SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,September 30, 2023
OR
☐¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File NumberNumber: 001-39618
DocGo Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 85-2515483 | |||||||
| (State or Other Jurisdiction of | ||||||||
Incorporation or Organization) | (I.R.S. Employer Identification Number) | |||||||
35 West 35th Street, Floor 6 | ||||||||
New York, New York | 10001 | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
(844) 443-6246
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
| Common Stock, par value $0.0001 per share | DCGO | The Nasdaq Stock Market LLC | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒x No ☐¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | Accelerated filer | |||||||||||||
| Non-accelerated filer | Smaller reporting company | |||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐¨ No ☒x
As of May 5,November 3, 2023, 103,473,896103,896,329 shares of Common Stock,the registrant’s common stock, par value $0.0001 per share, were issued and outstanding.
| Page | ||||||
DocGo Inc. and Subsidiaries
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 120,056,897 | $ | 157,335,323 | ||||
| Accounts receivable, net of allowance of $3,780,545 and $7,818,702 as of March 31, 2023 and December 31, 2022, respectively | 131,599,567 | 102,995,397 | ||||||
| Assets held for sale | - | 4,480,344 | ||||||
| Prepaid expenses and other current assets | 6,737,378 | 6,269,841 | ||||||
| Total current assets | 258,393,842 | 271,080,905 | ||||||
| Property and equipment, net | 21,729,460 | 21,258,175 | ||||||
| Intangibles, net | 38,939,054 | 22,969,246 | ||||||
| Goodwill | 47,668,654 | 38,900,413 | ||||||
| Restricted cash | 7,461,821 | 6,773,751 | ||||||
| Operating lease right-of-use assets | 9,375,132 | 9,074,277 | ||||||
| Finance lease right-of-use assets | 9,170,429 | 9,039,663 | ||||||
| Equity method investment | 482,691 | 597,977 | ||||||
| Deferred tax assets | 10,973,522 | 9,957,967 | ||||||
| Other assets | 3,350,571 | 3,625,254 | ||||||
| Total assets | $ | 407,545,176 | $ | 393,277,628 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 19,028,065 | $ | 21,582,866 | ||||
| Accrued liabilities | 30,544,082 | 31,573,031 | ||||||
| Notes payable, current | 649,808 | 664,913 | ||||||
| Due to seller | 27,198,044 | 26,244,133 | ||||||
| Contingent consideration | 26,428,272 | 10,555,540 | ||||||
| Operating lease liability, current | 2,353,383 | 2,325,024 | ||||||
| Liabilities held for sale | - | 4,480,344 | ||||||
| Finance lease liability, current | 2,773,029 | 2,732,639 | ||||||
| Total current liabilities | 108,974,683 | 100,158,490 | ||||||
| Notes payable, non-current | 1,272,415 | 1,236,601 | ||||||
| Operating lease liability, non-current | 7,315,226 | 7,040,982 | ||||||
| Finance lease liability, non-current | 6,061,828 | 5,914,164 | ||||||
| Total liabilities | 123,624,152 | 114,350,237 | ||||||
| Common stock ($0.0001 par value; 500,000,000 shares authorized as of March 31, 2023 and December 31,2022; 102,932,174 and 102,411,162 shares issued and outstanding as of March 31, 2023 and December 31,2022, respectively) | 10,293 | 10,241 | ||||||
| Additional paid-in-capital | 310,049,864 | 301,451,435 | ||||||
| Accumulated deficit | (32,367,602 | ) | (28,972,216 | ) | ||||
| Accumulated other comprehensive gain | 984,864 | 741,206 | ||||||
| Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries | 278,677,419 | 273,230,666 | ||||||
| Noncontrolling interests | 5,243,605 | 5,696,725 | ||||||
| Total stockholders’ equity | 283,921,024 | 278,927,391 | ||||||
| Total liabilities and stockholders’ equity | $ | 407,545,176 | $ | 393,277,628 | ||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.September 30,
2023December 31,
2022Unaudited Audited ASSETS Current assets: Cash and cash equivalents $ 52,922,517 $ 157,335,323 Accounts receivable, net of allowance of $4,778,401 and $7,818,702 as of September 30, 2023 and December 31, 2022, respectively 207,324,368 102,995,397 Assets held for sale — 4,480,344 Prepaid expenses and other current assets 6,899,412 6,269,841 Total current assets 267,146,297 271,080,905 Property and equipment, net 21,852,663 21,258,175 Intangibles, net 38,586,498 22,969,246 Goodwill 47,594,304 38,900,413 Restricted cash 14,333,421 6,773,751 Operating lease right-of-use assets 9,420,525 9,074,277 Finance lease right-of-use assets 8,566,308 9,039,663 Equity method investments 447,125 597,977 Deferred tax assets 8,908,731 9,957,967 Other assets 2,928,270 3,625,254 Total assets $ 419,784,142 $ 393,277,628 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 8,951,261 $ 21,582,866 Accrued liabilities 58,883,665 31,573,031 Notes payable, current 696,053 664,913 Due to seller 12,995,455 26,244,133 Contingent consideration 26,238,486 10,555,540 Operating lease liability, current 2,561,165 2,325,024 Liabilities held for sale — 4,480,344 Finance lease liability, current 2,733,332 2,732,639 Total current liabilities 113,059,417 100,158,490 Notes payable, non-current 2,044,938 1,236,601 Operating lease liability, non-current 7,196,596 7,040,982 Finance lease liability, non-current 5,930,776 5,914,164 Total liabilities 128,231,727 114,350,237 Commitments and contingencies Stockholders’ equity: Common stock ($0.0001 par value; 500,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 103,874,539 and 102,411,162 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 10,387 10,241 Additional paid-in-capital 315,745,338 301,451,435 Accumulated deficit (28,964,781) (28,972,216) Accumulated other comprehensive income 808,171 741,206 Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries 287,599,115 273,230,666 Noncontrolling interests 3,953,300 5,696,725 Total stockholders’ equity 291,552,415 278,927,391 Total liabilities and stockholders’ equity $ 419,784,142 $ 393,277,628
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND(LOSS) INCOME
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Revenues, net | $ | 186,552,910 | $ | 104,319,894 | $ | 425,042,373 | $ | 331,730,750 | |||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Cost of revenues (exclusive of depreciation and amortization, which is shown separately below) | 131,502,046 | 71,254,838 | 296,346,420 | 219,418,873 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| General and administrative | 33,619,962 | 22,186,036 | 93,637,516 | 70,684,270 | |||||||||||||||||||
| Depreciation and amortization | 4,336,267 | 3,014,864 | 11,816,657 | 7,253,656 | |||||||||||||||||||
| Legal and regulatory | 3,545,820 | 2,200,964 | 9,588,997 | 6,610,223 | |||||||||||||||||||
| Technology and development | 3,235,301 | 1,373,146 | 7,673,269 | 3,663,299 | |||||||||||||||||||
| Sales, advertising and marketing | 1,605,559 | 90,856 | 2,598,192 | 2,348,917 | |||||||||||||||||||
| Total expenses | 177,844,955 | 100,120,704 | 421,661,051 | 309,979,238 | |||||||||||||||||||
| Income from operations | 8,707,955 | 4,199,190 | 3,381,322 | 21,751,512 | |||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||
| Interest income, net | 346,376 | 334,221 | 1,677,420 | 296,891 | |||||||||||||||||||
| (Loss) gain on remeasurement of warrant liabilities | — | (1,831,947) | — | 1,137,070 | |||||||||||||||||||
| Change in fair value of contingent liability | 159,974 | — | 159,974 | — | |||||||||||||||||||
| (Loss) gain on equity method investments | (95,503) | 93,371 | (301,362) | 99,840 | |||||||||||||||||||
| Gain on remeasurement of finance leases | 4,834 | — | 4,834 | 1,388,273 | |||||||||||||||||||
| (Loss) gain on disposal of fixed assets | (9,983) | 42,667 | (163,452) | 42,667 | |||||||||||||||||||
| Other income (expense) | 43,353 | 30,900 | (661,825) | 42,288 | |||||||||||||||||||
| Total other income (expense) | 449,051 | (1,330,788) | 715,589 | 3,007,029 | |||||||||||||||||||
| Net income before income tax provision | 9,157,006 | 2,868,402 | 4,096,911 | 24,758,541 | |||||||||||||||||||
| Income tax (provision) | (4,526,767) | (401,916) | (2,041,843) | (1,163,755) | |||||||||||||||||||
| Net income | 4,630,239 | 2,466,486 | 2,055,068 | 23,594,786 | |||||||||||||||||||
| Net (loss) income attributable to noncontrolling interests | (134,682) | (687,944) | 2,767,084 | (2,924,992) | |||||||||||||||||||
| Net income attributable to stockholders of DocGo Inc. and Subsidiaries | 4,764,921 | 3,154,430 | (712,016) | 26,519,778 | |||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| Foreign currency translation adjustment | (582,471) | 248,283 | 66,965 | 252,854 | |||||||||||||||||||
| Total comprehensive income | $ | 4,182,450 | $ | 3,402,713 | $ | (645,051) | $ | 26,772,632 | |||||||||||||||
| Net income per share attributable to DocGo Inc. and Subsidiaries - Basic | $ | 0.05 | $ | 0.03 | $ | (0.01) | $ | 0.26 | |||||||||||||||
| Weighted-average shares outstanding - Basic | 103,874,845 | 98,960,538 | 103,351,345 | 100,725,697 | |||||||||||||||||||
| Net income per share attributable to DocGo Inc. and Subsidiaries - Diluted | $ | 0.05 | $ | 0.03 | $ | (0.01) | $ | 0.24 | |||||||||||||||
| Weighted-average shares outstanding - Diluted | 104,993,729 | 107,403,135 | 103,351,345 | 109,168,293 | |||||||||||||||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue, net | $ | 113,002,703 | $ | 117,891,552 | ||||
| Expenses: | ||||||||
| Cost of revenues (exclusive of depreciation and amortization, which is shown separately below) | 81,226,498 | 77,987,573 | ||||||
| Operating expenses: | ||||||||
| General and administrative | 29,220,317 | 23,860,616 | ||||||
| Depreciation and amortization | 3,649,329 | 2,201,021 | ||||||
| Legal and regulatory | 3,638,321 | 1,347,983 | ||||||
| Technology and development | 1,863,579 | 1,141,833 | ||||||
| Sales, advertising and marketing | 307,246 | 1,257,961 | ||||||
| Total expenses | 119,905,290 | 107,796,987 | ||||||
| (Loss) Income from operations | (6,902,587 | ) | 10,094,565 | |||||
| Other income (expenses): | ||||||||
| Interest income (expense), net | 809,172 | (135,606 | ) | |||||
| Loss on remeasurement of warrant liabilities | - | (58,749 | ) | |||||
| Loss on equity method investments | (115,286 | ) | (83,341 | ) | ||||
| Loss on disposal of fixed assets | (54,839 | ) | - | |||||
| Other income (expenses) | 214,880 | (4,253 | ) | |||||
| Total other income (expenses) | 853,927 | (281,949 | ) | |||||
| Net (loss) income before income tax benefit (expense) | (6,048,660 | ) | 9,812,616 | |||||
| Income tax benefit (provision) | 2,129,870 | (440,179 | ) | |||||
| Net (loss) income | (3,918,790 | ) | 9,372,437 | |||||
| Net (loss) income attributable to noncontrolling interests | (453,120 | ) | (1,257,257 | ) | ||||
| Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries | (3,465,670 | ) | 10,629,694 | |||||
| Other comprehensive (loss) income | ||||||||
| Foreign currency translation adjustment | 243,658 | (5,863 | ) | |||||
| Total comprehensive (loss) income | $ | (3,222,012 | ) | $ | 10,623,831 | |||
| Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Basic | $ | (0.03 | ) | $ | 0.11 | |||
| Weighted-average shares outstanding - Basic | 102,579,291 | 100,177,082 | ||||||
| Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Diluted | $ | (0.03 | ) | $ | 0.09 | |||
| Weighted-average shares outstanding - Diluted | 102,579,291 | 115,652,049 | ||||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Common Stock | Additional Paid-in- Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2021 | 100,133,953 | $ | 10,013 | $ | 283,161,216 | $ | (63,556,714) | $ | (32,501) | $ | 7,475,010 | $ | 227,057,024 | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | 195,152 | 195 | 374,149 | — | — | — | 374,344 | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 1,422,937 | — | — | — | 1,422,937 | ||||||||||||||||||||||||||||||||||||||||
| Equity cost | — | — | (19,570) | — | — | — | (19,570) | ||||||||||||||||||||||||||||||||||||||||
| Noncontrolling interest contribution | — | — | — | — | — | 2,063,000 | 2,063,000 | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | — | (5,863) | — | (5,863) | ||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (1,257,257) | (1,257,257) | ||||||||||||||||||||||||||||||||||||||||
| Net income attributable to stockholders of DocGo Inc. and Subsidiaries | — | — | — | 10,629,694 | — | — | 10,629,694 | ||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2022 | 100,329,105 | $ | 10,208 | $ | 284,938,732 | $ | (52,927,020) | $ | (38,364) | $ | 8,280,753 | $ | 240,264,309 | ||||||||||||||||||||||||||||||||||
| Common stock repurchased | (70,000) | (70) | (497,829) | — | — | — | (497,899) | ||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | 417,927 | 418 | 778,648 | — | — | — | 779,066 | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 1,999,619 | — | — | — | 1,999,619 | ||||||||||||||||||||||||||||||||||||||||
| UK Ltd. restricted stock | 8,258 | 8 | 82,297 | — | — | — | 82,305 | ||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (979,791) | (979,791) | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | — | 10,434 | — | 10,434 | ||||||||||||||||||||||||||||||||||||||||
| Net income attributable to stockholders of DocGo Inc. and Subsidiaries | — | — | — | 12,735,653 | — | — | 12,735,653 | ||||||||||||||||||||||||||||||||||||||||
| Balance - June 30, 2022 | 100,685,290 | $ | 10,564 | $ | 287,301,467 | $ | (40,191,367) | $ | (27,930) | $ | 7,300,962 | $ | 254,393,696 | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | 378,941 | 38 | 728,465 | — | — | — | 728,503 | ||||||||||||||||||||||||||||||||||||||||
| Cashless exercise of options | 354,276 | 35 | (354) | — | — | — | (319) | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 1,015,660 | — | — | — | 1,015,660 | ||||||||||||||||||||||||||||||||||||||||
| UK Ltd. restricted stock | — | — | 95,543 | — | — | — | 95,543 | ||||||||||||||||||||||||||||||||||||||||
| Share warrants conversion | 1,406,371 | 141 | 12,381,432 | — | — | — | 12,381,573 | ||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (687,944) | (687,944) | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | — | (248,283) | — | (248,283) | ||||||||||||||||||||||||||||||||||||||||
| Net income attributable to stockholders of DocGo Inc. and Subsidiaries | — | — | — | 3,154,430 | — | — | 3,154,430 | ||||||||||||||||||||||||||||||||||||||||
| Balance - September 30, 2022 | 102,824,878 | $ | 10,778 | $ | 301,522,213 | $ | (37,036,937) | $ | (276,213) | $ | 6,613,018 | $ | 270,832,859 | ||||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in- | Accumulated | Other Comprehensive | Noncontrolling | Total Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income | Interests | Equity | ||||||||||||||||||||||
| Balance - December 31, 2021 | 100,133,953 | $ | 10,013 | $ | 283,161,216 | $ | (63,556,714 | ) | $ | (32,501 | ) | $ | 7,475,010 | $ | 227,057,024 | |||||||||||||
| Exercise of stock options | 195,152 | 195 | 374,149 | - | - | - | 374,344 | |||||||||||||||||||||
| Stock based compensation | - | - | 1,422,937 | - | - | - | 1,422,937 | |||||||||||||||||||||
| Equity cost | (19,570 | ) | (19,570 | ) | ||||||||||||||||||||||||
| UK Ltd. Restricted Stock (Note 4) | 146,853 | - | - | - | - | - | - | |||||||||||||||||||||
| Noncontrolling interest contribution | - | - | - | - | - | 2,063,000 | 2,063,000 | |||||||||||||||||||||
| Foreign currency translation | - | - | - | - | (5,863 | ) | - | (5,863 | ) | |||||||||||||||||||
| Net loss attributable to noncontrolling interests | - | - | - | - | - | (1,257,257 | ) | (1,257,257 | ) | |||||||||||||||||||
| Net income attributable to stockholders of DocGo Inc. and Subsidiaries | - | - | - | 10,629,694 | - | - | 10,629,694 | |||||||||||||||||||||
| Balance - March 31, 2022 | 100,475,958 | $ | 10,208 | $ | 284,938,732 | $ | (52,927,020 | ) | $ | (38,364 | ) | $ | 8,280,753 | $ | 240,264,309 | |||||||||||||
Common Stock | Additional Paid-in- Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Noncontrolling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2022 | 102,411,162 | $ | 10,241 | $ | 301,451,435 | $ | (28,972,216) | $ | 741,206 | $ | 5,696,725 | $ | 278,927,391 | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | 96,101 | 10 | 249,705 | — | — | — | 249,715 | ||||||||||||||||||||||||||||||||||||||||
| UK Ltd. restricted stock | — | — | 167,175 | — | — | — | 167,175 | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 424,911 | 42 | 8,181,549 | — | — | — | 8,181,591 | ||||||||||||||||||||||||||||||||||||||||
| Health liquidation | — | — | — | 70,284 | — | — | 70,284 | ||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (453,120) | (453,120) | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | — | 243,658 | — | 243,658 | ||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to stockholders of DocGo Inc. and Subsidiaries | — | — | — | (3,465,670) | — | — | (3,465,670) | ||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2023 | 102,932,174 | $ | 10,293 | $ | 310,049,864 | $ | (32,367,602) | $ | 984,864 | $ | 5,243,605 | $ | 283,921,024 | ||||||||||||||||||||||||||||||||||
| Acquisition of CRMS | 117,330 | 12 | 1,000,000 | — | — | — | 1,000,012 | ||||||||||||||||||||||||||||||||||||||||
| Acquisition of FMC NA | 360,145 | 36 | (1,432,963) | 649,167 | — | (3,213,956) | (3,997,716) | ||||||||||||||||||||||||||||||||||||||||
| Acquisition of Healthworx | — | — | — | — | — | (1,296,553) | (1,296,553) | ||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | 260,410 | 26 | 706,379 | — | — | — | 706,405 | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 334,791 | 33 | 3,827,314 | — | — | — | 3,827,347 | ||||||||||||||||||||||||||||||||||||||||
| Shares withheld for taxes | (242,758) | (24) | (2,049,313) | — | — | — | (2,049,337) | ||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | — | — | — | — | — | 3,354,886 | 3,354,886 | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | — | 405,778 | — | 405,778 | ||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to stockholders of DocGo Inc. and Subsidiaries | — | — | — | (2,011,267) | — | — | (2,011,267) | ||||||||||||||||||||||||||||||||||||||||
| Balance - June 30, 2023 | 103,762,092 | $ | 10,376 | $ | 312,101,281 | $ | (33,729,702) | $ | 1,390,642 | $ | 4,087,982 | $ | 283,860,579 | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | 88,837 | 8 | 425,995 | — | — | — | 426,003 | ||||||||||||||||||||||||||||||||||||||||
| Cashless exercise of options | 6,374 | 1 | (1) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 30,650 | 3 | 3,335,707 | — | — | — | 3,335,710 | ||||||||||||||||||||||||||||||||||||||||
| Shares withheld for taxes | (13,414) | (1) | (117,644) | — | — | — | (117,645) | ||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (134,682) | (134,682) | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | — | (582,471) | — | (582,471) | ||||||||||||||||||||||||||||||||||||||||
| Net income attributable to stockholders of DocGo Inc. and Subsidiaries | — | — | — | 4,764,921 | — | — | 4,764,921 | ||||||||||||||||||||||||||||||||||||||||
| Balance - September 30, 2023 | 103,874,539 | $ | 10,387 | $ | 315,745,338 | $ | (28,964,781) | $ | 808,171 | $ | 3,953,300 | $ | 291,552,415 | ||||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in- | Accumulated | Other Comprehensive | Noncontrolling | Total Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income | Interests | Equity | ||||||||||||||||||||||
| Balance - December 31, 2022 | 102,411,162 | $ | 10,241 | $ | 301,451,435 | $ | (28,972,216 | ) | $ | 741,206 | $ | 5,696,725 | $ | 278,927,391 | ||||||||||||||
| Equity cost | - | - | - | - | - | - | - | |||||||||||||||||||||
| Noncontrolling interest contribution | - | - | - | - | - | - | - | |||||||||||||||||||||
| Common stock repurchased | - | - | - | - | - | - | - | |||||||||||||||||||||
| Exercise of stock options | 96,101 | 10 | 249,705 | - | - | - | 249,715 | |||||||||||||||||||||
| UK Ltd. Restricted Stock (Note 4) | - | - | 167,175 | - | - | - | 167,175 | |||||||||||||||||||||
| Stock based compensation, including 45,704 vested RSUs | 424,911 | 42 | 8,181,549 | - | - | - | 8,181,591 | |||||||||||||||||||||
| Ambulnz Health liquidation | - | - | - | 70,284 | 70,284 | |||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | - | - | - | - | - | (453,120 | ) | (453,120 | ) | |||||||||||||||||||
| Foreign currency translation | - | - | - | - | 243,658 | - | 243,658 | |||||||||||||||||||||
| Net loss attributable to stockholders of DocGo Inc. and Subsidiaries | - | - | - | (3,465,670 | ) | - | - | (3,465,670 | ) | |||||||||||||||||||
| Balance - March 31, 2023 | 102,932,174 | $ | 10,293 | $ | 310,049,864 | $ | (32,367,602 | ) | $ | 984,864 | $ | 5,243,605 | $ | 283,921,024 | ||||||||||||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 2,055,068 | $ | 23,594,786 | |||||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation of property and equipment | 4,697,717 | 2,592,244 | |||||||||
| Amortization of intangible assets | 4,295,958 | 2,269,423 | |||||||||
| Amortization of finance lease right-of-use assets | 2,822,982 | 2,391,989 | |||||||||
| Loss (gain) on disposal of assets | 163,452 | (42,667) | |||||||||
| Deferred tax asset | 1,049,236 | — | |||||||||
| Loss (gain) on equity method investments | 301,362 | (99,840) | |||||||||
| Bad debt expense | (311,441) | 2,702,979 | |||||||||
| Stock-based compensation | 15,161,847 | 4,616,056 | |||||||||
| Gain on remeasurement of finance leases | (4,834) | (1,388,273) | |||||||||
| Loss on liquidation of business | 70,284 | — | |||||||||
| Gain on remeasurement of warrant liabilities | — | (1,137,070) | |||||||||
| Change in fair value of contingent consideration | (159,974) | — | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (103,483,997) | 2,894,650 | |||||||||
| Prepaid expenses and other current assets | (336,093) | (282,668) | |||||||||
| Other assets | 696,984 | 882,432 | |||||||||
| Accounts payable | (12,640,920) | (3,983,383) | |||||||||
| Accrued liabilities | 27,319,258 | 2,596,887 | |||||||||
| Net cash (used in) provided by operating activities | (58,303,111) | 37,607,545 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Acquisition of property and equipment | (4,360,807) | (1,994,161) | |||||||||
| Acquisition of intangibles | (2,478,808) | (1,956,434) | |||||||||
| Acquisition of businesses | (20,203,464) | (33,843,373) | |||||||||
| Equity method investments | (150,510) | — | |||||||||
| Proceeds from disposal of property and equipment | 274,210 | — | |||||||||
| Net cash (used in) investing activities | (26,919,379) | (37,793,968) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from revolving credit line | — | 1,000,000 | |||||||||
| Repayments of notes payable | (529,583) | (585,711) | |||||||||
| Due to seller | (8,417,936) | (1,007,800) | |||||||||
| Noncontrolling interest contributions | — | 2,063,000 | |||||||||
| Proceeds from exercise of stock options | 1,549,298 | 1,880,568 | |||||||||
| Payments for taxes related to shares withheld for employee taxes | (2,166,982) | — | |||||||||
| Common stock repurchased | — | (497,759) | |||||||||
| Equity costs | — | (19,570) | |||||||||
| Payments on obligations under finance lease | (2,293,330) | (2,146,857) | |||||||||
| Net cash (used in) provided by financing activities | (11,858,533) | 685,871 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 227,887 | (252,854) | |||||||||
| Net (decrease) increase in cash and restricted cash | (96,853,136) | 246,594 | |||||||||
| Cash and restricted cash at beginning of period | 164,109,074 | 179,105,730 | |||||||||
| Cash and restricted cash at end of period | $ | 67,255,938 | $ | 179,352,324 | |||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss) income | $ | (3,918,790 | ) | $ | 9,372,437 | |||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| Depreciation of property and equipment | 1,482,610 | 711,878 | ||||||
| Amortization of intangible assets | 1,365,636 | 633,363 | ||||||
| Amortization of finance lease right-of-use assets | 801,083 | 855,781 | ||||||
| Loss on disposal of assets | 54,839 | - | ||||||
| Deferred tax asset | (1,015,555 | ) | - | |||||
| Loss on equity method investment | 115,286 | 68,995 | ||||||
| Bad debt expense | (1,902,587 | ) | 1,154,235 | |||||
| Stock based compensation | 8,450,016 | 1,422,937 | ||||||
| Loss on remeasurement of warrant liabilities | - | (58,749 | ) | |||||
| Gain on liquidation of business | 70,284 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (24,668,050 | ) | 1,061,709 | |||||
| Prepaid expenses and other current assets | (174,059 | ) | (1,537,550 | ) | ||||
| Other assets | 274,683 | 2,188,242 | ||||||
| Accounts payable | (2,581,796 | ) | (671,744 | ) | ||||
| Accrued liabilities | (1,471,551 | ) | 3,063,148 | |||||
| Net cash (used in) provided by operating activities | (23,117,951 | ) | 18,264,682 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Acquisition of property and equipment | (1,976,075 | ) | (602,416 | ) | ||||
| Acquisition of intangibles | (1,405,444 | ) | (534,624 | ) | ||||
| Acquisition of businesses | 1,574,604 | - | ||||||
| Proceeds from disposal of property and equipment | 117,420 | - | ||||||
| Net cash used in investing activities | (1,689,495 | ) | (1,137,040 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from revolving credit line | - | 1,000,000 | ||||||
| Repayments of notes payable | (129,370 | ) | (138,151 | ) | ||||
| Due to seller | (11,494,549 | ) | (160,250 | ) | ||||
| Noncontrolling interest contributions | - | 2,063,000 | ||||||
| Proceeds from exercise of stock options | 416,890 | 374,344 | ||||||
| Equity costs | - | (19,570 | ) | |||||
| Payments on obligations under finance lease | (744,030 | ) | (622,575 | ) | ||||
| Net cash (used in) provided by financing activities | (11,951,059 | ) | 2,496,798 | |||||
| Effect of exchange rate changes on cash and cash equivalents | 168,149 | (5,863 | ) | |||||
| Net (decrease) increase in cash and restricted cash | (36,590,356 | ) | 19,618,577 | |||||
| Cash and restricted cash at beginning of period | 164,109,074 | 179,105,730 | ||||||
| Cash and restricted cash at end of period | $ | 127,518,718 | $ | 198,724,307 | ||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
DocGo Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| Supplemental disclosure of cash and non-cash transactions: | |||||||||||
| Cash paid for interest | $ | 179,430 | $ | 102,203 | |||||||
| Cash paid for interest on finance lease liabilities | $ | 394,443 | $ | 434,580 | |||||||
| Cash paid for income taxes | $ | 4,223,810 | $ | 917,445 | |||||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | 2,407,938 | $ | 4,094,731 | |||||||
| Fixed assets acquired in exchange for notes payable | $ | 1,369,060 | $ | 819,231 | |||||||
| Acquisition of remaining FMC NA through due to seller and issuance of stock | $ | 7,000,000 | $ | — | |||||||
| Acquisition of CRMS through issuance of stock | $ | 1,000,000 | $ | — | |||||||
| Receivable exchanged for trade credits | $ | 1,500,000 | $ | — | |||||||
| Reconciliation of cash and restricted cash | |||||||||||
| Cash | $ | 52,922,517 | $ | 169,598,749 | |||||||
| Restricted cash | 14,333,421 | 9,753,575 | |||||||||
| Total cash and restricted cash shown in statement of cash flows | $ | 67,255,938 | $ | 179,352,324 | |||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Supplemental disclosure of cash and non-cash transactions: | ||||||||
| Cash paid for interest | $ | 32,827 | $ | 68,222 | ||||
| Cash paid for interest on finance lease liabilities | $ | 126,584 | $ | 153,327 | ||||
| Cash paid for income taxes | $ | 40,050 | $ | 440,179 | ||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | 926,468 | $ | 722,716 | ||||
| Fixed assets acquired in exchange for notes payable | $ | 150,079 | $ | - | ||||
| Reconciliation of cash and restricted cash | ||||||||
| Cash | $ | 120,056,897 | $ | 188,353,909 | ||||
| Restricted cash | 7,461,821 | 10,370,398 | ||||||
| Total cash and restricted cash shown in the statements of cash flows | $ | 127,518,718 | $ | 198,724,307 | ||||
| Non-cash investing activities acquisition of business funded by acquisition payable | $ | 19,473,805 | $ | - | ||||
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Organization and Business Operations
As contemplated by the Merger Agreement and as described in Motion’sthe Company’s definitive proxy statement/consent solicitation/prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 14, 2021, (the “Prospectus”), Merger Sub was merged with and into Ambulnz, with Ambulnz continuing as the surviving corporation (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). As a result of the Merger, Ambulnz isbecame a wholly-ownedwholly owned subsidiary of DocGothe Company and each share of Series A preferred stock of Ambulnz, no par value (“Ambulnz Preferred Stock”), Class A common stock of Ambulnz, no par value (“Ambulnz Class A Common Stock”), and Class B common stock of Ambulnz, no par value (“Ambulnz Class B Common Stock,” and together with Ambulnz Class A Common Stock, “Ambulnz Common Stock”) was cancelled and converted into the right to receive a portion of the merger consideration issuable as common stock of DocGo,the Company, par value $0.0001 (“Common Stock”), pursuant to the terms and conditions set forth in the Merger Agreement.
In connection with the Business Combination, DocGothe Company raised $158.0 million$158,000,000 of net proceeds. This amount was comprisedconsisted of $43.4 million(i) $43,400,000 of cash held in Motion’sthe Company’s trust account fromestablished in connection with its initial public offering, net of DocGo’sthe Company’s transaction costs and underwriters’ fees of $9.6 million,$9,600,000, and $114.6 million(ii) $114,600,000 of cash in connection withfrom the concurrent PIPE private placementsale of shares of common stockCommon Stock to certain investors at a price of $10.00 per share in a private placement that closed concurrently with the Business Combination (the “PIPE Financing”), net of $10.4 million$10,400,000 in transaction costs in connection with the PIPE Financing. These transaction costs consisted of banking, legal, and other professional fees, which were recorded as a reduction to additional paid-in capital.
The Business
DocGo Inc. and its Subsidiaries (collectively, the “Company”)The Company is a healthcare transportation and mobile health services (“Mobile Health”) company that uses proprietary dispatch and communication technology to provide quality healthcare transportation and healthcare services in major metropolitan cities in the United States (“U.S.”) and the United Kingdom. Mobile Health performs in-person care directly to patients in the comfort of their homes, workplaces and other non-traditional locations.
Ambulnz LLC was originally formed in Delaware on June 17, 2015 as Ambulnz, LLC, a limited liability company. On November 1, 2017, with an effective date of January 1, 2017, Ambulnz converted its legal structure from a limited liability company to a C-corporation and changed its name to Ambulnz, Inc. Ambulnz is the sole owner of Ambulnz Holdings, LLC (“Holdings”), which was formed in the state of Delaware on August 5, 2015 as a limited liability company. Holdings is the owner of multiple operating entities incorporated in various states in the United StatesU.S. as well as within England and Wales, United Kingdom.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United StatesU.S. (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in the Company’sour Annual Report on Form 10-K for the year ended December 31, 2022.
The Consolidated Balance Sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date but does not include all disclosures including notes required by U.S. GAAP.
Pursuant to theThe Business Combination the merger between Motion and Ambulnz, Inc. was accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, Motionthe Company was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Ambulnz Inc. stock for the net assets of Motion,the Company, accompanied by a recapitalization. The net assets of Motionthe Company are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Ambulnz, Inc.Ambulnz. The shares and corresponding capital amounts and earnings per share available for common stockholders prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio (645.1452 to 1) established in the Business Combination. Further, Ambulnz Inc. was determined to be the accounting acquirer in the transaction, and as such, the acquisition is considered a business combination under Accounting Standards Codification (“ASC”), Topic 805, Business Combinations (“ASC 805”) and was accounted for using the acquisition method of accounting.
Principles of Consolidation
The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of DocGo Inc. and its subsidiaries. All significant intercompany transactions and balances have been eliminated in these unaudited Condensed Consolidated Financial Statements.
The Company holds a variable interest in Mobile Medical Healthcare P.C., formerly known as MD1 Medical Care P.C. (“MD1”), which contracts with physicians and other health professionals and providesin order to provide services to the Company. MD1 is considered a VIEvariable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits—benefits — that is, if it has (1) the power to direct the activities of athe VIE that most significantly impacts the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of MD1 and funds and absorbs all losses of the VIEMD1 and therefore appropriately consolidates MD1.
Net lossincome for MD1 was $16,839 for the VIE was $186,637 for the threenine months ended March 31,September 30, 2023. The VIE’sMD1’s total assets, all of which were current assets apart from other assets amounting to $15,248, amounted to $635,620$635,777 as of March 31,September 30, 2023. Total liabilities, all of which were current for the VIE, was $532,127MD1, were $469,066 as of March 31,September 30, 2023. The VIE’sMD1’s total stockholders’ deficitequity was $103,493$166,711 as of March 31,September 30, 2023.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Foreign Currency
The Company’s functional currency is the U.S. dollar. The functional currenciescurrency of our foreign operation is the Company’s foreign operations are the respective local currencies.British pound. Assets and liabilities of foreign operations denominated in local currencies are translated at the spot rate in effect at the applicable reporting date, except for equity accounts which are translated at historical rates. The unaudited Condensed
Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in its financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue recognition related to the allowance for doubtful accounts, stock basedstock-based compensation, calculations related to the incremental borrowing rate for the Company’s lease agreements, estimates related to ongoing lease terms, software development costs, impairment of long-lived assets, goodwill and indefinite-lived intangible assets, business combinations, reserve for losses within the Company’s insurance deductibles, income taxes, and deferred income tax. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.
Self InsuranceSelf-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. Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks on an undiscounted basis. The recorded liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to the processing of these outstanding claim payments. 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.
Concentration of Credit Risk and Off-Balance Sheet Risk
The Company is potentially subject to concentration of credit risk with respect to its cash, cash equivalents and restricted cash, which the Company attempts to minimize by maintaining cash, cash equivalents and restricted cash with institutions of sound financial quality. At times, cash balances may exceed limits federally insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the funds are held. The Company has no financial instruments with off-balance sheet risk of loss.
Major Customers
The Company had one customer that accounted for approximately 46%33% of sales and 62% of net accounts receivable, for the three months ended March 31, 2023.
The Company had one customer that accounted for approximately 34% of sales and 22%36% of net accounts receivable and another customer that accounted for 19%32% of sales and 17%28% of net accounts receivable for the three months ended March 31,September 30, 2023. One customer accounted for approximately 37% of sales and 28% of net accounts receivable and another customer accounted for approximately 17% of sales and 36% of net accounts receivable for the nine months ended September 30, 2023.
Major Vendor
Emerging Growth Company
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non- emergingnon-emerging growth companies, but any such an election to opt out is irrevocable. The Company has elected not to opt out of suchthe extended transition period, which means that when a financial accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company whichthat has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.
Reclassifications
Certain reclassifications of amounts previously reported have been made to the accompanying unaudited Condensed Consolidated Financial Statements to maintain consistency between periods presented. The reclassifications had no impact on previously reported net income or retained earnings.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. The Company maintains most of its cash and cash equivalents with financial institutions in the United States.U.S. The Company’s accounts at financial institutions in the United StatesU.S. are insured by the FDIC. At times, cash balances may exceed limits federallyFDIC and are in excess of FDIC insured by the FDIC.limits. The Company had cash balances of approximately $4,880,746$5,434,110 and $8,125,966 with foreign financial institutions on March 31,September 30, 2023 and December 31, 2022, respectively.
Restricted Cash and Insurance Reserves
Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash in the unaudited Condensed Consolidated Balance Sheets. Restricted cash is classified as either a current or non-current asset depending on the restrictedrestriction period. The Company is required to pledge or otherwise restrict a portion of cash and cash equivalents as collateral for its line of credit, transportation equipment leases and a standby letter of credit as required by its insurance carrier (see Notes 9 and 14).
ARM Insurance, Inc., a Vermont-based wholly-ownedwholly owned captive insurance subsidiary of the Company, charges the Company’s operating subsidiaries premiums to insure itsthe retained workers’ compensation, automobile liability, general liability and professional liability exposures. Pursuant to Vermont insurance regulations, ARM Insurance, Inc. maintains certain levels of cash and cash equivalents related to its self-insurance exposures.
The Company also maintains certain cash balances related to its insurance programs, which are held in a self-depleting trust and restricted as to withdrawal or use by the Company other than to pay or settle self-insured claims and costs. These amounts are reflected in “Restricted cash” in the accompanying unaudited Condensed Consolidated Balance Sheets.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Fair Value of Financial Instruments
ASC 820, Fair Value Measurements, provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.
Level 3: 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,September 30, 2023 and December 31, 2022. 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 they areit is short term in nature. NotesThe notes payable are presented at their carrying value, which based on borrowing rates currently available to the Company for loans with similar terms, approximates theirits fair values.
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 financial milestone 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.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Accounts Receivable
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is recorded in operating expenses in the unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows:
| Estimated Useful Life | ||||||||
| Buildings | 39 years | |||||||
| Office equipment and furniture | 3 years | |||||||
| Vehicles | 5-8 years | |||||||
| Medical equipment | 5 years | |||||||
| Leasehold improvements | Shorter of useful life of asset or lease term | |||||||
Expenditures for repairs and maintenance are expensed as incurred. Expenditures that improve an asset or extend its estimated useful life are capitalized.
Software Development Costs
Costs incurred during the preliminary project stage, maintenance costs and routine updates and enhancements of products are expensed as incurred. The Company capitalizes software development costs intended for internal use in accordance with ASC 350-40, Internal-Use Software. Costs incurred in developing the application of its software and costs incurred to upgrade or enhance product functionalities are capitalized when it is probable that the expenses would result in future economic benefits to the Company and the functionalities and enhancements are used for their intended purpose. Capitalized software costs are amortized over its useful life.
Business Combinations
The Company accounts for its business combinations under the provisions of ASC 805-10, Business Combinations (“ASC 805-10”), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including NCI, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: (1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or (2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings. For transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expenses acquisition-related costs and fees associated with business combinations.
The estimated fair value of net assets to be acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. Management uses assumptions based on historical knowledge of the business and projected financial information of the target. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values.
Impairment of Long-Lived Assets
The Company evaluates the recoverability of the recorded amount of long-lived assets, primarily property and equipment and finite-lived intangible assets, whenever events or changes in circumstance indicate that the recorded amount of an asset may not be fully recoverable. An impairment is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. If an asset is determined to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. Assets targeted for disposal are reported at the lower of the carrying amount or fair value less cost to sell.
In 2022, the Company reassigned all the assets at Ambulnz Health, LLC (“Health”) to Assets held for sale as a result of an assignment for the benefit of creditors (“ABC”) transaction.. The Company also recognized a non-cash charge of $2,921,958 for its Goodwill impairment for the year ended December 31, 2022 in the Consolidated Statements of Operations.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill represents the excess of the total purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed in a business combination. Goodwill isand indefinite-lived intangible assets are not amortized but isare tested for impairment at the reporting unit level annually on December 31 or more frequently if events or changes in circumstances indicate that it is more likely than not to be impaired. These events include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization, as indicated by its publicly quoted share price, below its net book value.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Line of Credit
The costs associated with the Company’s line of credit are deferred and recognized over the term of the line of credit as interest expense.
The Company defines related parties as affiliates of the Company, entities for which investments are accounted for by the equity method, trusts for the benefit of employees, principal owners (beneficial owners of more than 10% of the voting interest), management, andmembers of immediate families members of principal owners or management, and other parties with which the Company may deal with if one party controls or can significantly influence management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
Related party transactions are recorded within operating expenses in the Company’s unaudited Condensed Consolidated StatementsStatement of Operations and Comprehensive (Loss) Income. For details regarding the related party transactions that occurred during the periodsthree and nine months ended March 31,September 30, 2023 and 2022, refer tosee Note 16.
Revenue Recognition
On January 1, 2019, the Company adopted ASU 2014-09, ASC 606, Revenue from Contracts with Customers (“ASC 606”), as amended.
To determine revenue recognition for contractual arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify each contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when (or as) the relevant performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services the Company provides to the customer.
The Company generates revenues from the provision of (1) ambulance and medical transportation services (“Transportation Services”)Services and (2) Mobile Health services. TheServices. Since the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, therefore the Company satisfies performance obligations immediately. The Company has utilized the “right to invoice” expedient, which allows an entity to recognize revenue in the amount of consideration to which the entity has the right to invoice when the amount that the Company has the right to invoice corresponds directly to the value transferred to the customer. Revenues are recorded net of an estimated contractual allowances for claims subject to contracts with responsible paying entities. The Company estimates contractual allowances at the time of billing based on contractual terms, historical collections, or other arrangements. All transaction prices are fixed and determinable, andwhich includes a fixed base rate, fixed mileage rate and an evaluation of historical collections by each payer.
Nature of Our Services
Revenue is primarily derived from:
| i.Transportation Services: These services encompass both emergency response and non-emergency transport services. Non-emergency transport services include ambulance transports and wheelchair transports. Net revenue from Transportation Services |
| ii.Mobile Health Services: These services include services performed at homes and offices, COVID-19 testing and vaccinations, and event services such as on-site healthcare support at sporting events and concerts. There is also an emphasis on providing total care management solutions to large population groups, which include healthcare services as well as ancillary services, such as shelter. |
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The Company concluded that Transportation Services and any related support activities are a single performance obligation under ASC 606. The transaction price is determined by the fixed rate usage-based fees or fixed fees which are agreed upon in the Company’s executed contracts. For Mobile Health Services, the performance of the services and any related support activities are a single performance obligation under ASC 606. Mobile Health servicesServices are typically billed based on a fixed rate (i.e., time and materials separately or combined) fee structure taking into consideration staff and materials utilized.
As the performance associated with such services is known and quantifiable at the end of a period in which the services occurred (i.e., monthly or quarterly), revenues are typically recognized in the respective period performed. The typical billing cycle for Transportation Services and Mobile Health servicesServices is same day to 5five days with payments generally due within 30 days. For large municipal customers in the Mobile Health Services segment, invoices are generally produced on a monthly basis, in arrears, and are generally due within 30-60 days of when they are submitted to the customer. For
For Transportation Services, since the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, therefore the Company satisfies performance obligations at the same time. For Transportation Services, where the customer pays fixed rate usage-based fees, the actual usage in the period represents the best measure of progress. Generally, forFor Mobile Health services,Services, the customer also generally simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, thereforefulfilled. Therefore, the Company satisfies performance obligations at the same time. For certain Mobile Health servicesServices that have a fixed fee arrangement and the services are provided over time, revenue is recognized over time as the services are provided to the customer.
Disaggregation of revenue
In the following table, revenue is disaggregated by geography and by service line:
| Three Months Ended March 31, | ||||||||
| Revenue Breakdown | 2023 | 2022 | ||||||
| Primary Geographical Markets | ||||||||
| United States | $ | 98,909,521 | $ | 115,053,431 | ||||
| United Kingdom | 14,093,182 | 2,838,121 | ||||||
| Total revenue | $ | 113,002,703 | $ | 117,891,552 | ||||
| Major Segments/Service Lines | ||||||||
| Transportation Services | $ | 40,055,946 | $ | 27,812,510 | ||||
| Mobile Health | 72,946,757 | 90,079,042 | ||||||
| Total revenue | $ | 113,002,703 | $ | 117,891,552 | ||||
| Revenue Breakdown | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Primary Geographical Markets | ||||||||||||||||||||||||||
| United States | $ | 174,076,595 | $ | 101,337,899 | $ | 385,589,261 | $ | 322,706,143 | ||||||||||||||||||
| United Kingdom | 12,476,315 | 2,981,995 | 39,453,112 | 9,024,607 | ||||||||||||||||||||||
| Total revenue | $ | 186,552,910 | $ | 104,319,894 | $ | 425,042,373 | $ | 331,730,750 | ||||||||||||||||||
| Major Segments/Service Lines | ||||||||||||||||||||||||||
| Transportation Services | $ | 47,212,443 | $ | 27,670,109 | $ | 132,690,538 | $ | 77,657,852 | ||||||||||||||||||
| Mobile Health Services | 139,340,467 | 76,649,785 | 292,351,835 | 254,072,898 | ||||||||||||||||||||||
| Total revenue | $ | 186,552,910 | $ | 104,319,894 | $ | 425,042,373 | $ | 331,730,750 | ||||||||||||||||||
Stock BasedStock-Based Compensation
The Company accounts for stock-based compensation using the provisions of ASC 718, Stock-Based Compensation, which requires the recognition of the fair value of stock-based compensation. The Company expenses stock-based compensation over the requisite service period based on the estimated grant-date fair value of the awards. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company accounts for forfeitures as they occur. All stock-based compensation costs are recorded in operating expenses in the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Earnings per Share
Earnings per share represents the net income attributable to stockholders divided by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stockCommon Stock were exercised or converted into common stock of the CompanyCommon Stock during the reporting periods. Potential dilutive common stockCommon Stock equivalents consist of the incremental common stockshares of Common Stock issuable upon exercise of warrants and the incremental shares issuable upon conversion of stock options. In reporting periods in which the Company has a net loss, the effect is considered anti-dilutive and excluded from the diluted earnings per share calculation.
The following table presents the calculation
For the Three Months | ||||||||
| 2023 | 2022 | |||||||
| Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries: | (3,465,670 | ) | 10,629,694 | |||||
| Weighted-average shares – basic | 102,579,291 | 100,177,082 | ||||||
| Effect of dilutive options | 1,236,473 | 14,569,654 | ||||||
| Weighted-average shares – dilutive | 102,579,291 | 115,652,049 | ||||||
| Net (loss) income share - basic | (0.03 | ) | 0.11 | |||||
| Net (loss) income share - diluted | (0.03 | ) | 0.09 | |||||
| Anti-dilutive employee share-based awards excluded | 9,337,239 | - | ||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Net income attributable to stockholders of DocGo Inc. and Subsidiaries: | 4,764,921 | 3,154,430 | (712,016) | 26,519,778 | ||||||||||||||||||||||
| Weighted-average shares - basic | 103,874,845 | 98,960,538 | 103,351,345 | 100,725,697 | ||||||||||||||||||||||
| Effect of dilutive options | 1,118,884 | 8,442,597 | 1,118,884 | 8,442,597 | ||||||||||||||||||||||
| Weighted-average shares - dilutive | 104,993,729 | 107,403,135 | 103,351,345 | 109,168,293 | ||||||||||||||||||||||
| Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Basic | 0.05 | 0.03 | (0.01) | 0.26 | ||||||||||||||||||||||
| Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Diluted | 0.05 | 0.03 | (0.01) | 0.24 | ||||||||||||||||||||||
| Anti-dilutive employee share-based awards excluded | 10,191,301 | — | 10,191,301 | — | ||||||||||||||||||||||
On October 26, 2021, the Company acquired a 50% interest in RND Health Services Inc. (“RND”) for $655,876.
On November 1, 2021, the Company acquired a 20% interest in National Providers Association, LLC (“NPA”) for $30,000. The Company uses the equity method to account for investments in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, but does not exercise control. The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investment” in the unaudited Condensed Consolidated Balance Sheets. Changes in value of NPA are recorded in “Gain (loss) on equity method investment” in the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The Company’s judgment regarding its level of influence over the equity method investee includes considering key factors, such as ownership interest, representation on the board of directors, and participation in policy-making decisions. Effective December 21, 2021, three members withdrew from NPA resulting in the remaining two members obtaining the remaining ownership percentage. Since December 31, 2021, DocGo has owned 50% of NPA.
Under the equity method, the Company’s investment is initially measured at cost and subsequently increased or decreased to recognize the Company’s share of income and losses of the investee, capital contributions and distributions and impairment losses. The Company performs a qualitative assessment annually and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Leases
The Company categorizes leases at its inception as either operating or finance leases based on the criteria in FASB ASC 842, Leases, (“ASC 842”). The Company adopted ASC 842 on January 1, 2019, using the modified retrospective approach, and has established a Right-of-Use (“ROU”) Assetright-of-use asset and a current and non-current lease liability for each lease arrangement identified. The lease liability is recorded at the present value of future lease payments discounted using the discount rate that approximates the Company’s incremental borrowing rate for the lease established at the commencement date, and the ROUright-of-use asset is measured as the lease liability plus any initial direct costs, less any lease incentives received before commencement. The Company recognizes a single lease cost, so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis.
The Company has lease arrangements for vehicles, equipment, and facilities. These leases typically have original terms not exceeding 10 years and, in some cases contain multi-year renewal options, none of which are reasonably certain of exercise. The Company’s lease arrangements may contain both lease and non-lease components. The Company has elected to combine and account for lease and non-lease components as a single lease component. The Company has incorporated
Income Taxes
Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or its tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense.
Recently Issued Accounting Standards Not Yet Adopted
In March 2022, the FASBFinancial Accounting Standards Board (“FASB”) issued ASUAccounting Standards Update (“ASU”) 2022-02, Financial Instruments – Credit Losses Troubled Debt Restructurings and Vintage Disclosures (“(“ASU 2022-02”), thatwhich eliminates accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. ASU 2022-02 also requires public business entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. This ASU 2022-02 only affects entities that have already adopted ASU 2016-13,Financial Instruments—Credit Losses (Topic 326), which is effective for fiscal years beginning after December 15, 2022. The Company expects that thisadopted ASU will2022-02 on January 1, 2023, which did not have a material impact on the Company’s unaudited Condensed Consolidated Financial Statements.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3. Property and Equipment, net
Property and equipment, net as of March 31,September 30, 2023 and December 31, 2022 are as follows:
| March 31, 2023 | December 31, 2022 | |||||||
| Transportation equipment | $ | 21,907,460 | $ | 20,773,862 | ||||
| Medical equipment | 5,835,273 | 5,177,520 | ||||||
| Office equipment and furniture | 2,860,756 | 2,686,065 | ||||||
| Leasehold improvements | 606,338 | 579,658 | ||||||
| Buildings | 527,283 | 527,283 | ||||||
| Land | 37,800 | 37,800 | ||||||
| $ | 31,774,910 | $ | 29,782,188 | |||||
| Less: Accumulated depreciation | (10,045,450 | ) | (8,524,013 | ) | ||||
| Property and equipment, net | $ | 21,729,460 | $ | 21,258,175 | ||||
| September 30, 2023 | December 31, 2022 | ||||||||||
| Transportation equipment | $ | 23,327,391 | $ | 20,773,862 | |||||||
| Medical equipment | 6,864,138 | 5,177,520 | |||||||||
| Office equipment and furniture | 3,507,597 | 2,686,065 | |||||||||
| Leasehold improvements | 656,662 | 579,658 | |||||||||
| Buildings | 527,283 | 527,283 | |||||||||
| Land | 37,800 | 37,800 | |||||||||
| $ | 34,920,871 | $ | 29,782,188 | ||||||||
| Less: Accumulated depreciation | (13,068,208) | (8,524,013) | |||||||||
| Property and equipment, net | $ | 21,852,663 | $ | 21,258,175 | |||||||
4. Acquisition of Businesses and Asset Acquisitions
Government Medical Services, LLC
On July 6, 2022, Holdings acquired 100% of the outstanding shares of common stock of Government Medical Services, LLC (“GMS”),GMS, a provider of medical services. The aggregate purchase price consisted of $20,338,789 in cash consideration. Holdings also agreed to pay GMS an additional $3,000,000 upon GMS meeting certain performance conditions within a year of the Closing Date.closing date of the acquisition, or July 6, 2023. Acquisition costs are included in general and administrative expenses and totaled $1,001,883 for the twelve months ended December 31, 2022.
Exceptional Medical Transportation, LLC
On July 13, 2022, Holdings acquired 100% of the outstanding shares of common stock of Exceptional, Medical Transportation, LLC (“Exceptional”)a provider of medical transportation services, in exchange for an aggregate purchase price of $13,708,333, consisting of $7,708,333 in cash at closing and $6,000,000 payable over a 24-month period. Holdingsperiod following the closing date of the acquisition. The Company also agreed to pay an estimated $1,080,000 Contingentup to $2,000,000 in contingent consideration upon Exceptional meeting certain performance conditions inwithin two years of the closing date of such acquisition. The estimated contingent consideration amount payable for Exceptional was $1,080,000 as of December 31, 2022 and September 30, 2023. Exceptional is in the business of providing medical transportation services. Acquisition costs are included in general and administrative expenses and totaled $56,571 for the twelve months ended December 31, 2022.
Ryan BrothersBros. Fort Atkinson, LLC
On August 9, 2022, Holdings acquired 100% of the outstanding shares of common stock of Ryan Brothers, Fort Atkinson, LLC (“RB”)a provider of medical transportation services, in exchange for an aggregate purchase price of $11,422,252, consisting of $7,422,252 in cash at closing and an estimated $4,000,000 of estimated Contingentin contingent consideration to be paid out over 24 months, commencing on August 1, 2022, based on performance of certain obligations. RB is in the business of providing medical transportation services. Acquisition costs are included in general and administrative expenses and totaled $230,175 for the twelve months ended December 31, 2022.
Community Ambulance Services LTD
On October 12, 2022, Holdings, through its indirect wholly owned subsidiary Ambulnz U.K. Ltd. (“UK Ltd.”), acquired Community Ambulance Service Ltd (“CAS”), a company locatedprovider of emergency and non-emergency transport services, including high dependency, urgent care, mental health and blue light transport services, and diagnostics testing in United Kingdom, in exchange forthe U.K. The aggregate purchase price consisted of approximately $5,541,269 in cash. The net assets acquired through the CAS acquisition was $7,134,881 mainly from the vehicles with high fair market value, which directly lead to a Gaingain on bargain purchase ofamounting to $1,593,612. CAS is engaged in providing emergency and non-emergency transport services, including high dependency, urgent care, mental health and blue light transport services and diagnostics testing. We believeThe Company expects this acquisition will allow us to help increase ourthe Company’s presence in thatthe U.K. market while giving usand help provide improved access to municipal contracts. Acquisition costs are included in general and administrative expenses totalingand amounted to $171,779 for the three and twelve months ended December 31, 2022, respectively.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Location Medical Services, LLC
On December 9, 2022, Holdings, through its indirect wholly owned subsidiary, Ambulnz U.K.UK Ltd., closed acquiringacquired 100% of the outstanding shares of common stock of Location Medical Services, LLC (“LMS”).LMS. The aggregate purchase price consisted of $302,450 in cash consideration. The CompanyHoldings also agreed to pay LMS an additional $11,279,201 in deferred consideration and an estimated $2,475,540 Contingentin contingent consideration upon LMS meeting certain performance conditions in 2023. The Company paid $11,279,201 of deferred consideration to LMS during the nine months ended September 30, 2023. Acquisition costs are included in general and administrative expenses and totaled $4,200 for the three and twelve months ended December 31, 2022, respectively.
Cardiac RMS, LLC
| Cardiac RMS LLC | Location Medical Services | Community Ambulance Service | Ryan Brothers | Exceptional Medical Transport | Government Medical Services | Total | ||||||||||||||||||||||
| Consideration: | ||||||||||||||||||||||||||||
| Cash consideration | $ | 9,000,000 | $ | 302,450 | $ | 5,541,269 | $ | 7,422,252 | $ | 6,375,000 | $ | 20,338,789 | $ | 48,979,760 | ||||||||||||||
| Stock consideration | 1,000,000 | - | - | - | - | - | 1,000,000 | |||||||||||||||||||||
| Deferred consideration | - | 11,279,201 | - | - | 6,000,000 | - | 17,279,201 | |||||||||||||||||||||
| Amounts held under an escrow account | - | - | - | - | 1,333,333 | - | 1,333,333 | |||||||||||||||||||||
| Contingent consideration | 15,822,190 | 2,475,540 | - | 4,000,000 | 1,080,000 | 3,000,000 | 26,377,730 | |||||||||||||||||||||
| Total consideration | 25,822,190 | 14,057,191 | 5,541,269 | 11,422,252 | 14,788,333 | 23,338,789 | 94,970,024 | |||||||||||||||||||||
| Recognized amounts of identifiable assets acquired and liabilities assumed | ||||||||||||||||||||||||||||
| Cash | $ | 1,574,604 | $ | 5,404,660 | $ | 892,218 | $ | 620,248 | $ | 299,050 | $ | 1,005,453 | $ | 9,796,233 | ||||||||||||||
| Accounts receivable | 2,033,533 | 623,635 | 7,002,325 | 5,844,494 | 3,785,490 | 3,975,160 | 23,264,637 | |||||||||||||||||||||
| Other current assets | 293,478 | 134,216 | 1,167,326 | 136,157 | - | 30,734 | 1,761,911 | |||||||||||||||||||||
| Property, plant and equipment | - | 519,391 | 4,548,956 | 2,125,134 | 2,450,900 | 4,092 | 9,648,473 | |||||||||||||||||||||
| Intangible assets | 15,930,000 | 2,419,600 | - | 387,550 | 125,000 | 10,305,000 | 29,167,150 | |||||||||||||||||||||
| Total identifiable assets acquired | 19,831,615 | 9,101,502 | 13,610,825 | 9,113,583 | 6,660,440 | 15,320,439 | 73,638,404 | |||||||||||||||||||||
| Accounts payable | $ | 28,978 | $ | 40,447 | $ | 2,036,714 | $ | 44,911 | $ | - | $ | 137,239 | 2,288,289 | |||||||||||||||
| Due to seller | 2,448,460 | - | - | 5,844,494 | 4,084,540 | - | 12,377,494 | |||||||||||||||||||||
| Other current liabilities | 174,177 | 1,012,992 | 4,439,230 | 286,792 | - | 562,809 | 6,476,000 | |||||||||||||||||||||
| Total liabilities assumed | 2,651,615 | 1,053,439 | 6,475,944 | 6,176,197 | 4,084,540 | 700,048 | 21,141,783 | |||||||||||||||||||||
| Goodwill/(Gain on bargain purchase) | 8,642,190 | 6,009,128 | (1,593,612 | ) | 8,484,866 | 12,212,433 | 8,718,398 | 42,473,403 | ||||||||||||||||||||
| Total purchase price | $ | 25,822,190 | $ | 14,057,191 | $ | 5,541,269 | $ | 11,422,252 | $ | 14,788,333 | $ | 23,338,789 | $ | 94,970,024 | ||||||||||||||
| FMC NA | CRMS | LMS | CAS | Ryan Brothers | Exceptional | GMS | Total | |||||||||||||||||||||||||||||||||||||||||||
| Consideration: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash consideration | $ | 4,000,000 | $ | 9,000,000 | $ | 302,450 | $ | 5,541,269 | $ | 7,422,252 | $ | 6,375,000 | $ | 20,338,789 | $ | 52,979,760 | ||||||||||||||||||||||||||||||||||
| Stock consideration | 3,000,000 | 1,000,000 | — | — | — | — | — | 4,000,000 | ||||||||||||||||||||||||||||||||||||||||||
| Due to seller | — | — | 11,279,201 | — | — | 6,000,000 | — | 17,279,201 | ||||||||||||||||||||||||||||||||||||||||||
| Amounts held under an escrow account | — | — | — | — | — | 1,333,333 | — | 1,333,333 | ||||||||||||||||||||||||||||||||||||||||||
| Contingent liability | — | 15,822,190 | 2,475,540 | — | 4,000,000 | 1,080,000 | 3,000,000 | 26,377,730 | ||||||||||||||||||||||||||||||||||||||||||
| Total consideration | $ | 7,000,000 | $ | 25,822,190 | $ | 14,057,191 | $ | 5,541,269 | $ | 11,422,252 | $ | 14,788,333 | $ | 23,338,789 | $ | 101,970,024 | ||||||||||||||||||||||||||||||||||
| Recognized amounts of identifiable assets acquired and liabilities assumed | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash | $ | — | $ | 1,574,604 | $ | 5,404,660 | $ | 892,218 | $ | 620,548 | $ | 299,050 | $ | 1,005,453 | $ | 9,796,533 | ||||||||||||||||||||||||||||||||||
| Accounts receivable | — | 2,033,533 | 623,635 | 7,002,325 | 5,844,494 | 3,785,490 | 3,975,160 | 23,264,637 | ||||||||||||||||||||||||||||||||||||||||||
| Other current assets | — | 293,478 | 134,216 | 1,167,326 | 136,157 | — | 30,734 | 1,761,911 | ||||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment | — | — | 519,391 | 4,548,956 | 2,125,134 | 2,450,900 | 4,092 | 9,648,473 | ||||||||||||||||||||||||||||||||||||||||||
| Intangible assets | — | 15,930,000 | 2,419,600 | — | 387,550 | 125,000 | 10,305,000 | 29,167,150 | ||||||||||||||||||||||||||||||||||||||||||
| Total identifiable assets acquired | — | 19,831,615 | 9,101,502 | 13,610,825 | 9,113,883 | 6,660,440 | 15,320,439 | 73,638,704 | ||||||||||||||||||||||||||||||||||||||||||
| Accounts payable | — | 28,978 | 40,447 | 2,036,714 | 44,911 | — | 137,239 | 2,288,289 | ||||||||||||||||||||||||||||||||||||||||||
| Due to seller | — | 2,448,460 | — | — | 5,844,494 | 4,084,540 | — | 12,377,494 | ||||||||||||||||||||||||||||||||||||||||||
| Other current liabilities | — | 174,177 | 1,012,992 | 4,439,230 | 286,792 | — | 562,809 | 6,476,000 | ||||||||||||||||||||||||||||||||||||||||||
| Total liabilities assumed | — | 2,651,615 | 1,053,439 | 6,475,944 | 6,176,197 | 4,084,540 | 700,048 | 21,141,783 | ||||||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests | 2,567,037 | — | — | — | — | — | — | 2,567,037 | ||||||||||||||||||||||||||||||||||||||||||
| Goodwill | — | 8,642,190 | 6,009,128 | (1,593,612) | 8,484,566 | 12,212,433 | 8,718,398 | 42,473,103 | ||||||||||||||||||||||||||||||||||||||||||
| Additional paid-in-capital | 4,432,963 | — | — | — | — | — | — | 4,432,963 | ||||||||||||||||||||||||||||||||||||||||||
| Total purchase price | $ | 7,000,000 | $ | 25,822,190 | $ | 14,057,191 | $ | 5,541,269 | $ | 11,422,252 | $ | 14,788,333 | $ | 23,338,789 | $ | 101,970,024 | ||||||||||||||||||||||||||||||||||
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. ABC Transaction and Held for Sale
On February 3, 2023, Health commenced the ABC pursuant to California law.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in the Company’s Consolidated Balance SheetsSheet as of December 31, 2022:
| Pre ABC Adjustment | 2022 Adjustments | December 31, 2022 | 1Q23 Adjustments | March 31, 2023 | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | (190,312 | ) | $ | 190,312 | $ | - | $ | - | $ | - | |||||||||
| Accounts receivable, net | 1,219,927 | (1,219,927 | ) | - | - | - | ||||||||||||||
| Prepaid expenses and other current assets | 22,850 | (22,850 | ) | - | - | - | ||||||||||||||
| Total current assets | 1,052,465 | (1,052,465 | ) | - | - | - | ||||||||||||||
| Property and equipment, net | 1,107,279 | (1,107,279 | ) | - | - | - | ||||||||||||||
| Intangibles, net | 30,697 | (30,697 | ) | - | - | - | ||||||||||||||
| Goodwill | 5,085,689 | (5,085,689 | ) | - | - | - | ||||||||||||||
| Operating lease right-of-use assets | 29,753 | (29,753 | ) | - | - | - | ||||||||||||||
| Assets held for sale | - | 4,480,344 | 4,480,344 | (4,480,344 | ) | - | ||||||||||||||
| Other assets | 18,053,495 | (96,419 | ) | 17,957,076 | (17,957,076 | ) | - | |||||||||||||
| Total assets | $ | 25,359,378 | $ | (2,921,958 | ) | $ | 22,437,420 | $ | (22,437,420 | ) | $ | - | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Accounts payable | $ | 196,122 | $ | (196,122 | ) | $ | - | $ | - | $ | - | |||||||||
| Accrued liabilities | 63,655,442 | (4,250,603 | ) | 59,404,839 | (59,404,839 | ) | - | |||||||||||||
| Operating lease liability, current | 33,619 | (33,619 | ) | - | - | - | ||||||||||||||
| Liabilities held for sale | - | 4,480,344 | 4,480,344 | (4,480,344 | ) | - | ||||||||||||||
| Total current liabilities | 63,885,183 | - | 63,885,183 | (63,885,183 | ) | - | ||||||||||||||
| Total liabilities | $ | 63,885,183 | $ | - | $ | 63,885,183 | $ | (63,885,183 | ) | $ | - | |||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||||||||||||||
| Accumulated deficit | $ | (38,525,805 | ) | $ | (2,921,958 | ) | $ | (41,447,763 | ) | $ | 41,447,763 | $ | - | |||||||
| Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries | (38,525,805 | ) | (2,921,958 | ) | (41,447,763 | ) | 41,447,763 | - | ||||||||||||
| Noncontrolling interests | - | - | - | - | - | |||||||||||||||
| Total stockholders’ equity | $ | (38,525,805 | ) | $ | (2,921,958 | ) | $ | (41,447,763 | ) | $ | 41,447,763 | $ | - | |||||||
| Total liabilities and stockholders’ equity | $ | 25,359,378 | $ | (2,921,958 | ) | $ | 22,437,420 | $ | (22,437,420 | ) | $ | - | ||||||||
| Pre ABC Adjustment | 2022 Adjustments | December 31, | YTD 2023 Adjustments | September 30, | |||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | (190,312) | $ | 190,312 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||
| Accounts receivable, net | 1,219,927 | (1,219,927) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Prepaid expenses and other current assets | 22,850 | (22,850) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Total current assets | 1,052,465 | (1,052,465) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Property and equipment, net | 1,107,279 | (1,107,279) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Intangibles, net | 30,697 | (30,697) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Goodwill | 5,085,689 | (5,085,689) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Operating lease right-of-use assets | 29,753 | (29,753) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Assets held for sale | — | 4,480,344 | 4,480,344 | (4,480,344) | — | ||||||||||||||||||||||||||||||||||||||||||
| Other assets | 18,053,495 | (96,419) | 17,957,076 | (17,957,076) | — | ||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 25,359,378 | $ | (2,921,958) | $ | 22,437,420 | $ | (22,437,420) | $ | — | |||||||||||||||||||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||||||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Accounts payable | $ | 196,122 | $ | (196,122) | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||
| Accrued liabilities | 63,655,442 | (4,250,603) | 59,404,839 | (59,404,839) | — | ||||||||||||||||||||||||||||||||||||||||||
| Operating lease liability, current | 33,619 | (33,619) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Liabilities held for sale | — | 4,480,344 | 4,480,344 | (4,480,344) | — | ||||||||||||||||||||||||||||||||||||||||||
| Total current liabilities | 63,885,183 | — | 63,885,183 | (63,885,183) | — | ||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | $ | 63,885,183 | $ | — | $ | 63,885,183 | $ | (63,885,183) | $ | — | |||||||||||||||||||||||||||||||||||||
| Stockholders' equity: | |||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated deficit | $ | (38,525,805) | $ | (2,921,958) | $ | (41,447,763) | $ | 41,447,763 | $ | — | |||||||||||||||||||||||||||||||||||||
| Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries | (38,525,805) | (2,921,958) | (41,447,763) | 41,447,763 | — | ||||||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | $ | (38,525,805) | $ | (2,921,958) | $ | (41,447,763) | $ | 41,447,763 | $ | — | |||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 25,359,378 | $ | (2,921,958) | $ | 22,437,420 | $ | (22,437,420) | $ | — | |||||||||||||||||||||||||||||||||||||
6. Goodwill
Additionally, the Company recorded Goodwill in connection with its acquisitions, the total Goodwill acquired in 2022 was $35,299,136.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company also updated the carrying value of the Goodwillgoodwill in its unaudited Condensed Consolidated Balance Sheets to reflect the additional Goodwill and the impairment charge.goodwill. The carrying value of Goodwill amounts $47,668,654, thegoodwill amounted to $47,594,304 as of September 30, 2023. The changes in the carrying value of Goodwillgoodwill for the period ended March 31,September 30, 2023 are as noted in the tablestable below:
| Carrying Value | ||||||||
| Balance as of December 31, 2022 | $ | 38,900,413 | ||||||
| Goodwill acquired during the period | 8,642,190 | |||||||
| Currency translation adjustment | 51,701 | |||||||
| Balance as of September 30, 2023 | $ | 47,594,304 | ||||||
| Carrying Value | ||||
| Balance as of December 31, 2022 | $ | 38,900,413 | ||
| Goodwill acquired during the period | 8,642,190 | |||
| CTA | 126,051 | |||
| Balance as of March 31, 2023 | $ | 47,668,654 | ||
Intangible assets consisted of the following as of March 31,September 30, 2023 and December 31, 2022:
| March 31, 2023 | ||||||||||||||||||
| Estimated Useful Life (Years) | Gross Carrying Amount | Additions | Accumulated Amortization | Net Carrying Amount | ||||||||||||||
| Patents | 15 years | $ | 62,823 | $ | 17,390 | $ | (11,454 | ) | $ | 68,759 | ||||||||
| Computer software | 5 years | 247,828 | - | (229,313 | ) | 18,515 | ||||||||||||
| Operating licenses | Indefinite | 8,799,004 | 600,000 | - | 9,399,004 | |||||||||||||
| Internally developed software | 4-5 years | 8,284,058 | 740,298 | (7,376,506 | ) | 1,647,850 | ||||||||||||
| Material contracts | Indefinite | 62,550 | - | - | 62,550 | |||||||||||||
| Customer relationship | 8-9 years | 12,397,954 | 15,872,732 | (947,737 | ) | 27,322,949 | ||||||||||||
| Trademark | 8 years | 326,646 | 6,669 | (13,888 | ) | 319,427 | ||||||||||||
| Non-compete agreements | 5 years | - | 100,000 | - | 100,000 | |||||||||||||
| $ | 30,180,863 | $ | 17,337,089 | $ | (8,578,898 | ) | $ | 38,939,054 | ||||||||||
| September 30, 2023 | |||||||||||||||||||||||||||||
| Estimated Useful Life (Years) | Gross Carrying Amount | Additions | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||
| Patents | 15 years | $ | 62,823 | $ | 20,461 | $ | (14,195) | $ | 69,089 | ||||||||||||||||||||
| Computer software | 5 years | 247,828 | — | (233,928) | 13,900 | ||||||||||||||||||||||||
| Operating licenses | Indefinite | 8,799,004 | 600,000 | — | 9,399,004 | ||||||||||||||||||||||||
| Internally developed software | 4-5 years | 8,284,058 | 1,838,085 | (8,680,204) | 1,441,939 | ||||||||||||||||||||||||
| Material contracts | Indefinite | 62,550 | — | — | 62,550 | ||||||||||||||||||||||||
| Customer relationships | 9 years | 12,397,954 | 15,847,527 | (2,530,535) | 25,714,946 | ||||||||||||||||||||||||
| Trademark | 8 years | 326,646 | 2,735 | (34,311) | 295,070 | ||||||||||||||||||||||||
| Non-compete agreements | 5 years | — | 100,000 | (10,000) | 90,000 | ||||||||||||||||||||||||
| Trade credits | 5 years | — | 1,500,000 | — | 1,500,000 | ||||||||||||||||||||||||
| $ | 30,180,863 | $ | 19,908,808 | $ | (11,503,173) | $ | 38,586,498 | ||||||||||||||||||||||
| December 31, 2022 | ||||||||||||||||||
| Estimated Useful Life (Years) | Gross Carrying Amount | Additions | Accumulated Amortization | Net Carrying Amount | ||||||||||||||
| Patents | 15 years | $ | 48,668 | $ | 14,155 | $ | (10,116 | ) | $ | 52,707 | ||||||||
| Computer software | 5 years | 294,147 | (46,319 | ) | (224,886 | ) | 22,942 | |||||||||||
| Operating licenses | Indefinite | 8,375,514 | 423,490 | - | 8,799,004 | |||||||||||||
| Internally developed software | 4-5 years | 6,013,513 | 2,270,545 | (6,378,911 | ) | 1,905,147 | ||||||||||||
| Material contracts | Indefinite | - | 62,550 | - | 62,550 | |||||||||||||
| Customer relationship | 8-9 years | - | 12,397,954 | (594,301 | ) | 11,803,653 | ||||||||||||
| Trademark | 8 years | - | 326,646 | (3,403 | ) | 323,243 | ||||||||||||
| $ | 14,731,842 | $ | 15,449,021 | $ | (7,211,617 | ) | $ | 22,969,246 | ||||||||||
| December 31, 2022 | |||||||||||||||||||||||||||||
| Estimated Useful Life (Years) | Gross Carrying Amount | Additions | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||
| Patents | 15 years | $ | 48,668 | $ | 14,155 | $ | (10,116) | $ | 52,707 | ||||||||||||||||||||
| Computer software | 5 years | 294,147 | (46,319) | (224,886) | 22,942 | ||||||||||||||||||||||||
| Operating licenses | Indefinite | 8,375,514 | 423,490 | — | 8,799,004 | ||||||||||||||||||||||||
| Internally developed software | 4-5 years | 6,013,513 | 2,270,545 | (6,378,911) | 1,905,147 | ||||||||||||||||||||||||
| Material contracts | Indefinite | — | 62,550 | — | 62,550 | ||||||||||||||||||||||||
| Customer relationships | 8-9 years | — | 12,397,954 | (594,301) | 11,803,653 | ||||||||||||||||||||||||
| Trademark | 8 years | — | 326,646 | (3,403) | 323,243 | ||||||||||||||||||||||||
| $ | 14,731,842 | $ | 15,449,021 | $ | (7,211,617) | $ | 22,969,246 | ||||||||||||||||||||||
The estimated futureCompany recorded amortization expense of definite life intangible assets as$4,295,958 and $2,269,423 for the nine months ended September 30, 2023 and 2022, respectively.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Amortization Expense | |||||
| 2023, remaining | $ | 986,093 | |||
| 2024 | 3,896,784 | ||||
| 2025 | 3,846,769 | ||||
| 2026 | 3,236,605 | ||||
| 2027 | 3,235,890 | ||||
| Thereafter | 12,422,803 | ||||
| Total | $ | 27,624,944 | |||
Accrued liabilities consistconsisted of the following as of March 31,September 30, 2023 and December 31, 2022:
| September 30, 2023 | December 31, 2022 | ||||||||||
| Accrued subcontractors | $ | 24,121,473 | $ | 8,101,150 | |||||||
| Accrued general expenses | 13,595,062 | 11,436,462 | |||||||||
| Accrued workers' compensation and other insurance liabilities | 10,786,533 | 3,766,469 | |||||||||
| Accrued payroll | 5,707,651 | 4,245,838 | |||||||||
| Accrued bonus | 1,893,172 | 1,500,717 | |||||||||
| Accrued fuel and maintenance | 902,789 | 253,243 | |||||||||
| Other current liabilities | 798,826 | 706,528 | |||||||||
| Accrued legal fees | 550,921 | 344,417 | |||||||||
| Accrued lab fees | 463,008 | 584,203 | |||||||||
| Credit card payable | 34,941 | 78,838 | |||||||||
| FICA/Medicare liability | 29,289 | 555,166 | |||||||||
| Total accrued liabilities | $ | 58,883,665 | $ | 31,573,031 | |||||||
| March 31, 2023 | December 31, 2022 | |||||||
| Accrued subcontractors | $ | 8,889,201 | $ | 8,101,150 | ||||
| Accrued general expenses | 7,080,279 | 11,436,462 | ||||||
| Accrued workers compensation and insurance liabilities | 6,564,201 | 3,766,469 | ||||||
| Accrued payroll | 3,688,168 | 4,245,838 | ||||||
| Accrued bonus | 1,312,368 | 1,500,717 | ||||||
| Other current liabilities | 1,014,005 | 706,528 | ||||||
| Accrued lab fees | 706,351 | 584,203 | ||||||
| Accrued legal fees | 629,694 | 344,417 | ||||||
| Accrued fuel and maintenance | 555,528 | 253,243 | ||||||
| Credit card payable | 84,623 | 78,838 | ||||||
| FICA/Medicare liability | 19,664 | 555,166 | ||||||
| Total accrued liabilities | $ | 30,544,082 | $ | 31,573,031 | ||||
9. Line of Credit
On December 17, 2021, Ambulnz-FMC North America, LLC (“FMC NA”), entered into a revolving loan and bridge credit and security agreement with a subsidiary of one of its members with a maximum revolving advance amount of $12,000,000 (each, a “Revolving Advance”). Each Revolving Advance would have borne interest at a per annum rate equal to the Wall Street Journal Prime Rate, as the same may have changed from time to time, plus one percent (1.00%), but in no event less than five percent (5.00%) per annum, calculated on the basis of a 360-day year for the actual number of days in the applicable period. The agreement was subject to certain financial covenants such as an unused fee. All accrued and unpaid interest and unused fee shall be due and payable on the first anniversary of the date of the agreement (“Revolving Credit Maturity Date”). This loan is secured by all assets of entities owned 100% by DocGo Inc. On January 26, 2022, the Company drew $1,000,000 to fund operations and meet short-term obligations. In December 2022, the Company did not renew the agreement, and repaid the outstanding balance.
On November 1, 2022, the Company entered into a revolving loan and securitycredit agreement with two banks, with one bank in the capacity as a lender and the administrative agent (the(collectively with the other lender, the “Lenders”), with. The Credit Agreement provides for a maximum revolving advancecredit facility in the initial aggregate principal amount of $90,000,000.$90,000,000 (the “Revolving Facility”). The revolving facilityRevolving Facility includes the ability for the Company to request an increase to the commitment by an additional amount of up to $50,000,000, though no Lender (nor the Lenders collectively) areis obligated to increase theirits respective commitments. Borrowings under the revolving facilityRevolving Facility bear interest at a per annum rate equal to,to: (i) at the Company’s option, the (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin. The applicable margins are based on the Company’s consolidated net leverage ratio, adjusted on a quarterly basis. The Initialinitial applicable margins are 1.25% for an adjusted term SOFR loan and 0.25% for a base rate loan and will be updated based on the Company's consolidated net leverage ratio reported in the compliance certificate.ratio. The revolving facilityRevolving Facility matures on the five-year anniversary of the closing date, November 1, 2027. The revolving facility is secured by a first-priority lien on substantially all of the Company’s present and future personal assets and intangible assets. The revolving facilityRevolving Facility is subject to certain financial covenants such as a net leverage ratio and interest coverage ratio, as defined in the agreement. TheCredit Agreement. As of September 30, 2023, the Company hashad not made any draws under the facilityRevolving Facility, and asthere were no amounts outstanding. On October 19, 2023, the Company drew down $25,000,000 under the Revolving Facility.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10. Notes Payable
The Company has various loans with finance companies with monthly installments aggregating $64,671,$83,823, inclusive of interest ranging from 2.5% through 8%11.3%. The loan notes mature at various times through 20272028 and are secured by transportation equipment.
The following table summarizes the Company’s notes payable:
| March 31, 2023 | December 31, 2022 | |||||||
| Equipment and financing loans payable, between 2.5% and 8% interest and maturing between January 2023 and March 2028 | $ | 1,922,223 | $ | 1,901,514 | ||||
| Loan received pursuant to the Payroll Protection Program Term Note | - | - | ||||||
| Total notes payable | 1,922,223 | 1,901,514 | ||||||
| Less: current portion of notes payable | $ | 649,808 | $ | 664,913 | ||||
| Total non-current portion of notes payable | $ | 1,272,415 | $ | 1,236,601 | ||||
| September 30, 2023 | December 31, 2022 | ||||||||||
| Equipment and financing loans payable, between 2.5% and 11.3% interest and maturing between June 2023 and August 2028 | $ | 2,740,991 | $ | 1,901,514 | |||||||
| Loan received pursuant to the Payroll Protection Program Term Note | — | — | |||||||||
| Total notes payable | 2,740,991 | 1,901,514 | |||||||||
| Less: current portion of notes payable | $ | 696,053 | $ | 664,913 | |||||||
| Total non-current portion of notes payable | $ | 2,044,938 | $ | 1,236,601 | |||||||
Interest expenses were $29,034expense was $48,794 and $22,559$26,296 for the three monthsmonth periods ended March 31,September 30, 2023 and 2022, respectively.
| Notes Payable | ||||
| 2023, remaining | $ | 425,309 | ||
| 2024 | 478,492 | |||
| 2025 | 463,573 | |||
| 2026 | 384,627 | |||
| 2027 | 160,977 | |||
| Thereafter | 9,245 | |||
| Total maturities | $ | 1,922,223 | ||
| Current portion of notes payable | (649,808 | ) | ||
| Long-term portion of notes payable | $ | 1,272,415 | ||
| Notes Payable | |||||
| 2023, remaining | $ | 180,213 | |||
| 2024 | 672,684 | ||||
| 2025 | 678,695 | ||||
| 2026 | 623,935 | ||||
| 2027 | 428,872 | ||||
| Thereafter | 156,592 | ||||
| Total maturities | $ | 2,740,991 | |||
| Current portion of notes payable | (696,053) | ||||
| Long-term portion of notes payable | $ | 2,044,938 | |||
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
11. Business Segment Information
| Transportation Services | Mobile Health Services | Corporate | Total | |||||||||||||
| Three Months Ended March 31, 2023 | ||||||||||||||||
| Revenues | $ | 40,055,946 | $ | 72,946,757 | $ | - | $ | 113,002,703 | ||||||||
| Income (loss) from operations | 1,083,040 | 13,188,159 | (21,173,786 | ) | (6,902,587 | ) | ||||||||||
| Total assets | 118,998,556 | 152,352,877 | 136,193,743 | 407,545,176 | ||||||||||||
| Depreciation and amortization expense | 1,863,304 | 716,539 | 1,069,486 | 3,649,329 | ||||||||||||
| Stock compensation | 259,693 | 116,934 | 8,073,389 | 8,450,016 | ||||||||||||
| Long-lived assets | 67,461,536 | 30,920,781 | 9,954,851 | 108,337,168 | ||||||||||||
| Three Months Ended March 31, 2022 | ||||||||||||||||
| Revenues | $ | 27,812,510 | $ | 90,079,042 | $ | - | $ | 117,891,552 | ||||||||
| Income (loss) from operations | (2,538,760 | ) | 23,402,298 | (10,768,973 | ) | 10,094,565 | ||||||||||
| Total assets | 73,244,007 | 48,736,456 | 203,215,841 | 325,196,304 | ||||||||||||
| Depreciation and amortization expense | 1,314,600 | 213,256 | 673,165 | 2,201,021 | ||||||||||||
| Stock compensation | 386,101 | 45,073 | 991,763 | 1,422,937 | ||||||||||||
| Long-lived assets | 27,510,779 | 3,224,955 | 1,154,969 | 31,890,703 | ||||||||||||
| Transportation Services | Mobile Health Services | Corporate | Total | ||||||||||||||||||||
| Three Months Ended September 30, 2023 | |||||||||||||||||||||||
| Revenues | $ | 47,212,443 | $ | 139,340,467 | $ | — | $ | 186,552,910 | |||||||||||||||
| Income (loss) from operations | 503,687 | 21,109,619 | (12,905,351) | 8,707,955 | |||||||||||||||||||
| Total assets | 129,796,548 | 225,084,373 | 64,903,221 | 419,784,142 | |||||||||||||||||||
| Depreciation and amortization expense | 2,333,426 | 1,193,187 | 809,654 | 4,336,267 | |||||||||||||||||||
| Stock compensation | 136,472 | 274,108 | 2,950,130 | 3,360,710 | |||||||||||||||||||
| Long-lived assets | 66,160,925 | 48,554,087 | 11,305,286 | 126,020,298 | |||||||||||||||||||
| Capital expenditures | 3,016,381 | 1,692,902 | 783,422 | 5,492,705 | |||||||||||||||||||
| Three Months Ended September 30, 2022 | |||||||||||||||||||||||
| Revenues | $ | 27,670,109 | $ | 76,649,785 | $ | — | $ | 104,319,894 | |||||||||||||||
| Income (loss) from operations | (3,858,715) | 17,962,484 | (9,904,579) | 4,199,190 | |||||||||||||||||||
| Total assets | 102,061,123 | 84,096,109 | 169,762,978 | 355,920,210 | |||||||||||||||||||
| Depreciation and amortization expense | 1,688,219 | 550,034 | 776,611 | 3,014,864 | |||||||||||||||||||
| Stock compensation | 152,163 | 80,351 | 878,689 | 1,111,203 | |||||||||||||||||||
| Long-lived assets | 66,116,505 | 21,431,704 | 2,817,517 | 90,365,726 | |||||||||||||||||||
| Capital expenditures | 4,839,972 | 11,504,148 | 1,009,414 | 17,353,534 | |||||||||||||||||||
| Transportation Services | Mobile Health Services | Corporate | Total | ||||||||||||||||||||
| Nine Months Ended September 30, 2023 | |||||||||||||||||||||||
| Revenues | $ | 132,690,538 | $ | 292,351,835 | $ | — | $ | 425,042,373 | |||||||||||||||
| Income (loss) from operations | 853,164 | 52,081,169 | (49,553,011) | 3,381,322 | |||||||||||||||||||
| Total assets | 129,796,548 | 225,084,373 | 64,903,221 | 419,784,142 | |||||||||||||||||||
| Depreciation and amortization expense | 6,137,364 | 3,111,497 | 2,567,796 | 11,816,657 | |||||||||||||||||||
| Stock compensation | 612,077 | 573,930 | 13,975,840 | 15,161,847 | |||||||||||||||||||
| Long-lived assets | 66,160,925 | 48,554,087 | 11,305,286 | 126,020,298 | |||||||||||||||||||
| Capital expenditures | 16,460,730 | 28,109,057 | 3,159,172 | 47,728,959 | |||||||||||||||||||
| Nine Months Ended September 30, 2022 | |||||||||||||||||||||||
| Revenues | $ | 77,657,852 | $ | 254,072,898 | $ | — | $ | 331,730,750 | |||||||||||||||
| Income (loss) from operations | (11,737,903) | 71,540,872 | (38,051,457) | 21,751,512 | |||||||||||||||||||
| Total assets | 102,061,123 | 84,096,109 | 169,762,978 | 355,920,210 | |||||||||||||||||||
| Depreciation and amortization expense | 4,127,322 | 980,677 | 2,145,657 | 7,253,656 | |||||||||||||||||||
| Stock compensation | 827,946 | 486,231 | 3,219,582 | 4,533,759 | |||||||||||||||||||
| Long-lived assets | 66,116,505 | 21,431,704 | 2,817,517 | 90,365,726 | |||||||||||||||||||
| Capital expenditures | 3,317,127 | 10,884,649 | 5,908,513 | 20,110,289 | |||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||
| Primary Geographical Markets | |||||||||||
| United States | 107,033,650 | 87,161,204 | |||||||||
| United Kingdom | 18,986,648 | 3,204,522 | |||||||||
| Total Long-Lived Assets | 126,020,298 | 90,365,726 | |||||||||
12. Equity
Share Repurchase Program
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
13. Stock BasedStock-Based Compensation
Stock Options
The Company’s stock options generally vest on various terms based on continuous services upover periods ranging from three to five years. The stock options are subject to time vesting requirements through 20262033 and are nontransferable. Stock options granted have a maximum contractual term of 10 years. On March 31,As of September 30, 2023, approximately 3.22.9 million employee stock options had vested.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. ManagementBefore the consummation of the Business Combination, management took the company specific volatility and the average of several publicly traded companies that were representative of the Company’s size and industry in order to estimate its expected stock volatility. The expected term of the options representsrepresented the period of time the instruments arewere expected to be outstanding. The Company basesbased the risk-free interest rate on the rate payable on the U.S. Treasury securities corresponding to the expected term of the awards at the date of grant. Expected dividend yield iswas zero based on the fact that the Company hashad not historically paid and does not intend to pay a dividend in the foreseeable future.
The following assumptions were used to compute the fair value of the stock option grants during the periodnine months ended March 31,September 30, 2023 and 2022:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Risk-free interest rate | 0.71% - 4.31% | 0.71% | ||||||
| Expected term (in years) | 6.25 | 4 | ||||||
| Volatility | 60% - 69% | 60% | ||||||
| Dividend yield | 0% | 0% | ||||||
| Nine Months Ended September 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| Risk-free interest rate | 4.10 - 4.87 | 0.07 - 2.80 | |||||||||
| Expected term (in years) | 6.25 | 4 | |||||||||
| Volatility | 52% - 62% | 60% - 64% | |||||||||
| Dividend yield | 0 | % | |||||||||
| Options Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
| Balance as of, December 31, 2022 | 11,571,308 | $ | 7.11 | 9.05 | $ | 39,389,063 | ||||||||||
| Granted/ Vested during the year | - | - | - | - | ||||||||||||
| Exercised during the year | (96,101 | ) | 2.60 | - | - | |||||||||||
| Cancelled during the year | (267,539 | ) | 7.74 | - | - | |||||||||||
| Balance as of March 31, 2023 | 11,207,668 | 7.15 | 8.73 | $ | 45,428,463 | |||||||||||
| Options vested and exercisable at March 31, 2023 | 3,153,550 | $ | 6.12 | 7.84 | $ | 9,827,324 | ||||||||||
| Options Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | ||||||||||||||||||||
| Balance as of December 31, 2022 | 11,571,308 | $ | 7.11 | 9.05 | $ | 39,389,063 | |||||||||||||||||
| Granted/vested during the year | 1,115,874 | 8.92 | — | — | |||||||||||||||||||
| Exercised during the year | (493,984) | 3.63 | — | — | |||||||||||||||||||
| Cancelled during the year | (551,665) | 7.66 | — | — | |||||||||||||||||||
| Balance as of September 30, 2023 | 11,641,533 | 7.42 | 8.47 | 49,268,644 | |||||||||||||||||||
| Options vested and exercisable as of September 30, 2023 | 2,937,143 | $ | 6.36 | 7.65 | 3,060,026 | ||||||||||||||||||
The aggregate intrinsic value in the above table is calculated as the difference between the fair value of the Company’s common stockCommon Stock price and the exercise price of the stock options. The weighted average grant date fair value per share for stock option grants during the periodsnine months ended March 31,September 30, 2023 and the year ended December 31, 2022 was $7.15$8.92 and $7.04, respectively. At March 31,On September 30, 2023 and December 31, 2022, the total unrecognized compensation related to unvested stock option awards granted was $32,118,556$30,994,529 and $41,666,564, respectively, which the Company expects to recognize over a weighted-average period of approximately 21.85 years.
Restricted Stock Units
The fair value of restricted stock units (“RSUs”) is determined on the date of grant. The Company records compensation expense in the unaudited Condensed Consolidated StatementsStatement of Operations and Comprehensive (Loss) Income on a straight-line basis over the vesting period for RSUs. The vesting period for employees and members of the Board of Directors ranges from one to four years.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Activity under RSUs during the nine months ended September 30, 2023 was as follows:
| RSUs | Weighted- Average Grant Date Fair Value Per RSU | |||||||
| Balance as of December 31, 2022 | 305,587 | $ | 8.35 | |||||
| Granted | - | - | ||||||
| Vested during the year | (80,008 | ) | 7.71 | |||||
| Balance as of March 31, 2023 | 225,579 | 8.58 | ||||||
| Vested and unissued as of March 31, 2023 | 136,250 | 7.71 | ||||||
| Non-vested as of March 31, 2023 | 225,579 | 8.58 | ||||||
| RSUs | Weighted- Average Grant Date Fair Value Per RSU | ||||||||||
| Balance as of December 31, 2022 | 305,587 | $ | 8.35 | ||||||||
| Granted | 253,796 | 8.39 | |||||||||
| Vested | (156,276) | 8.90 | |||||||||
| Forfeited | — | — | |||||||||
| Balance as of September 30, 2023 | 403,107 | 8.16 | |||||||||
| Vested and unissued as of September 30, 2023 | 212,518 | 8.25 | |||||||||
| Non-vested as of September 30, 2023 | 403,107 | 8.16 | |||||||||
The total grant-date fair value of RSUs granted during the periodnine months ended March 31,September 30, 2023 was $0.
For the period ended March 31, 2023, theThe Company recorded stock-based compensation expense related to RSUs of $429,675.
As of March 31,September 30, 2023, the Company had $1,934,998$3,290,875 in unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.11.3 years.
Operating Leases
The Company is obligated to make rental payments under non-cancellable operating leases for office, dispatch station space, and transportation equipment, expiring at various dates through 2029.2032. Under the terms of the leases, the Company is also obligated for its proportionate share of real estate taxes, insurance and maintenance costs of the property. The Company is required to hold certain funds in restricted cash and cash equivalents accounts under some of these agreements.
Certain leases for property and transportation equipment contain options to purchase, extend or terminate the lease. Determining the lease term and amount of lease payments to include in the calculation of the right-of-use (ROU) asset and lease obligations for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and whether the optional period and payments should be included in the calculation of the associated ROUright-of-use asset and lease obligation. In making such judgment, the Company considers all relevant economic factors that would require whether to exercise or not exercise the option.
The Company’s lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed rates, which were used to discount its real estate lease liabilities. The Company used estimated borrowing rates of 6% on January 1, 2019 for all leases that commenced prior to that date for office spaces and transportation equipment.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Lease Costs
The table below comprisecomprises operating lease expenses for the periods ended March 31,September 30, 2023 and 2022:
| Components of total lease cost: | March 31, 2023 | March 31, 2022 | ||||||
| Operating lease expense | $ | 756,245 | $ | 462,625 | ||||
| Short-term lease expense | 336,318 | 255,096 | ||||||
| Total lease cost | $ | 1,092,563 | $ | 717,721 | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Components of total lease cost: | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
| Operating lease expense | $ | 697,050 | $ | 626,188 | $ | 2,319,282 | $ | 1,517,541 | ||||||||||||||||||
| Short-term lease expense | 452,538 | 334,619 | 1,156,886 | 863,316 | ||||||||||||||||||||||
| Total lease cost - operating leases | $ | 1,149,588 | $ | 960,807 | $ | 3,476,168 | $ | 2,380,857 | ||||||||||||||||||
Lease Position as of March 31,September 30, 2023
Right-of-use lease assets and lease liabilities for the Company’s operating leases were recorded in the unaudited Condensed Consolidated Balance Sheets
| March 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Lease right-of-use assets | $ | 9,375,132 | $ | 9,074,277 | ||||
| Total lease assets | $ | 9,375,132 | $ | 9,074,277 | ||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Lease liability - current portion | $ | 2,353,383 | $ | 2,325,024 | ||||
| Noncurrent liabilities: | ||||||||
| Lease liability, net of current portion | 7,315,226 | 7,040,982 | ||||||
| Total lease liability | $ | 9,668,609 | $ | 9,366,006 | ||||
| September 30, 2023 | December 31, 2022 | ||||||||||
| Assets | |||||||||||
| Lease right-of-use assets | $ | 9,420,525 | $ | 9,074,277 | |||||||
| Total lease assets | $ | 9,420,525 | $ | 9,074,277 | |||||||
| Liabilities | |||||||||||
| Current liabilities: | |||||||||||
| Lease liability - current portion | $ | 2,561,165 | $ | 2,325,024 | |||||||
| Noncurrent liabilities: | |||||||||||
| Lease liability, net of current portion | 7,196,596 | 7,040,982 | |||||||||
| Total lease liability | $ | 9,757,761 | $ | 9,366,006 | |||||||
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Lease Terms and Discount Rate
| Weighted average remaining lease term (in years) - operating leases | ||||||||
| Weighted average discount rate - operating leases | % | |||||||
Undiscounted Cash Flows
Future minimum lease payments under the operating leases as of March 31,September 30, 2023 wereare as follows:
| Operating Leases | ||||
| 2023, remaining | $ | 2,170,565 | ||
| 2024 | 2,601,033 | |||
| 2025 | 2,592,944 | |||
| 2026 | 1,901,778 | |||
| 2027 and thereafter | 1,692,393 | |||
| Total future minimum lease payments | 10,958,713 | |||
| Less effects of discounting | $ | (1,290,104 | ) | |
| Present value of future minimum lease payments | $ | 9,668,609 | ||
| Operating Leases | |||||
| 2023, remaining | $ | 813,120 | |||
| 2024 | 2,987,762 | ||||
| 2025 | 2,982,487 | ||||
| 2026 | 2,183,265 | ||||
| 2027 | 1,090,802 | ||||
| Thereafter | 862,023 | ||||
| Total future minimum lease payments | 10,919,459 | ||||
| Less effects of discounting | (1,161,698) | ||||
| Present value of future minimum lease payments | $ | 9,757,761 | |||
Operating lease expenses wereexpense was approximately $756,245$697,050 and $462,625$960,807 for the three months ended March 31,September 30, 2023 and 2022, respectively.
The Company leases vehicles under a non-cancelable finance lease agreements with a liability of $8,834,857$8,664,108 and $8,646,803 for the quarter ended March 31,as of September 30, 2023 and December 31, 2022, respectively. This includes accumulated depreciation expense of $8,717,048$10,701,206 and $7,906,966$7,096,966 as of March 31,September 30, 2023 and December 31, 2022, respectively.
Depreciation expensesexpense for the vehicles under non-cancelable lease agreements amounted to $801,083$1,195,719 and $855,781$873,713 for the quarterthree months ended March 31,September 30, 2023 and 2022, respectively.
In June 2022, the Company reassessed its finance lease estimates relating to vehicle mileage and residual value. As a result, the Company determined to purchase the vehicles at the end of the leases, which resulted in a gain of $1.4 million$1,400,000 recorded as gains from lease accounting inon the unaudited Condensed Consolidated StatementsStatement of Operations and Comprehensive (Loss) Income.
Lease Payments
The table below presents lease payments for the periods ended March 31,September 30, 2023 and 2022:
| Components of total lease payment: | March 31, 2023 | March 31, 2022 | ||||||
| Finance lease payment | $ | 744,030 | $ | 622,575 | ||||
| Short-term lease payment | - | - | ||||||
| Total lease payments | $ | 744,030 | $ | 622,575 | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Components of total lease cost: | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
| Finance lease payment | $ | 782,808 | $ | 672,975 | $ | 2,293,330 | $ | 2,146,857 | ||||||||||||||||||
| Short-term lease payment | — | — | — | — | ||||||||||||||||||||||
| Total lease payments | $ | 782,808 | $ | 672,975 | $ | 2,293,330 | $ | 2,146,857 | ||||||||||||||||||
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Lease Position as of March 31,September 30, 2023
Right-of-use lease assets and lease liabilities for the Company’s finance leases were recorded in the unaudited Condensed Consolidated Balance SheetSheets as follows:
| March 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Lease right-of-use assets | $ | 9,170,429 | $ | 9,039,663 | ||||
| Total lease assets | $ | 9,170,429 | $ | 9,039,663 | ||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Lease liability - current portion | $ | 2,773,029 | $ | 2,732,639 | ||||
| Noncurrent liabilities: | ||||||||
| Lease liability, net of current portion | 6,061,828 | 5,914,164 | ||||||
| Total lease liability | $ | 8,834,857 | $ | 8,646,803 | ||||
| September 30, 2023 | December 31, 2022 | ||||||||||
| Assets | |||||||||||
| Lease right-of-use assets | $ | 8,566,308 | $ | 9,039,663 | |||||||
| Total lease assets | $ | 8,566,308 | $ | 9,039,663 | |||||||
| Liabilities | |||||||||||
| Current liabilities: | |||||||||||
| Lease liability - current portion | $ | 2,733,332 | $ | 2,732,639 | |||||||
| Noncurrent liabilities: | |||||||||||
| Lease liability, net of current portion | 5,930,776 | 5,914,164 | |||||||||
| Total lease liability | $ | 8,664,108 | $ | 8,646,803 | |||||||
Lease Terms and Discount Rate
The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s finance leases as of March 31,September 30, 2023:
| Weighted average remaining lease term (in years) - finance leases | 3.58 | |||||||
| Weighted average discount rate - finance leases | 5.96 | % | ||||||
Future minimum lease payments under the finance leases as of March 31,September 30, 2023 wereare as follows:
| Finance Leases | |||||
| 2023, remaining | $ | 867,050 | |||
| 2024 | 3,018,851 | ||||
| 2025 | 2,740,288 | ||||
| 2026 | 1,969,492 | ||||
| 2027 | 850,883 | ||||
| Thereafter | 114,107 | ||||
| Total future minimum lease payments | 9,560,671 | ||||
| Less effects of discounting | (896,563) | ||||
| Present value of future minimum lease payments | $ | 8,664,108 | |||
| Finance Leases | ||||
| 2023, remaining | 2,483,279 | |||
| 2024 | 2,678,787 | |||
| 2025 | 2,399,085 | |||
| 2026 | 1,617,995 | |||
| 2027 and thereafter | 613,905 | |||
| Total future minimum lease payments | 9,793,051 | |||
| Less effects of discounting | (958,194 | ) | ||
| Present value of future minimum lease payments | $ | 8,834,857 | ||
15. Other Income (Expenses)
| Three Months Ended March 31 | ||||||||
| Other income (expenses): | 2023 | 2022 | ||||||
| Interest income (expense), net | 809,172 | (135,606 | ) | |||||
| Loss on remeasurement of warrant liabilities | - | (58,749 | ) | |||||
| Loss on equity method investments | (115,286 | ) | (83,341 | ) | ||||
| Loss on disposal of fixed assets | (54,839 | ) | - | |||||
| Other income (expenses) | 214,880 | (4,253 | ) | |||||
| Total other income (expenses) | $ | 853,927 | $ | (281,949 | ) | |||
As The Company recognized $715,589 and $3,007,029 of March 31,other income for the nine months ended September 30, 2023 and September 30, 2022, respectively, as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| Other Income (Expense) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Interest income (expense), net | $ | 346,376 | $ | 334,221 | $ | 1,677,420 | $ | 296,891 | ||||||||||||
| (Loss) gain on remeasurement of warrant liabilities | — | (1,831,947) | — | 1,137,070 | ||||||||||||||||
| Change in fair value of contingent liability | 159,974 | — | 159,974 | — | ||||||||||||||||
| (Loss) gain on equity method investments | (95,503) | 93,371 | (301,362) | 99,840 | ||||||||||||||||
| Gain on remeasurement of finance leases | 4,834 | — | 4,834 | 1,388,273 | ||||||||||||||||
| (Loss) gain on disposal of fixed assets | (9,983) | 42,667 | (163,452) | 42,667 | ||||||||||||||||
| ABC litigation | — | — | (1,000,000) | — | ||||||||||||||||
| Other income | 43,353 | 30,900 | 338,175 | 42,288 | ||||||||||||||||
| Total other income (expense) | $ | 449,051 | $ | (1,330,788) | $ | 715,589 | $ | 3,007,029 | ||||||||||||
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
16. Related Party Transactions
Historically, the Company has been involved in transactions with various related parties.
Ely D. Tendler Strategic & Legal Services PLLC provides legal services for the Company. Ely D. Tendler Strategic & Legal Services PLLC is owned by Ely D. Tendler, the General Counsel and Secretary and a Director of the Company, and therefore is a related party. The Company made legal payments to Ely D. Tendler Strategic & Legal Services PLLC totaling $234,230$204,700 and none$261,185 for the three months ended March 31,September 30, 2023 and 2022, respectively.
PrideStaff provides subcontractor services to the Company. PrideStaff is owned by an operations manager of the Companyrespectively, and his spouse,$674,970 and therefore, is a related party. The Company made subcontractor payments to PrideStaff totaling $93,311 and $209,153$704,593 for the threenine months ended March 31,September 30, 2023 and 2022, respectively.
Included in Accountsaccounts payable were $125,539$78,800 and $86,555 due to related parties as of March 31,September 30, 2023 and December 31, 2022, respectively.
17. Income Taxes
As a result of the Company’s history of net operating losses, (“NOL”), the Company had historically provided for a full valuation allowance against its deferred tax assets for assets that were not more-likely-than-not to be realized. The Company’s income tax benefit (expense)(provision) for the three months ended March 31,September 30, 2023 and 2022 was $2,129,870were $(4,526,767) and ($440,179)$(401,916), respectively, and $(2,041,843) and $(1,163,755) for the nine months ended September 30, 2023 and 2022, respectively. OurIn determining the quarterly provision for income taxes, we use an estimated annual effective tax rate adjusted for the three months ended March 31, 2023discrete items. This rate is based on our expected annual income, statutory tax rates, and 2022 was 38.21%best estimates of non-taxable and 4.85%, respectively.
18. 401(K) Plan
19. Legal Proceedings
Stephanie Zamora, Jascha Dlugatch, et al. v. Ambulnz Health, LLC, et al. was filed in the Los Angeles Superior Court on October 11, 2018, and the complaint alleged wage and hour violations pursuant to California’s Private Attorneys’ General Act of 2004 (“PAGA”). On February 24, 2020, this case was consolidated with Jascha Dlugatch, et. al.Al. v. Ambulnz Health, LLC (the “Consolidated Compliant”Complaint”), another lawsuit filed in the Los Angeles Superior Court. On May 6, 2021, the parties attended mediation and settled the claims pled in the Consolidated Complaint on a class-wide and PAGA basis in exchange for a proposed $1,000,000 payment by the defendant parties, inclusive of administrative costs and fees. On September 9, 2022, the Los Angeles Superior Court preliminarily approved the proposed settlement. A final approval hearing is currently scheduled for April 28,settlement, which was paid in July 2023.
DocGo Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
20. Risk and Uncertainties
COVID-19 Risks, Impacts and Uncertainties
The spread of COVID-19 and the related country-wide shutdowns and restrictions had a mixed impact on the Company’s business. In the ambulance transportation business, which predominantly comprises of non-emergency medical transportation, the Company initially saw a decline in volumes from historical and expected levels, as elective surgeries and other procedures were postponed. In some of the Company’s larger markets, such as New York and California, there were declines in trip volume.the volume of transports completed by the Company (“trips”). In addition, the Company experienced lost revenues associated with sporting, concerts and other events, as those events were cancelled or had a significantly restricted (or entirely eliminated) the number of permitted attendees. Ambulance transports and event-related revenues have both since recovered to pre-COVID levels or higher.
The Company’s current business plan assumes continued recovery of industry-wide transportation volumes to historical levels and beyond, plus an increased demand for mobile healthMobile Health Services. Demand for such services a demand that was accelerated by the pandemic, but which is also being driven by longer-term secular factors, such as the increasing desire on the part of patients to receive treatments outside of traditional settings, such as doctor’s offices and hospitals. However, given the unpredictable, unprecedented, and fluid nature of the pandemic and its economic consequences, we are unable to predict the duration and extent to which the pandemic and its related positive and negative impacts will affect our business, financial condition, and results of operations in future periods. Likewise, we are unable to predict the emergence of future, unrelated pandemics, which would have some of the same impacts as those experienced with COVID-19.
21. Subsequent Events
In April
Unless the context requires otherwise, references to “DocGo,the “Company,” “we,” “us,” and “our” and the “Company” in this section arerefer to the business and operations of DocGo Inc. and its consolidated subsidiaries, including those periods prior to the Business Combination.subsidiaries. Certain figures included in this section, such as interest rates and other percentages, included in this section have been rounded for ease of presentation. Percentage figures included in this section have, in some cases, been calculated on the basis of such rounded figures. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in DocGo’sour unaudited Condensed Consolidated Financial Statements or in the associatedaccompanying notes. Certain other amounts that appear in this section may similarly not sum due to rounding.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding, among other things, the plans, strategies, 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. All statements other than statements of historical fact are forward-looking. Forward-looking statements include, but are not limited to, statements concerning our possible or assumed future actions,actions; business strategies, plans, goals,strategies; plans; goals; future events,events; future revenues or performance,performance; financing needs,needs; business trends,trends; results of operations,operations; objectives and intentions with respect to future operations, services and products, including our transition to non-COVID related services,services; geographic expansion,expansion; our margin normalization initiative,initiative; new and existing contracts and backlog; M&A activity,activity; workforce growth,growth; leadership transition,transitions; cash position,position; share repurchase program,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 China mainland and Taiwan; our competitive position and opportunities, including our ability to realize the benefits from our operating model,model; our ability to improve gross margins; cost-containment measures; legislative and regulatory actions; the impact of legal proceedings and compliance risk; the impact on our business and reputation in the event of information technology system failures, network disruptions, cyber-attacks, or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data privacy and protection; and others. 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.
Forward-looking statements areMoreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not guarantees of performancepossible for us to predict all risks and speak only as ofuncertainties that could have an impact on the date the statements are made. While DocGo believes that these forward-looking statements are reasonable, there can be no assurance that DocGo will achieve or realize these plans, intentions, outcomes or expectations. You should understand that the following important factors, in addition to those discussed under the sections entitled “Risk Factors,” included in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2022, and as may be updated in this and other subsequent Quarterly Reports on Form 10-Q, could affect the future results and prospects of DocGo and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statementscontained in this Quarterly Report on Form 10-Q.
intent or obligation to publicly update or revise any forward-looking statements whether becausemade in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as and to the extent required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future events,acquisitions, mergers, dispositions, joint ventures, or otherwise.investments.
Overview
DocGo, which was originally formed in 2015,The Company is a healthcare transportation and mobile services company that uses proprietary dispatch and communication technology to help provide quality healthcare transportation and mobile, in-person medical treatment directly to patients in the comfort of their homes, workplaces and other non-traditional locations, in major metropolitan cities in the United StatesU.S. and the United Kingdom.
The Company derives revenue primarily from two operating segments:
In addition, beginning with the first quarter of 2023, the Company isbegan reporting in three operating segments, adding a Corporate segment to allow for analysis of shared services and personnel that support both the Transportation Services and Mobile Health Services segments. Previously, these costs had been allocated almost entirely to the Transportation Services segment. All of the Company’s revenues and costs of goods sold continue to be reported within the Transportation Services and Mobile Health Services segments. The Corporate segment contains operating expenses such as information technology costs, certain insurance costs and the compensation costs of senior and executive leadership. The segment reporting for the prior-year period has been adjusted to conform to the new methodology, for the purposes of allowing for a clearer analysis of year-over-year performance. See Note 11, “Business Segment Information” to the unaudited Condensed Consolidated Financial Statements for additional information regarding DocGo’sthe Company’s segments and “Operating Expenses” below.
For the three months ended March 31,September 30, 2023, the Company recorded a lossnet income of $3.9$4.6 million, compared to net income of $9.4$2.5 million in the three months ended March 31,September 30, 2022.
COVID-19
The spread of COVID-19 and the related shutdowns and restrictions had a mixed impact on ourthe Company’s business. In the Transportation Services segment,ambulance transportation business, which predominantly comprises primarily of non-emergency medical transport, in 2020,transportation, the Company initially saw a decline in volumes from historical and expected levels, as elective surgeries and other non-emergency surgical procedures were postponed. In addition,some of the Company’s larger markets, such as New York and California, there were declines in the Mobile Health segment, in 2020,trip volume. In addition, the Company experienced lost revenuerevenues associated with sporting, concerts and other events, as those events were cancelled or had a significantly restricted (or entirely eliminated) the number of permitted attendees. Ambulance transports and event-related revenues have both since recovered to pre-COVID levels or higher.
While COVID-19 testing has become a minor part of this segment’s business, since the second half of 2022, the Mobile Health segment has continued to grow. We have expanded our service offeringsThere were two areas in this segment to offer a wider range of testing, vaccination and other services to a broader customer group. During the first quarter of 2023, Mobile Health generated approximately $72.9 million in revenue, compared to $90.1 million in the first quarter of 2022.
As the COVID-19 pandemic reaches endemic stages, the future impacts of it or other pandemics on DocGo remain highly uncertain and subject to numerous factors, including the severity of any new outbreaks, resurgences and variants, actions taken to contain resurgences or variants or to address their impact, and other effects, and its related impact on medical transportation levels remain uncertain. However, trip volumes in most of our markets returned to more normal historical levels in 2021, and this trend continued throughout 2022. The Company generated, during 2021, COVID-19 testing revenue, included in its Mobile Health services segment, above the levels projected, and this persisted through the second quarter of 2022. However, as expected, COVID-19 testing revenues declined in the third quarter of 2022 and declined further in the fourth quarter of 2022 and the first quarter of 2023, to the point where, as of the date of the filing of this Quarterly Report on Form 10-Q, they account for an insignificant proportion of total revenues. Given the nature of the Company’s contracts with most of its customers, which include multiple procedures for which the Company is paid per hours worked, per vehiclesinitially experienced positive business impacts from COVID-19. In April and related equipment utilized and on a per-procedure basis (such procedures including both testing and several other procedures), it is difficult to determine the revenues that are directly attributable to COVID-19 testing. However,May 2020, the Company estimates thatparticipated in an emergency project with FEMA in the New York City area. This engagement resulted in incremental transportation revenue. In addition, in response to the need for widespread COVID-19 testing, revenue will continue to account for an insignificant proportionEMTs and paramedics, the Company formed a new subsidiary, RRT, with the goal of Mobile Health segmentperforming COVID-19 tests at nursing homes, municipal sites, businesses, schools and overall consolidated revenues in 2023 and beyond, as COVID-19 enters the endemic phase. In a broader, strategic sense, the consumer focus on Mobile Health services and the formation ofother venues. RRT and its emergence as a significant contributor to overall revenues, have accelerated the diversification in the Company’s business by a more rapid expansionis part of the Mobile Health segment, which has now become our larger operating segment, both in termsServices segment.
The Company’s current business plan assumes an increased demand for Mobile Health services,Services, a demand that was accelerated by the pandemic, but which we believe is also being driven by longer-term secular factors, such as the increasing desire on the part of patients to receive treatments outside of traditional settings, such as doctor’s offices and hospitals. In the Transportation Services segment, volumes are expected to continue to rise, reflecting an aging population in the U.S. and U.K., which tends to drive demand for the non-emergent medical transportation services provided by the Company.
Factors Affecting Our Results of Operations
Our operating results and financial performance are influenced by a variety of factors, including, among others, our ability to obtain or maintain operating licenses; the success of our acquisition strategy; conditions in the healthcare transportation and mobile health services markets; our competitive environment; overall macroeconomic and geopolitical conditions, including rising interest rates, the inflationary environment, the potential recessionary environment, regional conflict and tensions, and financial institution instability;instability and the prospect of a shutdown of the U.S. federal government; availability of healthcare professionals;professionals and other personnel; changes in the cost of labor; and production schedules of our suppliers. Some of these importantkey factors are briefly discussed below. Future revenue growth and improvement in operating results will be largely contingent on DocGo’sour ability to penetrate new markets, andto further penetrate existing markets and to successfully bid on contracts, which isare subject to a number of uncertainties, many of which are beyond DocGo’sour control.
Operating Licenses
DocGo hasWe have historically pursued a strategy of applying for ambulance operating licenses in the states, counties and cities we have identified for future new market entry. The approval of a new operating license may take an extended period of time. DocGo reducesWe aim to reduce this risk through itsour acquisition strategy, by identifyingpursuant to which we identify businesses and/or underlying licenses in these new markets that may be for sale.
Acquisitions
Historically, DocGo haswe have pursued an acquisition strategy to obtain ambulance operating licenses from small operators.operators or to obtain enhanced capabilities to offer Mobile Health Services. Future acquisitions may also include larger companies that may help drive revenue, profitability, cash flow and stockholder value. During the threenine months ended March 31,September 30, 2023, the Company completed one acquisition,two acquisitions for aan aggregate purchase price of $25.8$32.8 million.
DocGo did not complete any acquisitions during the three months ended March 31, 2022.
Healthcare Services Market
The transportationMobile Health Services market is dependent on several factors, including increased patient acceptance of services that are provided outside of traditional health care facilities, such as in homes, businesses or other designated locations; healthcare coverage of the various Mobile Health Services; and continued desire on the part of government and municipal entities to fund programs to assist currently underserved patient segments via “population health” programs. These programs have increased in number, scale and scope since the beginning of the COVID-19 pandemic. 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.
Overall Economic Conditions in the Markets in which weWhich We Operate
Economic changes both nationally and locally in our markets may impact our financial performance. Unfavorable changes in demographics, health care coverage of transportationTransportation Services and mobile health services,Mobile Health Services, interest rates, or ambulance manufacturing,manufacturing; a weakening of the national economy or of any regional or local economy in which we operateoperate; and other factors beyond our control could adversely affect our business.
A “trip” is defined as an instance where the Company completes the transportation of a patient to a specific destination, for which we are able to charge a fee. This metric does not include instances where a trip is ordered and subsequently either canceled (by the customer) or declined (by the Company). As trip volume represents the most basic unit of transportation service provided by the Company, the Company believes it is the besta good measure of the level of demand for the Company’s Transportation Services and is used by management to monitor and manage the scale of the business.
The average trip price is calculated by dividing the aggregate revenue from completed transports (“trips”)the total number of trips by the total number of transportstrips and is an important indicator of the effective rate at which the Company is being compensated for its provision of Transportation services.
Revenues generated from programs under which DocGothe Company is paid a fixed hourly or daily rate for the use of a fully staffed and equipped ambulance do not factor in the trip counts or average trip prices mentioned above. We anticipate thatexpect these fixed rate, “leased hour” programs willto account for an increasing proportion of the Transportation Services segment’s revenues in the future.
Our Ability to Control Expenses
We pay close attention to the management of our working capital and operating expenses. Some of our most significant operating expenses are labor costs, medical supplies and vehicle-related costs, such as fuel, maintenance, repair and insurance. Insurance costs include premiums paid for coverage as well as reserves for estimated losses within the Company’s insurance policy deductibles. We employ our proprietary technology to help drive improvements in productivity per transport.transport and per shift. We regularly analyze our workforce productivity with a goal of balancingto help achieve the optimum, cost-efficient labor mix for our locations. This involves managing the mix of company-employed labor and subcontracted labor as well as full-time and part-time employees.
Inflation
Beginning in
Since 2021, the inflation rate in the US,U.S., as measured by the Consumer Price Index, (“CPI”) has generally trended higher. This data is reported monthly, showing year-over-year changes in prices across a basket of goods and services. Though the inflation rate has seemingly moderated in the first quarternine months of 2023, reaching an annualized level of 3.7% in September, it remains well 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. 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 ana continued attempt to dampen inflation, the U.S. Federal Reserve implemented twofour interest rate hikes to date in 2023, raising its benchmark rate (the “federal funds rate”) to the current level of 4.75%-5.00%5.25-5.50% as of the date of the filing of this Quarterly Report on Form 10-Q. Looking to the remainder of 2023, we anticipate a continued moderation of the inflation rate when compared to the levels seen in 2022, as a result of these recent interest rate hikes and additional potential rate hikes, but expect that inflation willto remain well above the levels seen in the previous 10 years. If inflation is above the levels that the Company anticipates, gross margins could be below plan and our business, operating results and cash flows may be adversely affected.
Investing in R&D and Enhancing Our Customer Experience
Our performance is dependent on the investments we make in research and development (“R&D”), including our ability to attract and retain highly skilled research and developmentR&D personnel. We intend to continually develop and introduce innovative new software services, integrateintegrations with third-party products and services, mobile applications and other new offerings. If we fail to innovate and enhance our brand and our products, our market position and revenue will likelymay be adversely affected.
Regulatory Environment
DocGoThe Company is subject to federal, state and local regulations, including healthcare and emergency medical services laws and regulations and tax laws and regulations. The Company’s current business plan assumes no material change in these laws and regulations. In the event that any such change occurs, compliance with new laws and regulations may significantly affect the Company’s operations and cost of doing business.
Components of Results of Operations
Our business consists of three reportable segments — TransportationMobile Health Services, Mobile HealthTransportation Services and Corporate. All revenue and cost of goods sold are contained within the TransportationMobile Health Services and Mobile HealthTransportation Services segments. Accordingly, revenues and cost of goods sold are discussed below on a consolidated level and are also broken down
Revenue
The Company’s revenue consists of services provided by its TransportationMobile Health Services segment and its Mobile HealthTransportation Services segment.
Cost of Revenues
Cost of revenues consists primarily of revenue generating wages paid to employees, vehicle insurance costs (including insurance premiums and costs incurred under the insurance deductibles), maintenance, fuel, related to Transportation Services, laboratory fees, facility rent, medical supplies and subcontractors. We expect cost of revenuerevenues to continue to rise along with the expected increase in revenue.
Operating Expenses
General and administrative expenses
General and administrative expense consists primarily of salaries, bad debt expense, insurance expense, consultant fees, and professional fees for accounting services. We expect our general and administrative expense to increase as we continue to scale up headcount with the growth of 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.
Depreciation and Amortization
DocGoThe Company depreciates its assets using the straight-line method over the estimated useful lives of the respective assets. Amortization of intangibles consists of amortization of definite-lived intangible assets over their respective useful lives.
Legal and Regulatory Expenses
Legal and regulatory expenses include legal fees, consulting fees related to healthcare compliance, claims processing fees and legal settlements.
Technology and Development Expenses
Technology and development expenses,expense, net of capitalization consists primarily of costs incurred in the design and development of DocGo’sthe Company’s proprietary technology, third-party software and technologies. We expect technology and development expensesexpense to increase in future periods to support our growth, including as we investour intent to continue investing in the optimization, accuracy and reliability of our platform to helpand drive efficiency in our operations. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments, which is in turn, dependent on numerous factors, includingparticularly when we plan to enter intoentering new business lines or customer sales channels.
Sales, Advertising and Marketing
ExpensesOur sales, advertising and marketing expenses consist of costs directly associated with our sales advertising and marketing activities, which primarily include sales commissions, marketing programs, trade shows, and promotional materials. We expect that our sales advertising and marketing expenses willto continue to increase over time as we increase our marketing activities, grow our domestic and international operations, and continue to build brand awareness. As the Company expands its sales efforts to include the direct-to-consumer channel, marketing expenses are likely to increase as a percentage of revenues, given the marketing-intensive nature of that sales channel.
Interest Expense
Interest expense consists primarily of interest on our outstanding borrowings under our outstanding notes payable and financing obligations.
Comparison of the Three Months Ended March 31,September 30, 2023 and March 31, 2022
| Three Months Ended March 31, | Change | Change | ||||||||||||||
| $ in Millions | 2023 | 2022 | $ | % | ||||||||||||
| Revenue, net | $ | 113.0 | $ | 117.9 | $ | (4.9 | ) | (4 | %) | |||||||
| Cost of revenues | 81.2 | 78.0 | 3.2 | 4 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 29.2 | 23.9 | 5.3 | 22 | % | |||||||||||
| Depreciation and amortization | 3.6 | 2.2 | 1.4 | 64 | % | |||||||||||
| Legal and regulatory | 3.6 | 1.3 | 2.3 | 177 | % | |||||||||||
| Technology and development | 1.9 | 1.1 | 0.8 | 73 | % | |||||||||||
| Sales, advertising and marketing | 0.3 | 1.3 | (1.0 | ) | (77 | %) | ||||||||||
| Total expenses | 119.8 | 107.8 | 12.0 | 11 | % | |||||||||||
| (Loss) Income from operations | (6.8 | ) | 10.1 | |||||||||||||
| Other income (expenses): | ||||||||||||||||
| Interest income (expense), net | 0.8 | (0.1 | ) | 0.9 | 900 | % | ||||||||||
| Loss on remeasurement of warrant liabilities | - | (0.1 | ) | 0.1 | ||||||||||||
| Loss on equity method investments | (0.1 | ) | (0.1 | ) | - | |||||||||||
| Loss on disposal of fixed assets | (0.1 | ) | - | (0.1 | ) | |||||||||||
| Other income | 0.2 | - | 0.2 | |||||||||||||
| Total other income (expenses) | 0.8 | (0.3 | ) | 1.1 | 367 | % | ||||||||||
| Net (loss) income before income tax benefit (provision) | (6.0 | ) | 9.8 | |||||||||||||
| Income tax benefit (provision) | 2.1 | (0.4 | ) | 2.5 | ||||||||||||
| Net (loss) income | (3.9 | ) | 9.4 | |||||||||||||
| Net loss attributable to noncontrolling interests | (0.5 | ) | (1.3 | ) | 0.8 | 62 | % | |||||||||
| Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries | $ | (3.4 | ) | $ | 10.7 | |||||||||||
ConsolidatedThree Months Ended September 30, Change
$Change
%$ in Millions 2023 2022 Actual Results % of Total Revenue Actual Results % of Total Revenue Revenues, net $ 186.6 100.0 % $ 104.3 100.0 % $82.3 78.9 % Cost of revenues 131.5 70.5 % 71.3 68.3 % 60.2 84.4 % Operating expenses: General and administrative $ 33.6 18.0 % 22.1 21.2 % 11.4 51.4 % Depreciation and amortization 4.3 2.3 % 3.0 2.9 % 1.3 43.3 % Legal and regulatory 3.5 1.9 % 2.2 2.1 % 1.3 59.1 % Technology and development 3.2 1.7 % 1.4 1.3 % 1.8 128.6 % Sales, advertising and marketing 1.7 0.9 % 0.1 0.1 % 1.5 1500.0 % Total expenses 177.8 95.3 % 100.1 96.0 % 77.7 77.6 % Income from operations 8.8 4.7 % 4.2 4.0 % 4.6 Other income (expenses): Interest income, net 0.3 0.2 % 0.3 0.3 % — — % (Loss) on remeasurement of warrant liabilities — — % (1.8) (1.8) % 1.8 Change in fair value of contingent liability 0.2 0.1 % — — % 0.2 (Loss) gain on equity method investments (0.1) (0.1) % 0.1 0.1 % (0.2) Gain on remeasurement of finance leases — — % — — % — (Loss) gain on disposal of fixed assets — — % 0.1 0.1 % (0.1) Other income (expense) — — % — — % — Total other income (expense) 0.4 0.2 % (1.3) (1.3) % 1.7 Net income before income tax provision 9.2 4.9 % 2.9 2.7 % 6.3 Income tax (provision) (4.5) (2.4) % (0.4) (0.4) % -4.1 Net income 4.7 2.5 % 2.5 2.4 % 2.1 Net (loss) attributable to noncontrolling interests (0.1) (0.1) % (0.7) (0.7) % 0.6 (85.7) % Net income attributable to stockholders of DocGo Inc. and Subsidiaries $ 4.8 2.6 % $ 3.2 3.0 % 1.6
For the three months ended March 31,September 30, 2023, total revenue was $186.6 million, an increase of $82.3 million, or 78.9%, compared to the three months ended September 30, 2022.
Mobile Health
| Nine Months Ended September 30, | Change $ | Change % | |||||||||||||||||||||||||||||||||
| $ in Millions | 2023 | 2022 | |||||||||||||||||||||||||||||||||
| Actual Results | % of Total Revenue | Actual Results | % of Total Revenue | ||||||||||||||||||||||||||||||||
| Revenues, net | $ | 425.0 | 100.0 | % | $ | 331.7 | 100.0 | % | $ | 93.3 | 28.1 | % | |||||||||||||||||||||||
| Cost of revenues | 296.3 | 69.7 | % | 219.4 | 66.1 | % | 76.9 | 35.1 | % | ||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| General and administrative | 93.6 | 22.0 | % | 70.7 | 21.3 | % | 22.9 | 32.4 | % | ||||||||||||||||||||||||||
| Depreciation and amortization | 11.8 | 2.8 | % | 7.3 | 2.2 | % | 4.5 | 61.6 | % | ||||||||||||||||||||||||||
| Legal and regulatory | 9.6 | 2.3 | % | 6.6 | 2.0 | % | 3.0 | 45.5 | % | ||||||||||||||||||||||||||
| Technology and development | 7.7 | 1.8 | % | 3.7 | 1.1 | % | 4.0 | 108.1 | % | ||||||||||||||||||||||||||
| Sales, advertising and marketing | 2.6 | 0.6 | % | 2.3 | 0.7 | % | 0.3 | 13.0 | % | ||||||||||||||||||||||||||
| Total expenses | $ | 421.6 | 99.2 | % | 310.0 | 93.4 | % | 111.6 | 36.0 | % | |||||||||||||||||||||||||
| Income from operations | $ | 3.4 | 0.8 | % | $ | 21.8 | 6.6 | % | (18.4) | ||||||||||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||||||||||||||
| Interest income, net | 1.7 | 0.4 | % | 0.3 | 0.1 | % | 1.4 | 466.7 | % | ||||||||||||||||||||||||||
| (Loss) gain on remeasurement of warrant liabilities | — | — | % | 1.1 | 0.3 | % | (1.1) | ||||||||||||||||||||||||||||
| Change in fair value of contingent liability | 0.2 | — | % | — | 0.3 | % | 0.2 | ||||||||||||||||||||||||||||
| (Loss) gain on equity method investments | (0.3) | (0.1) | % | 0.1 | — | % | (0.4) | ||||||||||||||||||||||||||||
| Gain on remeasurement of finance leases | — | — | % | 1.4 | 0.4 | % | (1.4) | ||||||||||||||||||||||||||||
| (Loss) gain on disposal of fixed assets | (0.2) | — | % | 0.1 | — | % | (0.3) | ||||||||||||||||||||||||||||
| Other income (expense) | (0.7) | (0.2) | % | — | — | % | (0.7) | ||||||||||||||||||||||||||||
| Total other income (expense) | 0.7 | 0.2 | % | 3.0 | 0.9 | % | (2.3) | (76.7 | %) | ||||||||||||||||||||||||||
| Net income before income tax provision | 4.1 | 1.0 | % | 24.8 | 7.5 | % | (20.7) | ||||||||||||||||||||||||||||
| Income tax (provision) | (2.0) | (0.5) | % | (1.2) | — | % | (0.8) | ||||||||||||||||||||||||||||
| Net income | 2.1 | 0.5 | % | 23.6 | 7.1 | % | (21.5) | ||||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | 2.8 | 0.7 | % | (2.9) | (0.9) | % | 5.7 | 196.6 | % | ||||||||||||||||||||||||||
| Net income attributable to stockholders of DocGo Inc. and Subsidiaries | $ | (0.7) | (0.2) | % | $ | 26.5 | 8.0 | % | $ | (27.2) | |||||||||||||||||||||||||
Transportation Services
For the threenine months ended March 31,September 30, 2023, Transportation Services revenue totaled $40.1$132.7 million, and increased by $12.3an increase of $55.0 million, or 44%, as70.9% compared withto the threenine months ended March 31,September 30, 2022. This increase was due to increasesan increase in both transportation trip volumes and the average price per trip. VolumesTrip volumes increased by approximately 21%20%, from 48,110154,534 trips for the threenine months ended March 31,September 30, 2022 to 58,176185,404 trips for the threenine months ended March 31,September 30, 2023. The increase in trip volumes iswas due to a combination of growth in the Company’s customer base in certain core markets further penetration of markets that were entered into in 2021 and the early part of 2022 and acquisitions made during the second half of 2022.2022 and second quarter of 2023. Our average trip price increased from $353$362 in the threenine months ended March 31,September 30, 2022 to $415$405 in the threenine months ended March 31,September 30, 2023. The increase in the average trip price in the 2023 period reflectsreflected a shift in mix toward higher-priced transports with existing customers, as well as the acquisition of licenses to provide higher acuity transports resulting inthat earn higher prices per trip. The average trip price also benefited from an 8.7% increase in the average Medicare reimbursement rate for ambulance transports.
Cost of Revenue
For the threenine months ended March 31,September 30, 2023, total cost of revenue (exclusive of depreciation and amortization) was $81.2 million an increase ofincreased by 4.1%, as35.1% compared to the threenine months ended March 31, 2022.September 30, 2022, while revenue increased by approximately 28.1%. Cost of revenue as a percentage of revenue increased to 71.9%69.7% in the first quarter ofnine months ended September 30, 2023 from 66.2%66.1% in the first quarter ofnine months ended September 30, 2022. For the remainder of 2023, we expect cost of revenues to account for a smaller percentage of revenue than in the first quarter, as the Company’s ongoing margin enhancement projects provide a larger impact. Areas of focus include subcontracted labor, overtime hours for field staff and vehicle costs, particularly in the area of rental vehicles.
In absolute dollar terms, total cost of revenue in the threenine months ended March 31,September 30, 2023 increased by $3.2$76.9 million from the levels of the three months ended March 31, 2022.prior year period. This was primarily attributable to an $15.7a $32.3 million increase in total compensation, reflecting higher headcount for both the Transportation Services and Mobile Health Services segments; and a $0.6$40.2 million increase in vehicle costs, reflectingsubcontracted labor, driven primarily by the expansion ofMobile Health Services segment, where revenue increases outpaced the Company’s fleet over the past year;ability to service such revenue solely with internal resources, as well as certain projects which required more specialized personnel; and $0.4a $4.8 million increase in medical and related supplies. These increases were slightly offset by a net decrease of $0.5 million in increasesexpenses across a variety of other cost of revenuerevenues categories. These factors were largely offset by a $1.9 million decline in subcontracted labor, as the Company more aggressively transitioned to internal employees toward the latter part of the first quarter; an $8.2 million decrease in medical supplies and a $3.4 million decline in lab fees, both reflecting the significant decline in COVID-19 testing activity in the first quarter of 2023 compared to the first quarter of 2022.
For the Mobile Health Services segment, cost of revenuesrevenue (exclusive of depreciation and amortization) in the threenine months ended March 31,September 30, 2023 amounted to $52.7$204.1 million, a decline of $3.8up $45.2 million, or 6.7%29%, from the threenine months ended March 31,September 30, 2022. Cost of revenuesrevenue as a percentage of revenuesrevenue increased to 72.3%69.8% in the first quarter ofnine months ended September 30, 2023 from 62.7%62.6% in the first quarter ofnine months ended September 30, 2022, due to the declinedespite a significant increase in COVID-testing revenues, and significantlyreflecting higher compensation expenses reflectingas a result of headcount growth, significantly higher subcontracted labor costs and increased costs for medical supplies, which outweighed the impact of reduced lab fees and other medical supplies. In absolute dollar terms, subcontracted laborsupplies costs declined, but these costs were higherdue to the significant decline in the first quarter of 2023 as a percentage of Mobile Health revenues than in the first quarter of 2022.
For the Transportation Services segment, cost of revenuesrevenue (exclusive of depreciation and amortization) in the threenine months ended March 31,September 30, 2023 amounted to $28.5$92.2 million, up $7.0$31.8 million, or 33%53%, from the threenine months ended March 31,September 30, 2022. Cost of revenuesrevenue as a percentage of revenues declineddecreased to 71.1%69.5% in the first quarter ofnine months ended September 30, 2023 from 77.3%77.8% in the first quarter of 2022,prior year period, reflecting the impact of higher per-trip prices, increased number of standby contracts (for which we are paid a daily or hourly rate) and the overall increase in revenue, as well as a decline in the average fuel price.
Operating Expenses
For the threenine months ended March 31,September 30, 2023, the Company recorded $38.7$125.3 million of operating expenses compared to $90.6 million for the nine months ended September 30, 2022, an increase of $8.9 million, or 30%, compared to the three months ended March 31, 2022.38.4%. As a percentage of revenue, operating expenses increased from 25.3%27.3% in the first quarter ofnine months ended September 30, 2022 to 34.3%29.5% in the first quarter ofnine months ended September 30, 2023. The increase of $8.9$34.4 million related primarily to a $6.9$21.3 million increase in total compensation,
For the Mobile Health Services segment, operating expenses in the threenine months ended March 31,September 30, 2023 were $7.2$35.8 million, compared to operating expenses of $10.2up 52% from $23.5 million in the threenine months ended March 31,September 30, 2022. Operating expenses as a percentage of Mobile Health revenues decreasedincreased to 9.8% from 11.3%12.3% in the first quarternine months ended September 30, 2023 from 9.3% in the nine months ended September 30, 2022, reflecting significant expenditures that were made in the nine months ended September 30, 2023 related to the expansion of 2022. The decrease in operating expenses was a resultservices and geographic areas of a reduction in non-field headcount inoperation, as well as the continued buildout of the Mobile Health segment, driven in part byServices management infrastructure and the movementcosts of Mobile Health management personnel into centralized corporate functional areas.
For the Transportation Services segment, operating expenses in the threenine months ended March 31,September 30, 2023 were $10.5$39.6 million, up $1.72.037% from $28.9 million or 18.8%, fromin the threenine months ended March 31,September 30, 2022. Operating expenses as a percentage of revenues decreased to 26.1%29.9% for the nine months ended September 30, 2023 from 31.9% in37.3% for the prior year period,nine months ended September 30, 2022, reflecting the increased revenues in the current year period.
For the Corporate segment, which represents primarily shared services that are not contained within the entities which compriseincluded in either the Mobile Health Services or Transportation Services segments, operating expenses in the threenine months ended March 31,September 30, 2023 were $21.12$49.6 million, compared to $10.8$38.1 million in the threenine months ended March 31,September 30, 2022. The increase was driven by higher headcount as the Company built out its corporate infrastructure, including areas such as Business Development, Product Development and Corporate Development; as well as significantly higher stock compensation expenses. As a percentage of total consolidated revenues, Corporate expenses amounted to approximately 18.7%11.7% of revenues in the first quarter ofnine months ended September 30, 2023, compared to 9.2%11.5% in the threenine months ended March 31,September 30, 2022.
Interest Income/(Expense),Income, Net
For the threenine months ended March 31,September 30, 2023, the Company recorded $809,172$1.7 million of net interest income, net compared to $135,606$0.3 million of interest expenseincome, net in the threenine months ended March 31,September 30, 2022. This increase was primarily due to a significantly higher amount of interest earned in the three months ended March 31, 2023, due to an increase in the Company’s cash balances in income-bearing accounts, coupled with higher rates of interest earned on balances in thesethe Company's interest-bearing accounts in the nine months ended September 30, 2023, which reflected significantly higher market interest rates.
Gain/(loss)(Loss) Gain on Remeasurement of Warrant Liabilities
During the threenine months ended March 31,September 30, 2023, there were no gains or losses recorded relating to remeasurement of warrant liabilities, as all warrants were redeemed during the third quarter of 2022. During the threenine months ended March 31,September 30, 2022, the Company recorded a lossgain of $58,749approximately $1.1 million from the remeasurement of warrant liabilities. The warrants wereare marked-to-market in each reporting period, and this loss reflectedgain was due to the decreasedecline in DocGo’sthe Company’s stock price relative to the beginning of the first quarterperiod.
Gain/(Loss) Gain on Equity Method Investment
During the threenine months ended March 31,September 30, 2023, the Company recorded a loss of $0.3 million on equity method investments, of $115,286, which representedrepresenting its share of the losses incurred by an entity in which the Company hadhas a minority interest, which was accounted for under the equity method.interest. During the threenine months ended March 31,September 30, 2022, the Company recorded a lossgain on equity method investments of $83,341 relatedapproximately $0.1 million.
Gain/(loss)(Loss) Gain on Disposal of Fixed Assets
During the threenine months ended March 31,September 30, 2023, the Company recorded a loss of $0.2 million on the disposal of fixed assets of $54,839. No such gain or loss was recorded duringassets. During the threenine months ended March 31, 2022.
Income Tax Benefit/(Expense)
During the three months ended March 31, 2023,September 30, 2022, the Company recorded income tax benefita gain of $2.1 million. For$42,667 on the threedisposal of fixed assets.
Net LossIncome (Loss) Attributable to Noncontrolling Interest
For the threenine months ended March 31,September 30, 2023, the Company had a net lossincome attributable to noncontrolling interestinterests of approximately $0.5$2.8 million, compared to a net loss attributable to noncontrolling interestinterests of $1.3$2.9 million for the threenine months ended March 31,September 30, 2022. The decreasedincome compared to the prior year period loss reflected improved performance in most of the Company’s joint venture ongoing investments in new markets in the threenine months ended March 31,September 30, 2023.
Liquidity and Capital Resources
Since inception DocGo hasand prior to the Business Combination, the Company completed three equity financing transactions as its principal source of liquidity. In November 2021, upon the completion of the Business Combination and the PIPE Financing, the Company received proceeds of approximately $158.1 million, net of transaction expenses. Generally, the Company has utilized equity raisedproceeds from the financing transactions and the Business Combination to finance operations, investmentsinvest in assets, acquire ambulance operating licenses and to fund accounts receivable. The Company has also funded these activities through operating cash flows. In November 2021, upon the completion of the merger between Motion and Ambulnz, the Company received proceeds of approximately $158.1 million, net of transaction expenses. However, even when the Company generates positive net income, 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 these working capital needs. The Company’s working capital needs depend on many factors, including the overall growth of the Company and the various payment terms that are negotiated with customers and vendors. FutureThe Company’s future capital requirements also depend on many factors, including potential acquisitions, DocGo’sthe Company’s level of investment in technology and ongoing technology development, and rate of growth in existing markets and into new markets. Capital requirements may also be affected by factors outside of the Company’s control, such as interest rates, rising inflation, financial institution instability or failure and other monetary and fiscal policy changes to the manner in which the Company currently operates. Additionally, as the impact of the COVID-19 on the economy and on the Company’s market environment and operations evolves, the Company routinely assesses its liquidity needs. If the Company’s growth rate is higher than is currently anticipated, resulting in greater-than-anticipated capital requirements, the Company might need to, or choose to, raise additional capital through debt or equity financings.
On November 1, 2022, the Company entered into a revolving loan and security agreement with two banks, with one bank acting as the administrative agent (the “Lenders”), with anCredit Agreement, which provides for the Revolving Facility in the initial maximum commitmentaggregate principal amount of $90,000,000.$90 million. The revolving facilityRevolving Facility includes the ability for the Company to request an increase to the commitment by an additional amount of up to $50,000,000,$50 million, though no Lender (nor the Lenders collectively) areis obligated to increase theirits respective commitments. Borrowings under the revolving facilityRevolving Facility bear interest at a per annum rate equal to (i) at the Company’s option, the (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin. The applicable margins are based on the Company’s consolidated net leverage ratio, adjusted on a quarterly basis. The initial applicable margins are 1.25% for an adjusted term SOFR loan and 0.25% for a base rate loan and will be updated based on the Company’s consolidated net leverage ratio. The revolving facilityRevolving Facility matures on November 1, 2027. The revolving facility2027 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 facilityRevolving Facility is subject to certain financial covenants, such as a net leverage ratio and interest coverage ratio, as defined in the agreement. AsCredit Agreement. On October 19, 2023, the Company drew down $25 million under the Revolving Facility, and this amount remains outstanding as of the date of the filing of this Quarterly Report on Form 10-Q, the Company has not made any draws under the facility and there are no amounts outstanding.
Considering the foregoing, DocGothe Company anticipates that existing balances of cash and cash equivalents, future expected cash flows generated from our operations and anthe remaining available line of credit (as discussed in Note 9, “Line of Credit” tounder the unaudited Condensed Consolidated Financial Statements)Revolving Facility will be sufficient to satisfy operating requirements for at least the next twelve months.
ComparisonWorking capital as of March 31,September 30, 2023 and MarchDecember 31, 2022
| September 30 | December 31 | Change $ | Change % | ||||||||||||||||||||
| $ in Millions | 2023 | 2022 | |||||||||||||||||||||
| Working capital | |||||||||||||||||||||||
| Current assets | $ | 267.1 | $ | 271.1 | $ | (4.0) | (1.5 | %) | |||||||||||||||
| Current liabilities | 113.1 | 100.2 | $ | 12.9 | 12.9 | % | |||||||||||||||||
| Total working capital | $ | 154.0 | $ | 170.9 | $ | (17.0) | (10.0 | %) | |||||||||||||||
As of March 31, | Change | Change | ||||||||||||||
| $ in Millions | 2023 | 2022 | $ | % | ||||||||||||
| Working capital | ||||||||||||||||
| Current assets | $ | 258.4 | $ | 268.2 | $ | (9.8 | ) | (4 | %) | |||||||
| Current liabilities | 109.0 | 61.0 | 48.0 | 79 | % | |||||||||||
| Total working capital | $ | 149.4 | $ | 207.2 | $ | (57.8 | ) | (28 | %) | |||||||
As of March 31,September 30, 2023, available cash totaled $120.1$52.9 million, which represented a decrease of $68.3$104.4 million as compared to MarchDecember 31, 2022, asreflecting a significant increase in accounts receivable and acquisitions made during the second half of 2022 and in the first quarter of 2023 outweighed cash flow from operations.nine months ended September 30, 2023. As of March 31,September 30, 2023, working capital amounted to $149.4$154.0 million, which represented a decrease of $57.8$17.0 million as compared to MarchDecember 31, 2022, primarily reflecting the reduceddecreased cash balance. Increased accounts receivable in the threenine months ended March 31,September 30, 2023, which reflected the growth of the business and a shift towards higher credit quality customers who have longer payment terms, partially offset by the decline in cash, resulting in a decline in current assets as of September 30, 2023 compared to December 31, 2022. However, this was outweighed by the increase in current liabilities in the first quarter ofnine months ended September 30, 2023 which reflecteddue to higher accrued liabilities, reflecting the growth of the business and higher amounts due to the seller andof contingent consideration resulting from acquisitions.
Cash Flows
ThreeCash flows as of the nine months ended March 31,September 30, 2023 and 2022
| Three Months Ended March 31, | Change | Change | ||||||||||||||
| $ in Millions | 2023 | 2022 | $ | % | ||||||||||||
| Cash flow summary | ||||||||||||||||
| Net cash provided by/(used in) operating activities | $ | (23.1 | ) | $ | 18.3 | $ | (41.4 | ) | (226 | %) | ||||||
| Net cash provided by/(used in) investing activities | (1.7 | ) | $ | (1.1 | ) | (0.6 | ) | (55 | %) | |||||||
| Net cash provided by/(used in) financing activities | (12.0 | ) | $ | 2.5 | (14.5 | ) | (580 | %) | ||||||||
| Effect of exchange rate changes | 0.2 | $ | - | 0.2 | 0 | % | ||||||||||
| Net (decrease) increase in cash | $ | (36.6 | ) | $ | 19.7 | $ | (56.3 | ) | (286 | %) | ||||||
| As of September 30, | Change $ | Change % | |||||||||||||||||||||
| $ in Millions | 2023 | 2022 | |||||||||||||||||||||
| Cash flow summary | |||||||||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (58.3) | $ | 37.6 | $ | (95.9) | (255.1 | %) | |||||||||||||||
| Net cash (used in) investing activities | (26.9) | (37.8) | 10.9 | 28.8 | % | ||||||||||||||||||
| Net cash (used in) provided by financing activities | (11.9) | 0.7 | (12.6) | (1794.1 | %) | ||||||||||||||||||
| Effect of exchange rate changes | 0.2 | (0.3) | 0.5 | (176.0 | %) | ||||||||||||||||||
| Net (decrease) increase in cash | $ | (96.9) | $ | 0.2 | $ | (97.1) | (48526.6 | %) | |||||||||||||||
Operating Activities
During the threenine months ended March 31,September 30, 2023, operating activities used $23.1$58.3 million of cash, driven by adespite net lossincome of $3.9$2.1 million. Non-cash charges amounted to $9.4$28.1 million and included $2.3$7.5 million in depreciation of property and equipment and right-of-use assets, $1.4$4.3 million from amortization of intangible assets, $8.5$15.2 million of stock compensation expense, and a $0.1$0.2 million loss on the disposal of assets and a loss of $0.3 million from an investment that is accounted for under the equity investment.method, and $1.0 million in deferred taxes. These were partially offset by a $1.9$0.3 million reduction in bad debt expense, related to an adjustmentand a non-cash gain of $0.2 million resulting from a reduction in the provision for potential uncollectible accounts receivable, and a $1.0 gain from a deferred tax asset.fair value of contingent consideration. Changes in assets and liabilities resulted in approximately $28.6$88.4 million in negative operating cash flow, as a $24.7$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 $2.6$12.6 million decrease in accounts payable, and a $1.5$0.3 million decreaseincrease in prepaid expenses and other current assets, partially offset by a $27.3 million increase in accrued liabilities and a $0.2$0.7 million increase in prepaid expenses outweighed a $0.3 million reductiondecline in other assets.
During the threenine months ended March 31,September 30, 2022, operating activities provided $18.2$37.6 million of cash, aided by net income of $9.4$23.6 million. Non-cash charges amounted to $4.8$11.9 million and included $1.6$5.0 million in depreciation of property and equipment and right-of-use assets, $0.6$2.2 million from amortization of intangible assets, $1.2$2.7 million in bad debt expense primarily related to a provision for potential uncollectible accounts receivable and $1.4$4.6 million of stock compensation expense. These were partially offset by non-cash gains of $1.4 million relating to the remeasurement of finance lease liabilities, $1.1 million from the remeasurement of warrant liabilities and a gain of $0.1 million from an investment that is accounted for under the equity method. Changes in assets and liabilities resulted in an approximately $4.1$2.1 million in additionalincrease to operating cash flow, as a $1.1$2.9 million decrease in accounts receivable, a $2.2$0.9 million decrease in
Investing Activities
During the threenine months ended March 31,September 30, 2023, investing activities used $1.7$26.9 million of cash and consisted of the acquisition of property and equipment totaling $2.0approximately $4.4 million, and the acquisition of intangibles in the amount of $1.4$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 $1.6$0.3 million in cash added via an acquisition and $0.1 million in proceeds from the disposal of property and equipment.
During the threenine months ended March 31,September 30, 2022, investing activities used $1.1$37.8 million of cash and primarily consisted of the acquisition of property and equipment totaling $0.5approximately $2.0 million, and the acquisition of intangibles in the amount of $0.6$2.0 million and the acquisition of businesses in the amount of $33.8 million, primarily relating to supportacquisitions the ongoing growthCompany completed in the third quarter of the business.
Financing Activities
During the threenine months ended March 31,September 30, 2023, financing activities used $12.0$11.9 million of cash, primarily due to a reduction of $11.5$8.4 million decrease in amounts due to seller, as deferredrelating to payments made for acquisitions that were made undercompleted in the termssecond half of previously-closed acquisitions, $0.8 million in payments under the terms2022 and second quarter of finance leases, and $0.1 million in repayments of notes payable. These items were partially offset by $0.4 million in proceeds from the exercise of stock options.
During the three months ended March 31, 2022, financing activities provided $2.5 million of cash, due to $1.0 million in proceeds from the Company’s revolving credit line, $2.1 million in noncontrolling interest contributions and $0.4 million in proceeds from the exercise of stock options, which were partly offset by $0.62023; $2.3 million in payments on obligations under the terms of finance leases, $0.1leases; $2.2 million in payments for taxes related to shares withheld for employee taxes; and $0.5 million in repayments of notes payable. 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 March 31,the nine months ended September 30, 2023 wereare as follows:
| Notes Payable | |||||
| 2023, remaining | $ | 0.2 | |||
| 2024 | 0.7 | ||||
| 2025 | 0.6 | ||||
| 2026 | 0.6 | ||||
| 2027 | 0.4 | ||||
| Thereafter | 0.2 | ||||
| Total maturities | 2.7 | ||||
| Current portion of notes payable | (0.7) | ||||
| Long-term portion of notes payable | $ | 2.0 | |||
| Notes Payable | ||||
| 2023, remaining | 0.4 | |||
| 2024 | 0.5 | |||
| 2025 | 0.5 | |||
| 2026 | 0.4 | |||
| 2027 | 0.1 | |||
| Thereafter | 0.0 | |||
| Total maturities | $ | 1.9 | ||
| Current portion of notes payable | (0.6 | ) | ||
| Long-term portion of notes payable | $ | 1.3 | ||
| Finance Leases | |||||
| 2023, remaining | $ | 0.9 | |||
| 2024 | 3.0 | ||||
| 2025 | 2.7 | ||||
| 2026 | 2.0 | ||||
| 2027 | 0.9 | ||||
| Thereafter | 0.1 | ||||
| Total future minimum lease payments | 9.6 | ||||
| Less effects of discounting | (0.9) | ||||
| Present value of future minimum lease payments | $ | 8.7 | |||
| Operating Leases | ||||
| 2023, remaining | $ | 2.2 | ||
| 2024 | 2.6 | |||
| 2025 | 2.6 | |||
| 2026 | 1.9 | |||
| 2027 and thereafter | 1.7 | |||
| Total future minimum lease payments | 11.0 | |||
| Less effects of discounting | (1.3 | ) | ||
| Present value of future minimum lease payments | $ | 9.7 | ||
Future minimum lease payments under finance leases as of March 31, 2023, and for the following four fiscal years and thereafter are as follows:
| Finance Leases | ||||
| 2023, remaining | $ | 2.5 | ||
| 2024 | 2.7 | |||
| 2025 | 2.4 | |||
| 2026 | 1.6 | |||
| 2027 and thereafter | 0.6 | |||
| Total future minimum lease payments | 9.8 | |||
| Less effects of discounting | (1.0 | ) | ||
| Present value of future minimum lease payments | $ | 8.8 | ||
| Operating Leases | |||||
| 2023, remaining | $ | 0.8 | |||
| 2024 | 3.0 | ||||
| 2025 | 3.0 | ||||
| 2026 | 2.2 | ||||
| 2027 | 1.1 | ||||
| Thereafter | 0.8 | ||||
| Total future minimum lease payments | 10.9 | ||||
| Less effects of discounting | (1.1) | ||||
| Present value of future minimum lease payments | $ | 9.8 | |||
Critical Accounting Policies
Basis of Presentation
The Company’s unaudited Condensed Consolidated Financial Statements are presented in conformity with accounting principles generally accepted in the United States of America (“U (“U.S. GAAP”)GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).SEC. The unaudited Condensed Consolidated Financial Statements include the accounts and operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated upon consolidation. Noncontrolling interests (“NCI”)NCI in the unaudited Condensed Consolidated Financial Statements represent the portion of consolidated joint ventures and a variable interest entity (“VIE”)VIE in which the Company does not have direct equity ownership. Accounts and transactions between consolidated entities have been eliminated.
Pursuant to theThe Business Combination the merger between Motion and Ambulnz, Inc. was accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”).GAAP. Under this method of accounting, Motionthe Company was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Ambulnz Inc. stock for the net assets of Motion,the Company, accompanied by a recapitalization. The net assets of Motionthe Company are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Ambulnz, Inc.Ambulnz. The shares and corresponding capital amounts and earnings per share available for common stockholders prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio (645.1452 to 1) established in the Business Combination. Further, Ambulnz Inc. was determined to be the accounting acquirer in the transaction,Business Combination, and as such, the acquisitionBusiness Combination is considered a business combination under Accounting Standards Codification (“ASC”), TopicASC 805 Business Combinations, (“ASC 805”) and was accounted for using the acquisition method of accounting.
Principles of Consolidation
The Company holds a variable interest in MD1, Medical Care P.C. (“MD1”), which contracts with physicians and other health professionals in order to provide services to the Company. MD1 is considered a VIE since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of MD1 and funds and absorbs all losses of the VIEMD1 and therefore appropriately consolidates MD1.
Net lossincome for MD1 was $16,839 for the VIE was $186,637 for the threenine months ended March 31,September 30, 2023. The VIE’sMD1’s total assets, all of which were current assets apart from other assets amounting to $15,248, amounted to $635,620$0.6 million as of March 31,September 30, 2023. Total liabilities, all of which were current for the VIE, was $532,127MD1, were $0.5 million as of March 31,September 30, 2023. The VIE’sMD1’s total stockholders’ deficitequity was $103,493$0.2 million as of March 31,September 30, 2023.
Business Combinations
The Company accounts for its business combinations under the provisions of ASC 805-10,Business Combinations (“ASC 805-10”), which requires that the acquisition method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including NCI, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill.
Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: (1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or (2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings. For transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expenses acquisition-related costs and fees associated with business combinations.
The estimated fair value of net assets to be acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. Management uses assumptions on the basis of historical knowledge of the business and projected financial information of the target. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill represents the excess of the total purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but is tested for impairment at the reporting unit level annually on December 31 or more frequently if events or changes in circumstances indicate that it is more likely than not to be impaired. These events include: (i) severe adverse industry or economic trends; (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; or (iv) a sustained decrease in our market capitalization, as indicated by our publicly quoted share price, below our net book value.
On February 3, 2023, Ambulnz Health LLC (“Health”), commenced an assignment for the benefit of creditors (“ABC”)ABC pursuant to California law. An ABC is a liquidation process governed by state law (California law in this instance) that is an alternative to a bankruptcy case under federal law. Prior to commencing the ABC, Health ceased business operations and all of its employees were terminated and treated in accordance with California law. In the ABC, all of Health’s assets were transferred to an assignee (the “Assignee”)the Assignee, who actsacted as a fiduciary for creditors and in a capacity equivalent to that of a bankruptcy trustee. The Assignee iswas responsible for liquidating the assets. Similar to a bankruptcy case, there iswas a claims process. Creditors of Health will receivereceived notice of the ABC and a proof of claim form and arewere required to submit a proof of claim in order to participate in distribution of net liquidation proceeds by the Assignee.
Revenue Recognition
On January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), as amended.
To determine revenue recognition for contractual arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify each contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when (or as) the relevant performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will be able to collect the consideration it is entitled to in exchange for the goods or services the Company provides to the customer.
The Company generates revenues from the provision of (1) Transportation Services and (2) Mobile Health Services. TheFor both Transportation and Mobile Health Services, the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, thereforefulfilled. Therefore, the Company satisfies performance obligations immediately. The Company has utilized the “right to invoice” expedientexpedient. which allows an entity to recognize revenue in the amount of consideration to which the entity has the right to invoice when the amount that the Company has the right to invoice corresponds directly to the value transferred to the customer. Revenues are recorded net of an estimated contractual allowances for claims subject to contracts with responsible paying entities. The Company estimates contractual allowances at the time of billing based on contractual terms, historical collections, or other arrangements. All transaction prices are fixed and determinable which includes a fixed base rate, fixed mileage rate and an evaluation of historical collections by each payor.
Income Taxes
Income taxes are recorded in accordance with ASC 740,Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or its tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense.
Please see Note 2, “Summary of Significant Accounting Policies” to the unaudited Condensed Consolidated Financial Statements.
Interest Rate Risk and Foreign Exchange Risk
Cash equivalents that are subject to interest rate volatility represent our principal market risk. We do not expect cash flows to be affected to any significant degree by a sudden change in market interest rates as our notes payable bear fixed interest rates. We do not enter into investments for trading or speculative purposes. Additionally, as of September 30, 2023, the Company hashad not made any draws under the facilityRevolving Facility, and as of March 31,there were no amounts outstanding. On October 19, 2023, there is no amount outstanding.
We operate our business primarily within the United StatesU.S. and currently execute a majority of our transactions in U.S. dollars. However, we are exposed to limited foreign exchange risk as a result of our U.K. operations. The foreign exchange gainloss amounted to $243,658$(582,471) to the Company in the firstthird quarter of 2023, ($5,863compared to $248,283 in the firstthird quarter of 2022).2022. We have not utilized hedging strategies with respect to such foreign exchange exposure. This limited foreign currency translation risk is not expected to have a material impact on our consolidated financial statements.
Concentrations of Risk and Significant Clients
OneThe Company had one customer that accounted for approximately 46%33% of sales and 62% of net accounts receivable, for the three months ended March 31, 2023.
One customer accounted for approximately 34% of sales and 22%36% of net accounts receivable and another customer that accounted for 19%32% of sales and 17%28% of net accounts receivable for the three months ended March 31,September 30, 2023. One customer accounted for approximately 37% of sales and 28% of net accounts receivable and another customer accounted for approximately 17% of sales and 36% of net accounts receivable for the nine months ended September 30, 2023.
Management’s Evaluation of Disclosure Controls and Procedures
Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report,Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”))Act) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission’sSEC rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31,September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We and other participants in the healthcare industry are subject to legal proceedings, claims and litigation arising in the ordinary course of our business. DescriptionsIn addition to the proceeding below, descriptions of certain legal proceedings to which we are a party are contained in Note 19, “Legal Proceedings” of the Notes to our unaudited Condensed Consolidated Financial Statements.
FromIn addition, from time to time, in the ordinary course of business and like others in our industry, we receive requests for information from government agencies in connection with their regulatory or investigational authority. These requests can include subpoenas or demand letters for documents to assist the government in audits or investigations. We review such requests and notices and take what we believe to be appropriate action. We have been subject to certain requests for information and investigations in the past and could be subject to such requests for information and investigations in the future.
Factors that could materially and adversely affect our business, financial condition and/or results of operations are described in the Annual Report on Form 10-K for the year ended December 31, 2022.2022 (the “2022 Form 10-K”). Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business, financial condition and/or results of operations. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our most recent Annual Report onthe 2022 Form 10-K.
Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds,
Unregistered Sales and Issuer Purchases of Equity Securities
On March 31, 2023, Holdings acquired 51% of the outstanding shares of common stock of Cardiac RMS, LLC (“CRMS”) in exchange for $10,000,000 closing consideration, consisting of $9,000,000 in cash and $1,000,000 worth of shares of DocGo common stock issued in a private placement transaction. A further probable consideration of $15,822,190 is to be paid out over 36 months for the remaining 49% equity of CRMS, based on CRMS’ attainment of full-year EBITDA targets. CRMS provides cardiac implantable electronic device (“CIED”) remote monitoring and virtual care management services.
The foregoing transaction did not involve any underwriters, underwriting discounts or commissions, or any public offering. Under the terms of the agreement, the Company issued and sold the shares of DocGo common stock in a private placement to four accredited investors, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company relied on this exemption from registration based in part as each accredited investor was aware of the terms of the transaction, the securities issued contained restrictive legends regarding resale and transfer, and the transaction was not publicly solicited or advertised.
Share Repurchases
On May 24, 2022, the Company was authorized to purchase up to $40 million of the Company’s common stock under a share repurchase program (the “Program”). During the second and fourth quarter of 2022, the Company repurchased 536,839 shares of its common stock for $3,731,712. These shares were subsequently cancelled. There were no shares repurchased during the first quarter of 2023. The Program does not oblige the Company to acquire any specific number of shares and will expire on November 24, 2023. Under the Program, shares may be repurchased using a variety of methods, including privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as part of accelerated share repurchases, block trades and other methods. The timing, manner, price and amount of any common stock repurchases under the Program are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions.
None.
Not applicable.
None.
| Exhibit Number | Description | |||||||
| 3.1 | ||||||||
| 10.1 | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1** | ||||||||
| 32.2** | ||||||||
| 101.INS* | Inline XBRL Instance | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DocGo Inc. | ||||||||
| Date: | By: | /s/ | ||||||
| Chief Executive Officer | ||||||||
| Date: | By: | /s/ Norman Rosenberg | ||||||
| Norman Rosenberg | ||||||||
Chief Financial Officer and Treasurer | ||||||||
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