DocGo (DCGO) Q3 2025: Base Revenue Rises 8% as Transport Utilization Unlocks Margin Expansion

2025-11-10 | By EarningsIQ Research

DocGo’s Q3 marks a decisive pivot to core healthcare services, with record transport volumes and an 8% base revenue increase offsetting the wind-down of migrant contracts. Margin trajectory and cash discipline underpin a credible path to profitability as new payer-provider and virtual care capabilities scale in 2026. Investors should watch for contract expansion and labor ramp to drive incremental upside.

Summary

• Transport Utilization Drives Margin Upside: Record volumes and higher utilization in medical transport signal embedded demand and margin leverage potential.
• Base Healthcare Growth Accelerates: Non-migrant mobile health and payer-provider services deliver double-digit organic growth, validating the shift away from episodic emergency contracts.
• 2026 Profitability Path Hinges on Execution: Margin improvement and labor scaling are key to delivering on management’s exit-year EBITDA positive run-rate target.

Performance Analysis

DocGo’s Q3 results reveal a business in transition, as the company cycles off high-revenue, low-margin migrant programs and reorients toward durable healthcare service lines. Total revenue fell sharply year-over-year due to the wind-down of migrant-related projects, but base revenue—excluding these contracts—grew 8% to $62.4 million, underscoring underlying demand for recurring medical transportation and mobile health offerings.

Medical transportation revenue grew to $50.1 million, achieving record trip volumes and the segment’s highest gross margins since early 2024. Non-migrant mobile health revenue rose over 20% year-over-year, led by care gap closure, remote patient monitoring, and mobile phlebotomy. Adjusted gross margin for the core business held at 33%, with transportation segment margins climbing to 31.7% amid peak utilization. Adjusted EBITDA loss widened to $7.1 million, reflecting continued investment in early-stage offerings and corporate overhead, but operating cash flow remained positive, aided by aggressive accounts receivable collection and debt reduction.

• Transport Utilization Peaks: Highest trip volumes and utilization rates ever, with 26,000 trips outsourced due to labor constraints, highlighting revenue recapture potential as hiring ramps.
• Mobile Health Mix Shifts: Higher-margin remote patient monitoring and phlebotomy replace lower-margin, sunset migrant contracts, supporting future margin expansion.
• Cash Position Strengthens: Debt-free balance sheet and $95 million in cash provide strategic flexibility for further M&A and growth investment.

Despite headline revenue declines, DocGo’s base business is expanding, and operational leverage is set to improve as labor capacity and new contracts scale through 2026.

Executive Commentary

Strategic Positioning

1. Transition to Recurring, High-Visibility Healthcare Revenue

DocGo’s strategic pivot away from episodic emergency contracts is now manifest in the revenue mix, with recurring medical transport and payer-provider services forming the foundation. Long-term contracts with marquee health systems and a growing roster of national payers provide multi-year revenue visibility, reducing dependence on one-off government programs.

2. Labor Investment to Unlock Embedded Revenue

Labor constraints have become the gating factor for transport growth, evidenced by the 26,000 trips outsourced over the past year. Management’s focus on ramping EMS hiring—targeting 700 to 800 additional staff—directly links to millions in recapturable revenue and supports margin expansion as utilization rates rise.

3. Payer-Provider Vertical Scaling and Margin Mix Shift

Payer-provider services, encompassing care gap closure, remote patient monitoring (RPM), and longitudinal care, are scaling rapidly. The RPM business, focused on cardiology and implantable cardiac devices, is already EBITDA positive and commands premium multiples. Expansion into primary care and preventative services with major health plans sets up a multi-year growth runway, with contract expansions expected to accelerate revenue and margin profile improvement.

4. Virtual Care Acquisition as a Platform Play

The SteadyMD acquisition adds a 50-state virtual clinician network, enabling DocGo to pair last-mile mobile care with virtual services. This creates an end-to-end offering for payers and providers and opens cross-selling opportunities across both customer bases. The deal is expected to add $25 million in revenue in 2026 and improve care delivery efficiency, positioning DocGo for new service launches and greater national reach.

5. Balance Sheet Flexibility for Growth and M&A

DocGo’s debt-free balance sheet and robust cash reserves afford strategic optionality to pursue further acquisitions, invest in technology, and fund labor ramp without near-term capital constraints. Positive cash flow from operations, even amid EBITDA losses, reflects disciplined working capital management and supports the company’s transition strategy.

Key Considerations

This quarter cements DocGo’s transition from project-based to recurring healthcare services, but execution on labor, contract expansion, and integration will dictate the pace and durability of margin improvement.

Key Considerations:

• Labor Ramp as Growth Lever: Success in hiring and retaining EMS staff is critical to unlocking latent transport demand and driving margin leverage.
• Payer-Provider Pipeline Depth: Expansion with top national payers and new care modalities (primary, preventative, RPM) are key to sustaining double-digit base revenue growth.
• Margin Mix Evolution: Replacement of low-margin, sunset contracts with higher-margin, tech-enabled services is essential for profitability targets.
• Integration of SteadyMD: Realizing cross-sell and care delivery synergies from the virtual care acquisition will be a major determinant of long-term platform value.
• Capital Deployment Discipline: Maintaining cash strength while investing in growth and potential M&A will be closely watched as the company scales.

Risks

Execution risk around labor ramp and integration of new service lines could delay margin inflection. The payer-provider vertical, while high-growth, is still maturing and subject to contract timing and reimbursement shifts. Hospital and payer budget pressures, regulatory changes, and competitive responses remain ongoing risks, especially as DocGo scales its national footprint and transitions to more complex care delivery models.

Forward Outlook

For Q4 2025, DocGo expects:

• Minimal migrant-related revenue; margin profile to reflect SteadyMD integration and continued labor investment.
• Ongoing sequential growth in base transport and mobile health volumes.

For full-year 2026, management guided:

• Revenue of $280 to $300 million, representing 12% to 20% growth over 2025 base revenue.
• Adjusted EBITDA loss of $15 million to $25 million, with the majority of losses in the first half and positive run-rate targeted by year-end.

Management emphasized:

• Revenue and EBITDA improvement in each quarter of 2026, driven by labor ramp, contract expansion, and margin mix shift.
• Further upside possible from new contract wins or M&A, not included in current guidance.

Takeaways

DocGo’s Q3 signals a successful pivot to core healthcare services, with record transport volumes and accelerating payer-provider growth supporting the shift to a recurring, margin-accretive business model.

• Margin Inflection Hinges on Labor Execution: Transport segment’s record utilization and outsourced trip volume highlight the near-term opportunity for revenue recapture and margin lift as hiring scales.
• Payer-Provider Contracts Offer High-Conviction Growth: Expansion with top payers and the SteadyMD acquisition set up a robust pipeline and higher-margin revenue mix for 2026 and beyond.
• Watch Quarterly Progression and Contract Wins: Investors should monitor quarterly sequential improvements in margin, cash flow, and contract expansions as leading indicators of long-term profitability and market share gains.

Conclusion

DocGo’s Q3 2025 results underscore a business in transformation, with core revenue growth and operational leverage emerging as migrant contracts sunset. The company’s path to profitability now rests on labor scaling, contract expansion, and disciplined capital deployment, with virtual care integration as a potential force multiplier.

Industry Read-Through

DocGo’s transition away from episodic emergency contracts toward recurring, tech-enabled healthcare services reflects a broader industry shift among healthcare service providers seeking margin stability and multi-year visibility. Labor constraints remain a sector-wide bottleneck, with successful hiring and retention emerging as key differentiators. Virtual care integration is increasingly table stakes, as payers and systems demand seamless, end-to-end solutions. Operators with strong balance sheets and proven cash discipline are best positioned to capitalize on M&A and new contract opportunities as the healthcare ecosystem consolidates and evolves.

DCGO Healthcare Outsourced Services Virtual Care Medical Transport Margin Expansion Labor Ramp Payer-Provider