’s migrant-related projects.

These declines were partially offset by a net $1.9 million increase spread across a variety of other operating expense categories.

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 June 30, 2024 were $15.8 million, up from $9.9 million in the three months ended June 30, 2023.

Operating expenses as a percentage of revenues increased to 13.5% in the second quarter of 2024, from 12.3% in the second quarter of 2023, reflecting significant expenditures that have been made in recent quarters in the expansion of services, particularly in relation to the migrant-related projects in New York as well as the continued build out of the Mobile Health Services management infrastructure.

For the Transportation Services segment, operating expenses in the three months ended June 30, 2024 were $16.1 million, compared to $14.6 million in the three months ended June 30, 2023.

Operating expenses as a percentage of revenues increased to 33.4% for the three months ended June 30, 2024 from 32.1% in the three months ended June 30, 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 June 30, 2024 were $13.8 million, compared to $15.9 million in the three months ended June 30, 2023.

Corporate expenses amounted to approximately 8.4% of total consolidated revenues in the second quarter of 2024, compared to 12.6% in the second 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.

For the Mobile Health Services segment, operating expenses in the three months ended September 30, 2024 were $13.2 million, down from $19.0 million in the three months ended September 30, 2023.

Operating expenses as a percentage of revenues increased to 14.6% in the third quarter of 2024, from 13.4% in the third quarter of 2023, reflecting the drop in Mobile Health Services revenues in relation to the ongoing wind-down of migrant-related projects in New York.

For the Transportation Services segment, operating expenses in the three months ended September 30, 2024 were $14.8 million, compared to $14.5 million in the three months ended September 30, 2023.

Operating expenses as a percentage of revenues increased to 30.8% for the three months ended September 30, 2024 from 30.6% in the three months ended September 30, 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 September 30, 2024 were $11.8 million, compared to $12.9 million in the three months ended September 30, 2023.

Corporate expenses amounted to approximately 8.5% of total consolidated revenues in the third quarter of 2024, compared to 6.9% in the third quarter of 2023, reflecting the decline in total consolidated revenues, which outweighed the effect of corporate expense reduction programs implemented at the end of 2023 and in early 2024.

Interest (expense) income, net

For the three months ended June 30, 2024, the Company recorded $0.5 million of interest expense, net compared to $0.5 million of interest income, net in the three months ended June 30, 2023.

Interest expenses on borrowings under the Revolving Facility outweighed interest earned on balances in the Company’s interest-bearing accounts in the three months ended June 30, 2024, while average cash balances in these accounts were also lower when compared to the three months ended June 30, 2024.

For the three months ended September 30, 2024, the Company recorded $0.5 million of interest expense, net compared to $0.3 million of interest income, net in the three months ended September 30, 2023.

Interest expenses on borrowings under the Revolving Facility outweighed interest earned on balances in the Company’s interest-bearing accounts in the three months ended September 30, 2024.

Change in fair value of contingent liability

During the three months ended June 30, 2024, the Company recorded a loss for the change in fair value of contingent consideration of $0.3 million.

There was no related change in fair value recorded in the three months ended June 30, 2023.

During the three months ended September 30, 2024, the Company recorded a loss for the change in fair value of contingent consideration of $44,520 compared to a gain of $159,974 in the three months ended September 30, 2023.

Loss on equity method investments

During the three months ended June 30, 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 June 30, 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 June 30, 2024, the Company recorded a gain on the disposal of fixed assets of $12,563, compared to a loss on the disposal of fixed assets of $98,630 during the three months ended June 30, 2023.

(Provision for) benefit from income taxes

During the three months ended June 30, 2024, the Company recorded an income tax provision of $3.7 million, compared to an income tax benefit of $0.4 million in the three months ended June 30, 2023.

The increased tax expense in the 2024 period was due to the recording of higher pretax income in the 2024 period, as well as increased state and local taxes in the jurisdictions in which the Company did business in the 2024 period.

Net income (loss) attributable to noncontrolling interests

For the three months ended June 30, 2024, the Company had net loss attributable to noncontrolling interests of

approximately $0.7 million, compared to net income attributable to noncontrolling interests of approximately $3.3 million for the three months ended June 30, 2023.

Comparison of the Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30, Change

During the three months ended September 30, 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 September 30, 2023, the Company also recorded a loss on equity method investments of $0.1 million.

Loss on disposal of fixed assets

During the three months ended September 30, 2024, the Company recorded a loss on the disposal of fixed assets of $28,681, compared to a loss on the disposal of fixed assets of $9,983 during the three months ended September 30, 2023.

Other income (expense)

During the three months ended September 30, 2024, the Company recorded other expense of $0.4 million, compared to other income of $43,353 in the three months ended September 30, 2023.

Provision for income taxes

During the three months ended September 30, 2024, the Company recorded an income tax provision of $4.5 million, compared to an income tax provision of $4.5 million in the three months ended September 30, 2023.

The slightly lower tax expense in the 2024 period was due to a small decline in pretax income in the 2024 period.

Net loss attributable to noncontrolling interests

For the three months ended September 30, 2024, the Company had net loss attributable to noncontrolling interests of approximately $1.0 million, compared to net loss attributable to noncontrolling interests of approximately $0.1 million for the three months ended September 30, 2023.

Comparison of the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30, Change

$ in Millions 2024 2023

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Total expenses 459.5 92.7 % 421.6 99.2 % 37.9 9.0 %

Income (loss) from operations 26.0 7.3 % (5.3) (2.2) % 31.3 590.6 %

Income from operations 36.2 7.3 % 3.4 0.8 % 32.8 964.7 %

Other income (expense):

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Loss on equity method investments (0.2) — % (0.3) (0.1) % 0.1 33.3 %

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

(Loss) gain on remeasurement of operating and finance leases — — % — — % — — %

Gain (loss) on disposal of fixed assets — — % (0.2) — % 0.2 100.0 %

1 unchanged sentence

Total other income (expense) (1.9) (0.4) % 0.7 0.2 % (2.6) (371.4) %

Net income (loss) before income tax provision 25.3 7.1 % (5.1) (2.1) % 30.4 596.1 %

(Provision for) benefit from income taxes (8.8) (2.5) % 2.5 1.0 % (11.3) (452.0) %

Net income (loss) 16.5 4.6 % (2.6) (1.1) % 19.1 734.6 %

Net income before income tax provision 34.3 6.9 % 4.1 1.0 % 30.2 736.6 %

Provision for income taxes (13.3) (2.7) % (2.0) (0.5) % (11.3) (565.0) %

Net income 21.0 4.2 % 2.1 0.5 % 18.9 900.0 %

Net income (loss) attributable to noncontrolling interests (2.2) (0.4) % 2.8 0.7 % (5.0) (178.6) %

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and Subsidiaries $ 23.2 4.7 % $ (0.7) (0.2) % $ 23.9 3414.3 %

For the six months ended June 30, 2024, total revenues were $357.0 million, an increase of $118.5 million, or 49.7%, compared to the six months ended June 30, 2023.

For the nine months ended September 30, 2024, total revenues were $495.7 million, an increase of $70.7 million, or 16.6%, compared to the nine months ended September 30, 2023.

Mobile Health Services

For the six months ended June 30, 2024, Mobile Health Services revenues were $260.7 million, an increase of $107.7 million, or 70.4%, compared to the six months ended June 30, 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 first half of 2023, the Company began providing services to the recently arrived 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.

For the nine months ended September 30, 2024, Mobile Health Services revenues were $351.3 million, an increase of $59.0 million, or 20.2%, compared to the nine months ended September 30, 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 recently arrived 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 third and fourth quarters 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 began to wind down in May 2024.

A portion of that contract has been extended through December 31, 2024, while other services began to wind down in May 2024, with the wind-down accelerating, as expected, during the third quarter of 2024.

While the exact timing of the wind-down of the remaining services is still subject to change, the process is well underway and the Company expects that the revenues from these migrant-related projects will be significantly lower in the fourth quarter of 2024 than in any of the first three quarters of the year.

As such, while we expect to launch new Mobile Health Services projects during the last quarter of the year, these are expected to be outweighed by a decline in revenues from migrant-related projects and we expect that overall Mobile Health Services revenues will be significantly lower in the fourth quarter of 2024 than in the fourth quarter of 2023.

Transportation Services

For the six months ended June 30, 2024, Transportation Services revenues were $96.4 million, an increase of $10.9 million, or 12.7%, compared to the six months ended June 30, 2023.

This increase was due to a 18.7% increase in trip volumes, to 143,699 trips in the six months ended June 30, 2024, from 121,083 trips for the six months ended June 30, 2023.

For the nine months ended September 30, 2024, Transportation Services revenues were $144.4 million, an increase of $11.7 million, or 8.8%, compared to the nine months ended September 30, 2023.

This increase was due to a 15.1% increase in trip volumes, to 213,475 trips in the nine months ended September 30, 2024, from 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 increased volumes with existing customers.

Our average trip price declined to $396 in the six months ended June 30, 2024, from $402 in the six months ended June 30, 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 half of 2023.

Our average trip price declined to $399 in the nine months ended September 30, 2024, from $405 in the nine months ended September 30, 2023.

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

Cost of revenues

For the six months ended June 30, 2024, total cost of revenues (exclusive of depreciation and amortization) increased by 41.9% compared to the six months ended June 30, 2023, while revenues increased by approximately 49.7%.

Cost of revenues as a percentage of revenues decreased to 65.5% in the six months ended June 30, 2024 from 69.1% in the six months ended June 30, 2023.

Total cost of revenues in the six months ended June 30, 2024 increased by $69.1 million compared to the same period in 2023.

This increase was primarily attributable to a $8.3 million increase in total compensation, due to higher headcount for both the Mobile Health Services and Transportation Services segments;

a $33.9 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 $16.9 million increase in medical and related supplies;

a $1.5 million increase in travel costs for field personnel and other clinicians who traveled out of their home regions to provide Mobile Health Services;

a $2.8 million increase in lab fees;

For the nine months ended September 30, 2024, total cost of revenues (exclusive of depreciation and amortization) increased by 8.9% compared to the nine months ended September 30, 2023, while revenues increased by approximately 16.6%.

Cost of revenues as a percentage of revenues decreased to 65.1% in the nine months ended September 30, 2024 from 69.7% in the nine months ended September 30, 2023.

Total cost of revenues in the nine months ended September 30, 2024 increased by $26.3 million compared to the same period in 2023.

This increase was primarily attributable to a $12.8 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 $6.3 million increase in medical and related supplies, also related to an increase in projects, particularly in the first six months of 2024;

and a $7.2 million net increase in other cost of revenues categories, including insurance.

For the Mobile Health Services segment, cost of revenues (exclusive of depreciation and amortization) in the six months ended June 30, 2024 amounted to $167.7 million, up 59.9% from $104.9 million in the six months ended June 30, 2023.

Cost of revenues as a percentage of revenues decreased to 64.3% from 68.5% in the prior year period, due to a significant increase in revenues and 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 six months ended June 30, 2024 amounted to $66.1 million, up 10.4% from $59.9 million in the six months ended June 30, 2023.

For the Mobile Health Services segment, cost of revenues (exclusive of depreciation and amortization) in the nine months ended September 30, 2024 amounted to $223.2 million, up 9.3% from $204.1 million in the nine months ended September 30, 2023.

Cost of revenues as a percentage of revenues decreased to 63.5% from 69.8% in the prior year period, due to an increase in revenues and 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 nine months ended September 30, 2024 amounted to $99.4 million, up 7.8% from $92.2 million in the nine months ended September 30, 2023.

Cost of revenues as a percentage of revenues decreased to 68.8% from 69.5% 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.

Operating expenses

For the six months ended June 30, 2024, the Company recorded $97.1 million of operating expenses compared to $78.9 million for the six months ended June 30, 2023, an increase of 23.1%.

As a percentage of revenue, operating expenses decreased from 33.1% in the first six months of 2023 to 27.2% in the first six months of 2024, reflecting the increase in

revenues described above.

For the nine months ended September 30, 2024, the Company recorded $136.9 million of operating expenses compared to $125.3 million for the nine months ended September 30, 2023, an increase of 9.3%.

As a percentage of revenue, operating expenses decreased from 29.5% in the first nine months of 2023 to 27.6% in the first nine months of 2024, reflecting the increase in revenues described above.

The increase of $11.6 million of operating expenses related primarily to a $0.9 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 $0.7 million increase in IT infrastructure, driven by the Company’s business and headcount expansion and acquisitions;

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

a $1.9 million increase in professional fees, including higher audit fees resulting from the growth of the business;

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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 six months ended June 30, 2024 were $34.7 million, up from $17.2 million in the six months ended June 30, 2023.

Operating expenses as a percentage of revenues increased to 13.3% in the first six months of 2024, from 11.2% in the first six months of 2023, reflecting significant expenditures that have been made in recent quarters in the expansion of services, particular in relation to the migrant-related projects in New York;

For the Mobile Health Services segment, operating expenses in the nine months ended September 30, 2024 were $47.9 million, up from $36.1 million in the nine months ended September 30, 2023.

Operating expenses as a percentage of revenues increased to 13.6% in the first nine months of 2024, from 12.3% in the first nine months of 2023, reflecting significant expenditures that were made in the second half of 2023 and the early part of 2024 in the expansion of services, particular in relation to the migrant-related projects in New York;

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

For the Transportation Services segment, operating expenses in the six months ended June 30, 2024 were $31.3 million, compared to $25.2 million in the six months ended June 30, 2023.

Operating expenses as a percentage of revenues increased to 32.5% for the six months ended June 30, 2024 from 29.4% in the six months ended June 30, 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 six months ended June 30, 2024 were $31.1 million, compared to $36.6 million in the six months ended June 30, 2023.

Corporate expenses amounted to approximately 8.7% of total consolidated revenues in the first half of 2024, compared to 15.4% in the first half 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.

For the Transportation Services segment, operating expenses in the nine months ended September 30, 2024 were $46.1 million, compared to $39.6 million in the nine months ended September 30, 2023.

Operating expenses as a percentage of revenues increased to 31.9% for the nine months ended September 30, 2024 from 29.9% in the nine months ended September 30, 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 during 2024 to date.

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, 2024 were $42.9 million, compared to $49.6 million in the nine months ended September 30, 2023.

Corporate expenses amounted to approximately 8.7% of total consolidated revenues in the first nine months of 2024, compared to 11.7% in the first nine months of 2023, reflecting the 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 six months ended June 30, 2024, the Company recorded $0.9 million of interest expense, net compared to $1.3 million of interest income, net in the six months ended June 30, 2023.

Interest expenses on borrowings under the Revolving Facility outweighed interest earned on balances in the Company’s interest-bearing accounts in the six months ended June 30, 2024, while average cash balances in these accounts were also lower when compared to the six months ended June 30, 2024.

For the nine months ended September 30, 2024, the Company recorded $1.4 million of interest expense, net compared to $1.7 million of interest income, net in the nine months ended September 30, 2023.

Interest expenses on borrowings under the Revolving Facility outweighed interest earned on balances in the Company’s interest-bearing accounts in the nine months ended September 30, 2024, while average cash balances in these accounts were also lower when compared to the nine months ended September 30, 2024.

Change in fair value of contingent liability

During the six months ended June 30, 2024, the Company recorded a loss for the change in fair value of contingent consideration of $0.3 million.

There was no related change in fair value recorded in the six months ended June 30, 2023.

During the nine months ended September 30, 2024, the Company recorded a loss for the change in fair value of contingent consideration of $0.4 million compared to a $0.2 million gain related to a change in fair value recorded in the nine months ended September 30, 2023.

Loss on equity method investments

During the six months ended June 30, 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 six months ended June 30, 2023, the Company recorded a loss on equity method investments of $0.2 million.

During the nine months ended September 30, 2024, the Company recorded a loss on equity method investments of $0.2 million, 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, 2023, the Company recorded a loss on equity method investments of $0.3 million.

Gain (loss) on disposal of fixed assets

During the six months ended June 30, 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 $0.2 million during the six months ended June 30, 2023.

(Provision for) benefit from income taxes

During the six months ended June 30, 2024, the Company recorded an income tax provision of $8.8 million, compared to an income tax benefit of $2.5 million in the six months ended June 30, 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.

During the nine months ended September 30, 2024, the Company recorded a gain on the disposal of fixed assets of $36,717 compared to a loss on the disposal of fixed assets of $163,452 during the nine months ended September 30, 2023.

Other income (expense)

During the nine months ended September 30, 2024, the Company recorded other income of $0.1 million, compared to other expense of $0.7 million in the nine months ended September 30, 2023.

Provision for income taxes

During the nine months ended September 30, 2024, the Company recorded an income tax provision of $13.3 million, compared to an income tax provision of $2.0 million in the nine months ended September 30, 2023.

The increased tax

expense in the 2024 period was due to the recording of significantly higher pretax income in the 2024 period, as compared to the 2023 period.

Net income (loss) attributable to noncontrolling interests

For the six months ended June 30, 2024, the Company had a net loss attributable to noncontrolling interests of

approximately $1.3 million, compared to net income attributable to noncontrolling interests of approximately $2.9 million for the six months ended June 30, 2023.

For the nine months ended September 30, 2024, the Company had a net loss attributable to noncontrolling interests of approximately $2.2 million, compared to net income attributable to noncontrolling interests of approximately $2.8 million for the nine months ended September 30, 2023.

Liquidity and Capital Resources

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

Despite the fact that the Company generated net income for the six months ended June 30, 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.

During the six months ended June 30, 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, near-term operating cash flows were not always sufficient to meet these demands for working capital, leading to fluctuations in the Company’s cash balances.

Despite the fact that the Company generated net income and operating cash flow for the nine months ended September 30, 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 have 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.

During the nine months ended September 30, 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, near-term operating cash flows were not always sufficient to meet these demands for working capital, leading to fluctuations 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.

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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 $25.0 million under the Revolving Facility, which amount remained outstanding as of December 31, 2023.

On October 19, 2023, the Company drew down $25.0 million under the Revolving Facility.

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

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

Looking beyond the next twelve months, the Company anticipates that expected future cash flows, amounts available under the Revolving Facility and proceeds from potential additional financings will be sufficient to satisfy any operating and potential investing requirements.

Looking beyond the next twelve months, the Company

anticipates that expected future cash flows, amounts available under the Revolving Facility and proceeds from potential additional financings will be sufficient to satisfy any operating and potential investing requirements.

Capital Resources

Working capital as of June 30, 2024 and December 31, 2023 was as follows:

June 30 December 31 Change

Working capital as of September 30, 2024 and December 31, 2023 was as follows:

September 30 December 31 Change

$ in Millions 2024 2023

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Total working capital $ 178.1 $ 168.8 $ 9.3 5.5 %

As of June 30, 2024, available cash totaled $66.1 million, which represented an increase of $6.8 million compared to December 31, 2023, reflecting a small decline in accounts receivable during the six months ended June 30, 2024, as the Company collected some of its larger invoices.

As of June 30, 2024, working capital amounted to $174.6 million, which represented an increase of $5.8 million compared to December 31, 2023, as an increase in cash and a decline in accrued liabilities outweighed a decline in accounts receivable.

As of September 30, 2024, available cash totaled $89.5 million, which represented an increase of $30.2 million compared to December 31, 2023, reflecting a decline in accounts receivable during the nine months ended September 30, 2024, as the Company collected some of its larger invoices.

As of September 30, 2024, working capital amounted to $178.1 million, which represented an increase of $9.3 million compared to December 31, 2023, as an increase in cash and a decline in accrued liabilities outweighed a decline in accounts receivable.

Current assets declined by $10.6 million, due to a drop in prepaid expenses.

However, this was outweighed by the decline in current liabilities in the six months ended June 30, 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 six months ended June 30, 2024 and 2023 were as follows:

Six Months Ended June 30, Change

However, this was outweighed by the decline in current liabilities in the nine months ended September 30, 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 year-to-date period.

Cash flows as of the nine months ended September 30, 2024 and 2023 were as follows:

Nine Months Ended September 30, Change

$ in Millions 2024 2023

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Operating Activities

During the six months ended June 30, 2024, operating activities provided $26.4 million of cash, aided by net income of $16.5 million.

During the nine months ended September 30, 2024, operating activities provided $57.4 million of cash, aided by net income of $21.0 million.

Non-cash charges amounted to $21.5 million and included $7.7 million in depreciation of property and equipment and right-of-use assets, $4.9 million from amortization of intangible assets, $9.7 million of stock compensation expense, bad debt expense of $3.8 million, a loss of $0.2 million from an investment that is accounted for under the equity method and a change in the fair value of contingent consideration of $0.4 million.

These were partially offset by $5.2 million in deferred taxes.

Changes in assets and liabilities resulted in approximately $6.3 million in negative operating cash flow, as a $1.6 million increase in accounts receivable, primarily driven by an increased amount of business with municipalities, which tend to have longer payment cycles, and a $27.9 million decrease in accrued liabilities due to payment of certain payables were partially offset by a $10.9 million increase in accounts payable and a $12.3 million decrease in prepaid expenses and other current assets.

During the six months ended June 30, 2023, operating activities used $12.4 million of cash, due in part to a net loss of $2.6 million.

Non-cash charges amounted to $19.4 million and included $4.7 million in depreciation of property and equipment and right-of-use assets, $2.8 million from amortization of intangible assets, $1.0 million in bad debt expense primarily related to a provision for potential uncollectible accounts receivable, $11.8 million of stock compensation expense, a $0.2 million loss on the disposal of assets and a loss of $0.2 million from an investment that is accounted for under the equity method.

These were partially offset by a non-cash gain of $1.3 million from a deferred tax asset.

Changes in assets and liabilities resulted in approximately $29.2 million in negative operating cash flow, as a $15.4 million increase in accounts receivable, driven by an increased amount of business with municipalities, who tend to have longer payment cycles;

a $14.9 million decrease in accounts payable;

and a $0.2 million decrease in prepaid expenses outweighed a $1.2 million increase in accrued liabilities.

Changes in assets and liabilities resulted in approximately $14.9 million in positive operating cash flow, as a $19.8 million decline in accounts receivable, reflecting collections of invoices from large municipal customers, a $12.3 million decrease in prepaid expenses and other current assets and a $15.3 million increase in accounts payable outweighed a $31.5 million decline in accrued liabilities and a $1.0 million increase in other assets.

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, 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 were partially offset by a $27.3 million increase in accrued liabilities and a $0.7 million decline in other assets.

Investing Activities

During the six months ended June 30, 2024, investing activities used $3.8 million of cash and consisted of the acquisition of property and equipment totaling approximately $2.2 million and the acquisition of intangibles in the amount of $1.6 million.

During the six months ended June 30, 2023, investing activities used $25.4 million of cash and consisted of the acquisition of property and equipment totaling approximately $3.6 million, the acquisition of intangibles in the amount of $1.9 million and $20.2 million from the acquisition of businesses, partially offset by $0.3 million in cash from the disposal of property and equipment.

During the nine months ended September 30, 2024, investing activities used $5.3 million of cash and consisted of the acquisition of property and equipment totaling approximately $2.9 million, the acquisition of intangibles in the amount of $2.2 million and an equity method investment in the amount of $0.3 million, partially offset by $0.1 million in cash proceeds from the disposal of property and equipment.

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.

Financing Activities

During the six months ended June 30, 2024, financing activities used $8.9 million of cash, as $45.0 million in proceeds from the Revolving Facility were mostly offset by $40.0 million in repayments of the Revolving Facility.

In addition, the Company spent approximately $9.8 million on its share repurchase program, $2.0 million in payments under the terms of a finance lease, $1.6 million in earnout payments on contingent liabilities, $0.2 million in dividends paid to a noncontrolling interest and $0.3 million in taxes related to shares withheld for employee taxes.

During the six months ended June 30, 2023, financing used $3.2 million of cash, primarily due to a $2.6 million decrease in amounts due to seller, relating to payments made for acquisitions that were completed in the second half of 2022 and early 2023;

During the nine months ended September 30, 2024, financing activities used $16.3 million of cash, as $45.0 million in proceeds from the Revolving Facility were mostly offset by $40.0 million in repayments of the Revolving Facility.

In addition, the Company spent approximately $11.1 million on its share repurchase program, $3.1 million in payments under the terms of a finance lease, $3.0 million in payments of amounts due to seller, $1.8 million in the acquisition of noncontrolling interest , $1.6 million in earnout payments on contingent liabilities, $0.3 million in dividends paid to a noncontrolling interest and $0.4 million in taxes related to shares withheld for employee taxes.

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;

and $0.5 million in repayments of notes payable.

These were partially offset by $1.1 million in proceeds from the exercise of stock options.

Future minimum annual maturities of notes payable as of June 30, 2024 are as follows (in thousands):

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

Future minimum annual maturities of notes payable as of September 30, 2024 are as follows (in thousands):

Notes Payable

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Long-term portion of notes payable $ 21.3

Future minimum lease payments under finance leases as of June 30, 2024 are as follows (in millions):

Future minimum lease payments under finance leases as of September 30, 2024 are as follows (in millions):

Finance Leases

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Present value of future minimum lease payments $ 14.0

Future minimum lease payments under operating leases as of June 30, 2024 are as follows (in millions):

Future minimum lease payments under operating leases as of September 30, 2024 are as follows (in millions):

2024, remaining $ 1.1

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

Net income (loss) for the Company’s VIEs was $(81,978) and $306,854 for the three months ended June 30, 2024 and 2023, respectively.

and $(357,883) and $120,217 for the six months ended June 30, 2024 and 2023, respectively.

Total assets amounted to $6,798,202 and $4,364,274 as of June 30, 2024 and December 31, 2023, respectively.

Total liabilities were $7,603,668 and $4,811,857 as of June 30, 2024 and December 31, 2023, respectively.

The Company’s VIEs’ total stockholders’ deficit was $805,466 and $447,583 as of June 30, 2024 and December 31, 2023, respectively.

Net income (loss) for the Company’s VIEs was $(67,785) and $(103,378) for the three months ended September 30, 2024 and 2023, respectively, and $(425,668) and $16,839 for the nine months ended September 30, 2024 and 2023, respectively.

Total assets amounted to $11,844,062 and $4,364,274 as of September 30, 2024 and December 31, 2023, respectively.

Total liabilities were $12,717,312 and $4,811,857 as of September 30, 2024 and December 31, 2023, respectively.

The Company’s VIEs’ total stockholders’ deficit was $873,250 and $447,583 as of September 30, 2024 and December 31, 2023, respectively.

Business Combination

38 unchanged sentences

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.

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.

17 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