DocGo Inc. (DCGO) Earnings Call Transcript & Summary

Thank you. Greetings and welcome to the DocGo acquisition of Hicuity Health. [Operator Instructions] As a reminder, this conference 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, and will not be used to describe the statements 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 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. computational risk and potential adverse reactions of Hicuity Health 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 Hicuity Health's business will perform consistent with management's expectations and projections and 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 Hicuity Health 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 Hicuity Health 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 understand that take 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 all for joining us today. I'm excited to share more about our acquisition of Hicuity Health and what we hope this combination will mean for our customers, our patients, and of course our shareholders. We've spent the last several years building our capability to bring high quality care to patients where they need it. Hicuity adds an important dimension to that vision, remotely supporting patients inside the hospital and connecting that care with the care they receive when they return home. Joining me are Andrea Clegg, Hicuity's Chief Financial Officer, and Dr. John Kazianis, Hicuity's Vice President and Senior Medical Director. Andrea, maybe give us a little background on yourself.

Thank you, Lee. I have spent the last 20 years leading tech-enabled healthcare services companies to create new and innovative healthcare solutions in both the public and private arenas. I've been with Hicuity Health for over 10 years as CFO, and I am very excited to see these two great companies come together to continue their missions and improve patient care and access in this country. Now I'd like you to meet Dr. Kazianis.

And I'm Dr. John Kazianis, Vice President and Senior Medical Director at Hicuity Health, where I lead our Tele-ICU program. I've been with Hicuity for over 10 years. I'm a board-certified intensivist, pulmonologist, and internist. I'm excited to be here today to discuss how Hicuity's clinical capabilities complement DocGo and the opportunities we see across the continuum of care.

Thanks so much. We are so excited to welcome you to the team, and we're so excited to welcome the entire Hicuity Health team into the DocGo family. Andrea and John both bring an important perspective on the Hicuity business and the clinical model behind it, and I'm pleased to have them here with us today as we walk through our vision for this acquisition and the opportunities that we believe will unlock. Afterwards, we'll then take your questions. So, let me start with some data that highlights the need we're addressing. The U.S. population continues to age. The population of adults 65 and older is growing at a rate that's nearly 10 times faster than working age adults, resulting in more individuals who need ongoing support across multiple settings. A recent study points to a shortage of approximately 400,000 nurses by 2030. And another predicts a shortage of 141,000 physicians by 2038. This is absolutely a challenge that the healthcare system needs to solve. And at the same time, more than 71% of physicians reported using telehealth in 2024, nearly three times the rate in 2018. Our health system partners are managing rising demand with limited clinical resources and significant financial pressure. Think of it. As the need is rising, the availability of clinicians is declining. So we need solutions that can help them provide care more efficiently and focus their precious resources on individuals who require high acuity care. These trends are driving the need for integrated care platforms that leverage technology to extend clinical capacity, meeting patients where they are, and expanding the classical care delivery model. This creates a significant opportunity for DocGo to deploy our vertically integrated technology, our clinical teams, our workflows, our holistic service offerings to extend the reach of our clinical teams and of course deliver care across multiple settings. Now, Andrea, maybe tell us a bit more about Hicuity Health.

Absolutely. Hicuity is a tech-enabled healthcare services provider delivering 24/7 care to acutely ill patients in the hospital, post-acute, and at-home care venues. Our team of 450 clinicians supports over 260 care facilities, operating in more than 30 states. We monitor 4,700 patient beds that serve 160,000 patients annually. On a trailing 12-month basis, Hicuity generated revenues of approximately $65 million and $4.5 million in adjusted EBITDA. Our revenues over the trailing 12-month period were led by our Tele-ICU, virtual nursing, and remote telemetry monitoring service line. Tele-ICU remains our largest service line and includes physician, nurse practitioner, and nursing support for intensive care unit patients. We also provide centralized telemetry monitoring and virtual patient observation services. We have also extended our capabilities beyond traditional care facilities by participating in the newer Hospital at Home program, where we remotely monitor hospital-level patients with chronic conditions in the comfort of their own home. Underlying our services is Hicuity's proprietary technology platform, the Hub. The Hub brings together clinical information from the hospital EMR and bedside technology, along with integrated audio and video communications, clinical alerts, and care team workflows, all within a common platform with the goal of providing optimal patient care and tailored coordination with the bedside care team. This combination of technology, clinical expertise, and a flexible delivery model provides an important foundation for the integration we are planning with DocGo.

Thanks, Andrea. And with that overview, I'd like now to walk through the transaction structure. So the merger agreement provides for DocGo to acquire Hicuity primarily in exchange for assuming $52 million of Hicuity's existing indebtedness held by Perceptive Advisors. The debt matures in December 2022 and carries an interest rate of SOFR plus 7.5 percentage points. In addition, we will issue 2% of DocGo's fully diluted common stock at closing to Hicuity's preferred shareholder, Concord Health Partners. Hicuity's preferred shareholder, Concord, would receive an additional 3.5% of our common stock if our market capitalization reaches $250 million within three years of closing subject to the agreement's terms. Perceptive has also committed up to $50 million of additional debt financing in tranches on like terms. Perceptive will also receive a warrant of 4 million shares of common stock with an exercise price of $0.5039. We expect the first $12.5 million of the $50 million I mentioned will be funded this week in connection with the effectiveness of DocGo's MSA with Hicuity. Another $12.5 million is tied to closing. The remaining $25 million of the $50 million I mentioned is available to use through 2027, if desired, provided we maintain at least $130 million in trailing 12-month mobile health revenue. To put that in perspective, to put the $130 million in perspective on a couple of things. On a combined basis, DocGo and Hicuity currently have approximately $155 million of trailing 12-month mobile health revenue. Of course, we intend to use this fresh capital judiciously and responsibly, while executing our integration plan and improving the cash-generating capacity of our combined business. All right, so this slide captures the heart of the opportunity. DocGo has built capabilities in medical transportation, mobile health, remote monitoring, and virtual care in the home. And then we said, EMD, which we acquired at the end of last year, added our nationwide virtual care network. Hicuity brings virtual acute care, including Tele-ICU, Hospital at Home, and virtual nursing for patients in the home, which Andrea mentioned earlier. Together, all those capabilities give us the foundation to create a vertically integrated offering that supports more of the patient journey. Think about a patient recovering from a serious illness for a second. In the hospital, Hicuity's virtual clinicians can support the bedside care team. When the patient is ready for discharge, DocGo can help coordinate transportation and the transition home. Once at home, one of our mobile clinicians can then visit the patient with a virtual provider overseeing the care. If additional acute monitoring is required at home when we're not with the patient, we can provide that as well. All in all, our combined offering with Hicuity Health will have the ability to provide virtual care in the hospital and in the home, monitor the patients when we're not on site, and visit them at home when needed. Virtual, remote, in-person, at scale, highly differentiated. That's the integrated model we're building, an offering where each step supports the patient's care team and care plan with the goal of making those transitions more coordinated. All managed on a single connected technology backbone, which can have a profound impact on the patient's journey, which is really what this is all about. For our health system and insurance payer customers, this means access to a broader set of capabilities through a partner that understands both the hospital environment and care in the home. For DocGo, it deepens our customer relationships and supports patients over a longer period of time. Combining DocGo and Hicuity will enable us to expand our care offering across a broader range of settings, connect patient care from hospital to the home, and differentiate from other point solution providers with a more comprehensive care delivery platform. Now, this is something we're really excited about. Both Hicuity and DocGo bring substantial health system relationships to this combination. You can see a portion, just a portion of those customer rosters here. Hicuity customers may have a need for medical transportation, mobile health, or remote monitoring. DocGo customers may benefit from Hicuity's virtual acute care capabilities. Together, we can also explore how to support their Hospital at Home programs. The starting point is the customer's need, it always is. And DocGo and Hicuity each have existing relationships where our teams understand and have earned the trust of our customers. This gives us a foundation to discuss additional services with them. And exploratory conversations are already underway. We had a promising discussion with one of our long-term medical transportation customers about the possibility of bringing Hicuity's Tele-ICU services to them to help relieve the clinical burden at some of their rural healthcare locations. And we've also had a preliminary discussion with one of Hicuity's large health system customers about the possibility of offering DocGo's mobile health services to portions of their patient population. It's important to note that the logos on this slide, while impressive, only represent, as I mentioned, a portion of a premier list of health services providers that we've been building long-standing relationships with over the past decade. We believe these relationships will give us a running start for our ability to cross-sell our vertically integrated offering. We're optimistic that our combined expanded offering will fill gaps in health systems clinical offerings and increase access to quality health care for their patients. And we're looking forward to sharing more with you as these opportunities take shape. Now, regarding our strategic and integration plans for the acquisition. Above all, our integration strategy starts with supporting the clinical model that makes Hicuity valuable to its customers. And on that, we see opportunities in three key areas. First, operating efficiency, combining shared corporate functions and improving procurement and vendor pricing. Second, technology and clinical coordination, aligning infrastructure and workflows so our virtual, mobile, and in-home teams can work together more efficiently. The objective is to make it easier to deliver the right service in the right setting. And third, growth, introducing a broader range of capabilities to our existing customers and supporting programs such as Hospital at Home. What excites me is how these synergies work together. Greater scale and combined purchasing power gives us opportunity to improve margins. Connecting our technology and clinical teams should increase productivity as well as improving coordination for patients. More specifically, operating scale can help us reduce SG&A of our revenue. Procurement savings can lower our cost to serve. And aligning our technology and workflows can help our clinical teams support more patients while better clinical coordination strengthens the quality and continuity of care. And the more effective and compelling our suite of services, the greater our opportunity to grow, especially with customers who already know and trust us. That's the opportunity for DocGo. Serve more of our customers' needs, support patients through more of their care journey, and ultimately turn that broader reach into profitable growth. And to that end, we've already identified approximately $4.3 million in incremental annual cost savings with additional upside still under evaluation. This slide breaks down where we see those savings coming from. The largest opportunity is approximately $2.3 million in clinical productivity and staffing optimization. That means aligning resources with demand and improving workflows so our clinicians can use their time more effectively. Another approximately $1.5 million comes from clinical leadership and organizational optimization, creating clear accountability, streamlining management, and reducing duplication as we bring the businesses together. We've also identified approximately $500,000 in savings from optimizing our operating footprint and facilities. Across all three areas, our focus is on building a more efficient business while preserving the clinical expertise and quality of care that our customers have come to rely on. Beyond these identified opportunities, we're evaluating additional savings across vendors, procurement, insurance, technology, staffing, and other workflows. As we develop the integration plan, we'll have a clearer view of the size and timing of those opportunities. These are annual savings opportunities that we expect to capture as the integration progresses. For DocGo, we believe this will help us achieve and maintain profitability and providing more efficient platform to support our growth. That's what we're focused on, translating the strategic value of this combination into measurable financial results. All right, diving deeper on the future state of our Care Anywhere platform. Dr. John, why don't you walk us through this one?

Absolutely, thankfully. Beyond the opportunity to drive operating efficiencies, we also see significant potential to create value by bringing together Hicuity Health and DocGo's complementary clinical capabilities to create a robust care delivery platform. Hicuity brings 20 years of experience delivering technology-enabled acute and complex care, primarily in facility-based settings. Our services include Tele-ICU with both physician and virtual nursing capabilities, centralized inpatient telemetry monitoring, and virtual patient safety services. More recently, we have extended that expertise beyond the traditional hospital walls through Hospital at Home and in-home monitoring of patients with chronic conditions. That evolution makes Hicuity a natural fit with DocGo's broader Care Anywhere vision. DocGo has expertise in mobile health, in-home virtual care, remote patient monitoring, and mobile phlebotomy. Putting these capabilities together creates the opportunity to extend the combined organization's reach across more care settings: hospital to the home, including both acute and chronic care management. For our hospital and health system partners, that creates the opportunity to access a broader range of inpatient and outpatient capabilities through a single organization, simplifying how they source and integrate services while bringing value across the continuum of care. Lee?

Thanks, John. Love that. And think about what that means for a patient. Support from a virtual clinical team in the hospital, a clinician visiting at home after discharge, and remote monitoring of the patient at home in between visits. Our goal is to connect those services around the patient's needs and the care team's treatment plan. That's a meaningful expansion of what we can offer our health system partners. The timeline at the bottom shows how we plan to bring the companies together. At closing, our first priority is continuity, making sure customers, clinicians, and patients continue to receive the support they depend on. The first 100 days focus on operational integration, bringing teams together and streamlining systems and workflows. During year 1, we expect to build on that foundation through commercial expansion and introducing more of our combined capabilities to existing and new customers. Over time, the goal is a unified platform that connects hospital-based and home-based care. Each phase moves us towards that vision while preserving the clinical strengths we each bring to the table. I think it's important we spend a moment on the technology because it's central to how we make all this work. As I previously shared, DocGo's proprietary platform coordinates the resources needed to deliver care in the field. It helps match the right vehicle and clinician to what the patient needs, optimizes routing, and gives our teams real-time visibility. We're excited to add the power of the Hicuity Hub to our health tech stack. Dr. John, maybe take a minute to share how this technology empowers Hicuity's clinicians to deliver the range of services that you provide.

So our clinical teams to manage complex virtual care at scale. It brings together thousands of patients across more than 260 facilities into a single real-time clinical environment. I'd like to highlight that the Hub has evolved iteratively over many years, shaped by the experience of our frontline clinicians, from our hospital partners, and the vision of our software and technology teams. At a high level, the Hub does three things. It creates visibility into patients and their needs, needs care for our clinicians and measures impact of our services. First, it creates visibility by aggregating data from the electronic medical record, bedside monitoring devices, and other data sources from our hospital partners. It allows our clinical teams to know when a new patient enters our environment, identifies changes in a patient's condition, and prioritize where and when clinical attention is needed. Second, it coordinates care. The Hub serves as a workflow engine, generating configurable alerts, assigning tasks, coordinating activity across multiple clinicians, while providing integrated audio and video communications capabilities. This allows us to create structured and scalable clinical workflows, but most importantly, to customize those workflows around the unique needs, staffing models, and clinical priorities of hospital and health system partners. And third, the Hub allows us to measure impact. The platform captures operational and service performance metrics, as well as clinical outcomes and rates of adherence to clinical best practices. The ability to demonstrate not only what services were delivered, but the patient outcomes that our services providing, is an important part of the value proposition to our partners. So, as we think about Care Anywhere, the Hub provides an important technology foundation for delivering and coordinating care, measuring its impact, and ultimately demonstrating the value of that care at scale.

Thanks, Dr. Kazianis. The technology aspect of what we're building is really, really crucial to delivering the care that our customers have come to love from us. And as you can see, both DocGo and Hicuity have built those technology platforms that improve how care is delivered for our respective customers and their patients. Bringing those capabilities together is, as I mentioned, crucial and allow us to better clinical resources across a much broader range of patient needs. That's the shared DNA between DocGo and Hicuity, and it's one of the reasons I'm so excited about this combination. Let's talk about the timeline to close. So this slide lays out the path from signing through closing and integration. In August, shared that we signed the Hicuity merger agreement and received the financing commitment from Perceptive. We expect the MSA will become effective this week, which will provide us with access to the initial $12.5 million tranche of funding. We're currently targeting a November closing for Hicuity, subject to the completion of a state filing, at which point the second tranche of $12.5 million of funding will be available. Our teams are already deep in efforts on a detailed integration plan so that we're prepared to move quickly once the transaction closes. Following closing, our first priority will be business continuity for customers, patients, and clinicians. From there, we will focus on capturing the operating efficiencies we've identified, aligning our technology and clinical workflows, and beginning to pursue the commercial opportunities created by the combination. That will be the first priority. Work will continue into 2027. The objective is a disciplined integration that protects what Hicuity does well, delivers the expected synergies, and builds the connected hospital-to-home platform we've been discussing today. We've done this before. One of the reasons we're so excited about the profitability and growth potential of Hicuity is due to the similar benefits we've realized with our October 2025 acquisition of virtual care provider, SteadyMD. Since our acquisition of SteadyMD, we've seen considerable progress in key areas of the business. Health volume increased 60% between the fourth quarter of 2025 when we acquired SteadyMD and the second quarter of 2026. And clinical headcount grew from 499 at year end to 866 as of September 14, an increase of 74%. We're in the process of further integrating and optimizing existing business lines in our Care Gap closure programs by having SteadyMD clinicians provide oversight for these visits. At acquisition, SteadyMD had approximately $25 million in trailing 12-month revenue, and we currently expect SteadyMD to have approximately $36 million for 2026, or 44% higher. We're also seeing improved profitability. SteadyMD had a negative adjusted EBITDA margin at acquisition, and we currently expect approximately 5% for 2026, expanding to 10% by the end of 2027 as the business scales. Our continued success with the SteadyMD acquisition is a good model for us as we approach the Hicuity acquisition, and has reinforced for us the importance of adding clinical capacity to meet demand and using shared infrastructure and automation to improve efficiency and profitability. We're bringing that experience to Hicuity with an integration plan designed for its business and its customers concurrent with improved growth and of course profitability. Health systems have a lot on their plate. They're working to care for more patients, support their clinical teams, and manage costs, doing it all at the same time. That's why bringing these capabilities together is so compelling. Hicuity's virtual clinicians can extend the reach of hospital teams facing staffing shortages while DocGo's Mobile and in-home services can help health systems care for appropriate patients beyond the hospital, preserving capacity for patients who need to be there. Connecting those services also gives us an opportunity to address fragmentation, which is so desperately needed. We can help build a more coordinated transition from hospital care to a home visit, to remote monitoring and to ongoing support. For patients, that means better access and better continuity. For health systems, it means more ways to support their patients and use their clinical resources more efficiently. That's what makes this combination strategically important for DocGo. We're building capabilities around the priorities that matter most to our customers, staffing, capacity, coordination, cost, and access. The better we can help them address those priorities, the more valuable we become as a partner, and the greater our opportunity to build lasting relationships and profitable growth. I'll close with the mission that has guided us throughout DocGo's journey, bringing high-quality, highly accessible care to patients where and when they need it. Hicuity expands our ability to pursue that mission, alongside the health systems and clinical teams who care for these patients every day. I'm excited about what we can build together, and I'm grateful to the clinicians, the operational teams and our support staff who make it all possible. Where we're needed, we go. The Hicuity acquisition expands DocGo's vertically integrated care offering with high acuity virtual care, proprietary technology, and an expanded ability to care for patients across the entire continuum of care, from the hospital to the home. This is an inflection point for our company, and I'm excited about the possibilities and growth prospects of our expanded offering. I want to take this opportunity to thank you for your continued support and now open the floor up for questions.

Thank you. At this time we'll be conducting a question and answer session. [Operator Instructions] Our first question comes from Ryan McDonald with Needham and Company. Your line is now live.

All right, thanks for taking my questions and for hosting the call, Lee. Um, maybe to start from a strategic perspective, it sounds like obviously you mentioned you've had some conversations already with health system customers across on both the Hicuity and the on the DocGo side. Just curious about sort of the potential appetite and value that you think you can see from across the board. cross-selling opportunity and if you could go as far to talk about sort of the number of what's call it individual point solutions that you could help sort of a health system uh narrow down or consolidate by sort of going on to the combined Hicuity and DocGo platform moving forward. Thanks.

Absolutely. It's great to hear from you, Ryan, and always appreciate the question. So as you mentioned, I think it first starts with our customers. So, Hicuity's customer base are health systems, hospitals, and they work with over 260, you know, different hospitals across the country. And then, of course, we work with hospital systems and our medical transportation. monitoring businesses and so there is absolutely as I shared in the presentation there's absolutely an opportunity for us to approach Hicuity's customer base and offer some of the suite of services like medical transportation and patient monitoring that we currently offer on the DocGo platform, offer that to Hicuity's customer base, and then of course have the ability to bring Hicuity's suite of services to our customer base that we currently work with. And we've already undergone a look at Hicuity's customer base, we've looked at our customer base, and we think there's a good opportunity to approach both with a more comprehensive an intensive suite of services that help patients both while they're in the hospital and in the ICU and then also when they're home. So that's a big, big driving force for us. And as I mentioned, we have started to have conversations. So some of the hospitals that we provide medical transportation for, as an example, have staffing shortages, have a hard time staffing their ICUs. So we think there's an opportunity for us to introduce Hicuity's platform to them. And we've also had conversations with some of Hicuity's hospital systems that are providing care in the home. Hospital at Home programs, as an example, virtual nursing programs in the home, and they'll call out for service providers to come into the home. And of course, we provide a suite of in-home services. So we think that ability to provide both solutions in the hospital, and then of course, in between the hospital with medical transportation, and then in the home, is going to provide a more comprehensive platform to our customers and to Hicuity's customers. And again, Hicuity works with hundreds of hospitals, and we do too. And so there's going to be a nice opportunity for us to approach over time those customers. As I mentioned, we've even started to have some of those conversations to help us pressure test that hypothesis, and we're quite confident about it.

Makes sense. And then as we think about the timeline here, so I think you mentioned sort of targeting in November closing of the deal, first 100 days really focused on operational integration. So as we think about that $4.3 million target of sort of cost synergies or cost savings from the acquisition, should we be looking at sort of the of a, let's call it mid to late Q1 as a timeframe to being able to realize those cost savings? Or how should we think about the timeline to achieving that $4.3 million target?