At-home Healthcare Expansion Will Capture Growing Demand

Key Takeaways

• Expansion into proactive, home-based healthcare and strong ties with major payers support long-term revenue growth and stability.
  
• Technology adoption and logistics investments drive efficiency, margin improvement, and scalable entry into new markets and services.
  
• Loss of lucrative government contracts exposes DocGo to margin pressure and revenue volatility, with success now hinging on scaling new service lines and achieving operational efficiency.

Catalysts

Provides mobile health and medical transportation services in the United States and the United Kingdom.

• The rapid expansion of care gap closure programs and at-home primary care services-bolstered by contracts with leading national payers and aggressive plans to enter additional states-positions DocGo to capture a larger share of the growing demand for proactive, home-based healthcare as the population ages, supporting future revenue growth.
  
• Increasing adoption of technology and AI (e.g., automated, multilingual patient engagement and scheduling tools) is improving operational efficiency, driving higher patient conversion rates, and freeing up workforce capacity, which should translate into better clinician utilization and EBITDA margin expansion over time.
  
• Strong and recurring partnerships with major public health systems, Medicaid/Medicare plans, and municipal agencies offer high-margin, multi-year contracts that reinforce revenue stability and provide a platform for scalable growth as value-based care spending shifts toward mobile, preventative solutions.
  
• Continued investment in DocGo's proprietary logistics technology and integration with health system EHR platforms enhances scalability and operational efficiency, enabling entry into new geographic markets and verticals, which should increase topline revenue and support margin improvement.
  
• The structural healthcare labor shortage and regulatory momentum toward outpatient, "hospital-at-home" models underpin sustained long-term demand for DocGo's mobile health and transport offerings, supporting higher patient volumes and reducing sensitivity to traditional healthcare reimbursement cyclicality, which bodes well for long-term revenue and earnings growth.

DocGo Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming DocGo's revenue will decrease by 12.3% annually over the next 3 years.
• Analysts are not forecasting that DocGo will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate DocGo's profit margin will increase from -4.2% to the average US Healthcare industry of 5.3% in 3 years.
• If DocGo's profit margin were to converge on the industry average, you could expect earnings to reach $15.5 million (and earnings per share of $0.18) by about August 2028, up from $-18.3 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 20.6x on those 2028 earnings, up from -8.5x today. This future PE is lower than the current PE for the US Healthcare industry at 21.3x.
• Analysts expect the number of shares outstanding to decline by 4.16% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

DocGo Future Earnings Per Share Growth

Risks

• The wind-down of high-margin, high-revenue migrant-related government contracts has caused a substantial decline in overall revenue and leaves DocGo increasingly reliant on growing newer business lines to replace lost revenue; if these segments do not scale as quickly or profitably as anticipated, future revenues and earnings may remain under pressure.
  
• The Mobile Health segment currently represents a much smaller portion of revenue (38%) and suffered a year-over-year drop, with heavy dependence on ramping patient engagement and clinician capacity; failure to rapidly drive efficiencies or convert assigned lives to paying patients risks continued compression of gross margins and EBITDA.
  
• Medical Transportation Services, now 62% of revenues, operates on thin margins (5–6% EBITDA in the quarter) and requires aggressive hiring and constant scaling to support contract growth, exposing DocGo to labor shortages, rising wage costs, and utilization risk-which may pressure net margins unless significant operational leverage is achieved.
  
• Increasing SG&A as a percentage of revenue, following the loss of legacy migrant contracts, signals potential for ongoing cost/income mismatches; although cost-cutting initiatives are underway, the need for continued investment in technology and workforce may limit SG&A reductions and prolong unprofitability, negatively impacting earnings.
  
• The heavy reliance on government, municipal, and large healthcare system contracts introduces significant revenue volatility and customer concentration risk; the loss, non-renewal, or repricing of these contracts, combined with secular trends toward automation and telehealth (which could reduce in-person service demand), threatens future revenue stability and growth.

Valuation

• The analysts have a consensus price target of $3.05 for DocGo based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $4.0, and the most bearish reporting a price target of just $1.45.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $294.3 million, earnings will come to $15.5 million, and it would be trading on a PE ratio of 20.6x, assuming you use a discount rate of 6.8%.
• Given the current share price of $1.59, the analyst price target of $3.05 is 47.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.