SteadyMD, Inc. (DCGO) Earnings Call Transcript & Summary

Greetings, and welcome to the DocGo acquisition of SteadyMD. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mike Cole. Thank you. You may begin.

Thank you, operator, and thank you all for joining the call today. 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 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, the risk that the cost savings and synergies from the transaction may not be fully realized or may take longer than anticipated to be realized, disruption to the parties' businesses as a result of the transaction and associated integration activities, reputational risk and potential adverse reactions of SteadyMD or DocGo customers, employees, vendors, contractors or other business partners, including those resulting from the announcement or completion of the transaction, the extent to which SteadyMD's business will perform consistent with management's expectations and projections, accuracy of projections and those other risks discussed in our risk factors and elsewhere in DocGo's annual report on Form 10-K, quarterly reports on Form 10-Q, Form 8-K disclosing this transaction 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 certain financial forecasts related to SteadyMD and the transaction. These projections have not been audited and should not be relied on as being necessarily indicative of future results. The assumptions and estimates underlying the prospective financial information are inherently uncertain and subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in this presentation. Accordingly, there can be no assurance that the prospective results are indicative of future performance of SteadyMD or that actual results, including on a combined basis with DocGo will not differ materially from those included in this presentation. Disclosure of the prospective financial information on this call should not be regarded as a representation by any person that the results contained in this prospective financial information will be achieved. 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, I will now turn the call over to Lee Bienstock, CEO of DocGo. Lee, please go ahead.

Thank you, Mike, and thank you all for joining us today. I'm Lee Bienstock, CEO of DocGo, and we are excited to share more about our announcement that DocGo has acquired SteadyMD. And today, joining me to help us do that is Guy Friedman, CEO and Co-Founder of SteadyMD.

Thanks, Lee. Hi, everyone. I'm Guy Friedman, the CEO and Co-Founder of SteadyMD, and we're excited to join the DocGo team and build a fantastic business together.

Likewise, thanks so much, Guy. So those that are new to the DocGo story, DocGo is a leading provider of tech-enabled mobile health care. We provide services across 31 U.S. states and the U.K. today with a fleet of over 900 mobile health vehicles powered by our proprietary tech platform and our heroes in the field, our over 3,000 clinical staff that are out providing care to where patients need it, when they need it every day. Since 2015, we've served over 10 million patients and our patients absolutely love the services we provide. We have over 92 patient Net Promoter Score. We have multiple service lines. We provide world-class medical transportation and medical transportation management powered by our tech platform and our state-of-the-art fleet as well as the thousands of EMS professionals that I mentioned that are out every day providing exceptional medical transportation and medical transportation management. This year, we expect to transport over 750,000 patients. We provide in-home medical care with an innovative approach, which I'll talk more about that uses upskilled clinicians to provide care in the comfort of a patient's home, office or community setting. And this year, we expect to provide and visit over 150,000 patients and provide care in their homes as well as mobile lab. We also provide remote patient monitoring with an empowered care team that provides continuous insight and monitoring on patients' health, driving smarter patient care plans and stronger patient engagement and this year, we expect to monitor over 50,000 patients, and we do that with an incredible roster of partners and customers ranging from Mount Sinai to Jefferson to Northwell to Molina and LA Care, the NHS in the U.K. and more, and now we're excited to add a 50-state tech-enabled telehealth platform in SteadyMD. So how do we do what we do? How do we bring care into the home of patients at scale. And it really comes down to our innovative hybrid care delivery model, where we utilize mobile health clinicians that are LPNs or RNs, licensed practical nurses or RNs who travel to patients' homes and patients' locations with specialized equipment. They are the hands, eyes and ears in the patient's home where they are, and we pair them with physicians, PAs and NPs that oversee the clinical visit virtually, synchronously, directing the LPN in the home to provide back real-time diagnostics screenings and other data so that the patient can receive a comprehensive visit, a high-quality visit in their home. It's this innovative approach that allows us to scale this model efficiently. I like to say the doctor coming to visit you is a 100-year-old idea. The doctor used to go visit their patients in the home, but it was just inefficient. There was a lot of drive time in between, and everyone knows we just don't have enough advanced practice providers in this country to meet the demand, and so in order to leverage that scarce resource maximally, we have them oversee virtually our LPNs in the field with our tech platform, and so SteadyMD is really going to help us scale this, by providing, we'll talk more about it, the hundreds of advanced practice providers in the telehealth platform that will allow us to scale this mobile health care delivery across the country and the U.K. Guy, maybe talk a little bit more about SteadyMD and the incredible platform that you and the team have built.

Yes. Thanks, Lee. Appreciate that. So yes, SteadyMD was founded 9 years ago in 2016. Originally, our business model was in the virtual primary care space, selling direct to consumers. In early 2020, we pivoted to our current business model. Today, as the slide shows, we power some of the largest digital health companies in the world from the Fortune 100 to the most innovative startups doing cutting-edge digital health and caring for patients in new and unique ways. So the way our business works is digital health companies integrate with our platform, and we power their offerings with our 50-state clinician network, which is comprised of hundreds of NPs, PAs, MDs and other specialists, built a robust technology platform with great APIs, a custom EMR and online clinic, spent a lot of time and energy building custom scheduling, workforce management and other operational technology to make this all run. In the past year, we've had very solid growth. We've seen approximately 3 million patients spanning from lab orders to urgent care visits and long-term care in a lot of different digital health verticals. So we're excited to join the team and keep building this and building upon the work we've done so far.

It's incredible, and to see the roster of customers that you have and the scale that you've been able to achieve with the team and the quality of the product and the platform is just incredible, and we think together, we have a really incredible foundation to build tremendous mobile health and virtual care management platform. Now I wanted to spend some time for us to touch on the synergies that both of us are going to bring and achieve together, how DocGo is going to benefit SteadyMD and how SteadyMD is going to benefit DocGo. So I mean, first, how SteadyMD benefits DocGo, we talked about it. SteadyMD's 50-state virtual provider network is going to really help augment DocGo's in-home care delivery, and the use of SteadyMD's hundreds of telehealth-based providers is going to potentially garner up to 10% of a gross margin improvement for our in-home visits, and SteadyMD is going to help us more quickly launch into new geographies with their existing scale and their existing presence, and we think the ability to cross-sell B2B telehealth services to our partners and customers is going to be a big opportunity as well. So we really feel that SteadyMD is going to bring a lot to the DocGo platform and allow us to scale faster and more efficiently. Guy, maybe touch on what DocGo is going to help bring to the SteadyMD platform and ecosystem.

Yes, absolutely. I mean it's always been kind of a dream in the industry to combine virtual care and in-person care, both are extremely complex businesses. If we can offer a combined offering to both our sets of customers, it's truly an end-to-end solution, and that has a tremendous potential for growth and the ability to care for more patients in a better way nationwide. So it's really an end-to-end solution where we can augment our clients and our partners with in-home care and all the services DocGo provides, and I think with DocGo's support, we'll be able to offer all the rest of the infrastructure DocGo has built to our partners as well. So it's really an amazing combination. I think it's going to be a revolutionary progress moving forward.

No question, and I want to kind of illustrate that a little bit more deeply here on how SteadyMD's telehealth platform is really going to accelerate DocGo's service offerings. So first off, we think SteadyMD is going to help advance the growth of our quality and gap closure programs, our world-class quality and gap closure programs, as I mentioned, by bringing SteadyMD's already existing 50-state virtual care platform that's going to seamlessly integrate into our mobile health care deployments, allowing us to scale in the markets we're in, allowing us to scale to new markets and expand our home visit capacity is going to be tremendous. Not only that, SteadyMD has big scale in lab order approvals, and obviously, DocGo has a fast-growing in-home phlebotomy, in-home lab business, and so SteadyMD's providers are going to be helping order diagnostics. They already help order diagnostics for major lab companies and employers, and of course, we can layer in DocGo's capabilities to that to provide in-home mobile lab and in-home phlebotomy, and as I mentioned, DocGo's mobile phlebotomy fulfill specimen collections in the home. So that pairs very nicely with SteadyMD's platform that's already providing order diagnostics for major, major lab companies. And then, of course, we've talked about it at DocGo. We've shared primary care is a big focus of ours, primary care, preventative care in the home, helping keep patients healthier and out of the hospital. That starts with great preventative primary care, and so SteadyMD's providers are going to significantly increase the capacity for our primary care patients and DocGo's in-home services are really going to augment SteadyMD's primary care practice. So that combination is going to allow us to bring primary care to even more patients much, much more quickly, and so many of the patients that we go and see to provide care gap closure programs and care gap services, so many of them don't have a primary care provider or haven't seen one in over a year, and we know there's a primary care provider shortage in this country. And so the ability to pair these two platforms together is going to help address that and the need is absolutely there and the need is great. Now how do we do this? One of the big components of really this integration are the two world-class proprietary health tech platforms that we're both bringing to the table, and DocGo's platform helps optimize mobile health resources in the field to provide maximum utilization with the right vehicle, the right clinician at the right time, at the right location, all at scale, scale I talked about. and SteadyMD's platform that optimizes the clinical resource utilization, the right clinician for the right patient at the right time via telehealth at scale. So this is a profound combination of tech platforms that help do and accomplish essentially the same thing in the field and remotely, and pairing those two together are going to allow us to be incredibly efficient and allow us to scale to much, much greater capacity, and so both platforms are purpose-built to create efficiency in last mile care delivery, and that is going to be a tremendous benefit to our customers, to our partners, to our patients by combining these two tech platforms, and we're very, very excited about that. So how did we structure the transaction? DocGo acquired SteadyMD for a purchase price of up to $25 million, which involves an upfront payment and a contingent payment, and DocGo funded the transaction through our existing cash on the balance sheet. Any contingent earn-out payment will be paid in either cash or stock at DocGo's election, and SteadyMD is expected to generate approximately $25 million of revenue in 2025 and is expected to be EBITDA positive in 2026, and I already talked about all the synergies and overlap and efficiency that both platforms are going to hopefully achieve together. Our mission has always been to bring high-quality care to where it's needed, when it's needed, helping patients lead healthier lives and stay out of the hospital. Where we are needed, we go, and now with SteadyMD, we'll be able to go farther more efficiently faster, and I couldn't be more excited about our future. Now we'll hand the call back to the operator for Q&A. Thank you.

[Operator Instructions] Our first question comes from Michael Latimore with Northland Capital Markets.

Great. Congrats on the news. Very exciting. Just curious if you guys have worked together in the past with any customers? How did you know each other?

Michael, absolutely, thanks for the question. So SteadyMD has been on our radar for quite some time. Actually, when we first started providing in-home services, we had looked at the marketplace for some potential partners to power the telehealth portion overseeing and directing the mobile health clinician in the home, and at the time, we had looked at some of SteadyMD's competitors, and they didn't have the capabilities or frankly, the quality that we needed. And we thought, well, maybe perhaps we'll build out this capability in-house. As we started to scale, we realize we want to go faster. There's an opportunity for us to be a lot more efficient. And so we started looking at utilizing and leveraging a partner again and SteadyMD rose right to the top of that list. The ability to scale to all 50 states, they're already licensed and servicing patients via telehealth and have customers with patients in all 50 states. And we realized pretty quickly that, yes, there's a partnership opportunity here, but there's a much bigger opportunity for us to integrate more deeply, for us to cross-sell and provide our various different solutions to our different customer bases. And so we started to get very excited about the ability to combine both businesses, and that's when we really started heading down that path. And so that's really what we're excited to do. And we've been looking at this portion of the market. We've tested with it. And we think that SteadyMD far and away has the best quality, the best leadership team, the best tech platform that will help pair in real time, the telehealth provider, the virtual care provider, the advanced practice provider with our mobile health clinician in the field, and we feel very, very excited to merge the 2 platforms together, and we think that it's going to be very accretive both to the top line and the bottom line.

Yes, makes sense. The 10% gross margin lift, was that for Mobile Health overall, the Mobile Health segment or a subsegment of Mobile?

That's right. It's for the Mobile Health segment, really specifically targeted at our in-home business. So the ability to pair SteadyMD's advanced practice provider with DocGo's mobile health clinician in the field. Really, the advanced practice provider overseeing the mobile health clinician in the home is the most expensive component of our in-home visit, and it's actually one of the most difficult portions of the visit to fulfill with the advanced practice provider. And so we want to get a lot more efficient with the advanced practice provider utilization because it is the most expensive component, and that's exactly what SteadyMD is bringing to us. And so that paired with our mobile health logistics platform and the mobile health deployment, the LPNs in the field is going to bring us that gross margin improvement. The other thing that we've been talking about is, as you know, we acquired a mobile phlebotomy company earlier in the year as well. And so we're also looking at leveraging our fleet of mobile phlebotomists to do some of the care gap and some of the care gap closure program work in the home. They can't do all of the services we provide. I mean that's one of our big competitive advantages. We provide over 40 different clinical offerings in the home. Some of them a mobile phlebotomist can do, and so we're looking to leverage them as well, which will also drive a gross margin improvement for some of the, call it, more entry-level care gap closure visits in the home, and then we're also going to pair that with SteadyMD. So what you see us doing here is really putting the pieces in place to be very efficient in the field, using the right clinician for the right patient need in the field, paired with the right clinician for the right patient need virtually, and as we start to put those pieces together, we're going to get scale, which is SteadyMD is significantly bringing to us and efficiency, and that's really the power of what we're doing here and what we're announcing. We're getting scale and efficiency on the advanced practice provider on the virtual side, and we've been obviously making investment on the mobile health clinician in the field. And the pairing of that is really the big opportunity here, and we're excited about it.

Our next question comes from Ryan Langston with TD Cowen.

On the cross-selling point, I guess what is the overlap of the two books of business kind of currently look like? I'm just trying to get a sense of the overall opportunity maybe just currently to cross-sell those services between the two businesses.

Absolutely. Absolutely. Thanks, Ryan. So first off, on the existing sort of customer overlap, I think the big area there is really with the labs that we both work with. So we have a deep integration with one of the large major labs. SteadyMD works closely with another major lab that we work with less. So we think we're going to be able to really scale our lab business pretty significantly by working together, bringing some of the lab customers we have, SteadyMD is going to bring some of the lab customers they have. And so we're going to be able to build out that infrastructure and that scale. And then I think there's actually a big opportunity to cross-sell customers that we don't have that SteadyMD has and to cross-sell the SteadyMD customers, but also cross-sell the DocGo customers that SteadyMD doesn't have. So we're looking forward to that. I think SteadyMD works with essentially direct-to-consumer B2C providers, wellness companies, a lot of health tech start-ups, and they have a huge roster of customers, some really, really impressive names. We're very excited to work with together with them, and then I think we really bring the enterprise hospital systems and payer partners that they don't have. So there's a big opportunity here, I think, to work with the already existing customer base we both have that overlaps, but we're also very excited to be introduced to a new customer base and then the same. So I think there's opportunity for both.

Cool. And then just last for me. I'm sorry if I missed it. I know you did mention some gross margin lift, but maybe just run through the growth profile of this company, maybe in terms of just revenue or a long-term algorithm, just how we should think about it maybe over the next couple of years? And maybe just a little bit more on how you think you can sort of leverage maybe existing G&A at both SteadyMD and DocGo over the next couple of years with that revenue growth.

Of course. So on the G&A side, I think we've already -- we've done a lot of work upfront on this, a lot of work upfront. We mentioned in our press release that Alvarez & Marsal was retained, and they helped us look at some of the overlap on the G&A side, some of the synergy side, they made great pairing with us to look at some opportunities there. So of course, on the G&A side, when it comes to compliance, human resources, finance, payroll, benefits, we're already identifying some really great overlap and synergies that just naturally comes from an acquisition like this. And then I was touching on the synergies really in the patient care delivery. I mean that's where there's huge synergies as we go to market together in the home and virtually. So we've sort of identified both gross margin and G&A synergies as part of this, and we've had some really great minds helping us think through all of that, and we have a really solid plan going forward. In terms of the growth profile, we'll share a lot more about sort of the financial profile of the combination, what it does for our guidance going forward for the rest of this year and into next year. We plan on sharing a lot more details about that on our earnings call coming up here in the beginning of November. So we'll dive a lot more into that. But we definitely think there's an opportunity for us to accelerate the growth trajectory of SteadyMD. It's a very impressive company. They have an incredible roster of customers. The solution is best in breed, and then we think that we can layer on both our resources and our infrastructure to help them scale even more. So that's what we're looking at doing. They have a very strong growth profile, and we think we could supercharge that.

Our next question comes from Ryan MacDonald with Needham & Company.

This is Matt Shea on for Ryan. Congratulations on the deal here, guys. Nice to see how SteadyMD can accelerate a variety of your service offerings, but maybe relative to the payer business, was the deal in part from an increased level of demand or patients being assigned to DocGo and SteadyMD is needed to help service that demand? Or how should we think about this potentially accelerating the payer and care gap business?