Greetings, and welcome to the DocGo Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Steve Halper. Please go ahead, sir.

Thank you, Irene. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. All statements in this conference call other than historical facts are indeed forward-looking statements. The words anticipate, believe, estimate, expect, intend, guidance, confidence, target, project and other similar expressions are used to typically to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and may involve and are subject to certain risks and uncertainties and other factors that may affect DocGo's business, financial condition and other operating results. These include but are not limited to the risk factors and other qualifications contained in DocGo's annual report on Form 10-K, quarterly reports filed on Form 10-Q and other reports and statements filed by DocGo with the SEC to which your attention is directed. Actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. In addition, today's presentation contains references to non-GAAP financial measures, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release, as well as in our filings with the securities and exchange commission. The information contained in this call is accurate only as of the date discussed. Investors should not assume that statements will remain relevant and operative at a later time. We undertake no obligation to update any information discussed in this call in the future. At this time, it is now my pleasure to turn the call over to Mr. Stan Vashovsky, CEO and Co-Founder of DocGo. Stan?

Thank you, Steve. And thank you all for joining us today. The second quarter represented another period of strong operational execution. Our revenues increased 76% year-over-year to $109.5 million. Continued sales momentum and acquisition-based contributions have supported an increase in our 2022 revenue guidance to range of 425 million to 435 million up from a previous range of 400 million to 420 million. We're also raising our guidance for adjusted EBITDA to range of 40 million to 45 million compared to original guidance of 35 million to 41 million. Some of the key factors driving our continued organic growth, including the expansion of our agreements with Carnival Cruise Lines, new municipal programs in New York, new mobile health programs in Los Angeles and expanded medical transportation business with Northwell. Our mass COVID testing revenues for the quarter were approximately 28 million and are expected to decline significantly in the third quarter. We have already begun offsetting with non-COVID related business in place and in many cases, the customers will remain the same. An example of this in New York is our transition from mass COVID testing with a municipal client directly into providing primary care at homeless shelters or medical imaging services for that same client. In some, we expect the transition to these new non-COVID projects to be relatively seamless with minimal impact on revenue generation. On the M&A front, we expect to increase our activity with several prospective transactions in the pipeline about which we are very excited. We continue to pursue synergistic opportunities where prospective targets may be currently outsourcing services, which DocGo could directly provide. This is in addition to those opportunities, which open up new markets and drive enhance profitability. Our goal is to continue utilizing a strong balance sheet and cash flow from operations…

Thanks, Stan. At its heart DocGo is a technology company, as its former Chief Technology Officer, I've observed our software evolve into a highly sophisticated system. In Q2, we greatly enhanced our dispatching application with the ability to assign mobile health and ambulance resources based upon predictive demand analysis. This sophisticated model allows for increased utilization, thus decreasing the idle time of our mobile units, further enabling our ability to deliver our cost-effective healthcare. Our team also built a highly intelligent machine learning system to help predict reimbursement and help ensure collectability. At DocGo, we built software that is core to our business model and integrate with systems that support our business. In Q2, we completed our integration with one of the nation's largest EHRs, Athenahealth. Additionally, DocGo is accepted into the Epic app portrait as its first and currently only fully embedded mobile health ordering application. Being in the Epic app portrait grants the thousands of hospitals using Epic, the ability to order DocGo services directly from within their native EHR. DocGo believes in virtual and mobile first medicine, to support this vision we've improved health point, our patient EHR system by embedding telehealth support, which ensures a seamless in-app patient experience. Software and automation is at the heart of our company. And over the coming years DocGo will continue investing tens of millions of dollars into our engineering team. Stan, I'll hand it back to you.

Thanks, Anthony. After an excellent quarter; we continue to see tremendous growth potential coming from a variety of different avenues in the years ahead. At this point, I will hand it over to Andre Oberholzer to address the financial details.

Thank you, Stan, and good morning. Total revenue for the second quarter of 2022 amounted to 209.5 million, representing growth of 76% as compared to the 62.2 million reported for the second quarter of ‘21. The year-over-year revenue growth was driven mainly by the contribution of revenue from continued expansion of major corporate accounts due and expanded municipal mobile health contracts, and the expansion of key customer relationships on the medical transportation side, such as Northwell. Mobile health revenue for the second quarter of 2022 amounted to 87.3 million as compared to 33.2 million in Q2 of ’21, up approximately 163%. Excluding mass COVID testing revenues from both quarters, mobile health revenues amounted to 59.3 million up from 23.2 million last, an increase of 156%. Total medical transportation revenues announced to 22.2 million, compared to 28.9 million in Q2 ’21. Recurring transportation revenues increased to 20.2 million as compared to 18.7 million in the prior year quarter, an increase of 8%. It is important to note that last year's second quarter included approximately 10.2 million in project based standby transportation revenue comprising emergency deployments on behalf of different municipal agencies to provide standby services at testing and vaccination sites. These emergency deployments gradually round down by the end of the second quarter of ’21. During Q2 ’22, project-based emergency deployment revenues amounted to approximately $2 million. Mobile health revenue amounted to 80% of total revenue during Q2 this year, which is 53% in the prior year with transportation as the remainder. Revenue generated by the UK market through by 45% to 3.2 million during Q2 of this year, representing approximately 3% of total revenue. Net income amounted to 11.8 million in the second quarter of 2022, which represents a substantial improvement over net income of $100,000 a quarter in the…

[Operator Instructions] Our first question is from Richard Close of Canaccord Genuity.

Andre, I was wondering maybe just some housekeeping, is there any way you could provide us the transport volumes and pricing for the quarter? And then as we think about the growth rate in transportation on the recurring revenue side, I'm just curious your thoughts on the 8% growth. Should we be looking for something greater than that going forward? Or how should we think about growth on recurring revenue in transportation?

In terms of the actual volume and the price per trip, at this time, we have not disclosed that it will be in [indiscernible], maybe fall with the SEC. When you see the results, you will see both an increase in the trip volume as well as the increase in price per call, which drove the 8% increase year-over-year. That excludes the project-based labor so just recurring. You still feel as in the past, the transportation year-over-year will grow around 30%. We do not see that train changing at this point in time.

Richard it’s Stan, good to hear from you again. Also, as we've discussed earlier, our business model has evolved over the last several years where the metric of quantity of trips per day is really no longer relevant because of the way we charge our customers, what we refer to as our least hour program. So we get paid the exact same dollar amount by the customer. They're paying us at -- call it a minimum rate per day, which includes vehicle, cruise supplies, everything. So if we do one transport or if we do seven transports with that single vehicle for that one customer, our compensation for that day is the same. This helps mitigate days that are quieter versus days that are busier, bring some consistency and allows us to better forecast our business. It also allows the customer to be assured that they have dedicated resources versus on demand resources that in the past have proven to be somewhat non-reliable.

Okay. And then -- but 30% is a good growth rate in transportation. I just want to --

Yes, we're still going to stick with 30% growth for the year, in that range.

Okay. And is there any non-recurring revenue in the third quarter of 2021 that we should be aware of?

Well, Richard, it's kind of hard to project. Right now, we're not projecting much, but the reality is that it could be a hurricane tomorrow. It could be forest fire in California, where we get notified by FEMA. We get notified by state agencies to come in and assist. Those are project based one-time type services. They happen several times throughout the course of the year, but projecting them is quite difficult. But we're always going to be super conservative and say that we can accomplish our growth target with what we can rely on, which is our contracted business. We don't know if Q3 is going to have that one-time call it project based emergency response that we've had in the past [indiscernible] will probably have a little bit of it there, but no way to gauge on how much of it will be in Q3.

But in terms in terms of last year, Q3 does not have any significant project-based revenue. Most of that work round down by the end of Q2 last year.

And then Stan on the M&A opportunity, maybe, if you could just dive into that a little bit more, based on your comments, it somewhat sounded like you guys are seeing opportunities on the mobile health side, maybe with some additional services. Did I hear that correctly? Or just any thoughts on M&A?

No, you're absolutely right, Richard. Our focus on M&A is mobile health services. We think there will be opportunities. We're starting to see more and more opportunities approaching us. We hope to execute in the near future on some of these opportunities. We'll always acquire licenses and small little companies on a transportation side, because that's just the most effective way to get a license to break into a market. You can file for one, but you can wait 6, 12, 24 months, if you're working through the municipality for a license, where you can spend few hundred dollars in acquire a small company, and then just use that license as a starting point. So there'll always be some, call it license acquisitions on the transportation side, but we are reserving most of our call it capital for a significant amount of M&A activity in the future around mobile health. That's the space that we're mostly excited. It's a very fast-growing space we see endless amounts of possibilities. We see lots of areas that we're very interested in that we've proven to be very effective in. And that's how we're going to put our capital to work.

Our next question is from Mike Latimore of Northland Securities.

So I guess just on the guidance. In the press release, it says guidance increases based on organic growth and M&A activities which occurred subsequent to the quarter. And it kind of sounds like you've already made an acquisition or am I interpreting that incorrectly?

No. Your assumption is correct. We've made a recall -- we use a term tuck in acquisitions, small acquisitions that give us licensing capabilities. So we haven't spent any material amount of money. We haven't acquired any material amounts of revenue, but we we're always, I mean, historically by 5, 6, 7 little companies, we use our licenses as launching points. And we haven't done anything call it material, Richard -- I mean, Mike. But historically, you look at our patterns every quarter we always buy a small little mama pop out somewhere for their license.

So, most of the increase relates to organic activities?

Virtually all of it. I mean, very, very -- and you also have to understand a lot of times will acquire company that may have a couple of few million dollars in revenue, but it's not the kind of business we want to keep anyway. So we'll release that revenue and focus more on the way we want to conduct our business. Q – Mike Latimore: Obviously, the gross margins were great, should we view them as relatively maintainable at these levels or are there room for expansion the second half of year?

Well, the reality is Mike, we're always going to make them better. We still pay premium for staffing where as the market is talking about contracting on staffing, we're doing the opposite, we're hiring full speed ahead. We're paying recruiter fees, we're paying staffing agencies, we're still giving up a lot of margin that over time I think will stabilize and that will help drive and continue to prove of our gross margin. We've always said mobile health ideally should be somewhere at about 42%, 43% gross margin and transportation slightly below that. So there's still move for growth and improvement.

And then just last on the, I think you said you're hiring -- you want to hire 600 people by year end. How many of those are sort of net new versus replacing a staffing agency person?

All 100% are incremental to our current headcount. So whatever we have right now, we're not -- that 600 does not include replacement for attrition. Just based on current workload contracts that we've executed with start date already agree to work that we're anticipating in the second quarter of the year. Our need for clinicians and operational staff is quite strong. We have a recruiting group of over 20 people. We have a whole bunch of agencies that help us bring candidates. So we're continuing to hire as aggressively as -- almost as aggressive as last year.

Mike, this is Andre, I just want to clarify something stands safe for mobile health. We still price contracts with a desired margin around 50% to 53%. And based on the improvement you saw in Q2 using the subcontract labor, we are on that path towards those desired margins.

Our next question is from Sarah James of Barclays.

So you guys had a really strong quarter as far as contract signing goes. I think you signed Carnival LA Care, the Empire Blue Cross in the release. Can you give us any idea on size of those or how we should think about modeling new contract ads as far as transportation revenue goes?

So we -- that's a great question, Sarah. We don't really provide details down to the customer level. Our agreements with our customers prohibit us from sharing that kind of information, in terms of modelling all I can say is we have a very good strong track record of meeting and beating our guidance. We feel very comfortable with the municipal contracts, the hospital contracts that we signed, the percentage of customers that are migrating from COVID related work to non-COVID related work is extremely high, well over 80%. And I would just say that municipal work will continue to be our biggest contributor throughout the country. We have some very unique programs that I think differentiate DocGo from other medical providers, and then followed by hospitals and insurance companies from there. Andre, anything else you want to add to that? Or what do you think, Andre?

No, that sounds good. I mean, year-over-year, we see this year about 30% to 36% growth and those kind of contract systems as it goes.

Let, me just add one more thing. We talk about 30% to 36% growth, but if that's if you take the number of 319 from last year compared to the guidance that we provided this year, the realities are that 319 number from last year has about 40 million, 50 million of COVID testing. That's not going to replicate in this year. So if you take that 319 number down to let's say 250, that's the real incremental business that we're out there securing. So it's been a wonderful year. We're very excited about the year, the demand for our services continue to be very strong. We provide clinical services in a way that our competition does not extremely innovative and very tech-enabled. So it's 30%, 35% if you look at it from end of last year, but in reality that number's closer to 50%, 60% if you remove last year's second half portion of the COVID testing, which we do not see as a major contributor this year.

And could you give us a little color on your pipeline for new clients, either municipal RFP pipeline or conversations with providers, how does that compare to last year?

Strong, extremely strong. One thing that we've said before something that we're very happy about is the remaining of the COVID business is really only two call it customers to major customers left that we do mass COVID testing for and one of those agreements expire early September, and the other one, the second one is extremely small. Something that we are just super proud of and I think speaks a lot to our company's efforts is that same exact customer is migrating from a COVID program to a pure mobile health traditional type program. And in the same and the personnel and the revenue that they contributed will remain working, there will be no layoffs. They'll just simply come in, get some additional training in house and then be redeployed a lot of times working for that exact same customer. We've accounted for all of the revenue that we expect to lose from the mass COVID testing sites for the second half of the year. And all of that revenue is going to be traditional mobile health, nothing to do with COVID testing, COVID vaccinations or anything related to COVID.

Our next question is from Pito Chickering of Deutsche Bank.

Hi there, this is -- Ryan on for Pito. Thanks for taking the question. Just wanted to ask on margins again. I heard your comments on the strong 2Q gross margin, and you think that can be maintainable going from here, but it looks like the guides suggest at least some step down in 2H so just wanted to get a feel for, is that just kind of the roll off of the COVID testing revenue or some conservatism around the labor and fuel costs? Or can you just talk a little bit more about kind of that move in margins for into 2H?

Andre, do you want to take that?

Sure. I'll give it a go. So in terms of the COVID testing reduction, there's no real impact on gross margin because everything we price on mobile health, that includes COVID testing, and this is mass testing, not consumer, we price it about the same margin between 50 and – 50% to 53%. So as we roll off COVID program and roll into your mobile health replacement program, there's no real change in the margin. For the second half, we continue to look at inflation gas prices that the prices more than we plan on during Q2. So that causes a couple of basis points. Labor is too holy, but we always want to keep guidance that include some conservative, there's no real margin decline that we plan on other than you looking at inflation and thinking about impact of inflation in the second half.

I would just add that, traditionally we've been always very conservative when it comes to revenue and EBITDA guidance. Internally, we always plan for the worst and those are the numbers that you're seeing and I'll ideally, we hope for the best. If we see an improvement we'll go ahead and then raise guidance one more time, if that opportunity arises at the end of the next quarter. But in general, our company cloud cultures try to be conservative, expect the worst and hope for the best.

And then if you could just give us any quick update on, is there any seasonality to watch for on the transportation side in 3Q and into 4Q? And just kind of how did that business track versus your internal expectations this quarter? I think you took down that transport mix as a percentage of total by one percentage point, I'm guessing that's just kind of some outperformance on the COVID revenues within mobile health, but did that kind of live up to what you guys wanted to see there in 2Q?

Yes. Look, we see a lot of value in our transportation business, that part of our business is getting smaller a little bit. It may continue over time, we'll see. We like that business because it's recurring, it's steady, it's almost annuity alike. It also gives us access to a lot of patients that may down the line require our mobile health services. So naturally we focus our energy. We focus our strength in our higher revenue, higher gross margin, more profitable business, which is mobile health. But we are still strategically committed to our transportation business. We still see good steady growth in that business. And what we're very busy with doing is we transport tremendous amounts of thousands of people every single day. So we're very busy in doing is saying, Hey we've got a person in our vehicle, we're taking them home. We know why they're being released. Well, what other services can we now offer to that patient? And ultimately take a patient that was purely transport revenue and have that patient contribute in the future to our mobile health revenue. And that's the kind of stuff that we're always thinking about and innovating.

The next question is from line Ryan MacDonald of Needham.

Congrats on a great quarter. Stan, first one for you. It's great to see the -- all the success you're starting to have in the payer end market. But now accessing member populations really starts to flex a new muscle for DocGo in terms of needing to market two members within that population, would just be curious how that's going thus far in the beta test and maybe what your expectations are as this grows of what sort of penetration you think you can get within those member populations. And then lastly, are you assuming any revenue or much revenue contribution from these contracts in the back half of this year?

The reality is we do not assume any revenue or any significant revenue from those payers for all the rest of 2022. We see a little bit of contribution to ‘23. We see a lot of potential in that space, in our direct-to-consumer future offering the results are coming in very strong, but Ryan, as you can imagine, we don't do anything traditional, and that we realize that in a traditional direct to consumer offering the customer acquisition costs can get very high. We know that. So we are working and thinking very creatively. How do we reach out to millions of patients that can benefit from our service, but doing it in a non-traditional way that allows us to have access to high amounts of people at a very low cost. And until we figure that out, we're going to keep on trying various different things. Right now, the pilots are going very well in New York and New Jersey. I would say tracking a little bit ahead of plan where we had expected, but we still have long way to go to really come up with a direct-to-consumer plan that we feel super, super confident about. And then once that happens and we hope that will happen sometime in 2023, that will open up a tremendous TAM, that we're not even tapping into right now.

And then maybe just as a follow up I thought it was interesting to hear about the updated technical integrations with Athena health and then being accepted into the epic app orchard. I'd be curious, when in your conversations with health systems, how much in the past has this been maybe a gating factor that might have prevented opportunities from materializing and how do you think what do you think the impact is to the pipeline having these natural integrations with two major EHRs now?

Brian, I'm going to let Anthony, our President answer that.

So one of the biggest, I would say, issues that many companies run into when they work with health systems is they try to convince the health system to use their software. So, it's a whole new application and a hospital system may have thousands -- tens of thousands of employees. And they're trying to get those tens of thousands of employees to use their new web portal, their new application. When you embed inside of their EHR and you eliminate all of that. So it's single sign on, it's a click, right from the patient's chart. It's seamless integration of data of all of the patient's demographics, payer details, and charting information H&P all of that comes straight into your application. The barrier is pretty much non-existent at that point. That's what the epic app orchard allows us to do. Now, many people go into the epic app orchard. It's really just a link that you're inside of epic, and then it launches your application. That's not the route we took. We took the route where the entire experience end to end start to finish is inside of epic. And then all of the data goes back into epic so that the health system can do all of their reporting and KPIs and metrics inside of their application without having to come to us for any of that. So that really, really eliminates the barrier. As far as the second part of your question about what it opens up to. Well, epic is the most widely used and the fastest growing EHR in the hospital health system space. And that is and that is very encouraging for us because the epic app portrait is now available to anyone that's in that space.

And Ryan, let me add to that, coming into a hospital system and major hospital system and sharing with them and offering that we would like to do with them and telling them they can further leverage their investment that they've already made in epic by utilizing our tech. It just makes the sales so much more attractive than anything else a competitor might be able to offer, uh, in terms of barriers of entry, getting that integration completed took years. It took millions of dollars, and most importantly, it took major hospital systems logging on our behalf with epic to get the support we needed to complete this endeavour. This was very, very complex expensive and time consuming. And the only reason why we are able to achieve it is because large hospital systems that we have working relationships with lagged in our behalf. Our competitors today don't have that advantage, and that's something that we are very excited about and something that we think will continue to contribute to our growth in the future, because we're telling hospitals -- just further leverage what you've already spent, hundreds of millions of dollars on by using our services.

Our next question is from Craig Jones of Stifel.

So Stan, you mentioned how that your main COVID mass COVID testing partner was rolling into just a mobile health contract. So of that 28 million that you did in 2Q of the mass COVID, how much of that are you modeling in for 3Q and 4Q, whether it's mobile or COVID or however you want to classify?

Very little, we basically just have – basic through August. Couple of days in September and then entire program goes away. So you're looking at we don't give segment reporting out on particular projects. But what I would say is very minimal mass COVID testing revenue going forward. And that is the reason why, as Andre mentioned, we don't really plan on reporting it as a separate line item going forward. It's way below the level of materiality. And it's just way too much effort and way too much work to continue doing, something that generates a few million here and there. It is not what separating out for us.

Yes. Sorry. Maybe I didn't ask that. Well, enough, I meant, so your client has transitioned into mobile health, so are they like how big of a quarterly revenue contributor, will they be from a mobile health perspective?

So from that aspect I would say you can basically model out very similar, if not, maybe a little higher to what they were contributing in terms of revenue while they were doing COVID testing.

Okay. So that expect the majority of the 28 million should keep going just, but as under different contract, under mobile,

Under different contract on the traditional mobile health services. Correct.

Okay. Got it. And then on the carnival side I think the mobile health grew something like 13%, 14% sequentially excluding COVID was the majority of this carnival ramping. And then you think about sort of the ARR how far, how close are we to getting, I guess where is it right now from a monthly or annual perspective recurring, and then how high can it get?

Carnival was definitely a contributor. We have other cruise lines that our contributor. We have other hospitals and municipalities that our contributors. But another way that you may want to consider looking at it is that all of the COVID, or was a very vast majority of the COVID testing revenue is going to become mobile health revenue. So whatever growth you're seeing right now in mobile health that excludes mass COVID testing in the future, that you can basically model out that revenue will become part of mobile health. And that percentage of mobile health growth will increase nicely going forward in Q3 and Q4.

Got it. Okay. So then if we look at the guidance, it looks like it's implying, sequentially lower 3Q and 4Q versus the first half for mobile health, or I guess for, yes, probably for mobile health. So if that customer is largely transitioning from mass COVID to mobile what's driving that headline there for why that would define sequentially?

So kind of like we mentioned earlier, we're always taken a very conservative approach. Many things can happen during the transition. We feel very good about the way the second half of the year looks, but naturally we are taking a conservative approach, and at the end of the third quarter, if we're a bit too conservative we'll once again, go ahead and raise guidance.

The next question is a follow up from Richard Close of Canaccord Genuity.

Stan, I was wondering if you could talk a little bit about the RFP. You made some comments there about activity growing. Can you just dive in a little bit more on that? Is anything baked into your guidance or is that all upside and on those type of contracts, how does a typical contract look like on that side?

Well, in terms of baking anything into our guidance, the answer is no -- we base our guidance on contracts and agreements that we feel very confident about. On the RFP side, we have access to lots of municipal and government systems that allow us to see what needs are throughout various municipalities throughout the country. We probably have the most amount of experience in the large medical programs of anyone out there today. And we have wonderful clients that are willing to be our references for those types of services. So we've seen that 3x growth in our responses in those RFPs. We win some of them and they could be small contracts but we're now really are focusing in for some of the large ones contracts by the CDC department of homeless services and there's municipalities, border patrol. There are medical services by very large agencies, dozens of them that come out every couple of months and more than ever we're responding to those and slowly we're starting to win a couple.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would love to hand the call back to Stan Vashovsky for closing remarks.

Well, this concludes our call this morning. We began 2022 with a clear and significant momentum across our businesses. And I am optimistic that we have set the stage for a very successful year. I look forward to our next quarterly update in November. Thank you everybody for joining us.

This concludes today's conference. Thank you for joining us. You may now disconnect your lines.