Q1 2024 DocGo Inc Earnings Call

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Operator: Greetings, and welcome to the Docgo First Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mike Cole, Director of Investor Relations. Please go ahead, sir.

Greetings and welcome to the Doctor <unk> first quarter 'twenty 'twenty four earnings conference call.

Operator: At this time, all participants are in listen only mode.

Operator: A question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference. Please press Star then zero on your telephone keypad.

Operator: As a reminder, this conference call is being recorded.

Mike Cole: 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.

Mike Cole: I would now like to turn the conference over to your host my Cold the rest of Investor Relations. Please go ahead Sir.

Mike Cole: 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 our risk factors and elsewhere in DOCCO's annual report on Form 10-K, quarterly reports on Form 10-Q, and other reports and statements filed by DOCCO or the SEC to which your attention is directed.

Mike Cole: 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 believe estimate.

Mike Cole: 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, and the most directly comparable GAAP financial measures are provided directly as part of this call or included in our earnings release, which is posted on our website, DOCCO.com, as well as filed with the Securities and Exchange Commission.

Mike Cole: 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 of our expectation.

Mike Cole: 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 the results or outcomes to differ materially from those contained in our forward looking statements.

Mike Cole: These risks uncertainties and assumptions include but are not limited to those discussed in our risk factors and elsewhere in <unk> annual report on Form 10-K quarterly reports on Form 10-Q, and other reports and statements filed by Docker, what do you see to what's your attention is directed actual outcomes and results or the timing of results or outcomes may differ materially.

Mike Cole: 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. The most directly comparable GAAP financial measures are provided directly as part of this call or included in our earnings release, which is posted on our website <unk> Dot com.

Mike Cole: As well as filed with the Securities and Exchange Commission.

Mike Cole: 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.

Mike Cole: The information contained in this call is accurate as of only the date discussed investors should not assume that statements will remain relevant and offered a that 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.

Mike Cole: It had been 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 Dacko Li. Please go ahead.

Lee Bienstock: Thank you, Mike. And thank you all for joining us today. I'm extremely pleased with our Q1 performance and our operational execution on all fronts. We are making considerable progress expanding our care gap closure programs with major insurance companies. We're proud of the diverse set of population health services we're providing underserved communities, and our medical transportation business with hospital systems remains strong and is growing nicely. We recorded $192.1 million in revenue and had record-adjusted EBITDA of $24.1 million.

Lee Bienstock: Thank you Mike and thank you all for joining today.

Lee Bienstock: I'm extremely pleased with our Q1 performance and our operational execution on all fronts, we are making considerable progress expanding our care gap closure programs with major insurance companies. We're proud of the diverse set of population health services, we're providing underserved communities in our medical transportation business with hospital systems.

Lee Bienstock: Strong and is growing nicely.

Lee Bienstock: We recorded $192 1 million in revenue had record adjusted EBITDA of $24 1 million. We served a record number of medical transportation patients launched our primary care offering introduced a new mobile X Ray program and continue to hire top talent by our leadership team in Q1.

Lee Bienstock: We served a record number of medical transportation patients, launched our primary care offering, introduced a new mobile x-ray program, and continued to hire top talent for our leadership team in Q1. To start, I would like to discuss our updated guidance for 2024. On our last earnings call, we provided guidance for 2024 with expected annual revenues in a range of $720 to $750 million and adjusted EBITDA of $80 to $85 million. Given the accelerated timing of the wind-down of migrant-related projects and associated revenues, we are updating our revenue and adjusted EBITDA guidance.

Lee Bienstock: We now anticipate full-year 2024 revenues of $600 to $650 million. This includes migrant-related revenues of approximately $320 to $350 million and revenues from our base business lines going forward, our medical transportation business and our non-migrant mobile health business of $280 to $300 million. This reduction in guidance comes solely from the accelerated wind-down of certain migrant services projects.

Lee Bienstock: To start I would like to discuss our updated guidance for 2024.

Lee Bienstock: On our last earnings call, we provided guidance for 2024 with expected annual revenues in a range of $720 million to $750 million and adjusted EBITDA of $80 million to $85 million.

Lee Bienstock: Given the accelerated timing of the wind down of micro related projects and associated revenues, we are updating our revenue and adjusted EBITDA guidance.

Lee Bienstock: We now anticipate full year 2024 revenues of 600 to 650 million. This includes micro related revenues of approximately $320 million to $350 million and revenues from our base business lines going forward, our medical transportation business and our non migrant mobile health business up 280 to 300.

Lee Bienstock: Million.

Lee Bienstock: This reduction in guidance comes solely from the accelerated wind down of certain migrants services projects. The base business performed at expected levels in Q1 and should track in line with the original guidance throughout the year.

Lee Bienstock: The base business performed at expected levels in Q1 and should track in line with original guidance throughout the year. Breaking this base revenue down further, we expect non-migrant mobile health revenues of approximately $105 million and transportation revenues of $195 million at the high end of the range. We now see adjusted EBITDA for the full year in a range of $65 to $75 million, representing an 11% adjusted EBITDA margin. We have embarked upon a program to optimize our operating expenses so that we can maintain adjusted EBITDA margins as the migrant-related revenues wind down. I would also like to provide some color beyond 2024.

Lee Bienstock: Breaking this base revenue down further we expect non migrant mobile health revenues of approximately $105 million and transportation revenues of $195 million at the high end of the range.

Lee Bienstock: We now see adjusted EBITDA for the full year in a range of $65 million to $75 million, representing an 11% adjusted EBITDA margin.

Lee Bienstock: We had embarked upon a program to optimize our operating expenses. So that we can maintain adjusted EBITDA margins as the micro related revenues wind down.

Lee Bienstock: I would also like to provide some color beyond 2024.

Lee Bienstock: Looking ahead to 2025, we plan to grow our base revenue from $280 million to $300 million to $400 million and expect $50 million in adjusted EBITDA. We anticipate that $400 million in revenue to break down as follows. Roughly $175 million in non-migrant mobile health and $225 million in transportation. Breaking it down by customer vertical, we expect $250 million from hospital system customers, $100 million from municipal customers, and $50 million from payer and provider programs.

Lee Bienstock: Looking ahead to 2025, we plan to grow our base revenue from 280 to 300 million to 400 million and expect $50 million and adjusted EBITDA, We anticipate that 400 million in revenues to break down as follows.

Lee Bienstock: $175 million and not in non migrant mobile health and $225 million in transportation.

Lee Bienstock: Breaking it down by customer vertical we expect 250 million from hospital system customers 100 million from municipal customers and $50 million from payer and provider programs.

Lee Bienstock: While it is possible that some of the current migrant-related projects could carry over into 2025, any migrant revenues in 2025 would be incremental to this base amount. Our 2025 base revenue goal would represent an increase of over 30% from 2024, and as usual, I'd love to share some drivers from our three customer verticals that are helping support this growth. First,

Lee Bienstock: While it is possible that some of the current migraine related projects could carry over into 2025 any micro revenues in 2025 would be incremental to this base amount.

Lee Bienstock: Our 2025 base revenue goal would represent an increase of over 30% from 2024 and as usual I'd love to share some drivers from our three customer verticals that are helping support this growth.

Lee Bienstock: First.

Lee Bienstock: Our work with insurance companies continues to accelerate, and we now have Care Gap Closure Focus contracts with two out of the five largest health insurance companies in the country. We are actively planning expansions with payers in California and New York, with more in the pipeline. We have an innovative model that engages health plan members to address gaps in care with convenient home visits and provide ongoing care to those lacking access to a traditional primary care provider.

Lee Bienstock: Our work with insurance companies continues to accelerate and we now have care gap closure focused contracts with two out of the five largest health insurance companies in the country. We are actively planning expansions with payers in California, and New York with more in the pipeline we.

Lee Bienstock: We have an innovative model that engages health plan members to address gaps in care with convenient home visits and provide ongoing care for those lacking access to a traditional primary care provider. In fact, we're excited to announce that this past quarter Dacko has launched its mobile and virtual P. C P offering to better meet the.

Lee Bienstock: In fact, we're excited to announce that this past quarter, Docgo launched its mobile and virtual PCP offering to better meet the needs of the patients we see every day. And we are working to bring this new offering to more patients through our health plan partnerships. We believe that by serving as a patient's PCP with our unique in-home and virtual model, we can help better coordinate their care and improve health outcomes.

Lee Bienstock: <unk> of the patients we see every day and we are working to bring this new offering to more patients through our health plan partnerships, we believe that by serving as the patient's P. C. P without unique in home and virtual model, we can help better coordinate their care and improve health outcomes.

Lee Bienstock: We're excited about what our innovative approach to primary care can do for our patients. For example, one of our first PCP patients was discharged from a rehab center in December and needed cataract surgery, but she was recovering from a stroke at home and lacked a relationship with a PCP who could provide a clearance exam for her surgery. We deployed our combined virtual and in-home PCP offering to provide her with a full exam, including labs and an EKG. After we completed all the necessary testing, we followed up in her home again and cleared her for her overdue eye surgery.

Lee Bienstock: We're excited about what our innovative approach to primary care can do for our patients. For example, one of our first P. C. P patients was discharged from a rehab center in December and needed cataract surgery.

Lee Bienstock: He is recovering from a stroke at home and lack the relationship with a P. C P who could provide a clearance exam for her surgery.

Lee Bienstock: We deployed our combined virtual and in home PCP offering to provide her with a full exam, including labs and an EKG. After we completed all the necessary testing, we followed up in her home again and cleared her for her overdue eye surgery. This was a procedure she desperately needed to improve our quality of life and it wouldn't have been possible.

Lee Bienstock: This was a procedure she desperately needed to improve her quality of life, and it wouldn't have been possible without our visits. We now have a total of eight different payer contracts in place, allowing us to leverage our mobile capabilities to provide greater access to healthcare for traditionally hard-to-reach populations and provide a platform for future revenue growth. We also continue to make progress with our remote monitoring and virtual care management offerings. We have signed new patient monitoring contracts with two large cardiology practices in Ohio and Delaware and launched two new virtual care programs in New Jersey and Pennsylvania, to give a sense of and an example of how we scale this business.

Lee Bienstock: Without our visits.

Lee Bienstock: We now have a total of eight different payer contracts in place, allowing us to leverage our mobile capabilities to provide greater access to health care for traditionally hard to reach populations and providing a platform for future revenue growth. We also continue to make progress with our remote monitoring and virtual care management offerings, we have signed new patient.

Lee Bienstock: Monitoring contracts with two large cardiology practices in Ohio in Delaware and launched two new virtual care programs in New Jersey and Pennsylvania.

Lee Bienstock: To give a sense and an example of how we scale this business.

Lee Bienstock: Last year, a three-million-member health plan contracted with Docgo to see members across multiple states and lines of business, including their Medicare, Medicaid, and commercial exchange health plans. They assigned Docgo around 25,000 members with known gaps in care, including no recent hemoglobin A1c or blood pressure tests, overdue diabetic eye exams, kidney health evaluations, and bone density screenings.

Lee Bienstock: Last year, a 3 million member health plan contracted with Taco to see members across multiple states and lines of business, including the Medicare Medicaid and commercial exchange health plans. They assigned Darko around 25000 members with no gaps in care, including no recent hemoglobin, a <unk> or blood pressure tests.

Lee Bienstock: Overdue diabetic eye exams, kidney health evaluations and bone density screenings and less than five months, we saw over 1400 members with in home and virtual visits and helps improve quality metrics by closing over 3500. He just stars related care gaps.

Lee Bienstock: In less than five months, we saw over 1,400 members with in-home and virtual visits and helped improve quality metrics by closing over 3,500 HEDIS-STARS related care gaps. Based on these results, the health plan is expanding the number of patients it's assigning Docgo by 50% in 2024. Our goal to scale our insurance and patient monitoring business for 2025 is to complete over 65,000 care gap closures, enroll 10,000 PCP patients, and monitor over 70,000 patients. These metrics are all in line with our current partnerships and pipeline of future partners.

Lee Bienstock: Based on these results the health plan is expanding the number of patient, it's signing dacko by 50% in 2024.

Lee Bienstock: Our goal is to scale, our insurance and patient monitoring business for 2025, it's a complete over 65000 care gap closures.

Lee Bienstock: To enroll 10000, PCP patients and monitor over 70000 patients. These.

Lee Bienstock: These metrics are all in line with our current partnerships and pipeline of future partners.

Lee Bienstock: Second our.

Lee Bienstock: Our transportation service vertical saw record trip volumes in Q1, in part due to our large health system partners in the U.S. and the U.K. experiencing higher patient volumes. We pride ourselves on being able to support capacity management efforts by collaborating closely with our hospital partners. Concurrently, we have fully deployed our leased hour program with MainLine Health in Pennsylvania. We've been awarded a leased hour 9-1-1 contract in Dover, Delaware, and have launched medical transportation at Lettix Hill Hospital in Manhattan.

Lee Bienstock: Our transportation service vertical saw record trip volumes in Q1 in part due to our large health system partners in the U S and the U K experiencing higher patient volumes.

Lee Bienstock: We pride ourselves on being able to support capacity management efforts by collaborating closely with our hospital partners concur.

Lee Bienstock: Concurrently we have fully deployed our at least our program with mainline health in Pennsylvania, We've been awarded a leased our 911 contract in Dover, Delaware and have launched medical Transportation Analytics Hill Hospital in Manhattan.

Lee Bienstock: We continue to grow our event medical services, including a new contract with Ballpark Commons in Wisconsin and our work with New York City Football Club. In addition, we are increasingly expanding our mobile health footprint within this customer base. While mobile health services are still a relatively small component of the equation today, they have the potential to grow substantially over time, given our ability to help our customers keep lower-acuity patients out of the emergency room, which is exactly what our health system customers want.

Lee Bienstock: We continue to grow our that medical services, including a new contract with ballpark Commons in Wisconsin, and our work with New York City Football Club.

Lee Bienstock: In addition, we are increasingly expanding our mobile health footprint within this customer base, while mobile health services are still a relatively small component of the equation today. They have the potential to grow substantially over time, given our ability to help our customers keep lower acuity patients out of the emergency room, which is exactly what our health system.

Lee Bienstock: Customers want.

Lee Bienstock: And third, within our municipal population health business, we debuted an exciting new mobile X-ray program, which we expect will initially be used to help diagnose tuberculosis in underserved populations but we believe has much broader utility beyond that. We introduced our first mobile X-ray unit at the National Tuberculosis Coalition of America's annual TB conference in Baltimore, Maryland, and believe this program has considerable growth potential in the near term, as many geographies across the country are experiencing a sharp increase in cases of TB.

Lee Bienstock: And third within our within our municipal population health business. We debuted in exciting new mobile X Ray program, which we expect will initially be used to help diagnose tuberculosis and underserved populations, but we believe has much broader utility beyond that we introduced our first our first mobile X Ray unit at the National tuberculosis.

Lee Bienstock: This coalition of America's annual TB Conference in Baltimore, Maryland, and believe this program has considerable growth potential in the near term as many geographies across the country are experiencing a sharp increase in cases of TB.

Lee Bienstock: We're already seeing strong municipal interest in this offering and look forward to sharing additional updates as this program expands. Going forward, our growth will be driven by our pipeline of municipal RFPs for larger, more sustainable behavioral health and population health programs. The noise surrounding our market-related work wound up clouding the core story of Docgo. My job is to remind everybody what that story is.

Lee Bienstock: We're already seeing strong municipal interest in this offering and look forward to sharing additional updates as this program expands going forward our growth will be driven by our pipeline of municipal rfps for larger more sustainable behavioral health and population health programs.

Lee Bienstock: The noise surrounding our market related work wound up clouding. The core story of Dacko My job is to remind everybody what that story is.

Lee Bienstock: We have built our proprietary technology platform to efficiently and profitably deploy thousands of clinicians and hundreds of mobile units daily to bring care to patients wherever they may be. In a post-pandemic world that is coming to the realization that telehealth alone is insufficient to truly impact patient outcomes, our combination of technology and caring hands-on clinical services allows us to do what telehealth alone cannot. We're able to meet patients on their terms, in person, expanding access and helping keep people out of the hospital, which at the end of the day, is what everyone wants.

Lee Bienstock: We have built a proprietary technology platform to efficiently and profitably deploy thousands of clinicians and hundreds of mobile units daily to bring care to patients wherever they may be in a post pandemic world that is coming to the realization that telehealth alone is insufficient.

Lee Bienstock: To truly impact patient outcomes, our combination of technology and caring hands on clinical services allows us to do a telehealth alone cannot.

Lee Bienstock: We're able to meet patients on their terms in person expanding access and helping keep people out of the hospital, which at the end of the day is what everyone wants we've created a differentiated model a differentiated product and a differentiated patient experience. There is a tremendous market a world of parts.

Lee Bienstock: We've created a differentiated model, a differentiated product, and a differentiated patient experience. There is a tremendous market, a world of partners, and millions of patients that need us. With that, I'll hand it over to Norm to cover the financials. Thank you, Lee.

Norm: <unk> and millions of patients that need us.

Lee Bienstock: With that I'll hand, it over to norm to cover the financials.

Norman Rosenberg: Thank you, Lee, and good afternoon. Total revenue for the first quarter of 2024 was $192.1 million, a 70% increase from the first quarter of 2023. Mobile health revenue for the first quarter of 2024 was $143.9 million, nearly double the levels of the first quarter of 2023. We experienced growth across several projects, business lines, and geographies. However, the bulk of the year-over-year revenue gains related to the migrant-related projects we operated in New York, both HPD and H&H.

Norm: Lee and good afternoon.

Norman Rosenberg: Total revenue for the first quarter of 2024 was $192 1, million% to 70% increase from the first quarter of 2023 mobile health revenue for the first quarter of 2024 was $143 9 million nearly double the levels of the first quarter of 2023, we experienced growth across several projects business lines.

Norman Rosenberg: However, the bulk of the year over year revenue gains related to the migrant related projects. We operated in New York for both H P D and H H.

Norman Rosenberg: Transportation services revenue increased to $48.2 million in Q1 of 2024, 20% higher than the transport revenues we recorded in the first quarter of 2023. Nearly every transportation market witnessed year-over-year revenue growth, continuing the momentum that began back in the second half of 2022. In the first quarter, mobile health revenues accounted for about 75% of total revenues, and transport for 25%. Net income was $10.6 million in Q1 of 2024, compared with a net loss of $3.9 million in the first quarter of 2023, reflecting higher revenues and wider gross margins. Our effective tax rate for the first quarter was approximately 33%, which we believe is a good assumption for future periods.

Norman Rosenberg: Transportation services revenue increased to $48 $2 million in Q1 of 2024, 20% higher than the transport revenues. We recorded in the first quarter of 2023, nearly every transportation market witnessed year over year revenue growth continuing the momentum that began back in the second half of 2022 in the first quarter mobile health revenues accounted for it.

Norman Rosenberg: 75% of total revenues and transport for 25%.

Norman Rosenberg: Net income was $10 $6 million in Q1 of 2024 compared with a net loss of $3 9 million in the first quarter of 2023, reflecting higher revenues and wider gross margins our effective tax rate for the first quarter was approximately 33%, which we believe is a good assumption for future periods.

Norman Rosenberg: Adjusted EBITDA for the first quarter of 2024 was $24.1 million, the highest quarterly adjusted EBITDA figure we've ever recorded and more than four times the $5.6 million in last year's first quarter. The adjusted EBITDA margin was 12.6% in Q1, up from 5% in the first quarter of 2023. Total gross margin percentage during the first quarter of 2024 was 35%, up significantly from 28.1% in the first quarter of 2023. Gross margin in the first quarter of 2024 represented a continued rebound from the subpar levels of the first and third quarters of last year, which had been negatively impacted by the increased cost that resulted from the launch and ramp-up of new projects.

Norman Rosenberg: Adjusted EBITDA for the first quarter of 2024 was $24 1 billion the highest quarterly adjusted EBITDA figure, we've ever recorded and more than four times to $5 $6 million in last year's first quarter. The adjusted EBITA margin was 12, 6% in Q1 up from 5% in the first quarter of 2023.

Norman Rosenberg: Total gross margin percentage during the first quarter of 2024 was 35% up significantly from 28, 1% in the first quarter of 2023 gross margin in the first quarter of 2024 represented a continued rebound from the subpar levels are the first and third quarters of last year, which had been negatively impacted by the <unk>.

Norman Rosenberg: <unk> cost that resulted from the launch and ramp up of new projects. During the first quarter, while we were able to largely maintain fourth quarter 2023 revenue levels, we were able to improve margins further by bringing overtime costs and subcontracted labor expenses more closely in line with the targets. We have communicated in our recent earnings calls we saw saw.

Norman Rosenberg: During the first quarter, while we were able to largely maintain fourth quarter 2023 revenue levels, we were able to improve margins further by bringing overtime costs and subcontracted labor expenses more closely in line with the targets we have communicated in our recent earnings calls. We saw solid sequential improvements in both of these key metrics. During the first quarter of 2024, subcontracted labor accounted for 31% of total hours worked, as compared to 41% in the fourth quarter of 2023. Overtime accounted for 7% of total hours worked in the first quarter of 2024, compared to 9% in the fourth quarter of 2023, and down from our peak of 16% back in the third quarter of 2022.

Norman Rosenberg: <unk> sequential improvements in both of these key metrics during the first quarter of 2024 subcontracted labor accounted for 31% of total hours worked as compared to 41% in the fourth quarter of 2023 overtime accounted for 7% of total hours worked in the first quarter of 2024 compared to 9% in the fourth quarter.

Norman Rosenberg: 2023, and down from our peak of 16% back in the third quarter of 2022.

Norman Rosenberg: Both of these metrics have continued to trend lower in the second quarter to date, which bodes well for Q2 March. During the first quarter of 2024, gross margin for the mobile health segment was 35.5% compared to 27.7% in the first quarter of 2023, which had been impacted by the project launch and ramp-up related costs. While there were some new project ramp-ups in Q1 2024, these impacts were outweighed by ongoing margin improvement on some of our more mature projects.

Norman Rosenberg: Both of these metrics have continued to have continued to trend lower in the second quarter to date, which bodes well for Q2 margins.

Norman Rosenberg: During the first quarter of 2020 for gross margin for the mobile Health segment was 35, 5% compared to 27, 7% in the first quarter 2023, which had been impacted by those project launch and ramp up related costs. While there were some new project ramp ups in Q1 2020 for these impacts were outweighed by an ongoing margin.

Norman Rosenberg: Improvement on some of our more mature projects.

Norman Rosenberg: We aim to generate a blended gross margin of 40% or better in our mobile health segment, so we still have some more work to do, but the improvements we've seen in the past six months have been very encouraging. In the transportation segment, gross margins were 33.7% in Q1 of 2024, up from 28.9% in the first quarter of 2023. Transportation gross margins continue to benefit from increased scale, improved utilization, an easing of fuel price pressures, and a higher value mix of trips, along with a continued shift toward higher-margin leased hour programs.

Norman Rosenberg: We aim to generate a blended gross margin of 40% or better in our mobile health segment. So we still have some more work to do but the improvements we've seen in the past six months have been very encouraging.

Norman Rosenberg: In the transportation segment gross margins were 33, 7% in Q1 of 2024 up from 28, 9% in the first quarter of 2023 transportation gross margins continued to benefit from increased scale improved utilization and easing of fuel price pressures and a higher value mix of trips along with a continued shift toward higher.

Norman Rosenberg: Margin leased our programs the first quarter of 2024 marked a fourth consecutive quarter of transportation gross margins in excess of 30%. We expect the transportation gross margins will stay right around the current level. Despite some anticipated wage pressures in certain geographies as the market for MTS remains tight.

Norman Rosenberg: The first quarter of 2024 marked the fourth consecutive quarter of transportation gross margins in excess of 30%. We expect that transportation gross margins will stay right around the current level, despite some anticipated wage pressures in certain geographies, as the market for EMTs remains tight.

Norman Rosenberg: Now looking at operating costs, SG&A as a percentage of total revenues was 26.7% in the first quarter of 2024, much lower than the 34.2% in the first quarter of 2023. As revenues increased over the second half of 2023 and on into 2024, we saw SG&A decline as a percentage of total revenues, leading to operating margin expansion. We also executed a targeted reduction in force during Q1, which resulted in some cost savings that will be realized as we move into Q2 and beyond.

Norman Rosenberg: Now looking at operating costs SG&A as a percentage of total revenues was 26, 7% in the first quarter of 2020 for much lower than the 34, 2% in the first quarter of 2023 as revenues increase over the second half of 2023 and on into 2024, we saw SG&A decline as a percentage of total revenues.

Norman Rosenberg: Leading to operating margin expansion, we also executed a targeted reduction enforced during Q1, which resulted in some cost savings that will be realized as we move into Q2 and beyond.

Norman Rosenberg: Turning to the balance sheet, as of March 31st, 2024, our total cash and cash equivalents, including restricted cash, were $58.9 million, as compared to $72.2 million as of the end of 2023. Our accounts receivable continued to increase, reflecting the spike in revenues that we witnessed over the second half of 2023 and in early 2024. While we collected significant amounts during Q1, particularly in late February, we saw a slowdown in collections over the final three weeks of the quarter before payments started to flow again early in Q2. Looking at our project with New York City's Department of Housing Preservation and Development, HPD, as of today, we have collected nearly 65% of the year-end 2023 accounts receivable for this particular project.

Norman Rosenberg: Turning to the balance sheet as of March 31, 2024, our total cash and cash equivalents, including restricted cash was $58 9 million as compared to $72 $2 million as of the end of 2023, our accounts receivable continued to increase reflecting the spike in revenue. So we witnessed over the second half of 2023.

Norman Rosenberg: And in early 2024, while we collected significant amounts during Q1, particularly in late February we saw a slowdown in collections over the final three weeks of the quarter before payments started to flow again early in Q2 looking at our project with New York City's Department of housing preservation development H B D. As of today, we have collected nearly 65% of the year.

Norman Rosenberg: And 2023 accounts receivable for this to get a project offsetting these collections, though are the larger amounts that we have invoiced for 2024 to date, the bulk of which has not yet been collected.

Norman Rosenberg: Offsetting these collections, though, are the larger amounts that we have invoiced for 2024 to date, the bulk of which has not yet been collected. At quarter end, we had approximately $210 million in accounts receivable from the various migrant programs, representing about 75% of our total company accounts receivable. While the wind-down of migrant-related programs will have an impact on revenues, our balance sheet is expected to benefit substantially in 2024 as we collect this revenue, leading to an improvement in cash flow from operations.

Norman Rosenberg: At quarter end, we had approximately $210 million in accounts receivable from the various migron programs, representing about 75% of our total company accounts receivable, while the wind down of migrant related programs will have an impact on revenues our balance sheet is expected to benefit substantially in 2024, as we collect as they are leading to it.

Norman Rosenberg: Improvement in cash flow from operations. In addition to working capital uses during Q1, we used our cash balance was to execute our stock buyback program during the quarter, we repurchased about one 3 million shares via open market purchases for an aggregate amount of approximately $4 $9 million to this point in Q2 in accordance with it.

Norman Rosenberg: In addition to working capital uses, during Q1, we used our cash balances to execute our stock buyback program. During the quarter, we repurchased about 1.3 million shares via open market purchases for an aggregate amount of approximately $4.9 million. To this point in Q2, in accordance with the terms of our automated 10B51 trading plan, we have repurchased an additional 1.4 million shares for an additional $4.9 million. Having spent approximately $10 million on our repurchase program so far this year, we still have another $26 million remaining under that program.

Norman Rosenberg: Terms of our automated <unk> one trading plan, we have repurchased an additional one 4 million shares for an additional $4 9 million.

Norman Rosenberg: Having spent approximately $10 million on our repurchases. So far this year, we still have another $26 million remaining under that program.

Norman Rosenberg: As Lee mentioned, we now expect lower migrant-related revenue this year due to the anticipated accelerated wind-down of certain migrant projects. However, the collection of receivables mentioned above will lead to an improvement in our working capital situation. As we collect older, larger invoices and as our cash outflows decrease in line with lower migrant project expenditures, we would expect to see an increase in our cash balance. We therefore now expect to generate cash flow from operations of $70 million to $80 million in 2024, which is higher than the range that we originally got it to when we reported our 2023 results at the end of February. At this point, I'd like to turn the call back to the operator for Q&A. Operator, please go ahead.

Norman Rosenberg: As Lee mentioned, we now expect lower migrant related revenue this year due to the anticipated accelerated wind down of certain migron projects. However, the collection of receivables mentioned above will lead to an improvement in our working capital situation as we collect older larger invoices and as our cash outflows decreased in line with lower migrant project expenditure.

Norman Rosenberg: We would expect to see an increase in our cash balance. We therefore now expect to generate cash flow from operations of 70 million to $80 million in 2024, which is higher than the range that we originally guided to when we reported our 2023 results at the end of February.

Norman Rosenberg: At this point I'd like to turn the call back to the operator for Q&A operator. Please go ahead.

Norman Rosenberg: Okay.

Operator: Thank you, sir. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press the star key and then 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Again, if you would like to ask a question today, please press star and N1. The first question that we have comes from Ryan MacDonald of Needham. Please go ahead, sir.

Speaker Change: Thank you Sir at this time, we will be conducting a question and answer session. If you would.

Operator: Like to ask a question. Please press star and then one on your telephone keypad.

Operator: A confirmation tone will indicate your line is in the question queue.

Operator: Press Star and then two if you would like to move your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: Again, if you would like to ask a question today. Please press star and then one.

Ryan Michael MacDonald: First question would be have comes from Ryan Macdonald of Needham. Please go ahead Sir.

Ryan Michael MacDonald: Hi, thanks for taking my questions and congrats on a nice quarter. And great to see sort of a clearing of the decks here as we think about, you know, the core business moving forward relative to migrant contracts. Lee, maybe just to start and just to clarify, so as you're thinking about going into 2025, your expectations are for sort of the core business to be around $400 million of revenue with $50 million of EBITDA. Are you expecting any migrant contract-related revenue at all? It sounded like that would be in addition to it, but are you still expecting any migrant contracts at all in your initial 25 expectations? Thanks.

Ryan Michael MacDonald: Hi, Thanks for taking my questions and congrats on a nice quarter and great to see sort of a clearing of the decks here as we think about the core business moving forward relative to migrate contracts.

Ryan Michael MacDonald: I mean, maybe just to start and just to.

Lee Bienstock: <unk>, so as Youre thinking about going into 2025 year expectations are for sort of the core business to be around 400 million of revenue was $50 million of EBITDA.

Ryan Michael MacDonald: Are you expecting any migrant contract related revenue at all.

Ryan Michael MacDonald: It sounded like that would be in addition to it but are you still expecting any bagger contract at all in your initial twenty-five expectations. Thanks.

Lee Bienstock: Thanks, Ryan. Thanks, Ryan. I appreciate the question.

Lee Bienstock: Thanks, Ryan Thanks, Ron I. Appreciate the question. So we really wanted to breakout the base revenue and that's the 400 million that youre alluding to which is going to grow into 2025.

Lee Bienstock: So we really wanted to break out the base revenue, and that's the $400 million that you're alluding to, which is going to grow into 2025. Any migrant-related revenues in 2025 would be incremental to that. So it's certainly possible, depending on the nature of the crisis, depending on the nature of the deployment and the needs of the city, it's possible that it could continue on into 2025, but that would be incremental to the 400 million base business.

Lee Bienstock: Migrant related revenues into 2025 would be incremental to that so it's certainly possible depending on the nature of the crisis, depending on the nature of them.

Lee Bienstock: The deployment and the needs of the city, it's possible that it could continue on into 2025, but that would be incremental to the $400 million base business.

Norman Rosenberg: Ryan, it's normal. I'll just add to that. We want to make sure that we're clear about this. The numbers that we're sharing for 2025 do not represent guidance, right? They just represent sort of a scale for everybody so that they can do their modeling as to what we think our, so to speak, base revenues are. As we get closer to 2025, we'll have better visibility into what actually might be added to that via the migrant-related revenue, and that would constitute our actual guidance.

Lee Bienstock: Brian It's normal I'll, just add to that we want to make sure that we're clear about it the numbers that we're sharing for 2025 do not represent guidance right. They just represent sort of a scaling.

Norman Rosenberg: For everybody so that they can do their modeling as to what we think are so so to speak base revenues are as.

Norman Rosenberg: As we get closer to 2025, we'll have better visibility into into what actually might be.

Norman Rosenberg: Added to that via the the migraine related revenue and that that would constitute our actual guidance for the period.

Ryan Michael MacDonald: All right, that's super helpful clarification. And then as we think about the core business and sort of the breakdown of the 2025 numbers, you said $250 million from hospital systems, $100 million from municipalities, and $50 million from payer and provider programs. Can you give us a sense of, you know, there are a lot of great initiatives you were talking about within there, but give us a sense of what the respective growth rates of those end markets are as you're thinking about this year into next year? Thanks.

Ryan: Alright, that's super helpful clarification, and then as we think about the core business and sort of the breakdown of the 2025 numbers. You said 250 million from hospital systems 100 million from municipal 50 million from from payer and provider programs can you give us a sense of you know there are a lot of great initiatives you were talking about.

Ryan Michael MacDonald: In there, but give us a sense of what the respective growth rates.

Ryan Michael MacDonald: Of those end markets are as Youre thinking about this year into next year. Thanks.

Lee Bienstock: Sure. So, I think the growth of those three segments is really going to be driven by where the pipeline of those businesses is. You alluded to the hospital business. That business is the medical transportation business that we have today, and that business is expected to grow in the 15 percent range from 24 to 25.

Speaker Change: Sure So I think.

Lee Bienstock: The growth of these of those three segments really going to be driven by where where the pipeline of those businesses are you alluded to the hospital business that.

Lee Bienstock: That business is the medical transportation business that we have today and that business is expected to grow in the 15% range into.

Lee Bienstock: Into 2020.

Lee Bienstock: And from 'twenty four to 'twenty five.

Lee Bienstock: In addition to that, we're going to add more mobile health programs with our health system partners, which is where you see the growth also coming from in 25. And that will come from hospital systems that are already partnered with us, as well as a pipeline of hospital systems that are new potential partners for us that we work with every single day. On the municipal business, I shared a bit, but we're going to be growing that business through what we call population health, long-term sustainable RFPs and opportunities with municipalities. And really, the characteristics we're going to look for there are that they're long-term in nature, they're long-term programs in nature versus less crisis response.

Lee Bienstock: In addition to that we're going to add more mobile health programs with our health system partners, which is where you see the growth also coming from in 'twenty, five and that will come from hospital systems that are already partnered with us as well as a pipeline of hospital systems that are new potential partners for us that we're working with every single day.

Lee Bienstock: On the on the municipal business I shared a bit, but we're going to be growing that business through what we call population health long term sustainable rfps and opportunities with municipalities and really the.

Lee Bienstock: Yeah.

Lee Bienstock: The characteristics, we're going to look for there are really that they're long term in nature of their long term programs in nature versus less crisis response.

Lee Bienstock: They incorporate our core services, our core medical services, such as vaccination deployment, behavioral health care services, and other infectious disease services that are in our core competencies and also incorporate aspects of our technology and our innovative delivery model. And so we're going to be evaluating RFPs going forward under those three criteria. And again, we have our pipeline of RFPs, which we shared on previous calls that we're going to continue to pursue.

Lee Bienstock: They incorporate our core services to our core medical services, such as vaccination deployment behavioral health care services.

Lee Bienstock: And other infectious disease are services that are in our core competencies and also incorporate aspects of our technology and our innovative delivery model and so we're going to be evaluating rfps going forward under those three criterias and again, we have our pipeline of Rfps, which we shared on previous calls that we're going to continue to pursue.

Lee Bienstock: And we're going to look for RFP opportunities that embody those characteristics. And then on the insurance side with our payers and our provider partners. And the monitoring business, that business, as we shared, is the smallest business of ours today. But it's the fastest growing business in our portfolio. And that's going to grow based on expanding the current,

Lee Bienstock: And we're going to look for RFP opportunities that embody those characteristics and then on the insurance side with our payers and our provider partners.

Lee Bienstock: And the monitoring business that business is we shared as is the smallest business of ours today, it's the fastest growing business in our in our portfolio and that's going to grow based on expanding the current payout.

Lee Bienstock: Payer relationships that we have as well into new geographies and then expanding the new payer partnerships that we have in our pipeline and I would say.

Lee Bienstock: That has the highest growth rate, but still off the smallest base.

Ryan Michael MacDonald: A lot of great opportunities, Lee, and again, I really appreciate all the additional color here on the call today.

Speaker Change: Yeah, a lot of great opportunities and again really appreciate all the additional color here on the call today. Thanks.

Lee Bienstock: Thanks, Brian.

Richard Collamer Close: The next question we have comes from Richard Close of Cancord Genuacy. Please go ahead.

Ryan Michael MacDonald: The next question we have comes from Richard close of Canaccord Genuity. Please go ahead.

Richard Collamer Close: Yeah, thanks and congratulations on the quarter. Just with respect to the migrant workers, just to clarify, you know, appreciate the details in terms of the expected revenue contribution. What I'm curious about is NYC Health and Hospitals. I believe that's a separate contract for migrant work. And are you saying you're expecting that to wind down or go away? Maybe some details with respect to that would be helpful.

Richard Collamer Close: Yes, thanks, and congratulations on the quarter.

Richard Collamer Close: Just with respect to the migrant.

Speaker Change: Just to clarify.

Richard Collamer Close: I appreciate the details in terms of the expected revenue contribution what I'm curious on is a N Y C health and hospitals.

Richard Collamer Close: I believe that's a separate contract for migrant work in.

Richard Collamer Close: Are you, saying, you're expecting that to wind down or go away, maybe some details with respect to that would be helpful.

Norman Rosenberg: Sure, sure, Richard, let me walk through that with you. You know, just to start at a high level, essentially, we're taking down the estimate around the migrant related revenues by about $100 million or so, give or take, when you compare our last guidance to the current guidance. Just about every dollar of that relates to HPD, and that's because of two different factors. Number one, you have the transition away from some of the sites here in New York City, the so-called downstate sites, and then the anticipated, now anticipated wind down of the upstate sites as well, which, granted, is a projection. There's not a calendar yet for that, but we're projecting that.

Speaker Change: Sure sure Richard Let me, let me walk through that with you just to just started at a high level essentially we're taking down the estimate around the migrant related revenues by about $100 million or so give or take when you compare our last guidance to the current guidance.

Norman Rosenberg: Just about every dollar of that relates to HPT.

Norman Rosenberg: And thats because of two different factors number one you have the.

Norman Rosenberg: Transition away from some of the sites here in New York City, the so-called Downstate sites and then the anticipated now anticipated wind down of the upstate sites as well, which granted is a projection there is not a calendar yet for that but we're projecting that as for the <unk> part of the business when I look at the old what I, what I'll call the old projection versus the <unk>.

Norman Rosenberg: As for the H&H part of the business, when I look at the old, what I'll call the old projection versus the current projection, it's pretty much flat. The H&H-related migrant work is, you know, obviously, there are going to be some sites that close, other sites that are a little bit longer, but with the ins and outs, essentially, that number doesn't move very much. And I can break that out for you. We assume that H&H will be roughly $180 million for the full year, while HPD-related items will be about $150 million, and that's down from a previous expectation of about $250 million. So the entire Delta is really explained by the various elements of the HPD programs and contracts.

Norman Rosenberg: Current projection.

Norman Rosenberg: It's pretty much flat.

Richard Collamer Close: Okay, but is there an end date on H and H or not? I apologize; I just missed that.

Norman Rosenberg: <unk> related.

Norman Rosenberg: Work is you know obviously, they're going to be some types of close other sites that are a little bit longer, but with the ins and outs essentially that number doesn't it doesn't move very much.

Richard Collamer Close: And I can I can break it out for you I mean, we assume that the H and H well.

Richard Collamer Close: Roughly $180 million.

Speaker Change: For the full year, while the HPV related.

Richard Collamer Close: Items will be about $150 million and that's down from our previous expectation of about $250 million. So the entire delta really is explained by the various H P D, but various elements of the HDD programs and contracts.

Speaker Change: Okay, but is there a end date on eight H and H are.

Speaker Change: I apologize I just missed that.

Lee Bienstock: Sure. So there isn't currently an end date for the H&H work. We'll continue to support Health and Hospitals. They're one of our longstanding partners. We've been working with them for years on a myriad of different healthcare deployments and needs.

Speaker Change: Sure. So there isn't currently an end date on the on the <unk> work, we will continue to support helping households, they are one of our long standing partners that we're working with them for years on a myriad of different.

Lee Bienstock: So there's no end date on that, and obviously, as we know more and more in terms of how those projects shape up, we'll keep you updated. But right now, there's no end date on that. We did, all of those H&H projects did go out for bid. We were originally providing services under an emergency procurement, and then those services went out to bid. And we did initiate new contracts there, and those will run for a year, roughly from now or the past few months. But depending on the need, we'll continue to provide those services, but we have no end date scheduled right now. But as we know more and more heading into 2025, of course, we'll update you.

Lee Bienstock: Health care deployments and needs. So theres no end date on that obviously as we know more and more in terms of how those projects shape up we're going to update.

Lee Bienstock: But right now Theres no end date on that we did those all of those <unk> projects did go out for bid we were originally providing services under an emergency procurement and then those services went out to bid and we.

Lee Bienstock: Did initiate new contracts, there and those will run for a year roughly from from now or in the past past few months, but depending on the need will continue to provide those services, but no end date scheduled right now but.

Lee Bienstock: But as we know more and more heading into 2025 of course, well we'll update you.

Richard Collamer Close: Okay, that's helpful. And then maybe a follow-up to Ryan's question with respect to 2025. Just to be clear on this, Norm, the 400 million is sort of a target. And it sounds like that's business that's already under contract, you're currently executing, and some, you know, expected growth or ramp-up of, you know, certain contracts, like the managed care contracts, for example. Is that correct? Or is there, excuse me, some sort of get in that 400 million?

Speaker Change: Okay. That's helpful. And then maybe a follow up to Ryan's question with respect to 2025 just to be clear on this.

Richard Collamer Close: Norm.

Richard Collamer Close: Aye.

Richard Collamer Close: 400 million is sort of a target.

Richard Collamer Close: And it sounds like that's like business, that's already under contract you're currently executing and some you know.

Richard Collamer Close: I expect to grow with the ramp up of certain contracts.

Richard Collamer Close: The managed care contracts for example is that correct or is there.

Richard Collamer Close: Me some sort of go get in that $400 million.

Norman Rosenberg: Yeah, well, I think that anytime that you're talking about revenues that are anywhere from six to 18 months out, there's going to be some going to get in there. And a lot of it has to do with the goals that have already been disseminated here internally.

Speaker Change: Yes, well I think that anytime that you're talking about revenues.

Norman Rosenberg: That are anywhere from six to 18 months out theres going to be some go get in there and a lot of it has to do with the goals that have already been disseminated here internally.

Norman Rosenberg: But essentially what that breaks down to and we talked about $225 million of that would be transport.

Norman Rosenberg: But essentially, what that breaks down to, and we talked about $225 million of that would be for transport. So, you know, if you compare that to maybe 195 or 200 this year, you get that growth, that double-digit growth, the low double-digit growth. On the payer programs and the things in that category, we're probably trending to 25 or 30 million this year. So you're talking about nearly doubling that to about 50 million

Norman Rosenberg: So if you compare to add maybe 195% or 200. This year, you get that growth that double digit growth and low double digit growth.

Norman Rosenberg: On the payer programs.

Norman Rosenberg: Things in that category, we're probably trending to 25% to $30 million. This year, so you're talking about nearly doubling that.

Norman Rosenberg: So about $50 million, that's based on a couple of factors, it's based on targets and goals as far as the number of patients. We would expect to have number of agreements that we would expect to have and then in the hospital system, because we look at that as not a hurt as a vertical as opposed to a segment. We're assuming as Lee mentioned, maybe 10% of that number of the $2 50, we said from hospitals are not transport, but.

Norman Rosenberg: That's based on a couple of factors. It's based on targets and goals as far as the number of patients we would expect to have, and the number of agreements that we would expect to have. And then in the hospital system, because we look at that as a vertical as opposed to a segment, we're assuming, as Lee mentioned, maybe 10% of that number of the 250 we said from hospitals are not transport but are mobile health.

Norman Rosenberg: Our mobile health and those are those are based on some deals that are in the some of them are in the signing phase and some of them are a little bit further up the funnel, but a lot of that is spoken for but sure. There's definitely some go get in there but every every dollar of go get revenue. That's in there is applied against something in the funnel.

Norman Rosenberg: And those are based on some deals that are in the – some of them are in the signing phase, and some of them are a little bit further up the funnel. But a lot of that is spoken for, but sure, there's definitely some go-get in there. But every dollar of go-get revenue that's in there is applied against something in the funnel.

Lee Bienstock: The only thing I'd add, Richard, is really it's a combination of the base business, the contracts we have, and all the partners we have right now, as well as it's based off of the pipeline we have for this year and for next year, with all the various different partners in all the stages of that pipeline that we have for this year and next.

Speaker Change: Yes, the only thing I'd add Richard is really it's it's a it's a combination of the base business. The contracts, we have and all the partners. We have right now to date as well as its based off of the pipeline. We have for this year and for next year pipeline of all the various different partners and all the stages of that pipeline that we have.

Lee Bienstock: For this year and next year.

Norman Rosenberg: Yeah, but here's an important thing for everyone to really note, something we talk about internally: the people who are going to be out there getting that revenue and developing that pipeline are the same people who, the last two years, you know, the better part of the last two years have been focused on some of this migrant revenue. So there's definitely, while there was definitely an opportunity cost over the last couple of years, there's a quote, an opportunity benefit as we go forward, as we focus on building out that base. So we're not turning down migrant work, but in terms of business development activity, and other operational activity, the focus will clearly be on the base.

Speaker Change: Yeah, but it is an important thing for everyone related to note when we talk about it here internally.

Norman Rosenberg: People, who are going to be out there going and getting that revenue and developing that pipeline are there.

Norman Rosenberg: The same people who for the last two years.

Norman Rosenberg: You are the better part of the last few years have been focused on some of this margin revenue. So theres definitely while there was definitely an opportunity cost over the last couple of years. There is I'll call. It an opportunity benefit as we go forward.

Norman Rosenberg: As we focus on building out that base. So we're not turning down Margaret work, but in terms of business development activity in terms of other operational activity. The focus will clearly be on the base.

Richard Collamer Close: Okay, thank you very much.

Speaker Change: Okay. Thank you very much.

Richard Collamer Close: Sure.

Speaker Change: Thank you.

David Michael Larsen: Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then 1 now. The next question we have comes from David Larsen of BTIG. Please go ahead.

Speaker Change: Thank you ladies and gentlemen, just a reminder, if you would like to ask a question. Please press star and then one now.

David Michael Larsen: Question, we have comes from David Larsen of BT IAG. Please go ahead.

David Michael Larsen: Hi. Can you talk about the payer-facing business, maybe talk about the demand that you're seeing for care gap closures? How is your competition in the space?

David Michael Larsen: Hi can you talk about the payer facing business.

David Michael Larsen: Maybe talk about the demand that youre seeing for care gap closures.

Lee Bienstock: It sounds like you have a very unique solution that would be attractive to health plans. And then maybe you could talk a little bit about the virtual primary care business? It seems like plans could probably benefit from that as well. And I think all of this probably drives improvement in STARS ratings, which are obviously very important to health plans. So any more color there would be very helpful. Thank you.

David Michael Larsen: How is your competition in the space. It sounds like you have a very unique.

Lee Bienstock: Solution that would be attractive to health plans.

Lee Bienstock: And then maybe can you talk a little bit about the virtual primary care business. It.

Lee Bienstock: It seems like plans could probably.

Lee Bienstock: Benefit from that as well and I think all of this probably drives improvement in star.

Lee Bienstock: Stars ratings, which is obviously very important to health plan. So any more color there would be very helpful. Thank you.

David Michael Larsen: Of course, thanks, David. Great to hear from you. I appreciate the question.

Speaker Change: Of course, thanks, David Great to hear from you. Appreciate the question. So absolutely as you described we're absolutely seeing demand.

Speaker Change: For care gap is really being driven by the health plans really investing deeply on improving their quality scores improving their heaters star's measures and really making sure that they're investing in impacting their member and their patient their member base of their health outcomes.

Lee Bienstock: So absolutely, as you described, we're absolutely seeing the demand for care gap is really being driven by the health plans really investing deeply in improving their quality scores, improving their HEDIS STARS measures, and really making sure that they're investing in impacting their members and their patients, their member base, their health outcomes. And we see a tremendous opportunity for us to engage these health plans, many of which have millions of members, to reach those members that have gaps in care and have accessibility issues.

Speaker Change: And we see a tremendous opportunity for us to engage these health plans many of which have millions of members to reach those members that have gaps in care and have accessibility issues I think our competition.

Lee Bienstock: I think our competition is primarily sort of your brick-and-mortar clinics where the health plans traditionally have tried to funnel or try to direct patients into those clinics to be able to close those gaps in care. Obviously, we take a very different approach.

Lee Bienstock: Primarily are sort of your brick and mortar clinics, where the health plans traditionally have tried to funnel or try to direct patients into those clinics to be able to close those gaps in care and obviously, we take a very different approach instead of calling a patient and saying we need you to come into our clinic for bone density scanner, we need you to come into the office for a diabetic.

Lee Bienstock: Instead of calling a patient and saying, we need you to come into our clinic for a bone density scan, or we need you to come into the office for a diabetic eye exam, we call the patient and say, hey, we're in your neighborhood. We understand you need... A Care Gap Closer, you need a colon cancer screening. We're in your neighborhood, and we'll come to your home. How does tomorrow sound? How does next week sound?

Lee Bienstock: Hi exam, we call the patients say hey, we are in your neighborhood, we understand your need.

Lee Bienstock: Sure.

Lee Bienstock: A care gap close you need a colon cancer screening where in your neighborhood will come to your home how does tomorrow sound. How does next weeks out and we feel like we have a really differentiated patient experience that I think is proving successful and very valuable and patients love. It. So that's really where we see the demand that's kind of the competition set of course, there are other mobile providers.

Lee Bienstock: And we feel like we have a really differentiated patient experience that is proving successful and very valuable, and patients love it. So that's really where we see the demand; that's kind of the competition set. Of course, there are other mobile providers out there, but we have a really unique service delivery model that combines our tech platform; we're able to efficiently optimize the field clinicians that we have, we provide them with the technology they need, and then we marry them up with a partner that's directing the clinical encounter remotely.

Lee Bienstock: Out there, but we have a really unique.

Lee Bienstock: Really unique service delivery model that that combines our tech platform, we're able to efficiently optimize the field clinicians that we have we provide them with the technology. They need and then we marry them up with a we partner them with advanced practice provider that's directing the clinical encounter remotely so really unique model and.

Lee Bienstock: So, really unique model, and obviously, bringing care to patients and meeting them where they are is way more likely to be helpful in improving health outcomes. In terms of the primary care practice business, the PCP business that you mentioned, we really feel there as well that we have a differentiated model. So you can imagine that when we go and close gaps in care, when we engage patients in their home, and we form that relationship, there's an opportunity for us to become their primary care provider.

Lee Bienstock: And obviously, bringing care to patients and meeting meeting them, where they are is way more likely to be.

Lee Bienstock: Helpful in improving health outcomes.

Lee Bienstock: In terms of the virtual care in terms of the primary care practice business PCP business that you mentioned, we really feel there as well that we have a differentiated model. So you can imagine when we go and close gaps in care when we engage patients in their home and we form that relationship there is an opportunity for us to become their primary care provider and theirs.

Lee Bienstock: And there's an opportunity for us to help quarterback their care, to help coordinate their care, and impact their care in a much more profound, deeper way. And so we feel like we have an opportunity there. And so as we engage patients, closing care gaps is going to be an opportunity for us to become their primary care provider, because perhaps they don't have access to one, or they haven't seen one in over a year, or they have a hard time getting to their PCP, or they have a hard time getting an appointment with their PCP.

Lee Bienstock: An opportunity for us to help quarterback their care to help coordinate their care and impact their care.

Lee Bienstock: In a much more profound deeper way and so we feel like we have opportunity there and so as we engage patients close care gaps is going be an opportunity for us to become their primary care provider because perhaps they don't have access to one where they havent seen one in over a year and they have a hard time getting to their PCP or they have a hard time getting an appointed with the PCP, we have a unique model.

Lee Bienstock: We have our unique model where we essentially bring the PCP to them. And so as we go and close care gaps, this is going to be sort of that natural funnel where we can then become their PCP as well. And then as we're helping coordinate care, as we're closing gaps in care, you can imagine we'll be successful in impacting STARS ratings, quality score metrics, and obviously that benefits the patient, that betters the plans, and ultimately helps lower costs for the overall system. And we will participate in that. So we're excited about that funnel. We think the value proposition is certainly there. The patient experience is certainly there.

Lee Bienstock: Where we essentially bring the PCP to that and so as we go and close care gaps is going to be sort of a natural funnel, where we can then become the PCP as well and then as we're helping coordinate care as we're closing gaps in care you can imagine we'll be successful in impacting stars ratings he is quality.

Lee Bienstock: Core metrics and obviously that better is the patient that betters the plans and ultimately.

Lee Bienstock: Ultimately helps lower cost for the overall system and we will participate in that so we're excited about that funnel. We think the value prop is certainly there. The patient experience is certainly there is a really differentiated offering from what's out there today and we're excited to scale it and invest in it.

David Michael Larsen: Okay, that's very helpful. And just one quick follow-up on the primary care business. Like the virtual primary care businesses that I'm aware of are very like fast growth businesses plush care within Accolade, I think is their highest growth segment. You know, life MD, very high growth.

Speaker Change: Okay. That's very helpful. And then just one quick follow up on the primary care business.

David Michael Larsen: Like the virtual primary care businesses that I'm aware of are very like SaaS growth businesses Tushker within accolade I think is the highest growth segments.

David Michael Larsen: Life from the very high growth.

Lee Bienstock: Would there be, like, what would the revenue model be? Could it be like a hundred bucks a month direct to consumer? And then, I mean, I think that would be like 12 million a year in revenue if you assume 10,000 patients. And then, or would you potentially bear risk and collect a percentage of the premium, or is that sort of still in development, and you'll sort of see where the need is in the market?

David Michael Larsen: There be like what would the revenue model be could it be like 100 Bucks a month direct to consumer.

Lee Bienstock: And then I mean, I think that would be like $12 million a year in revenue if you assume.

Lee Bienstock: 10000 patients and then.

Lee Bienstock: Or would you potentially bear risk.

Lee Bienstock: And and collect a percentage of premium or is that sort of still in development and you'll sort of see where the need is in the market.

Lee Bienstock: Yes, I think it's important to know we really feel like our differentiation is the virtual when it's effective, and then the ability to go in person when it's needed. And in many cases, it just simply is needed.

Speaker Change: Yeah. So I think it's important to know we really feel like our differentiation is the virtual when it's effective and then the ability to go in person when it's needed and in many cases. It just simply is needed and I think a lot of health care companies are finding that out where theyre doing telehealth only they really are.

Lee Bienstock: Meeting that in in home clinical care. So we really feel like that's our differentiation not just on the virtual side, but we are adding to the equation the in person and in some cases, we'll do virtual but when it's needed we're able to go in person I think our monetization of this really is exactly is.

David Michael Larsen: And I think a lot of healthcare companies are finding that out, where they're doing, you know, telehealth only, they really are needing that in-home clinical care. So we really feel like that's our differentiation, not just on the virtual side, but we are adding to the equation the in-person. In some cases, we'll do virtual, but when it's needed, we're able to go in person. I think our monetization of this really is exactly as you described it. I think initially, we're going to be having a per member or per patient per month, essentially, fee that gets charged either to the health plan or commercial payer.

David Michael Larsen: You described I think initially we're going to be.

David Michael Larsen: We're gonna be having a per member per patient per month essentially.

David Michael Larsen: See that gets charged either to the health plan or a commercial payer.

David Michael Larsen: And then eventually.

David Michael Larsen: And then eventually, Once we have the data, once we feel comfortable, some of the contracts we're signing do have the ability for us to enter into risk sharing, initially upside only, and then eventually full risk when we feel comfortable, when we feel like we are indeed impacting patient outcomes and lowering total cost of care. But we are structuring things in a way that it is a step function, not all at once. Okay, thanks very much.

David Michael Larsen: Once we have the data once we feel comfortable some of the contracts. We're signing do have the ability for us to enter into risk sharing initially upside only and then eventually full risk when we feel comfortable when we feel like we are indeed impacting patient outcomes and lowering total cost of care.

David Michael Larsen: But we are structuring things in a way that it is a step.

David Michael Larsen: Function not all at once.

David Michael Larsen: Okay, thanks very much. I'll hop back in the queue.

Speaker Change: Okay. Thanks, very much I'll hop back in the queue.

Speaker Change: Thanks I appreciate it.

Philip Chickering: The next question we have comes from Pito Chickering of Deutsche Bank. Please go ahead.

David Michael Larsen: The next question we have comes from Peter Chickering with Deutsche Bank. Please go ahead.

Kieran Joseph Ryan: Hi there, you've got Kieran Ryan on for PETA. Thanks for taking the question. Just wondering, is there any way you can, anything you can say to maybe help us understand what the margin is on your base revenues today or in 2024? Just as we think about kind of bridging to that 12.5% for 2025 on the 400 million in REVs and 50 million in EBITDA. Thanks.

Philip Chickering: Hi, there you've got a cure and Ryan on for Peter Thanks for taking the question.

Kieran Joseph Ryan: I was just wondering is there any way you can anything you can say to maybe help us understand what the margin is on euro based revenues today or in 2024, just as we think about kind of bridging to that 12, 5% for 2020 fives on the.

Kieran Joseph Ryan: $400 million in rats 50 million need there. Thanks.

Kieran Joseph Ryan: Thanks.

Norman Rosenberg: Sure, so on the gross margin side, the transport business, we break out pretty easily. So that's about 33 and change, so that's where we're running. Obviously, the EBITDA margin on that, depending on how you allocate the overhead, is a different number. But when you look at mobile health, we'll start with the gross margin, probably about 35% and change. Actually, if you break out migrant workers, that number might be a little bit higher.

Kieran Joseph Ryan: Sure. So on the storm so on the gross margin side, the transport business, we break out pretty easily so that's about 33 and change.

Norman Rosenberg: So thats were running.

Norman Rosenberg: Obviously, the EBITDA margin on that depending on how you allocate the overhead is a different number.

Norman Rosenberg: But when you look at mobile health, we will start with the gross margins probably about 35% in change.

Norman Rosenberg: Actually if you breakout migrant number might be a little bit higher some of the migrant revenues, especially the programs that are going to be the first ones that go out the door.

Norman Rosenberg: Some of the migrant revenues, especially the programs that are going to be the first ones that go out the door, happen to be lower margin. So I think the mobile health-based gross margin is in the high 30s. The way we get there, though, is we talk about having a blended gross margin of, let's say, 35 points. And then SQ&A's percentage of revenue is about 23 points, and then you get to year 12, where you have 22 and a half points.

Norman Rosenberg: It happened to be a lower margin. So so I think the mobile health based margin base gross margin is in is in the high <unk>.

Norman Rosenberg: The way, we get there, though as we talk about having a blended gross margin of let's say 35 points.

Norman Rosenberg: And then SG&A as a percentage of revenues about 23 points and then you get to your 12 22 and a half.

Norman Rosenberg: The tricky thing is that you've got three different categories of SQ&A. So we have the mobile health SQ&A, which is pretty variable, so that should come down along with when the revenues come out for the migrant piece. The transport revenues are also, and with transport, SQ&A is generally connected on a variable basis. The issue for us is going to be whether the work that we have to do, which has really started and is really underway, is making sure that we right-size our corporate expenses.

Norman Rosenberg: The tricky thing is the tricky thing is that you've got three different categories of SG&A. So we have the we have the global health SG&A, which is pretty variable.

Norman Rosenberg: So that that should come down along with Wendy when the revenues come out for the migrant piece. The transport revenues are also would transport SG&A is generally.

Norman Rosenberg: Connected on a variable basis the issue for us is going to be whether the work do we have to do that is really startup its really underway is making sure that we right size our corporate expenses. So how do we manage our corporate expenses in such a way that we scaled for a company, that's let's say $400 million or so in revenue or a little bit more than that.

Norman Rosenberg: So how do we manage our corporate expenses in such a way that we scale them for a company that's, let's say, $400 million or so in revenue, or a little bit more than that, as opposed to $600 million or $700 million? But that is going to be the work that has to get done as we scale and right-size the rest of the business. But that's kind of how we get there. 35% gross margin on a blended basis, right about where we are now, and then about 23 points on the SG&A side, getting you to an adjusted EBITDA margin of about 12, 12.5%. So the margin, the margin character is:

Norman Rosenberg: As opposed to 600 or $700 million.

Norman Rosenberg: But that is going to be the work that has to get done as we scale as we scale and right size. The rest in the rest of the business, but that's kind of how we get there at 35% gross margin on a blended basis right about where we are now and then and then that 23 points on the on the on the SG&A side getting you to an adjusted EBITDA margin of about 12 12.

Norman Rosenberg: Yes.

Norman Rosenberg: So the kind of margin so margin characteristics. So appreciate it look very similar actually to what we have here in Q1.

Norman Rosenberg: Right, so that would imply there's probably not much change to your expectation that quarterly gross margins this year stay relatively consistent with 4Q23. Yeah, I mean, we're very encouraged because not only do we have

Speaker Change: Right. So that would imply there's probably not much change to your expectation that quarterly gross margins. This year stay relatively consistent with <unk> 23.

Speaker Change: Yeah, I mean, we're very encouraged because not only do we have a continued improvement in gross margin on a sequential and of course, a year over year basis, but I can say that.

Norman Rosenberg: Yeah, I mean, we're very encouraged because not only do we have a continued improvement in gross margin on a sequential and, of course, a year-over-year basis, but I can say, I mean, that number is pretty neat and clean. There weren't a lot of adjustments of expenses or anything like that. There wasn't any reversal of accruals or the typical accounting stuff that you could have in a quarter that would take your margins up or down. There was very, very little that was not recurring in nature.

Norman Rosenberg: That number is pretty it's pretty neat and clean you know there wasn't a lot of adjustments of expenses or anything like that there wasn't any reversal of accruals in a typical accounting stuff that you could have in a quarter that take your margins up or down.

Norman Rosenberg: It was very very little of that was nonrecurring in nature and that was pretty much it.

Norman Rosenberg: That was pretty much a pure, clean margin that we saw this quarter. Now, obviously, there are always factors that will put some pressure on margins from time to time, but at the same time, there are factors that move in the other direction. So, we think we ought to be in this general area for quite some time. As I pointed out during the call, things like overtime continue to trend in a positive direction, even better than they were in Q1.

Norman Rosenberg: Pure clean margin that we saw this quarter now obviously there are always factors that will put some pressure on margins from time to time, but at the same time your factors that move in the other direction. So we think we ought to VNS and as general area for for quite some time as I pointed out during the call.

Norman Rosenberg: Things like overtime continue to trend in a positive direction, even better than they were in Q1 things like the subcontracted labor as a percentage of of hours or cost or whatever you want to look at it are also trending in a positive direction. So when we look at those kpis.

Norman Rosenberg: Things like subcontracted labor as a percentage of hours or cost or whatever you want to look at it are also trending in a positive direction. So, when we look at those KPIs, the signal is flashing green.

Norman Rosenberg: The signal is flashing green so that's good.

Norman Rosenberg: Thanks.

Norman Rosenberg: Yeah.

Speaker Change: Thank you Sir.

Sarah Elizabeth James: Thank you, sir. The next question we have comes from Sarah James of Council Fitzgerald. Please go ahead.

Norman Rosenberg: The next question we have comes from Sarah James of Cantor Fitzgerald. Please go ahead.

Sarah Elizabeth James: Okay.

Sarah Elizabeth James: Thank you. So just to clarify on that last question, it sounds like as you step out of HPD revenue, we shouldn't expect any mix shift in expenses between the buckets of cost of revenue and GNA, that you guys have a similar enough mix in that business to your core that those ratios would stay pretty consistent. Is that right?

Sarah Elizabeth James: Thank you so just to clarify on that last question. It sounds like as you step out of the.

Sarah Elizabeth James: The HDD revenue.

Sarah Elizabeth James: That we shouldn't expect any mix shift in expenses between the buckets of cost of revenue and G&A that you guys.

Sarah Elizabeth James: Have a similar enough mix on that business to your core.

Sarah Elizabeth James: But those ratios would stay pretty consistent alright.

Norman Rosenberg: Sarah, on an overall basis, that's correct. Realistically, in terms of timing, it happens to be that the first projects or the first sites that are going to be transitioned happen to be the ones that have the lower gross margins. So, you would see a little bit of an improvement technically.

Speaker Change: Yes, Sarah on an overall basis, that's correct realistically in terms of timing it happens to be that the first projects. So the first sites that are going to be transition happened to be the ones that have the lower gross margin, so you'd see a little bit of an improvement technically.

Sarah Elizabeth James: But, you know, again, we didn't choose – it wasn't like we cherry-picked those sites or anything like that. It just happens to be that way, and certain regions and certain sites tend to be a little bit less profitable. But on an overall basis, when you look at sort of the blended projects, they don't have a dramatically different margin profile from the rest.

Norman Rosenberg: But again, we didn't we didn't choose it wasn't like we cherry pick those sites or anything like that it just happens to be that way and at certain regions and certain sites tend to be a little bit less profitable, but on an overall basis. When you look at sort of the blended projects. They don't have a dramatically different margin profile from from the rest of the business.

Norman Rosenberg: Okay, great. And is there anything that you can offer us to help with seasonality this year, kind of as that contract winds down, but you're comparing it with growth in some of your other units? How should we think about the contribution of first half versus second half?

Speaker Change: Okay great.

Norman Rosenberg: And is there anything that you can offer to help on the seasonality this year kind of as that contract.

Norman Rosenberg: Winds down, but youre contrasting it with growth in some of your other units how should we think about the contribution of first half versus second half.

Norman Rosenberg: So I would look at, I mean, there will be seasonality or at least a fluctuation, not really seasonality per se, but a fluctuation on a sequential basis. And essentially, what I would look at is that overall revenue is going to, you know, the blended revenue would trend lower. Because while the core revenue is going to grow sequentially, I feel pretty good about that, and then if you line up what we did in Q1 with what our full-year projections are that we've shared for the core business, you know, they will pick up sequentially as we go throughout the year. And that's based on certain projects that we have that are about to launch, both on the transport side and on the non-migrant mobile health side

Norman Rosenberg: So I would look at I mean, there will be a seasonality or at least a fluctuation not really seasonality per se, but a fluctuation on a sequential basis and essentially what I would look at is that overall revenue is going to blended revenue would trend lower because while the core revenue is going to grow sequentially.

Norman Rosenberg: <unk> feel pretty good about that and then if you'd lineup what we did in Q1 with with what our full year projections are that we shared for the core business.

Norman Rosenberg: They would pick up sequentially as we go throughout the year and that's based on certain projects that we have that are about to launch both on the transport side and on the non banking mobile health side, but that's not going to outweigh or that will be outweighed by the decline in HDD revenue. So we're looking at HPV revenue coming down by a pretty significant amount in Q2 and then.

Sarah Elizabeth James: But that's not going to outweigh, or it will be outweighed by the decline in HPD revenue. So we're looking at HPD revenue coming down by a pretty significant amount in Q2, and then maybe dropping by half again in Q3, and then by Q4, there's, you know, almost an immaterial contribution in our guidance and our projection from that particular contract. So that's going to be a big enough delta that it will outweigh the increase in core revenue.

Sarah Elizabeth James: Dropping by half again in Q3, and then by Q4.

Sarah Elizabeth James: Most immaterial contribution from.

Sarah Elizabeth James: In our guide and our guidance and our projections from that particular contract. So.

Sarah Elizabeth James: That's going to be a big enough delta that it will outweigh the increase in the in the core revenue. So if I was looking at our overall revenue numbers sequentially. The way it lines up at the moment is that you would have Q1 will end up serving as a high watermark for revenues for us on a quarterly basis in 2024.

Sarah Elizabeth James: So if I was looking at our overall revenue numbers sequentially, the way it lines up at the moment is that you'd have, you know, Q1 will end up serving as a high watermark for revenues for us on a quarterly basis in 2024, and it'll drop into Q2, drop further into Q3, probably drop further into Q4, depending on the timing of when some of that other revenue picks up.

Norman Rosenberg: Great. Last question. Could you give us any details on the payable bills in the quarter, accounts payable? Lee House Payable.

Norman Rosenberg: And it will drop into Q2 dropped further into Q3.

Norman Rosenberg: Probably dropping further into Q4, depending on the timing of when some of that other revenue picks up.

Speaker Change: Great last question could you give us any details on the payable billed in the quarter accounts payable.

Speaker Change: <unk> payable.

Sarah Elizabeth James: Sure. So, an interesting thing that we look at is, you know, we've mentioned that we collected, actually collected quite a bit of money during the quarter, yet, you know, obviously, what you've seen is continued pressure on the working capital side. If you look at the balance sheet, which was included both in the release and in our 10-Q, which was filed today as well, right after the close, you'll notice that obviously not only did the AR go up, but certain payable levels went down, i.e.

Lee Bienstock: Sure. So you know an interesting thing that we look at as we've mentioned that we collected actually collected quite a bit of money during that during the quarter.

Sarah Elizabeth James: Obviously, what you've seen is continued pressure on the working capital side.

Sarah Elizabeth James: Look at the balance sheet, which was included both in the release and in our <unk>.

Sarah Elizabeth James: 10-Q, which was filed today as well right. After the close so you'll notice that obviously not only do the AAR go up but certain payable levels went.

Sarah Elizabeth James: Went down I E. The prepaid expenses and things of that nature. So I would I would estimate just to walk everybody through it I would estimate to be collected from the from the various migrant and related programs, we've probably collected about $120 million during the quarter.

Sarah Elizabeth James: The prepaid expenses and things of that nature. So I would estimate, just to walk everybody through it, I would estimate that from the various migrant and related programs, we probably collected about $120 million during the quarter.

Norman Rosenberg: But at the same time, obviously, there's a lot of large payroll against that, and then we paid out payables to the extent of almost $80, $90 million, almost $90 million on those projects. And, you know, one thing we were discussing internally is that we can't, we're not in a position where we can just match up the payment of the payables with when we get the money. We have to pay them, and in order to get paid, in many cases, we have to have receipts that show that we paid the underlying providers.

Norman Rosenberg: But at the same time, obviously, there's a lot of large payroll against that and we paid out payables to the extent of almost $80 million to $90 million about almost $90 million on those projects and one thing we were discussing here internally is that we can't we're not in a position where we can just match up the payment of the payables with when we get the money.

Norman Rosenberg: We have to pay the <unk> in order to get paid in many cases, we have to have receipts that show that we paid the underlying the underlying providers. So.

Norman Rosenberg: So, you know, we can stretch it a little bit, but we really don't have the luxury of turning that working capital cycle around. We're in a negative working capital cycle on these migrant revenues, and that's always going to be the case. And the other thing is that a lot of these vendors are very important to us, and they're very important vendors, and they're not, they're small companies, but already-owned companies in some cases, private companies. They can't afford to wait four, five, six months before they get paid, even if we were to choose to do that. So when you're dealing with these kinds of revenues, there's always going to be a lot of working capital pressure, and that's what came up during the first quarter again.

Norman Rosenberg: We can we can stretch it a little bit, but we really don't have the luxury of turning that working capital cycle around it we're in a negative working capital cycle on these migrant revenues and Thats always going to be the case and the other thing is that a lot of these vendors are very important to us and theyre very important vendors.

Norman Rosenberg: Theyre not theyre small companies, but already owned companies in some cases private companies.

Norman Rosenberg: Can't afford to wait 456 months before they get paid even if we were to choose to do that so.

Norman Rosenberg: When you're dealing with these kinds of revenues there is always going to be a lot of working capital pressure and Thats what came up during that during the first quarter again.

Speaker Change: Very helpful. Thank you.

Norman Rosenberg: Yeah.

Michael James Latimore: Thank you. The next question we have comes from Mike Latimore of Nordland Capital. Please go ahead. Hi, this is Adit here on behalf of Nordland Capital.

Sarah Elizabeth James: Very helpful. Thank you. Thank you. The next question we have comes from Mike Latimore.

Norman Rosenberg: Thank you the next.

Norman Rosenberg: Question, we have comes from Mike Latimore with Northland Capital. Please go ahead.

Adit: Hi, This is <unk> on behalf of Mike Latimore could you give some color on the noise I don't be migrants affecting your other deals and <unk>.

Adit: Sure. I'm happy to answer that question. I think I heard it clearly. Could you repeat the last part of the question? or whether the noise around your migrant care is affecting your other deals in New York City or state. Yeah, so the noise, I think that certainly has. Something we monitor; we are in close communication with all of our current partners and everybody in our pipeline. Whenever there is some noise or something misleading gets printed, we're very proactive.

Sarah Elizabeth James: Sure.

Adit: Happy to answer that question I think I heard it clearly, but could you just repeat the last part of the question.

Adit: However, the noise surrounding migrant yet it's affecting you or other needs in New York the DLC.

Adit: Yes, so the noise I think that certainly has.

Adit: It's something we monitor.

Adit: We're in close communication with all of our current partners and everybody in our.

Adit: In our pipeline whenever there is some noise or something misleading gets printed were very proactive we call all of our current partners in <unk>.

Adit: We call all of our current partners and prospective partners, and we clarify, and obviously, the partners that are working with us today know the quality of our work and really value our partnership. And so we're able to really address that noise. And that's one of the things, frankly, that we're looking forward to moving past.

Adit: Respective partners and we clarify and obviously the partners that are working with US today, no the quality of our work and.

Adit: Really value our partnership and so we're able to really address that noise and that's one of the things frankly that we're looking forward to moving past I think a lot of the migrant.

Lee Bienstock: I think a lot of the migrant-related revenues unfortunately became politicized and, as a result, created some noise. Created some noise in the market with our investors and created noise, potentially, in the market with customers, which I think we've handled very, very well. So it's something we're paying close attention to. We have had one partner that wanted to pause until the noise subsides. We're in close communication with that partner, but the rest of our partners are all working closely with us. We continue to address any noise that comes up, and that has not been an issue.

Adit: <unk> revenues Unfortunately became politicized.

Lee Bienstock: And as a result created created some noise created some noise in the market with our investors and created noise potentially in the market with customers, which I think we've handled very very well. So it's something we're paying close attention to.

Lee Bienstock: <unk> had one partner that wanted to pause until the noise subsides, we are in close communication with that partner, but the rest of our partners are all.

Lee Bienstock: Are all working closely with US we continue to address any of the noise that it comes up and there has not been an issue and with our prospective pipeline. We update everybody as we go and we really feel like our value proposition for prospective partners and the quality of our work with all the partners. We have today really speaks for.

Norman Rosenberg: And with our prospective pipeline, we update everybody as we go, and we really feel like our value proposition for prospective partners and the quality of our work with all the partners we have today really speaks for itself. And one of the great things we have the opportunity to do is, any prospective partners, we actually put in contact with our current customers as references. And we've done that very, very successfully. Our current customers are great references for us, speaking to the quality of our work and what it's like to work with us and partner with us. And we've utilized that as well to help in the sales process. Got it?

Norman Rosenberg: South and one of the great things, we have the opportunity to do is any prospective partners, we actually put in contact with our current customers as references and we've done that very very successfully our current customers are great.

Norman Rosenberg: References for us speak to the quality of our work in.

Norman Rosenberg: What it's like to work with us and partner with Us and we've utilized that as well to help in the in the sales process.

Speaker Change: Got it and could you also give some color on that.

Norman Rosenberg: The ratio of operating cash flow to EBITDA, you might expect this year.

Michael James Latimore: Yeah, sure. As you heard, or hopefully heard, we actually even as we took the assumption of EBITDA down by a little bit, we're actually taking the cash flow from operations number. And to be clear, when we talk about cash flow from operations, that's a gap line item that you have in your statement of cash flows. And we're saying that now we expect that number is going to be between 70 and $80 million, actually a little bit higher than the EBITDA that we have. Now, typically, we should be running at a we are taxpayers.

Speaker Change: Yeah sure so.

Norman Rosenberg: As you.

Michael James Latimore: As you heard or hopefully heard we actually even as we took the even as we took the assumption of EBITDA down.

Michael James Latimore: By a little bit.

Michael James Latimore: We're actually taking the cash flow from operations number and to be clear when we talk about casual from operations.

Michael James Latimore: GAAP line item that you have in your statement of cash flows and we're seeing that now we expect that that number is going to be between $70 million to $80 million actually a little bit higher than the EBITDA that we have now typically we should be running at a we are taxpayers. So that's part of the factor we should be running at a I don't know all things being equal maybe 80% or so of the.

Norman Rosenberg: So that's part of the factor; we should be running at, all things being equal, maybe 80% or so of the adjusted EBITDA in terms of operating cash flow. What we have built in is that if we are going to have a decline in this migrant revenue base, then obviously, that's going to result, as we model it out, that's going to result in the collection of receivables that is going to be faster So we're going to be collecting on older invoices here for the next two, three months.

Norman Rosenberg: The adjusted EBITDA in terms of operating cash flow. What we have built in is that if we are going to have a decline in this margin revenue base than.

Norman Rosenberg: Obviously, that's going to result, and as we model. It out that's going to result in the collection of receivables that is going to be faster than what we pay out as we go through the year. So we're going to be collecting on older invoices here over the next two three months, but then at the same time, we are paying out less money and sort of a reversal of some of the working capital issues that we've had.

Norman Rosenberg: But then at the same time, we're paying out less money, a sort of reversal of some of the working capital issues that we've had in the last three to four quarters. So for example, in Q1, if you look at that, if you look at our statement of cash flows, I think the number was a negative 10 million in change in the first quarter, it was about 10 million or so that was used in operations. That number, on a full year basis, should be somewhere in the 70 to $80 million range as compared to adjusted EBITDA in the 65 to 75 range.

Norman Rosenberg: In the last.

Norman Rosenberg: Three to four quarters. So for example in Q1, if you look at that if you look on our statement of cash flows I think the number was a negative $10 million and change.

Norman Rosenberg: In the first quarter.

Norman Rosenberg: He was about 10 million or so that was used in operations.

Norman Rosenberg: That number on a full year basis should be somewhere in the $70 million to $80 million range as compared to two adjusted EBITDA of 65 to 75 range. So for the year, we would expect it to be a little bit more than 100%.

Norman Rosenberg: So for the year, we would expect it to be a little bit more than 100%, although acknowledging that a lot of that has to do with the fact that we're going to get some positive working capital changes here in Q2, three, and four.

Norman Rosenberg: Acknowledging that a lot of that has to do with the fact that we're going to get some positive working capital changes here in Q2, three and four.

Speaker Change: Got it alright, thank you.

Norman Rosenberg: Yeah.

David Michael Grossman: Thank you. The final question we have comes from David Grossman of Stifle. Please go ahead.

Speaker Change: Thank you.

Norman Rosenberg: Our final question, we have comes from David Grossman with Stifel. Please go ahead.

David Michael Grossman: Thank you. Sorry, just two really quick ones. One is, I'm on the road. So I'm not in front of a screen here.

David Michael Grossman: Alright, thank you.

David Michael Grossman: Sorry, just two really quick ones one is.

David Michael Grossman: I'm on the road.

David Michael Grossman: I'm not in front of the screen here, but did you give them.

David Michael Grossman: The core growth rate that you're expecting for 'twenty four or so when you back out migrant work in 'twenty, four and 'twenty train like the core growth rate.

David Michael Grossman: What do you assume birthrate instead otherwise okay.

David Michael Grossman: But did you give the core growth rate that you're expecting for 24? So when you back out migrant work in 24 and 23, what's the core growth rate? This is the assumed growth rate that underlies the gap.

David Michael Grossman: I'm, sorry, you're asking about the non migrant revenue for for 'twenty four right alright.

David Michael Grossman: I'm sorry, you're asking about the non-migrant revenue for 24? Right. Yeah, so the assumption on the non-migrant revenue for 24 is roughly $300 million.

David Michael Grossman: Alright.

David Michael Grossman: So the assumption on non margin revenue for 'twenty four is roughly $300 million.

Norman Rosenberg: Which is right and which is which? What does that look like from a close perspective?

David Michael Grossman: Yeah.

David Michael Grossman: Which is right and what does which is what does that look like from a growth perspective year over year.

Norman Rosenberg: So, year over year, if I just look at those line items, it's pretty flat. The reason for that is that while you're going to have transport growing by, you know, from about 100 low 180s to the mid to high 190s, so maybe by 10% or so, on the transport side, on the non-migrant mobile health side, we had a couple of large municipal projects that were, I'll call them, you know, They weren't testing projects, but they were vaccination-related projects that we had in the first three and a half months of 2023.

Norman Rosenberg: So year over year, if I just look at those line items, it's pretty flat.

Norman Rosenberg: The reason for that is that why youre going to have transport growing.

Norman Rosenberg: From about 100, low <unk> to the mid to high 190, so maybe by 10% or so on the transport side on the non migrant mobile health. We had a couple of large municipal projects that were I'll call them COVID-19 adjacent they werent testing projects, but they were vaccination related projects that we had in the first three five months of 2020.

Norman Rosenberg: Three that.

Norman Rosenberg: That was probably $25 million or so, and maybe another $5 million or $10 million of other projects that expired in the early part of 2023. So, you know, when you look at that, then that number comes down by a little bit. If you take that out, then it's up by a bit. So on a blended basis, we did about $300 million of what you would consider those core revenues.

Norman Rosenberg: That was probably $25 million or so and maybe another five or $10 million of other projects that expired in the early part of 2023.

Norman Rosenberg: So that when you when you look at that then that number came down by a little bit.

Norman Rosenberg: Take that out then its finished up by that so on a blended basis, we did about $300 million of what you would consider those core revenues last year and would expect to do 300 million this year.

David Michael Grossman: Thanks, and then just on the segment margins, did you provide, is that in the queue, the segment EBITDA margins? Transcripts provided by Transcription Outsourcing, LLC. All right, guys, that's it for me. Thanks again.

Speaker Change: Got it thanks, and then just.

Speaker Change: On the segment margins did you provide.

Speaker Change: Provides is that in the queue.

Speaker Change: The segment EBITDA margins.

Speaker Change: Any chance between transport.

Speaker Change: The same the same way we've broken it out because we have the corporate and I know that you guys supply you apply the.

Speaker Change: The breakout of the quarter I used but yes, that's all of it.

Speaker Change: Great guys Thats it from me Thanks again.

Speaker Change: Yes, yes.

Lee Bienstock: Thank you, sir. Ladies and gentlemen, we have reached the end of our question and answer session, and I would like to turn the call back over to Lee Bienstock for closing remarks. Please go ahead, sir. Thank you.

Speaker Change: Thank you Sir.

Speaker Change: Ladies and gentlemen, we have reached the end of our question and answer session and I would like to turn the call back over to maintain stock for closing remarks. Please go ahead Sir.

Lee Bienstock: Thank you and thank you all for joining us today. We're looking forward to speaking with you again soon about all our progress. Be well.

Lee Bienstock: Thank you and thank you all for joining today, we're looking forward to speaking with you again soon on all our progress the well.

Lee Bienstock: Yeah.

Operator: Thank you, sir. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.

Speaker Change: Thank you, Sir ladies and gentlemen, Dustin <unk> concludes today's conference. Thank you for joining US you may now disconnect your lines.

Operator: Okay.

Operator: [music].