Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DocGo Inc (DCGO, Financial) reported strong performance across all customer verticals, with $138.7 million in revenue and $17.9 million in adjusted EBITDA for the third quarter.
- The company has made significant progress in its CareGap closure programs, doubling the number of assigned lives to over 500,000 patients and projecting a run rate of 1,000 visits per week by year-end.
- DocGo Inc (DCGO) has increased its cash flow from operations guidance to $90 million to $100 million, up from $80 million to $90 million, reflecting strong cash collections.
- The company has a robust pipeline and is expanding its infrastructure to meet demand, particularly in the payer and provider customer verticals.
- DocGo Inc (DCGO) has a strong balance sheet with over $108 million in cash and cash equivalents, providing resources to support growth initiatives and strategic opportunities.
Negative Points
- Total revenue for the third quarter of 2024 decreased by 26% compared to the third quarter of 2023, driven by the anticipated wind down of migrant-related projects.
- Mobile health revenue declined by 35% from the third quarter of 2023, reflecting the planned wind down in migrant-related work.
- The company expects a decrease in non-migrant municipal population health programs, lowering the base business forecast for 2024.
- SG&A expenses as a percentage of total revenues increased to 28.7% in the third quarter of 2024, up from 24.8% in the third quarter of 2023.
- DocGo Inc (DCGO) anticipates that SG&A could increase as a percentage of revenues over the next few quarters due to sequentially lower revenues.
Q & A Highlights
Q: Can you provide more color on what drove the strong EBITDA this quarter, and should we expect any impact on expenses as you grow the CareGap closure business?
A: Norman Rosenberg, Chief Financial and Accounting Officer, explained that the strong EBITDA was primarily driven by a blended gross margin of 36%, the highest since Q4 2022. This was due to a favorable mix within the migrant program and well-controlled SG&A expenses, which were down 14% year-over-year. Lee Bienstock, CEO, added that they will continue to invest in growth, particularly in payer programs, ensuring high-quality service and customer satisfaction, which is reflected in their EBITDA percentage range guidance for next year.
Q: Regarding the 2025 guidance, what changes have been made since the last quarter, particularly concerning base business revenues and margins?
A: Lee Bienstock, CEO, clarified that the 2025 guidance now includes an expected $50 million contribution from migrant-related revenues, which are health care-focused. The base business is projected to grow at a lower rate, and the EBITDA margin guidance has been adjusted to 8% to 10% to reflect investments in expansion and quality service delivery. Stephen Klasko, Independent Chair of the Board, added that some costs are being retained to support growth, such as redeploying staff from migrant programs to other parts of the organization.
Q: How do the margins for CareGap Closure contracts compare to corporate averages, and will this growth impact margins?
A: Lee Bienstock, CEO, stated that CareGap Closure contracts are priced in line with historical margins. While the expansion will require investment, such as staffing and training, these costs are factored into the guidance. The focus is on delivering exceptional quality and results for payers, with optimization expected over time.
Q: Can you clarify the revised expectations for non-migrant municipal population health business in 2025?
A: Lee Bienstock, CEO, explained that the base business is now expected to be in the $240 million to $260 million range, revised from previous forecasts. This adjustment reflects the timing of migrant-related revenue wind-downs and the transition of resources to base business growth, including payer programs and municipal health care services.
Q: How has the pipeline for CareGap Closure programs been affected by recent updates on star ratings from payers?
A: Lee Bienstock, CEO, noted that the need for payers to close care gaps has increased following recent updates on star ratings. This has led to greater traction with existing and new payer partners, resulting in more patients being assigned to DocGo for care gap closure services. The company is investing heavily in this area to meet the growing demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
