DocGo Inc. (DCGO) Q3 2026 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and welcome to the DocGo Third Quarter Earnings Call. [Operator Instructions] This call is being recorded on Monday, November 9, 2026. I would now like to turn the conference over to Mr. Michael Cole, Vice President, Investor Relations. Please go ahead, sir.

Thank you, operator. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. All statements made in this conference call other than statements of historical fact are forward-looking statements. The words may, will, plan, potential, could, goal, outlook, design, anticipate, aim, believe, estimate, expect, intend, guidance, confidence, target, project and other similar expressions may be used to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance, and we cannot assure you that we will achieve or realize our 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 results or outcomes to differ materially from those contained in our forward-looking statements. These risks, uncertainties and assumptions include, but are not limited to, those discussed in risk factors and elsewhere in DocGo's annual report on Form 10-K quarterly reports on Form 10-Q, our earnings release for this quarter and other reports and statements filed by DocGo with the SEC to which your attention is directed. Actual outcomes and results or the timing of results or outcomes may differ materially from what is expressed or implied by these forward-looking statements. In addition, today's call 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 and the current report on Form 8-K that includes our earnings release, which is posted on our website, docgo.com as well as filed with the SEC. The information contained in this call is accurate as of only 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 to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events, except as to the extent required by law. At this time, it is now my pleasure to turn the call over to Mr. Lee Bienstock, CEO of DocGo. Lee, please go ahead.

Thank you, Mike, and thank you all for joining us. We have a lot to cover on today's call. First, Norm and I will dive into the operational details, and then I'll discuss the CEO transition. Today, I'm pleased to report considerable progress on our path toward profitability. For the quarter, we generated revenue of $73.4 million and reported an adjusted EBITDA loss of $3.2 million, compared with losses of $6.3 million in the second quarter and $10.2 million in the first quarter, while revenues have remained relatively consistent. Today, we also reaffirmed our full year 2026 adjusted EBITDA guidance of a loss of $17 million-$22 million and revised our revenue guidance to approximately $300 million from $305 million-$310 million previously. The revenue revision reflects our ongoing efforts to optimize the business by restructuring or discontinuing unprofitable business lines. We expect these efforts to continue in the fourth quarter and into next year as we prioritize profitability and cash flow. With profitability remaining a central priority, I would like to discuss the key drivers across revenue, gross margin, and SG&A. First, revenue of $73.4 million was relatively flat sequentially as growth in select areas offset the impact of eliminating unprofitable revenue streams and optimizing existing operations. We are currently winding down our medical transportation business in Upstate New York, which generates approximately $10 million in annual revenue. I will discuss the financial benefits shortly, but we believe this is an important step toward profitability. We have also discontinued or restructured certain care gap closure programs within our Care in the Home business, contributing to a modest revenue decline in the third quarter. Although Care in the Home is on track to incur a loss of approximately $5 million in 2026, its profitability has improved significantly. We expect the business to achieve positive adjusted EBITDA on a contribution basis late this year or very early next year, alongside substantial revenue growth in 2027. We continue to view Care in the Home as a key aspect of our vertically integrated differentiated care delivery platform, a holistic offering that meets the needs of our healthcare partners and their patients by offering virtual care when it's efficient and in-person care when it's needed. We plan to continue expanding our model with a disciplined approach to growth and an emphasis on profitability. Second, gross margin improved to 33.3% in the third quarter, up from 30.5% just last quarter. This improvement came despite continued elevated fuel costs driven by geopolitical events, which reduced consolidated gross margins by approximately 38 basis points compared with the year-ago period when fuel prices were lower. While we have been successful in most markets we have entered, some have not met our profitability thresholds, and we are winding down or restructuring those select business operations. As noted earlier, we are winding down our Upstate New York medical transportation business. Excluding that market, our consolidated gross margin would have been 140 basis points higher. In addition to the positive impact that discontinuing operations in that market will have on gross margin, it is also expected to contribute an approximate $3 million adjusted EBITDA loss this year that will not reoccur in 2027. Third, adjusted SG&A improved to $28.7 million in the third quarter, compared with $29.7 million in the second quarter and $30.8 million in the first quarter. This improvement was driven in part by the significant corporate workforce reduction implemented in June. Additional reductions in September should support further improvement in the fourth quarter. We are also realizing the financial impact of vendor renegotiations completed earlier in the year and continue to leverage the benefits of AI to increase operating efficiencies across the business. One example is the launch of automated outreach via AI voice agents for our in-home visits, which has reduced cost per booking by over 50%. Turning to liquidity. Our cash burn is also improving. Unrestricted cash was $19.1 million as of September 30, compared to $25.2 million at the end of the second quarter. At the beginning of the fourth quarter, we closed the first tranche of our debt facility with Perceptive Advisors totaling $12.5 million. An additional $12.5 million is available upon the closing of the Hicuity Health transaction later this year, with an additional $25 million available, subject to maintaining $130 million in Mobile Health revenue. For context, Mobile Health revenue, including Hicuity, currently stands at more than $150 million. Our goal is to minimize borrowings under this facility as we continue to advance towards profitability. In addition to reducing operating cash burn, we are making significant progress towards collecting longstanding receivables associated with our discontinued municipal population health business. Two major receivables total approximately $19 million, and we have made meaningful progress on both. The smaller receivable is approximately $6.7 million, the majority of which we expect to collect imminently. The other receivable, totaling $12.6 million, will likely be resolved late this year or early in 2027. Taken together, these developments reflect substantial improvement in both liquidity and profitability, and I remain optimistic that these trends will continue. We remain firmly committed to our goal of exiting the year at a profitable run rate and continue to make meaningful progress towards that objective. At this time, I will hand it over to Norm to review the financial details.

Thank you, Lee, and good afternoon. Total revenue for the third quarter of 2026 was $73.4 million, up 4% from $70.8 million in the third quarter of 2025. This was our first year-over-year revenue increase since the second quarter of 2023, a meaningful milestone that we believe reflects our progress in repositioning the business for growth. To put that in context, last year's third quarter included $8.4 million in migrant-related revenue. Excluding that revenue from the 2025 comparison, third quarter revenue increased 18% year over year. That increase was largely driven by SteadyMD, which we acquired in October 2025 and which contributed $7.8 million in revenue in the third quarter of 2026. Excluding both migrant-related revenue in the 2025 period and SteadyMD revenue in the 2026 period, revenue still increased about 5% year over year. Medical transportation services revenue reached $53.3 million in the third quarter of 2026, up 6.4% from $50.1 million in the third quarter of 2025. This surpassed the second quarter's transport revenue and set a new quarterly record for DocGo. Growth came from both large and small U.S. markets, with some of the strongest gains in the New York City market, in Delaware, Wisconsin, and Tennessee. We continue to see increasing demand across most of our markets. Mobile Health revenue was $20.2 million in the third quarter of 2026, which included no contribution from migrant-related revenue, compared to $20.7 million in the third quarter of 2025, which included $8.4 million of migrant-related revenue. Specifically, non-migrant Mobile Health revenue increased 64% year over year. That growth reflected increases in remote patient monitoring and mobile phlebotomy, as well as revenue from SteadyMD, which we acquired during the fourth quarter of 2025. Adjusted EBITDA for the third quarter of 2026 was a negative $3.2 million, compared to an adjusted EBITDA of negative $7.2 million in the third quarter of 2025. The adjusted gross margin, which removes the impact of depreciation and amortization, and is the measure of margins that we track most closely, was 33.3% in the third quarter of 2026, compared to 33% in the third quarter of 2025. During the third quarter of 2026, adjusted gross margins from the medical transportation segment were 34.7%, compared to 31.7% in Q3 of 2025, and up solidly from the first two quarters of this year. We took significant strides in increasing our field headcount in the first half of 2026, and we saw the overtime rate decline again in the third quarter of 2026 to near 10%, which is well below the nearly 14% that we experienced throughout much of 2025. Despite the strong improvement, medical transportation gross margins are still being restrained by a couple of factors. First, we continue to experience higher-than-expected fuel costs. Our average gas price was $4.18 per gallon in Q3, down slightly from $4.27 in Q2 of 2026, but more than a dollar per gallon higher than in last year's third quarter. We estimate that the increase in fuel costs restrained transport gross margins by about 52 basis points versus last year, and the consolidated gross margin by about 38 basis points. Secondly, transport gross margins were impacted by continued weak results in the Upstate New York market, where we have begun the process of winding down our operations, exiting that market, and selling our license. Excluding the Upstate New York market from our results, we estimate that our third quarter medical transportation gross margins would have approached 37%. Mobile Health segment adjusted gross margin was 29.7% versus 36.2% in the third quarter of 2025. SteadyMD gross margins were several points lower than normal, reflecting aggressive hiring in the year-to-date to catch up to the increased demand from large customers and in anticipation of much higher seasonal volumes in the fourth quarter. However, SteadyMD's gross margins increased during each month of the third quarter and reached a far more normalized level in the month of September, which bodes well for a fourth quarter improvement. The impact of SteadyMD's subpar margins was partially offset by greater relative contributions from other higher-margin service lines, such as remote patient monitoring and mobile phlebotomy. In addition to the expanded gross margins that we experienced this quarter, recurring operating expenses declined again as anticipated. This was due to our cost-cutting actions that we have implemented so far this year, primarily in the areas of headcount and vendor spending. Offsetting this impact were increased recruiting costs due to ramped-up hiring, onboarding, and training of EMTs and Mobile Health clinical staff to meet customer demand. During the third quarter, we spent approximately $200,000 on recruiting outreach, supplementing the efforts of our in-house recruiting team. With SteadyMD's recent hiring push mostly behind us, our continued cost-cutting efforts during the first half of 2026, and additional savings from our efficiency portfolio initiative that are still to come, we expect continued sequential declines in SG&A over the next several quarters. We now expect full-year 2026 revenue of approximately $300 million, as Lee noted earlier and as we stated in our press release. This is slightly below our most recent guidance range of $305 million-$310 million, but it is at the higher end of our initial guidance range of $280 million-$300 million. The revenue outlook excludes any revenue from the Hicuity Health acquisition, which is expected to close later this month or early next month. Our adjusted EBITDA outlook is unchanged. We continue to anticipate a full-year adjusted EBITDA loss of between $17 million and $22 million. Finally, turning to the balance sheet. At September 30, 2026, available cash was $19.1 million, down from $25.2 million at June 30. On October 1, right after the third quarter ended, we closed the first $12.5 million tranche of funding from the Perceptive term loan, which has increased our available cash balance. This term loan commitment from Perceptive, which has replaced our asset-based line of credit, will immediately reshape our balance sheet, providing us with the flexibility and the security we need to execute our growth plans. Over the longer term, we will continue to explore and execute steps necessary to reposition our business line portfolio and to strengthen our balance sheet, making the company leaner and more profitable. At this point, I'd like to turn the call back over to Lee for some closing comments.

Thank you, Norm. Today is a day of mixed emotions for me, but mostly pride. Today, we announced that I'll be transitioning out of my role as CEO of DocGo upon the appointment of my successor, and I want to tell you why I feel so good about where we are. We have been working to pivot DocGo from a company built on emergency response to a vertically integrated hybrid care company. Today, we combine medical transportation, virtual care, in-person care, and proprietary technology to support millions of patients across the entire healthcare continuum, from the hospital to the home. Over the last three years, we have navigated executive changes and major shifts in our government business. We brought PTI, SteadyMD, and Hicuity Health into the DocGo family to expand our virtual and in-person care. We continued to execute and grow our medical transportation and Mobile Health offerings to generate hundreds of millions of dollars of evergreen healthcare revenue, and we earned the trust of an enviable roster of blue-chip healthcare partners. Our company hasn't just weathered change; we've used it to build something stronger, and the results of our efforts are starting to show. We just delivered our best EBITDA performance since Q4 2024, and we're on track to exit 2026 at a profitable run rate as well. When I took this role, my job was to set the vision and build the foundation. That foundation is now in place, and I feel strongly that the company is pointed in a positive direction. I'm convinced DocGo is positioned to create significant value as healthcare continues to evolve, and I'll be cheering for this team every step of the way. I plan to stay on until at least March 31, 2027, and will work closely with the board on an orderly transition. In the interim, I'll stay fully focused on driving our profitability, cash flow, and growth. Our valuable customers, our dedicated employees, and our stakeholders have always been my top priority, and that won't change. It has been an honor to lead and work alongside our staff of thousands of healthcare heroes, and I'm endlessly grateful for their dedication, their resilience, and everything they've given to this company and our patients. Thank you. At this point, I'd like to turn the call over to the operator for Q&A. Operator, please proceed.

[Operator Instructions] Your first question comes from Pito Chickering with Deutsche Bank.

Lee, I guess, thanks for all of your help, and good luck in the future. I guess, the first question is here, as we're focusing on profitability next in the year, any guidance for how we should think about both the revenue growth and EBITDA growth for 2027 as you're ramping up your EBITDA guidance in the fourth quarter, which I think is for the break year?

It's Norm Rosenberg. I'll take that one. We specifically did not issue guidance for 2027 in this call. In the past, I know that we've sometimes we've done it with our first call in the calendar year, sometimes we do it in the last call in the calendar year, like this one would have been. Obviously, with the CEO transition underway or about to happen, that makes it a little bit trickier. But we will still go through our budgeting process. We're deep into our budgeting process, so I can talk about it a little bit. We certainly expect to have some solid revenue gains year-over-year. The medical transportation business continues to grow at, I would say, a high single-digit level. There's nothing there that really would change that other than, as we mentioned, maybe the Upstate New York market being scaled back. But that'll be offset and outweighed by some growth in some of our other markets, of our other larger markets. That's going to result in some growth. Every other element of our Mobile Health business is going to continue to grow and is going to grow year-over-year. So, whether it's the mobile phlebotomy business or it's remote patient monitoring business, obviously on the Care in the Home side, we're being more selective about the type of business that we take, and we're going to have a little bit more moderated growth. But we should definitely see some growth year-over-year across all of those particular business lines. So, I think that you're going to see really growth across the board. Same thing with SteadyMD, and obviously, we layer on Hicuity Health next year, which also will grow, but that's going to be all incremental revenue compared to what you're going to see in 2026 for the most part. On the margin side, the first thing that I think we need to do is to make sure that the gains that we saw in this quarter remain sustainable. As we sort of look through these items, and I mentioned, there are actually some things that move the other way against us that we think will moderate, such as the fuel price, which eventually is going to come down, and that's definitely going to give us a little bit of a tailwind. But more importantly, by either getting out of markets or restructuring markets that are currently I'm thinking about transport markets that are currently providing subpar margins, we think that we can get to a higher margin level. Our core markets on the transport side are all operating at or above planned margins, and that ought to continue. Then finally, on the operating expense side, we've put a lot of time and effort into squeezing out as much as we could on the operating expenses side. There's still more that can happen as we go forward. That's also going to be an important factor for us. When you add that all up, we would expect that we would see a positive EBITDA number. I know that's a very broad range because I'm not giving a number, but we should certainly see, for the full year 2027, we would anticipate seeing some positive adjusted EBITDA as we go with some reasonably sized growth year over year on the top line.

Okay. Fair enough. And then for Michael, you get to start the search for a new CEO, which skill sets are you looking for the new CEO? And should we expect any pivots from a strategy perspective going forward?

It's a little melancholy, obviously, with the news of Lee's departure here down the line. Lee's got some amazing talents, and I'm sure he's going to find an appropriate home for those talents in the future. I'm very confident of that, and really like to thank him. Me and the board would like to thank him for his contributions to date and up through the next few months while we do seek out a successor. Obviously, we're moving into a different phase in the company's existence. We've been through a lot. Been through a lot of restructuring, a couple of important recent acquisitions. As Lee pointed out, we've established a new foundation for the company, and I think operational wherewithal and operational leadership skills, someone who's sort of been there, done that as it relates to having been involved in restructuring and turnaround situations in the past would probably be a nice sort of checklist to mark off for potential candidates. But we're just looking for a good leader. We're entering a new phase of the company, and we're looking for somewhat of a fresh start.

Okay. Fair enough. Last question for Norm. Looking at the implied revenue guidance for the fourth quarter, it looks to be up about $4 million. Your medical transport has been growing fairly consistently throughout the year, but that should see some pressure, I think, as you wind down New York. In Mobile Health, you are winding down some of the areas that are less profitable. So I guess, how should we be modeling the $4 million sequential revenue growth in the fourth quarter with New York pressure on medical and then reducing some of these home visits on the mobile side?

Yes, sure. I would say probably for the first time, I have been here for a bunch of years, and people always ask me about the seasonality of our business, and I have always said, "Look, we are a pretty rapidly growing business, and seasonality is not a factor." But now I am here to tell you that there actually is going to be a seasonal factor in Q4. SteadyMD seasonally has much higher revenue in Q4. It is shaping up based on the backlog, based on the work that we know they have signed up. They did about $7.8 million, let us call it $8 million in Q3. That number is going to be a good couple million or so higher, I would expect, in Q4. That is going to be part of the gain. Even on the Care in the Home, it is still a much more seasonal-type business vis-a-vis what the work that they are able to do in Q4. So that is going to be some of the driver. On the transport side, we are already almost halfway through the fourth quarter. We have seen volumes continue to increase sequentially, whether it is in the New York City market, which is our primary market, or even in the U.K., or in other places like that. We believe that we are looking at what it would take to get to about that $300 million level, the implied revenue for the fourth quarter would be somewhere in the $77 million, $78 million range or something like that. At this point, that looks like something that is very achievable for us.

Yes, I would just add, Pito -- Lee. I think the Care in the Home business, we did dial that back in the quarter as we were scaling back our outreach efforts and as we were improving our go-to-market model. But we have done that work in Q3, and we expect to expand the Care in the Home business in Q4 and going forward with this new unit economic model that we have been able to implement, adjusting the type of clinician we have in the field. So we have done that work in Q3, and we are anticipating scaling that Care in the Home business under this new unit economic model in Q4, and then of course, seasonally, it is a big quarter for us, and then also into 2027.

Your next question comes from Ryan MacDonald of Needham.

This is Matt Shea on for Ryan. It was great working with you, Lee. Good luck in your future endeavors. Maybe wanted to start on the dialing back commentary. First, Lee, you mentioned restructuring certain Care in the Home programs. I do not know if I missed it, but what programs or areas are changing the most? Is that just mainly the unit economic model? Then if we take a step back, you talked about dialing back patient outreach, clinical operations to prioritize profitability, but also announced that new program in Pennsylvania. I guess, are there Care in the Home aspects to that Pennsylvania relationship, or how should we read that? Is that just portfolio optimization effort? I guess what makes the Pennsylvania opportunity attractive relative to the core areas you are winding down?

Absolutely. Likewise, it's been great to get to know you and work with you. On the Care in the Home business, we did share that our visit volume was down about 26% in Q3, and that was very deliberate. We did basically two things. Number one was we reduced our outreach efforts. These are our team members that reach out to patients to schedule visits, confirm visits, and coordinate the visits. We've optimized a lot of that utilizing AI in the quarter. We've, as I mentioned on the prepared remarks, we've been launching AI efficiency initiatives that allow us to do it at a lot lower cost. We scaled it back while we were building the AI efforts that are now going to allow us to scale it a lot more profitably. That's the first thing we did on the AI optimization and on the outreach efforts. The second thing we did in the quarter was we shifted the mix of clinicians that we have in the field. Historically, we've only used LPNs, which are licensed practical nurses in the field, overseen by licensed clinicians via telehealth. Now we shifted the mix not only to LPNs, but also to mobile phlebotomists and medical assistants. That's allowed us to scale our efforts, but do so in a more cost-efficient way. We undertook a lot of that work in Q3, and that's going to bear fruit for us in Q4, also going forward. It was a mix of operational efficiencies in the field and automation in the back office, if you will, on the outreach, that's going to allow us to scale it more profitably. In the quarter, we pared back the visits while we were making those changes so that we can then essentially scale with those optimizations in place in Q4 and into 2027. That was really the big, big change. That change will carry over into the new initiatives that we're going to launch in Pennsylvania. That same model I'm describing, where we've been able to lower the unit economic cost, we're going to do that as well in Pennsylvania. The beauty as well is we have thriving operations in Pennsylvania for medical transportation business. Our Mobile Health teams are going to be launching from those very same bases that we have in Pennsylvania serving medical transportation customers. We're going to do so for one of the largest payers in the country in the Pennsylvania market. We're utilizing efficiencies where we can with our other businesses, like medical transportation, and then also changing the mix in the field and in the patient engagement so that we can lower the cost and scale it more profitably. That's the impact you're seeing that happen in the quarter, setting us up for next quarter and beyond.

Got it. That is super helpful, Lee. On the Physician Fee Schedule, it seems like some positive updates, at least for you guys, in terms of RPM, and it seems like any of the requirements they have going forward would align well with your model. But curious what your puts and takes were from the Physician Fee Schedule, and maybe just a comment on how you are thinking about RPM.

Yes, absolutely. On the Physician Fee Schedule, as you mentioned, there are some advancements and developments really with CMS where they are requiring essentially a physician visit, a well visit to be enrolled in an RPM. You simply cannot enroll a patient without also having a medical visit. As you are mentioning, both we provide the medical visits, but also provide the patient monitoring. So we have the ability to do both, and we think that is a benefit for us and a positive, and also a good benefit for the patient. On the patient monitoring side, the primary codes that we bill for our services that we provide are primarily for the implantable devices, cardiac implantable devices like pacemakers and loop recorders. So those fee schedules have remained largely unchanged. They are obviously very critical for patients with heart failure to be monitoring a patient's heart rhythm regularly and in real time. We think we are in a good space there. But I would also say again, the developments you mentioned where we have the ability to provide RPM services, but also the medical care that goes with it is probably where the industry is headed, and we are positioned very well for it.

Your next question comes from Richard Close with Canaccord Genuity.

And Lee, wish you the best of luck going forward, even though you will be here, I guess, through March. Maybe just to pull the thread on some of Pito's questions, maybe a little bit more. With respect to the 2026 updated revenue guidance, Norm, it sort of sounds like with New York being about $10 million in annualized revenue, assuming you shut that down at the beginning of the quarter, I guess, that is about a $2.5 million impact to the updated guidance. If you could just tell us what the other $2.5 million is related to, that would be helpful.

The first thing to note is that it is more of a gradual shutdown than what people are anticipating. So, we are continuing to do some traffic, and that is going to wind down. It is not going to be anywhere near a $2.5 million drop quarter-over-quarter. In fact, it was already starting to dip a little bit into Q3 versus what it had been in Q2. So, that impact is probably going to be, I do not know, maybe half of that, maybe $1 million, $1.5 million as we go. There are still contracts that we continue to honor, we need to honor, and there is still traffic that we need to take. You cannot just sort of abruptly stop taking those trips. That's something that's going to have a full-year impact over a longer period of time, but not as much of an impact in the fourth quarter. Then your question about the other $2.5 million, I'm not sure what you're asking.

Well, if New York was going to be $2.5 million, which it's not, just trying to think about guidance going from $305 million to...

The decline in the guidance. Okay, sure. Yes, I would say it's a mixture of some things. There's probably, as we ran the numbers and we look at a full year's worth of SteadyMD, I would say maybe SteadyMD is a shade lower. I will tell you, obviously, because it's a relatively new business for us, when we first acquired it, we made certain assumptions as to what they were going to do in 2026, and we sharply increased that expectation as the first couple quarters came in, and now we've probably dialed it back a little bit. The Q3 revenue is probably, I don't know, half a million to $1 million lower than what we would have expected. So for the full year, that's probably about $1 million, $1 million and change. Also on the Care in the Home side, probably a similar amount is coming in a little bit lower. When I look at the other business lines, like I look at our flagship New York City transport market, it's sort of hitting all the numbers we had expected them to hit, maybe even a little bit higher. Same thing for most of the transport markets. When I look at things like mobile phlebotomy and the CRMS business, the remote patient monitoring business, I think that business also is really performing right in line with what we had expected. So, that $5 million number, it's $1 million here, $1 million there, and a couple million there. It's really what it comes down to.

Yes, I'll also just add to that, Rich. I mean, we really did take a deliberate approach to either shutting down contracts, even in some markets that are doing well, but shutting down contracts where they were not profitable contracts for us, or paring back some of the hiring efforts to make sure that, again, we're hitting those profitability metrics. So, we really did take effort to either shut down or restructure both markets that were not performing, but also some contracts that we had in markets that are doing well, but again, that were weighing on profitability. That was the balance we struck, which was essentially giving back some revenue, if you will. Again, coming short a little bit on the revenue, but increasing the margin significantly, which we saw in the quarter. That was a deliberate decision, and that's basically what we executed on in the quarter and have since continued executing on as we're in Q4 now.

Okay. Then, with respect to, I guess, the comments on the $300 million in revenue and $240 million being profitable, the $60 million that is not, it sounds like you're going to make a decision by year-end if that doesn't get the profitability. Just trying to gauge where that business sits between that $60 million sits in between transportation and Mobile, and then maybe what percentage of that $60 million is pretty close to being positive adjusted EBITDA on a contribution basis.

Absolutely. So, I think first on the $60 million, which I think you mentioned we've shared, $240 million of the $300 million is EBITDA contribution positive. We do have $60 million that is weighing on the margin. So, I would say that $60 million, about 1/3 of which we will shut down. Again, we already noted the upstate New York market. Again, we have some additional contracts in the U.K., as well as some work here again in the U.S. on the Mobile Health side, where they're not accretive contracts, and so we are going to be winding them down. Again, that's about a third of the $60 million. 2/3 of the $60 million, we believe that we can effectively restructure, either by revisiting the contracts we have, some of the legacy contracts we have that are over five years old. We have been working for many months to evolve those contracts, to renegotiate rates in those contracts. I think that will bear fruit as we exit this year into next year. About 2/3 of that $60 million, we believe, will be restructured or renegotiated in a way where we are able to produce EBITDA from those contracts and service lines and markets. Again, of those 2/3, it is a mix. There is some medical transportation in there. There is also some virtual care and Care in the Home that is in that two-thirds. But overall, we feel like 2/3 of it we can evolve and restructure so that it is EBITDA contributing in next year.

I would just add to that even as we ended the third quarter, there were significant chunks of that $60 million basket that had flipped to the positive in the latter stages of the third quarter. I will give one example. Part of the improvement that we saw in our gross margin when you look at Q2 versus Q3 or year-over-year was happening in the Pennsylvania and New Jersey market, which, one of our biggest markets, probably our second-largest U.S.-based transportation market, notoriously tricky market, but we were working off a pretty low comp. They ended the quarter with gross margins that were in the low to mid-30s, which is pretty healthy. We always want more. But it made a positive contribution to EBITDA if I just look at the month of September, for example. I would not say problem solved. Obviously, it is an ongoing battle to make sure that we can sustain that level of margin. But that is something where you get there, as Lee pointed out, by managing your portfolio of different contracts and of different customers and of volumes, and there is a real pathway to get there. It is not a fundamentally flawed market where one cannot make money. It is a market where you can make money if you have the ability to be compensated properly, or I should say reimbursed properly for the cost of providing that service. Whereas there are other markets that we have given a few tries to, and we see that they are inherently not really profitable markets. Over the years, those have included markets like California and Colorado. Now we talk about the upstate New York market. This is nothing new. This is really a pruning that we have been doing for years now. But a lot of that $60 million, really, if I looked at it today, is already on the positive side of the ledger.

Okay. That is helpful. And I guess my final question, just update anything going on with Hicuity. Is that deal slipping a little bit, or anything to update us there would be good?

Yes, absolutely. Nothing is slipping. We have been waiting on a regulatory approval, and we anticipate, we have been sharing that we have anticipated that we will close that transaction at the end of this month, and we are on track to do that.

Your next question comes from David Larsen with BTIG.

Lee, great work while you were with DocGo. You will be missed. I think you set the business up for a good foundation. I guess, just can you break out the revenue components for the year for fiscal '26 between mobile phlebotomy, monitoring, care gaps, SteadyMD? What is the expected revenue in '26 for each of those four categories, and any sense for the growth rate?

I think, first off, when we look at the $300 million, about $205 million or so to $210 million is going to be coming from medical transportation for the year, we anticipate, and the remaining is going to come from Mobile Health. Again, this does not include any contribution for Hicuity, as we haven't closed that transaction yet. Anything that would be contributed from them would be in addition to this. Norm will break down the revenue components of the question a little further.

Yes, so let's go through them. Obviously, I'm rounding here a little bit. So we're looking at probably about $16 million-$17 million on the remote patient monitoring side. We think SteadyMD will be in the low 30s. I'll say somewhere between $30 million and $35 million, probably $33 million or so. The mobile phlebotomy should be between $5 million and $6 million for the year. The clinical staffing should be about $14 million, $15 million for the year. I'm not sure if I'm leaving anything out here. Oh, and the Care in the Home, not sure where we think that number's going to be. Probably also in the $7 million or $8 million, maybe even as much as $9 million, depending on the seasonality gains that we get in fourth quarter.

In the press report, you highlighted some growth rates, all of which actually looked pretty good to me. I guess, where is the low or no growth coming from?

Yes, so I think you're talking about the Mobile Health or medical transportation?

Mobile.

Yes, so on the mobile side, again, we've been very, very deliberate, first off, with the Care in the Home. Again, we projected a higher growth rate for Care in the Home, but we were very deliberate in paring back that in Q3. Again, we dropped the volume there by 26%, which helped with the margin, but hurt on obviously the top line. And then we've also been taking a very, very moderate approach to some of the clinical staffing work that we do on the growth side, and even with the remote patient monitoring growth that we have in the business. So we've been prioritizing profitability this year. And again, we saw those fruits come to bear in the quarter, and we expect that to continue. But we, this year, prioritized profitability and margins over growth. Even on the medical transportation side, again, we've been paring back some of the staffing in favor of some of the margins. So that really is what we prioritized over the course of this year as we also head into next year.

I would say for next year, we are probably going to flip it a little bit in that we are going to be a little bit less focused. There are two components of revenue on the transportation side. There is the volume, and then there is the average price per trip. We have been very, very focused on the volume side because we are trying to build up market share. We are trying to increase volumes to certain specific large customers. We are going to give a lot more thought and effort, put a lot more effort into portfolio management in 2027. So, you might see some scaling back of those volume gains. It will still be up, but it will be a smaller increase and much more of an emphasis on having the appropriate mix. When we look at a market, like, should we have the mix that we have of the different types of payers? Should we have the mix that we have of the certain type of traffic, for example, BLS versus, basic life support versus advanced life support, critical care, and trying to do that in a way that we are able to maximize the price that we are paid for each trip. I think that will be a little bit more of a point of emphasis in 2027.

Okay, that is great. Then, before year-end, how much more in cost do you expect to take out of the business, and when do you expect to get to positive cash flow? Can you just remind me, what was cash flow in the quarter? What do you think it will be in 4Q? What do you think it will be in 2027?

Yes, so I will kick the question over to Norm on the cash flow side. So I think on the cost cutting, we have shared before our model for profitability is roughly around $80 million of revenue, about mid-30s of gross margin, and about $28 million of SG&A. That gets us to break even. I think in the quarter, this quarter that we just reported, we showed that we are approaching the mid-30s level on the gross margin, and the SG&A was at $28.7 million, so really close to that $28 million point. So I think over the quarter, you are going to see us grow revenues in Q4. As Norm mentioned, it is our highest seasonal quarter on medical transportation and Mobile Health. I think you'll see us cut the SG&A some more beyond the $28.7 million we sit at today, but we're very close to that target of $28 million, but we think there's more opportunity there. Then again, we want to push the margin, the gross margin higher. As Norm shared, without the Upstate New York market, our transportation gross margin would have been 37%, which I know, Dave, you know our business well, that is significant improvement from where we've been on gross margin. So I think it really is a confluence of all. We're going to push the revenue up in the quarter as we add the seasonal volume that we see in Q4. I think there's more opportunity for us to improve the gross margin, which we showed significant progress in the quarter. Again, we're right at that $28 million of SG&A, quarterly SG&A. We were at $28.7 million for the quarter, and we think there's additional opportunity to cut from there. And we've been working towards that.

Yes, as for the cash flow. Yes, as for the cash flow, looking at cash flow from operating activities, through the 9-month period, we were down about $18 million. In the quarter, that number was only about $3 million or $4 million. That's in terms of the cash flow statement. That was accomplished without a very significant drop in AR. Right, we've been doing a decent job of collections, but we didn't have any of those large bulk collections from New York City or elsewhere of the aged receivables during the quarter, during the third quarter. We certainly expect it, as Lee pointed out in his comments on the call, we certainly expect a good amount of that to come in Q4, and then what doesn't come in in Q4 would hopefully come in Q1 of 2027. That wasn't an impact for us in the three months ended September 30th. We actually did a fairly good job of managing that burn. If you just look at the headline cash number, we were down to $19 million in available cash at the end of the quarter versus $25 million at the end of the second quarter. If you just look at those raw numbers and you look at where we were, let's say, in Q1 or in Q2, or even going back to the end of last year, you've seen a declining burn. The burn rate, let's say, in the fourth quarter of last year was about $22 million. If you just look at the available cash beginning and end of the quarter, that went down to $15 million in Q1 and Q2. Our available cash dropped by $10 million in Q3, and that number dropped to $6 million. It's not a pure mathematical function that automatically says that that number is going to be much lower, but those are the trends and those are the things that we're seeing. We are seeing that the cash flow with a negative cash flow is following that same trend of the EBITDA burn or the EBITDA negative number coming down. We would expect that to happen. I would say, though, that given some of the things that we have to pay out, maybe we get to cash flow from operations, a positive cash flow from operations, maybe a quarter or two after we get to that level on the EBITDA side. If we're able to hit EBITDA breakeven or somewhat positive in Q4, for example, I think it might be not until Q1 or maybe even Q2 that we show a positive operating cash flow, depending on how the receivables go.

There are no further questions at this time. I will turn it back to Mr. Lee Bienstock.

Thank you so much, and thank you all for joining. Be well.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.