DCGO - NASDAQ

Greetings, and welcome to the DocGo First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Steven Halper of LifeSci Advisors. Please go ahead, sir.

Thank you, operator. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. All statements in this conference call other than historical facts are indeed forward-looking statements. The words anticipate, believe, estimate, expect, intend, guidance, confidence, target, project, and other similar expressions are used to typically to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and may involve and are subject to certain risks and uncertainties and other factors that may affect DocGo's business, financial condition and other operating results. These include but are not limited to the risk factors and other qualifications contained in DocGo's annual report on Form 10-K, quarterly reports filed on Form 10-Q and other reports and statements filed by DocGo with the SEC to which your attention is directed. Actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. DocGo expressly disclaims any intent or obligation to update these forward-looking statements. At this time, it is now my pleasure to turn the call over to Stan Vashovsky, CEO and Co-Founder of DocGo. Stan?

Thank you, Steve. And thank you to everyone for joining our first quarter 2022 results conference call. As other factors, I'll make a few remarks about our business and then turn the call over to Andre to review the financials, we will then take your questions. During the first quarter of fiscal 2022, we were able to sustain the momentum with which we exited 2021. For the quarter, we generated total revenue of $118 million, representing growth of 137% over the first quarter a year ago. Approximately 38 million of our Q1 '22 revenue was related to COVID testing, which is down from approximately 50.1 million in Q4 of 2021. Revenue growth was again driven by a mobile health division, which generated revenue of $90.1 million, an increase of 193% over 30.7 million in the first quarter of 2021. Of this 90 million of mobile health revenue more than 90% came from customers with DocGo is operating on the terms of extended or expanded contracts. We have worked hard to cultivate a customer base to build broader, long-lasting relationships. Our first quarter of 2022 transport revenue was 27.8 million, an increase of 46% over 19 million in the first quarter of '21. We've generated adjusted EBITDA of 13.9 million in Q1 representing solid profitability and a substantial improvement over adjusted EBITDA of 0.4 million that we generated in the first quarter of last year. Adjusted EBITDA margin was 11.8%, a significant improvement over a year ago period. We continue to expect our adjusted EBITDA margins to expand to its 20% over the next three to five years. Finally, net income for the first quarter was $9.4 million, also a significant improvement as compared to a net loss of $2 million in the first quarter of last year. DocGo continues to retain a leadership position as a provider of mobile medical services. During the first quarter, we began the transition of some COVID related services to longer term non-COVID related work with new and existing customers. Our goal is to make this transition as seamless as possible. While there are challenges, we're making great progress. A robust growth in revenue was again driven by the by the extension of existing contracts and signing up new contracts, and the expansion of our services into new markets throughout 2022 that are now fully implemented and contributing revenue. As of March 31, 2022, we acquired licenses and assets to offer medical transportation services in Maryland and Delaware. Our clinicians interacted with 1.1 million patients in Q1, representing an 80% increase over the same period in 2021. Today, between our two business divisions, we have provided services and 29 states in the United Kingdom. We have significant opportunity in front of us to both further expand in existing states while entering new ones. Taken together, we estimate that our markets are less than 1% penetrated today. Since this is only our second conference call as a public company, we thought it would be beneficial to take a few minutes and review that DocGo story for the benefit of anyone listening who may be new to the story. We are a leading provider of last mile healthcare delivery services meaning that we deliver high quality, highly affordable health care services to patients where they are when they need it most. We operate in two distinct divisions, Mobile Health and Medical Transportation. Mobile Health the most significant driver of our growth brings in person healthcare to patients where a visit to a doctor's office or hospital may not be necessary. Many companies provide patient care in nontraditional settings. What differentiates our mobile health business is DocGo use of highly trained licensed practical nurses and paramedics who work under physicians’ license in our network of medical practices across the United States. This allows our clinicians to perform a much broader scope of service at a lower cost to the overall healthcare system. This innovative model has enabled us to build a large cost efficient labor workforce to facilitate a host of medical treatments that are traditionally provided by more expensive nurses, physician assistants and medical doctors. This approach has enabled us to significantly scale up our medical workforce to facilitate a wide range of high quality medical treatment and interventions to patients at lower costs than the traditional model. In addition to our LPNs and paramedics, DocGo also employs hundreds of registered nurses, nurse practitioners, physician's assistants, and medical doctors to provide a range of higher acuity services and procedures to our patients. By leveraging this workforce to provide care to patients in their homes, their offices and in other nontraditional settings, we help avoid costly and unnecessary visits to hospitals or emergency rooms. Our services include bedside procedures, preventative care, medicine administration, monitoring, and various vaccinations, EKGs, ultrasounds, and much more. We contract directly with government agencies, corporations, insurers and hospitals, and then provide services directly to their constituents. We rarely do fee for service. Most of our mobile health work is paid for on a clinician basis. This model gives us more opportunity to align our revenues with our costs, helps us mitigate volume risks and better allows us to pass along cost increases to our customers. It is worth reiterating that we employ the majority of our practitioners, they are not contractors. We believe this leads to more satisfied customers and loyal employees and ultimately better care for our patients. A key metric that demonstrates our employee satisfaction is DocGo’s Stella rating on leading internet employment portals. Hundreds of our employees have left ratings of their experience working for our company and we enjoy a 4.2 rating on Glassdoor and 4.1 on Indeed, impressive scores for our industry. One of the new services we are most excited about is our DocGo on demand direct to consumer offering. As medical copays and deductibles continue to increase, we see an opportunity to provide cost effective treatment alternatives directly to patients and employees who are seeking medical treatment for non-emergency conditions. We are in the early stages of piloting this B2C offering and have plants that take the learnings from this pilot and expand these services to a number of markets in the future. The backbone of our mobile health service is our purpose-built technology platform that plugs seamlessly into the existing healthcare EMRs and other IT systems that provide better coordination of care, designed to be used by patients and their families, care providers and facilities among its many core functions and benefits. It integrates into electronic health records from well known leaders in the field, ensuring that all patient information is in a single repository. The ability to interface with these complex EMR systems provides DocGo with a significant and we believe a sustainable competitive advantage. Our other offering is medical transportation, which basically refers to providing Uber-like pre-scheduled on demand ambulance patient transfer solutions between clinical settings. While we have a small number of wheelchair vans and medical sedans over 99% of our transportation revenue comes from high margin, ambulance transports. We developed a CapEx flight model for our ambulances, where we lease vehicles through GE capital for five year terms with no money down. We maintain long term multi-year partnerships with some of the largest and highly regarded healthcare providers in the industry, including [indiscernible] Jefferson, UC Health, as well as Northwell and HCA. Our customers are increasingly moving towards a least hour model where we provide vehicles, equipment, and staff for a daily fee away from the traditional fee for service model. Not only does this provide our customers with dedicated resources, but it creates recurring predictable revenue and strong gross margin performance to our company. This is just one example how we think outside the box to develop solutions that are in the best interest of our customers and their patients while still creating value for DocGo. We currently provide medical transportation services in 11 states with additional, additional licenses pending. With mobile health we have significant untapped Greenfield opportunity in front of us to further grow this business. At this point, I'd like to hit on a few key operational highlights from the quarter. We touched upon this last quarter, but it is worth recapping. In January we announced a multi-year contract to provide mobile at home healthcare services, to Aetna, Commercial and Medicare advantage members across New York and New Jersey. This gives us the opportunity to provide a range of at home healthcare services to 2.5 million lives, including episodic and emergency care. We bolstered our senior management ranks by hiring Lee Bienstock as DocGo's Chief Operating Officer. Lee has spent the last 10 years at various business units at Google, and has a proven track record of scaling businesses for profitable growth. His experience and unique perspectives will help increase our market footprint, expand our mobile health initiatives and introduce new technologies. We expanded our presence in the United Kingdom with three new contracts. These contracts enable us to introduce our services into new territories, including the East of England and Central England, while expanding our footprint in Greater Manchester. Additional international expansion will remain a key growth driver for our company this year and beyond even while we pursue what is largely an untapped U.S. market. We unveiled the first zero missions all electric ambulance in the United States, debuted at the New York International Auto Show, and completed our first patient transport in partnership with Jefferson Health in Pennsylvania. This vehicle marks the first step in our

Thank you, Stan. Good morning. Total revenue for the first quarter of 2022 amounted 217.9 million, representing growth of 137% as compared to the 49.7 million reported for the first quarter of 2021. Year-over-year growth was driven mainly by the contribution of revenue from several new and extended T Mobile Health contracts. Mobile Health revenue for the first quarter of 2022 amounted to 90.1 million as compared to 3.7 million in Q1 of '21, up approximately 193%. Medical transportation revenue amounted to 27.8 million up 26% combined 10.1 million in Q1 of 2021. It's important to note that excluding COVID testing related revenue from Q1 of both years, total Q1 revenues to increase approximately 2.7 times year-over-year, increasing from approximately 29 million in Q1 '21 to approximately 80 million in Q1 2022 strong momentum in our core mobile health, business and consistent growth in our cancer patient segment. Mobile Health revenue is includes COVID testing amounted to 76% of total revenue during Q1 this year versus 62% in the prior year with transportation as a reminder. Revenue generated by UK market grew by 40% to 2.8 million during Q1 of this year, representing approximately 2% of total revenue. Net income amounted to $9.4 million in the first quarter of 2022 which represent a substantial improvement over the net loss of $2 million recorded in the first quarter of the prior year. Net income improvement resulted from a strong increase in revenues during the quarter of certain overhead costs and legacy infrastructure provided leverage that did not increase in the same proportion as the revenue growth. Adjusted EBITDA grew to $13.6 million in the first quarter of 2022, even with additional investments made in regional expansion and infrastructure versus adjusted EBITDA of $2.4 million in a prior year period. As a reminder, adjusted EBITDA as a non-GAAP measure representing earnings before interest, taxes, depreciation, amortization, stock compensation, warrant liability, evaluation and nonrecurring expenses incurred in connection with a public listing. Please refer to our earnings release for a reconciliation of adjusted EBITDA to net income. Total gross margin percentage during Q1 '21 amounted to 33.8% as compared to 28.2% during the prior year, the 5.7% increase in the total gross margin but driven by the Mobile Health segment, via gross margins increased from 30.9% during Q1 last year, to 37.3% during our previous quarter this year. The Mobile Health gross margin improvement was driven by a combination of factors, including an increased number of higher margin value based contracts, and a reduction in our average break test fees. These positive improvements were induced somewhat by higher subcontracted labor costs and certain medical supplies. Margins from the transportation segment were constant at 22.7% during both quarters, transportation gross margin improvements generated by the increases in the number of hourly or daily based contracts. And higher [indiscernible] prices were offset by the impact of higher hourly wages in certain markets increase over time, and increase cost of fuel. It is important to note that DocGo was able to drive year-over-year gross margin improvements, despite the negative effects of inflation on the cost of labor and other cost of sales items. As of March 31, '22, our cash and cash equivalents totaled 188.4 million as compared to 135.5 million as of December 21, '21. It's important to note that during the first quarter of '22, positive net cash provided by operational activities amounted to 18.3 million versus a 1.4 million use of cash for operations in a prior period. In terms of the impact of inflation, we have two major expense categories, where inflation may significantly impact our results. [indiscernible] provide it on beginning of this year included certain assumptions regarding the impact of inflation on labor and the cost of fuel. During the first quarter of 2022, the actual increase in average hourly labor rate was below our guidance assumptions, while the average fuel cost per gallon was approximately at our forecast at rates. During the fiscal year 21 earning call, we discussed the impact of the warranty evaluation, which resulted in the $5 million of gain in the fourth quarter of '21. The evaluation of these obtaining warrants amounted to a loss of approximately $60,000 into one of this year. Now turning to our '22 outlook. Consistent with the guidance that we introduced during our fourth quarter '21 conference call, we anticipate strong demand from our customers for both mobile health and transportation services. We confirm the guidance we provided and anticipate 2022 revenue to be approximately $400 million to $420 million, representing growth of 27% to 32% over '21. Adjusted EBITDA is anticipated to be approximately $35 million to $41 million or 9.3% of revenues at the midpoint. As discussed in the past, we are only providing annual guidance and not providing quarterly guidance. Although, we are comfortable with our annual guidance, it is difficult to predict with accuracy, the quarterly new contract wins and the related operational execution of new contracts. In addition, the first half of this year is a transition cleared, as we wind down revenue from testing activities and transition to new other mobile health services. At the midpoint of the annual revenue guidance range, that is $410 million, the average quarterly revenue calculates as $102.5 million. We expected that Q1 would be above this average, which was the case with actual Q1 revenue at $117.9 million, which is the evident that, there is an expectation that there would be a quarter when the revenue will track below the above-mentioned average of a $102.5 million. As previously discussed, we expect Q2 COVID testing revenues to continue to decline to approximately $20 million compared to the $38 million generated in Q1. As a result, Q2 is expected to be a transition quarter to replace the decline in testing related contracts with new mobile health contracts or expansion of existing mobile health contracts. After Q2, company will no longer track over testing revenue as a separate number, since it is becoming a much more percentage of revenues and COVID testing services are invaded with the mobile health contracts, as just another service. In terms of segment revenues, we expect that the mobile health segment will continue to contribute approximately 70% to 75% of revenues with medical transportation as the remainder. That concludes our prepared remarks. At this point, I'll ask the operator to open the call to questions. Back to the operator.

Thank you. [Operator Instructions]. Our first question is from line of Richard Close with Canaccord. Please go ahead.

Andre, I was wondered if we could just go over the COVID testing. Just so from a housekeeping perspective, our models are correct for 2021. So I guess first is 110 million still the COVID testing revenue for 2021?

If that's the number that we disclosed, 110 million, it's an estimate. I think we discussed in the past that, there's a lot of commingling of contracts. So that estimate, we came up with, 110 million.

Let me just clarify the 110 million was for 2021 and we anticipate 55 million in 2022 between the first and second quarter which are surpass the patient.

And then so now that we have the first quarter and the fourth quarter for 2021, can you just give us the breakout in terms of what second and third quarter is just so we're on an apples-to-apples basis?

With COVID testing, the estimated Q2 to be around 20 million. And then the guidance that was given, we expect starting July 1, we assume COVID testings will be zero.

So second quarter and third quarter of 2021, what is the breakout of COVID testing?

We have not provided that in the past and the second quarter last year and third quarter last year, basically are no longer relevant. So the guidance is given for Q2 is 20 million. And starting July, we assume no COVID testing in the guidance.

I just wanted to make sure I had the ex-COVID Mobile Health growth. Correct. So I'll move on. Can you guys talk a little bit about the conversion of the COVID contracts to long-term work? Stan, you mentioned, you guys are definitely having some progress there. But then you also said, it does present some challenges. So I'm just curious with respect to that COVID book, maybe how much you still have to convert? And any type of success metrics, like a percentage of the book that has been converted, if you can provide anything like that. And just then talk about the discussions and the challenges.

Well, the challenges is really just about timing. We have people that are working on COVID contracts. We are people’s business, we want to make sure we timed it well, where COVID contracts and people come back into a classroom get the additional training they need and then get assigned to new contracts. I mean, that's the challenge. We're fortunate we have a good healthy book of business. We have customers that have already executed agreements, we have new customers, that we're working towards executing agreements. And it's really just about the timing. It's about timing of making sure that we take the group of people that are finishing one project and getting them ready for the next project. What we don't want to do, what we want to avoid is starting new contracts, hiring new people, training new people, and then while COVID contracts and having to lay off that group of personnel. We've done a great job in the first quarter. We know how to do it. We've demonstrated that in the first quarter and we're going to follow those exact same processes in the second quarter. In addition to that, a lot of our contracts actually offer the same municipalities or same customers that we did COVID testing for. So as COVID testing wind down, we have new programs that are with the same customers that startup. So it's just a matter of wrapping up one project, getting the people back into a classroom, 5, 10, 15 days in a classroom, and then getting them assigned to a new project.

Our next question is from Mike Latimore with Northland capital.

How many -- what was the final provider headcount at the quarter end?

Which somewhere over 4000 full time personnel. I mean, the overwhelming majority are clinical providers. These are our employees. We still use the help of agencies and probably a couple 100 more from agencies that are in the process of being converted to employees, I anticipate to have some way of total headcount of about 5000 by the end of the year.

And then, on the -- you talk about transitioning customers from COVID testing to new mobile health services. What's been the initial kind of revenue transition? Is it transition to a new service, is the total amount contracted about the same strength as it grew up?

I'd like to say we run a fairly simple business model. Depending on the clinical professional that you need, we have a daily rate, plus a nominal per procedure or per test fee above that. So you really don't see much variation between COVID testing as they transition out of testing and they get involved in doing other services. The fees are very similar. You may have small variation, depending on supplies, but it's very insignificant, for the most part. So if it's the same practitioner and that practitioner on Monday was doing COVID testing, but on Friday, they're now doing vital signs and maybe bloodwork or EKGs, the revenue model pretty much is, I would say 95%, identical.

In terms of the absolute dollar amount that the customer is contracting for, is it -- does it shrink or does it expand relative to the COVID testing what you've seen so far?

For the most part, pretty consistent, pretty flat, almost the same. I mean, it's a daily amount for clinician, so if they have an RN, doing COVID testing that same RN doing other clinical services. The model doesn't change much.

And just last on medical transport, medical mobility, nice sequential growth in the quarter there. Should we think of that as sort of a new baseline upon which you can build going forward?

I was just going to say, it's not totally sequential. We had some special projects in upstate New York and also we launch some new markets like Delaware. And also in upstate New York, we added some additional services, [indiscernible] for example. So it's not basically an indicator of your run rate in terms of some extra revenue from those potential projects in Q4. So in the past, the average pay for transportation was around 35% and guidance that's full more the same [indiscernible] on annual basis.

Our next question is from line of Sarah James with Barclays.

EBITDA revenue for the first quarter came in a good amount of a consensus. I'm wondering, how it compared to your internal expectations and how we should think about seasonality playing out for the rest of the year?

Sarah, we are happy internally. Teamwork is really hard, to make sure the timing is proper when we make conversions and as we implement new accounts. So, yes, it was a good quarter. You can't say we are shocked. We have a good strong record of beating expectations and I'd like to, and hope that we can maintain that going forward. And especially on EBITDA, where our operations team is doing a wonderful job, getting things fine-tuned and making sure our profitability maximized. In terms of seasonality, it's a little bit hard to say right now. I mean, mobile health, which is just such a fast and rapid growing part of our business, is quite new to us. I mean, we are only doing it for about three years now, and it's growing, at a very good, healthy pace. So it's just a little bit early for us to predict seasonality. In addition to that, we are converting accounts from traditional what I would call COVID testing to non-COVID testing. We are doing an excellent job at that right now and it's working out really well. We expect that trend to continue into Q2 and for the rest of the year. But I don't think we have enough experience at the moment to really be definitive in our seasonality estimates.

And then on the Aetna contract, you guys have been live for a couple of months now. Can you talk about what engagement or uptake has been on those services and how you think about the adoption per se?

Yes. We have signed with Aetna, but we've also signed with several other companies. Those are ancillary agreements with healthcare providers to provide at home urgent care services. That is all towards what we call our B2C business offering. The development of that program headed by Aaron Severs at our company is coming along really nicely. We still have tremendous amount to learn and perfect in that business model. As we mentioned in last quarter, we do not have any direct-to-consumer revenue built into our models for 2022. So everything we are doing on that front is really in preparation for 2023. We do expect our direct-to-consumer offering to be really successful. Preliminary testing of those services have been very positive. But we still have a long ways to go and a lot of learning to do.

Our next question is from Pito Chickering with Deutsche Bank.

This is Kieran Ryan on for Pito. Thanks for taking my question. First, I just wanted to ask about guidance, I see the 400 to 420 was maintained, but seems like there was a slight change in the language and on the growth rates. I think the bottom end moved a little bit. So I just wanted to make sure there was nothing to call out there. Whether that's around the COVID revenue estimates or something else?

The range is unchanged, so 400 million to 420 million.

The growth range moves from 25 to 32, or from 27 to 32 to 25 to 32.

That just the rounding and we did the calculation. So we're still at 400 million to 420 million for the year.

And then I guess a couple of may have already been hit on. So just about your discussions with municipalities just wanted to see if you have any updated views on kind of replicating that success in New York City. You talked about a couple special projects on the transportation size this quarter that helped, but just any discussions you're having with any other municipalities and how that's continuing to play out? It would be would be helpful.

I mean, without going into a lot of detail. We continue to have discussions with municipalities about specifically in areas of homelessness services and medical services for public schools. We've gotten good engagement from several new markets. And if all goes well, if we timed it properly, we should be able to transition COVID testing work that we're doing in those municipalities to other municipal clinical services in that same market, as one goes off, the other one will come on. But the two areas that we really have a good niche on is homeless services. And the work that we're doing in public schools. And I also should add another niche that we've really grown is the healthcare HC. We have really developed a wonderful program for Carnival Cruise Line. And that relationship continues to expand at a very, very rapid pace. And we're now in conversation with several others, significant cruise providers to do similar program. So good growth on multiple fronts and we've closed some deals, we've got to close additional deals and then it's all about execution for the rest of the year for us.

[Operator Instructions] Our next question is from Ryan MacDonald with Needham.

I just want to start with a clarifying question on the COVID revenue. So it sounds like that right now, the balancing act is more of a maybe a supply issue, if you will, of making sure that you're not over investing in headcount to as you transition versus a more of a demand problem of finding ways to replace that COVID revenue from interested customers. Is that the right way to think about sort of what's kind of going on during this COVID transition?

Yes, Ryan, I think you're definitely articulated correctly. Demand for services are very strong with existing and several new customers. And now it's just a matter of working out the timing of these new projects to make sure that as a group of medical personnel become available by concluding their COVID testing contracts, we can quickly prepare them and then get them assigned to new work. It's a balancing act, we gotten pretty good at it, as demonstrated in Q1. And it actually should be a little bit easier for us in Q2, because we're just dealing with a smaller bucket of business COVID testing in Q2, kind of going from 37 million, 38 million down to about 20 million of conversion that we need to do. But we've got good customers that are patient, that they're working with us on starting these new programs. And that we feel confident we can make that transition pretty seamlessly.

As a follow-up, wanted to touch more on the recent success you've had with payers, obviously, already talked about Aetna but we also recently announced a win with Empire in New York and New Jersey. Can you just give us a little more color on sort of how this deal is structured? Would we think of this as more of a traditional PMPM structure? And then how do you start to penetrate that 4.5-million-member opportunity across the three groups, as we look throughout the remainder of '22 and beyond?

I mean, it's actually more than just Aetna and Empire. There are other companies that we've negotiated agreements with. Those are fee for service visit, that we have a contract to perform. Just basically think of urgent care at home services. The reimbursement is very similar to what urgent care center receives when someone walks into their building, we've negotiated very, very similar fee structures, when we sent someone to the home and conducted similar medical tests or medical procedure. And the testing of those services, the technology, the processes are taking place as we speak. They will continue to get ramped up during the course of the year with the intent of 2023 of really making a strong marketing and operational push into that program. Overall, we feel very bullish on a direct-to-consumer offering side by side with our business to business offering that we currently conduct. And there's just a lot of opportunity for us in the way we provide clinical services. And we're off to a good start. We are assigning these contracts now to have them in place. So we can test the billing system integration. So we can test the EMR integration, kind of going through all the operational flows and testing in 2022. So in 2023, arise, we're off to the races in a very productive manner.

Our next question is from Rich Close with Canaccord.

Yes, thanks for the follow up. Andre, I was wondering if you could just go over the gross margins, again in the quarter. On my side, it broke up a little bit. And then can you talk a little bit, just remind us of the gross margin targets for both mobile health and transportation longer-term?

Sure. So total gross margin during Q1 '21 was about 33.8%. Actually, Q1 of this year was 33.8% versus last year at 28.2%. So it was a 5.7% increase in our gross margin. And most of that was given by that Mobile Health segment of the business. So in the Mobile Health segment of the business, we were able to sign up more contracts at higher hourly base rates. So some of those improvements were offset by higher cost of labor. But we did plan on that, in our guidance. Plus we also had some savings in the average purchase lab fees that we historically paid for Q1 last year was fairly expensive. In transportation, we did 22.7% last year, as well as this year. We were able to drive some top-line improvement in transportation with increase in hourly or daily based contracts, as well as higher prices. But those improvements will offset by higher labor costs and the cost of fuel, both of those obviously you also plan on inflation. But overall, 5.7, the same improvement, in the total business in terms of gross margin. In terms of 2022, we have not really given guidance on gross margins. We did revenue and EBITDA and part of that is the same thing as the quarterly, the lack of quarterly guidance, because '22 there are a lot of moving parts, new contracts, transition. We internally do track the gross margin by market and by segment. So, we know exactly the margins, in each one of our markets. But it's kind of a moving target the same as with the quality items that I said earlier. We are not planning on keeping that at this point in time. There is a lot of transition this year. You feel comfortable with the items. It's a combination obviously of gross margin that we manage as well as SG&A cost that we manage.

Okay. But on the Mobile Health, I think in the past you said something about a 50% gross margin. Is that still a long-term target?

So -- sorry, I missed that one. So in terms of future guidance, we have stated that, the long-term margin is 50% to 53% on mobile health that's for our [target] margins. And then on transportation side, we also guided that we are aiming for 40% to 42% margins.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Stan Vashovsky for closing remarks.

Thank you. That concludes our call this morning. Clearly, we started 2022 with significant momentum across our businesses. We expanded our direct-to-consumer testing, the lock-up – the majority of the lock-up has expired, we’ve executed new contracts, we expanded into Canada, and overall the business looks healthy and we feel very confident about the guidance for this rest of the year. I'm optimistic that we had set the stage for very successful year and I look forward to our next quarterly update in August. Thank you everybody for joining.