What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 221 added, 118 removed, 378 unchanged (47% of the section changed)

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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, including, but not limited to the following:

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

impacts related to the recent and ongoing wind down of migrant-related services;

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

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

the availability of healthcare

professionals and other personnel;

availability of healthcare professionals and other personnel;

changes in the cost of labor;

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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 March 31, 2025, the Company recorded net loss of $11.1 million, compared to net income of $10.6 million in the three months ended March 31, 2024.

For the three months ended June 30, 2025, the Company recorded a net loss of $13.3 million, compared to net income of $5.8 million in the three months ended June 30, 2024.

For the six months ended June 30, 2025, the Company recorded a net loss of $24.3 million, compared to net income of $16.5 million in the six months ended June 30, 2024.

Factors Affecting Our Results of Operations

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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, moderated in 2024 after trending well above historical levels in the period from the second quarter of 2021 through the second quarter of 2024.

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

However, the inflation rate declined throughout most of 2024, and the annual inflation rate declined to 2.9% for the full year 2024 from 4.1% in 2023 and 8.0% in 2022.

For 2025 to date, the inflation rate has remained moderate, with readings

of 3.0% in January, 2.8% in February and 2.4% in March.

However, the introduction of new tariffs on imported goods has led to the prospect of increased inflation over the rest of 2025 and beyond.

The increased inflation rate witnessed between 2021 and 2024 has had an impact on the Company’s expenses in several areas, including wages, fuel and medical and other supplies.

This has had the effect 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.

The inflation rate

declined during the second half of 2024, and the annual inflation rate declined to 2.9% for the full year 2024 from 4.1% in 2023 and 8.0% in 2022.

For 2025 to date, the inflation rate has remained moderate, with readings of 3.0% in January, 2.8% in February, 2.4% in March, 2.3% in April, 2.4% in May and 2.7% in June.

However, the introduction of new tariffs on imported goods has led to the prospect of increased inflation over the second half of 2025 and beyond.

The increased inflation rate witnessed between 2021 and 2024 had an impact on the Company’s expenses in several areas, including wages, fuel and medical and other supplies.

This had the effect 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 addition, opportunities to mitigate the impact of inflation are limited, aside from potentially buying more medical supplies than are currently needed in an effort to reduce the volume of future purchases, in instances where supply prices are anticipated to rise.

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

During the three months ended March 31, 2025, the Company completed one acquisition, for $4.2 million.

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

During the six months ended June 30, 2025, the Company completed one acquisition, for $4.2 million.

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

Investing in R&D and Enhancing our Customer Experience

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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.

In recent years, the Company’s government contract work has represented a substantial portion of its overall revenue.

While the Company expects government contract work to decline, both in absolute dollar terms and as a percentage of overall consolidated revenue, due primarily to the ending of large migrant-related projects in New York, the Company continues to bid on government contracts and expects some revenue from this sector in the future.

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

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

While a portion of that contract was extended through December 31, 2024, other services began to wind down in May 2024.

While a portion of that

contract was extended through December 31, 2024, other services began to wind down in May 2024.

The wind-down of all services under such contract was completed in the fourth quarter of 2024.

While the Company continued to provide services under other contracts during the first and second quarters of 2025, the wind-down of those services is

nearly complete and the Company expects that the revenues from these migrant-related projects will be significantly lower in 2025 than they were in 2024 and in the second half of 2023.

While the Company continued to provide services under other contracts during the first and second quarters of 2025, the wind-down of those services is nearly complete and the Company expects that the revenues from these migrant-related projects will be significantly lower in 2025 than they were in 2024 and in the second half of 2023.

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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Furthermore, a shift in government policies or priorities, at either the federal, state or local level, surrounding the allocation of public spending to health care-related projects, could have a large impact on the Company’s revenues in this area.

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.

A loss of or a decline in 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 revenues and cost of goods sold are contained within the Mobile Health Services and Transportation Services segments.

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.

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General and administrative expenses consist primarily of salaries, bad debt expense, insurance expense, consultant fees and professional fees for accounting services.

We expect our general and administrative expenses to increase as we continue to scale our business and grow headcount and as a result of operating as a public company, including our compliance with SEC rules and regulations, audit activities, additional insurance expenses, investor relations activities and other administrative and professional services.

We incur additional general and administrative expenses as a result of operating as a public company, including our compliance with SEC rules and regulations, audit activities, additional insurance expenses, investor relations activities and other administrative and professional services.

In dollar terms, our general and administrative expenses have declined in recent quarters, along with the decline in our overall revenues, due to the wind-down of the Company’s migrant-related projects.

However, these costs have increased when measured as a percentage of total revenue, as the decline in general and administrative costs has been smaller than has been the decline in total revenue.

Over the remainder of 2025, we expect this trend to continue, with general and administrative costs declining sequentially in absolute dollar terms, while increasing as a percentage of revenues.

Over the longer term, we expect that general and administrative expenses will increase along with headcount as the Company’s overall business activity increases, including higher sales and marketing fees.

Depreciation and Amortization

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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.

Technology and development expenses will also be driven by investments made into new areas, such as artificial intelligence (AI).

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 and general branding.

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

We expect our sales, advertising and marketing expenses to continue to increase over time as we increase our marketing activities, expand into new geographic markets and customer verticals, particularly in the Mobile Health segment;

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, including our Revolving Facility.

These expenses are determined by the amounts of debt that are outstanding, as well as market interest rates, which form the basis for the interest expenses relating to our Revolving Facility.

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

These expenses are determined by the amounts of debt that are outstanding, as well as market interest rates, which form the basis for the interest expenses relating to our Prior Revolving Facility.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31, Change

Comparison of the Three Months Ended June 30, 2025 and 2024

Three Months Ended June 30, Change

$ in Millions 2025 2024

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Loss on equity method investments — — % (0.1) (0.1) % 0.1 100.0 %

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

Gain on disposal of fixed assets — — % 0.1 0.1 % (0.1) (100.0) %

Other income 0.1 0.1 % 0.3 0.2 % (0.2) (66.7) %

Total other expense (0.4) (0.5) % (0.6) (0.4) % 0.2 33.3 %

Net (loss) income before income tax benefit (expense) (17.9) (22.3) % 9.5 5.8 % (27.4) (288.4) %

Benefit from (provision for) income taxes 4.6 5.8 % (3.7) (2.3) % 8.3 224.3 %

Net (loss) income (13.3) (16.5) % 5.8 3.5 % (19.1) (329.3) %

Net loss attributable to noncontrolling interests (2.1) (2.6) % (0.7) (0.4) % (1.4) (200.0) %

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

and Subsidiaries $ (11.2) (13.9) % $ 6.5 3.9 % $ (17.7) (272.3) %

For the three months ended June 30, 2025, total revenues were $80.4 million, a decrease of $84.5 million, or 51.2%, compared to the three months ended June 30, 2024.

Mobile Health Services

For the three months ended June 30, 2025, Mobile Health Services revenues were $30.8 million, a decrease of $85.9 million, or 73.6%, compared to the three months ended June 30, 2024.

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 was extended through December 31, 2024, while other services began to wind down in May 2024.

The wind-down of all services under such contract was completed in the fourth quarter of 2024.

While the exact timing of the wind-down of the remaining migrant-related services under other contracts is still uncertain, this process is nearly complete and the Company expects that the revenues from any remaining migrant-related projects will be significantly lower in 2025 than in 2024 and the second half of 2023.

As such, while we expect to launch new Mobile Health Services projects in 2025 and to expand existing projects, we expect that overall Mobile Health Services revenues will be significantly lower in 2025 than they were in 2024.

Transportation Services

For the three months ended June 30, 2025, Transportation Services revenues were $49.6 million an increase of $1.4 million, or 2.9%, compared to the three months ended June 30, 2024.

This increase was despite a 1.5% decrease in U.S.

trip volumes, to 72,598 trips in the three months ended June 30, 2025, from 73,722 trips for the three months ended June 30, 2024.

Offsetting this decline in volume was an increase in the average trip price to $410 in the three months ended June 30, 2025, from $393 in the three months ended June 30, 2024.

The increase in the average trip price in the 2025 period reflected a shift in mix toward higher-priced transports when compared to the same period in 2024 in some of the Company’s markets.

Cost of revenues

For the three months ended June 30, 2025, total cost of revenues (exclusive of depreciation and amortization) decreased by 49.6% compared to the three months ended June 30, 2024, while revenues decreased by approximately 51.2%.

Cost of revenues as a percentage of revenues increased to 68.4% in the three months ended June 30, 2025 from 66.2% in the three months ended June 30, 2024.

Total cost of revenues in the three months ended June 30, 2025 decreased by $54.1 million compared to the same period in 2024.

This decrease was primarily attributable to a $9.4 million decrease in total compensation, a $31.0 million decline in subcontracted labor costs and a $9.6 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 $1.3 million decrease in vehicle costs and a $2.8 million net decrease 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, 2025 amounted to $20.8 million, down 72.2% from $74.9 million in the three months ended June 30, 2024.

Cost of revenues as a percentage of revenues increased to 67.5% from 64.2% in the prior year period, due to the decline in Mobile Health Services revenues, driven by the wind-down of migrant-related projects and lower margins from the early-stage care gap closure business.

For the Transportation Services segment, cost of revenues (exclusive of depreciation and amortization) in both the three months ended June 30, 2025 and 2024 amounted to $34.2 million.

Cost of revenues as a percentage of revenues decreased to 69.0% from 71.0% in the prior year quarter, as revenues increased while cost of revenues remained essentially unchanged.

Total compensation increased by 15.0% year-over-year, reflecting increased field headcount and temporary increases in the effective hourly wage for certain shifts in some of the Company’s markets, as the Company aggressively expands its staff in order to reduce its reliance on subcontractors.

Costs for subcontractors declined by 44.9% when compared to last year’s first quarter, 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, 2025, the Company recorded $42.9 million of operating expenses compared to $45.7 million for the three months ended June 30, 2024, a decrease of 6.1%.

As a percentage of revenue, operating expenses increased from 27.7% in the second quarter of 2024 to 53.4% in the second quarter of 2025, reflecting the decrease in revenues described above.

The decrease of $2.8 million in operating expenses related to a $5.1 million decrease in travel-related expenses, all due to the ongoing wind-down of the Mobile Health Services segment’s migrant-related projects.

This decline was partially offset by an increase of $1.8 million in total compensation as well as a net $0.5 million increase spread across a variety of other operating expense categories.

The Company anticipates that operating expenses will continue to decline as certain ongoing cost-containment efforts take hold.

For the Mobile Health Services segment, operating expenses in the three months ended June 30, 2025 were $10.6 million, down 32.9% from $15.8 million in the three months ended June 30, 2024.

Operating expenses as a percentage of revenues increased to 34.4% in the second quarter of 2025, from 13.5% in the second quarter of 2024, 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 both the three months ended June 30, 2025 and 2024 were $16.1 million.

Operating expenses as a percentage of revenues decreased slightly, to 32.5% for the three months ended June 30, 2025 from 33.4% in the three months ended June 30, 2024, due to 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 three months ended June 30, 2025 were $16.2 million, up 17.4% from $13.8 million in the three months ended June 30, 2024, as higher stock compensation costs and professional fees outweighed a decline in subcontractor expenses and insurance costs.

Corporate expenses amounted to approximately 20.1% of total consolidated revenues in the second quarter of 2025, compared to 8.4% in the second quarter of 2024, reflecting the decline in total consolidated revenues.

Interest expense, net

For both the three months ended June 30, 2025 and 2024, the Company recorded $0.5 million of interest expense, net.

Interest expenses on borrowings under the Prior Revolving Facility outweighed interest earned on balances in the Company’s interest-bearing accounts in both of the three month periods ended June 30, 2025 and 2024.

Change in fair value of contingent liability

During the three months ended June 30, 2025, the Company did not record a gain or loss for the change in fair value of contingent consideration.

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.

Loss on equity method investments

During the three months ended June 30, 2025, the Company recorded a loss on equity method investments of $38,817, 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, 2024, the Company recorded a loss on equity method investments of $64,014.

During the three months ended June 30, 2025, the Company recorded other income of $0.1 million, compared to other income of $0.3 million in the three months ended June 30, 2024.

Benefit from (provision for) income taxes

During the three months ended June 30, 2025, the Company recorded an income tax benefit of $4.6 million, compared to an income tax provision of $3.7 million in the three months ended June 30, 2024.

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 loss attributable to noncontrolling interests

For the three months ended June 30, 2025, the Company had net loss attributable to noncontrolling interests of approximately $2.1 million, compared to net loss attributable to noncontrolling interests of approximately $0.7 million for the three months ended June 30, 2024.

Comparison of the Six Months Ended June 30, 2025 and 2024

Six Months Ended June 30, Change

$ in Millions 2025 2024

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

Revenues, net $ 176.5 100.0 % $ 357.0 100.0 % $ (180.5) (50.6) %

Cost of revenues (exclusive of depreciation and amortization, which is shown separately below) 120.2 68.1 % 233.9 65.5 % (113.7) (48.6) %

Operating expenses:

General and administrative 64.2 36.4 % 74.9 21.0 % (10.7) (14.3) %

Depreciation and amortization 7.7 4.4 % 8.4 2.4 % (0.7) (8.3) %

Legal and regulatory 8.6 4.9 % 8.3 2.3 % 0.3 3.6 %

Technology and development 6.6 3.7 % 4.8 1.3 % 1.8 37.5 %

Sales, advertising and marketing 0.7 0.4 % 0.7 0.2 % — — %

Total expenses 208.0 117.9 % 331.0 92.7 % (123.0) (37.2) %

(Loss) income from operations (31.5) (17.9) % 26.0 7.3 % (57.5) (221.2) %

Other expense:

Interest expense, net (0.9) (0.5) % (0.9) (0.3) % — — %

Change in fair value of contingent liability — — % (0.3) (0.1) % 0.3 100.0 %

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

(Loss) gain on disposal of fixed assets — — % 0.1 — % (0.1) (100.0) %

Other (expense) income (0.2) (0.1) % 0.5 0.1 % (0.7) (140.0) %

Total other expense (1.2) (0.7) % (0.7) (0.3) % (0.5) (71.4) %

Net (loss) income before income tax (expense) benefit (14.8) (15.4) % 15.7 8.2 % (30.5) (194.3) %

Net (loss) income before income tax benefit (expense) (32.7) (18.5) % 25.3 7.1 % (58.0) (229.2) %

Benefit from (provision for) income taxes 8.4 4.7 % (8.8) (2.5) % 17.2 195.5 %

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and Subsidiaries $ (20.5) (11.6) % $ 17.8 5.0 % $ (38.3) (215.2) %

For the three months ended March 31, 2025, total revenues were $96.0 million, a decrease of $96.1 million, or 50.0%, compared to the three months ended March 31, 2024.

For the six months ended June 30, 2025, total revenues were $176.5 million, a decrease of $180.5 million, or 50.6%, compared to the six months ended June 30, 2024.

Mobile Health Services

For the three months ended March 31, 2025, Mobile Health Services revenues were $45.2 million, a decrease of $98.7 million, or 68.6%, compared to the three months ended March 31, 2024.

For the six months ended June 30, 2025, Mobile Health Services revenues were $76.0 million, a decrease of $184.7 million, or 70.8%, compared to the six months ended June 30, 2024.

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.

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Transportation Services

For the three months ended March 31, 2025, Transportation Services revenues were $50.8 million, an increase of $2.6 million, or 5.4%, compared to the three months ended March 31, 2024.

This increase was due to a 5.9% increase in trip volumes, to 74,130 trips in the three months ended March 31, 2025, from 69,977 trips for the three months ended March 31, 2024.

For the six months ended June 30, 2025, Transportation Services revenues were $100.5 million, an increase of $4.1 million, or 4.3%, compared to the six months ended June 30, 2024.

This increase was due to a 2.1% increase in U.S.

trip volumes, to 146,728 trips in the six months ended June 30, 2025, from 143,699 trips for the six months ended June 30, 2024.

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 decreased to $378 in the three months ended March 31, 2025, from $400 in the three months ended March 31, 2024.

The decline in the average trip price in the 2025 period reflected a shift in mix toward lower-priced transports when compared to the same period in 2024 in some of the Company’s markets.

Our average trip price decreased slightly, to $394 in the six months ended June 30, 2025, from $396 in the six months ended June 30, 2024.

The decline in the average trip price in the 2025 period reflected a shift in mix toward lower-priced transports when compared to the same period in 2024 in some of the Company’s markets, particularly in the first quarter of the year.

Cost of revenues

For the three months ended March 31, 2025, total cost of revenues (exclusive of depreciation and amortization) decreased by 47.8% compared to the three months ended March 31, 2024, while revenues decreased by approximately 50.0%.

Cost of revenues as a percentage of revenues increased to 67.9% in the three months ended March 31, 2025 from 65.0% in the three months ended March 31, 2024.

Total cost of revenues in the three months ended March 31, 2025 decreased by $59.6 million compared to the same period in 2024.

For the six months ended June 30, 2025, total cost of revenues (exclusive of depreciation and amortization) decreased by 48.6% compared to the six months ended June 30, 2024, while revenues decreased by approximately 50.6%.

Cost of revenues as a percentage of revenues increased to 68.1% in the six months ended June 30, 2025 from 65.5% in the six months ended June 30, 2024.

Total cost of revenues in the six months ended June 30, 2025 decreased by $113.7 million compared to the same period in 2024.

This decrease was primarily attributable to a $16.5 million decrease in total compensation, a $62.4 million decline in subcontracted labor costs and a $23.3 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;

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and a $6.8 million net decrease 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 March 31, 2025 amounted to $31.3 million, down 66.3% from $92.9 million in the three months ended March 31, 2024.

For the Mobile Health Services segment, cost of revenues (exclusive of depreciation and amortization) in the six months ended June 30, 2025 amounted to $52.1 million, down 68.9% from $167.7 million in the six months ended June 30, 2024.

Cost of revenues as a percentage of revenues increased to 68.6% from 64.3% in the prior year period, due to the decline in Mobile Health Services revenues, driven by the wind-down of migrant-related projects and lower margins from the early-stage care gap closure business.

For the Transportation Services segment, cost of revenues (exclusive of depreciation and amortization) in the three months ended March 31, 2025 amounted to $33.9 million, up 6.3% from $31.9 million in the three months ended March 31, 2024.

Cost of revenues as a percentage of revenues increased to 66.7% from 66.3% in the prior year quarter, as the increase in cost of revenues outpaced the increase in revenues.

Total compensation increased by 3.2% year-over-year, reflecting increased field headcount and temporary increases in the effective hourly wage for certain shifts in some of the Company’s

markets, as the Company aggressively expands its staff in order to reduce its reliance on subcontractors.

Costs for subcontractors declined by 33% when compared to last year’s first quarter, 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.

For the Transportation Services segment, cost of revenues (exclusive of depreciation and amortization) in the six months ended June 30, 2025 amounted to $68.1 million, up 3.0% from $66.1 million in the six months ended June 30, 2024.

Cost of revenues as a percentage of revenues decreased to 67.8% from 68.6% in the prior year quarter, as the increase in revenues outpaced the increase in cost of revenues.

Total compensation increased by 14.8% year-over-year, reflecting increased field headcount and temporary increases in the effective hourly wage for certain shifts in some of the Company’s markets, as the Company aggressively expands its staff in order to reduce its reliance on subcontractors.

Costs for subcontractors declined by 39.3% when compared to last year’s first half, 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 March 31, 2025, the Company recorded $44.8 million of operating expenses compared to $51.4 million for the three months ended March 31, 2024, a decrease of 12.8%.

As a percentage of revenue, operating expenses increased from 26.8% in the first quarter of 2024 to 46.7% in the first quarter of 2025, reflecting the decrease in revenues described above.

The decrease of $6.6 million in operating expenses related to a $7.3 million decrease in travel-related expenses, all due to the ongoing wind-down of the Mobile Health Services segment’s migrant-related projects.

This decline was partially offset by a net $0.7 million increase spread across a variety of other operating expense categories.

For the six months ended June 30, 2025, the Company recorded $87.8 million of operating expenses compared to $97.1 million for the six months ended June 30, 2024, a decrease of 9.6%.

As a percentage of revenue, operating expenses increased from 27.2% in the first half of 2024 to 49.7% in the first half of 2025, reflecting the decrease in revenues described above.

The decrease of $9.3 million in operating expenses related to a $12.5 million decrease in travel-related expenses, due to the ongoing wind-down of the Mobile Health Services segment’s migrant-related projects.

This decline was partially offset by a $2.5 million increase in total compensation and a net $0.7 million increase spread across a variety of other operating expense categories.

The Company anticipates that operating expenses will continue to decline as certain ongoing cost-containment efforts take hold.

For the Mobile Health Services segment, operating expenses in the three months ended March 31, 2025 were $11.4 million, down 39.7% from $18.9 million in the three months ended March 31, 2024.

Operating expenses as a percentage of revenues increased to 25.2% in the first quarter of 2025, from 13.1% in the first quarter of 2024, 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 March 31, 2025 were $15.7 million, up 3.3% from $15.2 million in the three months ended March 31, 2024.

Operating expenses as a percentage of revenues decreased to 30.9% for the three months ended March 31, 2025 from 31.5% in the three months ended March 31, 2024, due to 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 three months ended March 31, 2025 were $17.7 million, up 2.3% from $17.3 million in the three months ended March 31, 2024, as higher stock compensation costs outweighed a decline in subcontractor expenses and professional fees.

Corporate expenses amounted to approximately 18.4% of total consolidated revenues in the first quarter of 2025, compared to 9.0% in the first quarter of 2024, reflecting the decline in total consolidated revenues.

For the Mobile Health Services segment, operating expenses in the six months ended June 30, 2025 were $22.1 million, down 36.3% from $34.7 million in the six months ended June 30, 2024.

Operating expenses as a percentage of revenues increased to 29.1% in the second quarter of 2025, from 13.3% in the second quarter of 2024, 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 six months ended June 30, 2025 were $31.8 million, up 1.6% from $31.3 million in the six months ended June 30, 2024.

Operating expenses as a percentage of revenues decreased to 31.6% for the six months ended June 30, 2025 from 32.5% in the six months ended June 30, 2024, due to 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 six months ended June 30, 2025 were $33.9 million, up 9.0% from $31.1 million in the six months ended June 30, 2024, as higher stock compensation costs outweighed a decline in subcontractor expenses and professional fees.

Corporate expenses amounted to approximately 19.2% of total consolidated revenues in the first half of 2025, compared to 8.7% in the first half of 2024, reflecting the decline in total consolidated revenues.

Interest expense, net

For the three months ended March 31, 2025, the Company recorded $0.4 million of interest expense, net compared to $0.4 million of interest expense, net in the three months ended March 31, 2024.

Interest expenses on borrowings under the Revolving Facility outweighed interest earned on balances in the Company’s interest-bearing accounts in both of the three month periods ended March 31, 2025 and 2024.

For both the six months ended June 30, 2025 and 2024, the Company recorded $0.9 million of interest expense, net.

Interest expenses on borrowings under the Prior Revolving Facility outweighed interest earned on balances in the Company’s interest-bearing accounts in both of the six month periods ended June 30, 2025 and 2024.

Change in fair value of contingent liability

During the six months ended June 30, 2025, the Company did not record a gain or loss for the change in fair value of contingent consideration.

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.

Loss on equity method investments

During the three months ended March 31, 2025, the Company recorded a loss on equity method investments of $40,698, 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, 2024, the Company also recorded a loss on equity method investments of $83,167.

Gain on disposal of fixed assets

During the three months ended March 31, 2025, the Company recorded a gain on the disposal of fixed assets of $15,139, compared to a gain on the disposal of fixed assets of $52,835 during the three months ended March 31, 2024.

During the six months ended June 30, 2025, 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, 2024, the Company also recorded a loss on equity method investments of $0.1 million.

(Loss) gain on disposal of fixed assets

During the six months ended June 30, 2025, the Company recorded a loss on the disposal of fixed assets of $33,215, compared to a gain on the disposal of fixed assets of $65,398 during the six months ended June 30, 2024.

Other (expense) income

During the three months ended March 31, 2025, the Company recorded other expense of $0.3 million, compared to other income of $0.2 million in the three months ended March 31, 2024.

During the six months ended June 30, 2025, the Company recorded other expense of $0.2 million, compared to other income of $0.5 million in the six months ended June 30, 2024.

Benefit from (provision for) income taxes

During the three months ended March 31, 2025, the Company recorded an income tax benefit of $3.7 million, compared to an income tax provision of $5.1 million in the three months ended March 31, 2024.

During the six months ended June 30, 2025, the Company recorded an income tax benefit of $8.4 million, compared to an income tax provision of $8.8 million in the six months ended June 30, 2024.

The recording of a tax benefit in the current period compared to a tax provision in the prior year period is due to the recording of a pretax loss in the current period compared to pretax income in the prior year period.

Net loss attributable to noncontrolling interests

For the three months ended March 31, 2025, the Company had net loss attributable to noncontrolling interests of approximately $1.7 million, compared to net loss attributable to noncontrolling interests of approximately $0.6 million for the three months ended March 31, 2024.

For the six months ended June 30, 2025, the Company had net loss attributable to noncontrolling interests of approximately $3.8 million, compared to net loss attributable to noncontrolling interests of approximately $1.3 million for the six months ended June 30, 2024.

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 operating cash flow for the three months ended March 31, 2025, operating cash flows are not always sufficient to meet immediate obligations arising from current operations.

Despite the fact that the Company generated operating cash flow for the six months ended June 30, 2025, 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.

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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 2023 and 2024, leading to a draw down in the Company’s credit line during the fourth quarter of 2023 and during 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.

The Revolving Facility includes the ability for the Company to request an increase to the commitment by an additional amount of up to $50.0 million, though no lender (nor the lenders collectively) is obligated to increase its respective commitments.

Borrowings under the Revolving Facility bear interest at a per annum rate equal to (i) at the Company’s option, (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin.

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

The 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 $25.0 million under the Revolving Facility.

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.

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

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

The Prior Revolving Facility included the ability for the Company to request an increase to the commitment by an additional amount of up to $50.0 million, though no lender (nor the lenders collectively) was obligated to increase its respective commitments.

Borrowings under the Prior Revolving Facility bore interest at a per annum rate equal to (i) at the Company’s option, (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin.

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

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

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

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

There was a total of $30.0 million outstanding under the Prior Revolving Facility as of June 30, 2025.

On August 1, 2025, the

Company repaid these outstanding balances, and there were no amounts outstanding as of the date of the filing of this Quarterly Report on Form 10-Q.

On August 7, 2025, the Company amended and restated the Prior Credit Agreement.

The Credit Agreement provides for a revolving credit facility up to an aggregate principal amount of $55.0 million and borrowings thereunder are subject to a borrowing base formula based on eligible receivables as described therein.

The Revolving Facility includes the ability for the Company to request an increase to the commitment by an additional amount of up to $20.0 million, though neither Lender nor any other lender is obligated to provide any such additional commitment.

Borrowings under the Revolving Facility bear interest at a per annum rate equal to:

(i) at the Company’s option, (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin.

The applicable margin for an adjusted term SOFR loan is 2.00% and the applicable margin for a base rate loan is 1.00%.

The Revolving Facility matures on November 1, 2027, the five-year anniversary of the original closing date of the Revolving Facility.

The Credit Agreement is secured by a first-priority lien on substantially all of the Company’s present and future personal assets and intangible assets.

The Credit Agreement is subject to a certain minimum liquidity financial covenant, as defined in the Credit Agreement.

There was a total of $0 outstanding under the Revolving Facility as of the date of this Quarterly Report on Form 10-Q.

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.

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Capital Resources

Working capital as of March 31, 2025 and December 31, 2024 was as follows:

March 31 December 31 Change

Working capital as of June 30, 2025 and December 31, 2024 was as follows:

June 30 December 31 Change

$ in Millions 2025 2024

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Total working capital $ 136.5 $ 182.7 $ (46.2) (25.3) %

As of March 31, 2025, available cash totaled $79.0 million, which represented a decrease of $10.2 million compared to December 31, 2024, despite a decline in accounts receivable during the three months ended March 31, 2025, as the Company generated a net loss and used cash for share repurchases and an acquisition.

As of March 31, 2025, working capital amounted to $154.9 million, which represented a decrease of $27.8 million compared to December 31, 2024, as declines in cash and accounts receivable outweighed a decline in accounts payable and accrued liabilities.

Current assets declined by $42.0 million, due to a drop in cash and accounts receivable, which outweighed a decline in current liabilities in the three months ended March 31, 2025, due to lower accounts payable and a reduction in accrued liabilities, reflecting lower invoices and accrued liabilities in the current period for certain expenses, such as subcontracted labor.

Cash flows as of the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended

March 31, Change

As of June 30, 2025, available cash totaled $104.2 million, which represented an increase of $14.9 million compared to December 31, 2024, as increased collections leading to a decline in accounts receivable during the six months ended June 30, 2025, which outweighed a net loss and cash used for share repurchases and an acquisition.

As of June 30, 2025, working capital amounted to $136.5 million, which represented a decrease of $46.2 million compared to December 31, 2024, as a large decline in accounts receivable outweighed an increase in cash and a decline in accounts payable and accrued liabilities.

Current assets declined by $67.9 million, due to the large drop in accounts receivable, which outweighed a decline in current liabilities in the six months ended June 30, 2025, due to lower accounts payable and a reduction in accrued liabilities, reflecting lower invoices and accrued liabilities in the current period for certain expenses, such as subcontracted labor.

Cash flows as of the six months ended June 30, 2025 and 2024 were as follows:

Six Months Ended June 30, Change

$ in Millions 2025 2024

Cash flow summary

Net cash provided by (used in) operating activities $ 9.6 $ (10.6) $ 20.2 190.6 %

Net cash provided by operating activities $ 43.2 $ 26.2 $ 17.0 64.9 %

Net cash used in investing activities (27.1) (3.6) (23.5) (652.8) %

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Effect of exchange rate changes 1.0 (0.1) 1.1 1100.0 %

Net decrease in cash $ (4.3) $ (13.3) $ 9.0 67.7 %

Net increase in cash $ 1.2 $ 13.6 $ (12.4) (91.2) %

Operating Activities

During the three months ended March 31, 2025, operating activities provided $9.6 million of cash, despite a net loss of $11.1 million.

Non-cash charges amounted to $6.0 million and included $4.8 million of stock compensation expense, $2.5 million in depreciation of property and equipment and right-of-use assets, $1.3 million from amortization of intangible assets, bad debt expense of $1.2 million, and a loss of $40,698 from an investment that is accounted for under the equity method.

During the six months ended June 30, 2025, operating activities provided $43.2 million of cash, despite a net loss of $24.3 million.

Non-cash charges amounted to $11.0 million and included $9.7 million of stock compensation expense, $5.0 million in depreciation of property and equipment and right-of-use assets, $2.7 million from amortization of intangible assets and bad debt expense of $2.5 million.

These were partially offset by $8.8 million in deferred taxes and $0.1 million in accretion of discount related to restricted investments.

Changes in assets and liabilities resulted in approximately $56.5 million in positive operating cash flow, as an $86.2 million decrease in accounts receivable, reflecting collections of invoices from large municipal customers, a $1.0 million decrease in other assets and a $0.3 increase in operating lease liabilities and right-of-use assets were partially offset by a $7.5 million decrease in accrued liabilities, a $18.2 million decrease in accounts payable and a $5.3 million increase in prepaid expenses and other current assets.

During the six months ended June 30, 2024, operating activities provided $26.2 million of cash, aided by net income of $16.5 million.

Non-cash charges amounted to $16.2 million and included $5.1 million in depreciation of property and equipment and right-of-use assets, $3.3 million from amortization of intangible assets, $6.6 million of stock compensation expense, bad debt expense of $2.8 million, a loss of $0.1 million from an investment that is accounted for under the equity method and a change in the fair value of contingent consideration of $0.3 million.

These were partially offset by $2.0 million in deferred taxes.

Changes in assets and liabilities resulted in approximately $14.7 million in positive operating cash flow, as a $31.4 million decrease in accounts receivable, reflecting collections of invoices from large municipal customers, and a $0.5 million decrease in other assets were partially offset by a $9.1 million decrease in accrued liabilities, a $7.7 million decrease in accounts payable and a $0.4 million increase in prepaid expenses.

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.

Changes in assets and liabilities resulted in approximately $6.5 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 $28.0 million decrease in accrued liabilities due to payment of certain payables were partially offset by a $10.8 million increase in accounts payable and a $12.3 million decrease in prepaid expenses and other current assets.

Investing Activities

During the three months ended March 31, 2025, investing activities used $5.7 million of cash and consisted of the acquisition of a business of $3.6 million, the acquisition of property and equipment totaling approximately $1.5 million, and the acquisition of intangibles of $0.7 million, partially offset by $0.1 million in cash proceeds from the disposal of property and equipment.

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 six months ended June 30, 2025, investing activities used $27.1 million of cash and restricted cash and consisted of the purchase of restricted investments of $22.2 million, the acquisition of a business of $3.6 million, the purchase of property and equipment totaling approximately $2.2 million, and the acquisition of intangibles of $1.6 million, partially offset by $2.3 million in proceeds from the sale of restricted investments and $0.2 million in cash proceeds from the disposal of property and equipment.

During the six months ended June 30, 2024, investing activities used $3.6 million of cash and consisted of the acquisition of property and equipment totaling approximately $2.0 million and the acquisition of intangibles in the amount of $1.6 million.

Financing Activities

During the three months ended March 31, 2025, financing activities used $8.5 million of cash, as the Company spent approximately $5.7 million on its share repurchase program, made $1.3 million in payments under the terms of a finance lease, paid $1.2 million in taxes related to shares withheld for employee taxes, and made $0.3 million in earnout payments on contingent liabilities.

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.

Future minimum annual maturities of notes payable as of March 31, 2025 are as follows (in thousands):

During the six months ended June 30, 2025, financing activities used $15.9 million of cash, as the Company spent approximately $10.8 million on its share repurchase program, made $2.7 million in payments under the terms of a finance lease, paid $1.3 million in taxes related to shares withheld for employee taxes, made $0.8 million in payments due to seller and made $0.3 million in earnout payments on contingent liabilities.

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

Future minimum annual maturities of notes payable as of June 30, 2025 are as follows (in thousands):

Notes Payable

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Long-term portion of notes payable $ —

Future minimum lease payments under finance leases as of March 31, 2025 are as follows (in millions):

Future minimum lease payments under finance leases as of June 30, 2025 are as follows (in millions):

Finance Leases

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Present value of future minimum lease payments $ 17.0

Future minimum lease payments under operating leases as of March 31, 2025 are as follows (in millions):

Future minimum lease payments under operating leases as of June 30, 2025 are as follows (in millions):

2025, remaining $ 2.7

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The Company has therefore determined that it is the primary economic beneficiary of the PCs and appropriately consolidates them as VIEs.

Net loss for the Company’s VIEs was $1,711,511 and $275,905 for the three months ended March 31, 2025 and 2024, respectively.

Total assets amounted to $34,921,206 and $20,837,325 as of March 31, 2025 and December 31, 2024, respectively.

Total liabilities were $37,312,253 and $21,516,860 as of March 31, 2025 and December 31, 2024, respectively.

The Company’s VIEs’ total stockholders’ deficit was $2,391,046 and $679,535 as of March 31, 2025 and December 31, 2024, respectively.

Net loss for the Company’s VIEs was $2,392,937 and $81,978 for the three months ended June 30, 2025 and 2024, respectively, and $4,104,448 and $357,883 for the six months ended June 30, 2025 and 2024, respectively.

Total assets, exclusive of intercompany assets, amounted to $6,759,053 and $3,122,209 as of June 30, 2025 and December 31, 2024, respectively.

Total liabilities, exclusive of intercompany liabilities, were $11,543,036 and $3,801,744 as of June 30, 2025 and December 31, 2024, respectively.

The Company’s VIEs’ total stockholders’ deficit was $4,783,983 and $679,535 as of June 30, 2025 and December 31, 2024, respectively.

Self-Insurance Reserves

The Company self-insures a number of risks, including, but not limited to, workers’ compensation, general liability, auto liability and certain employee-related healthcare benefits.

The Company self-insures a number of risks, including, but not limited to, workers’ compensation, auto liability and certain employee-related healthcare benefits.

Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks on an undiscounted basis.

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On a regular basis, the liabilities are evaluated for appropriateness with claims reserve valuations.

To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers’ compensation, general liability and auto liability.

Fair Value of Financial Instruments

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Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2025 and December 31, 2024.

For certain financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, restricted cash, accounts payable and accrued expenses, and due to seller, the carrying amounts approximate their fair values as it is short term in nature.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2025 and December 31, 2024.

For certain financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, restricted cash, accounts payable and accrued

expenses, and due to seller, the carrying amounts approximate their fair values as it is short term in nature.

The notes payable are presented at their carrying value, which, based on borrowing rates currently available to the Company for loans with similar terms, approximates its fair values.

The Company’s restricted cash equivalents and restricted investments are valued at quoted market prices in active markets for similar assets, which the Company receives from the financial institutions that hold such investments on its behalf.

This fair value determination is categorized as Level 1 within the fair value hierarchy.

Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value.

Future changes in fair value of the contingent consideration, as a result of changes in significant inputs such as the discount rate and estimated probabilities of financial milestone achievements, could have a material effect on the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income and Condensed Consolidated Balance Sheets in the period of the change.

Future changes in fair value of the contingent consideration, as a result of changes in significant inputs such as the discount rate and estimated probabilities of financial milestone achievements, could have a material effect on the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income and unaudited Condensed Consolidated Balance Sheets in the period of the change.

Accounts Receivable

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The carrying amount of accounts receivable represents the maximum credit risk exposure of these assets.

On a quarterly basis, in accordance with Federal Accounting Standards Board ASC 326, Measurement of Credit Losses on Financial Instruments , the Company evaluates the collectability of outstanding accounts receivable balances to determine

an allowance for credit loss that reflects its best estimate of the lifetime expected credit losses.

Individual uncollectible accounts are written off against the allowance when collection of the individual account does not appear probable.

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As of January 1, 2025, the Company held a beginning balance in its allowance for credit losses on accounts receivable of $5,873,942.

The Company recognized an additional provision for credit losses of $1,266,216 and write offs of $(1,357,926) during the three months ended March 31, 2025.

The Company’s balance in its allowance for credit losses amounted to $5,782,232 as of March 31, 2025.

Business Combination

The Company recognized an additional provision for credit losses and write offs of $1,238,462 and $(928,106), respectively, for the three months ended June 30, 2025, and $2,504,678 and $(2,286,032), respectively, for the six months ended June 30, 2025.

The Company’s balance in its allowance for credit losses amounted to $6,092,588 as of June 30, 2025.

Business Combinations

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.

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(i) severe adverse industry or economic trends;

(ii) significant company-specific

actions, including exiting an activity in conjunction with restructuring of operations;

(ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations;

(iii) current, historical or projected deterioration of our financial performance;

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For these services, revenues are recorded net of estimated contractual allowances for claims subject to contracts with responsible paying entities.

The Company estimates contractual allowance at the time of billing based on contractual terms, historical collections or other arrangements.

The Company estimates contractual allowance at the time of billing

based on contractual terms, historical collections or other arrangements.

The Company also estimates the amount unbilled at month end and recognizes such amounts as revenue, based on available data and customer history.

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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