Greetings, and welcome to the DocGo fourth quarter and full year 2021 earnings conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If you would like to ask a question, please press star one on your telephone keypad. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Halper of LifeSci Advisors. Thank you, sir. Please go ahead.
Thank you, Donna. 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 the historical facts, are indeed forward-looking statements. The words anticipate, believe, estimate, expect, intend, guidance, confidence, target, project, and other similar expressions are used 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's now my pleasure to turn the call over to Stan Vashovsky, Chief Executive Officer and Co-founder of DocGo. Stan?
Thank you, Steve, and thank you to everyone for joining our conference call, our first since closing the acquisition between DocGo and Motion Acquisition Corporation, which we announced back in March 2021 and finalized on November 5th. 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. 2021 was, by almost any measure, a very successful year for our company. Andre will cover the financials in detail, but I want to hit on a few of the highlights. We're pleased to report that our full year 2021 total company revenue of $318.7 million, which was well ahead of our expectations.
This represents growth of more than 239% over the $94 million in revenue that we reported for the full year 2020. Similarly, we are reporting an adjusted full year 2021 EBITDA of $25.1 million, representing solid profitability and a substantial improvement over the adjusted EBITDA loss of $8.1 million that we reported for the full year 2020. We reported positive net income for the full year and fourth quarter, which both represent significant improvements relative to the net losses that we reported for Q4 2020 and full year 2020. It is important to note that COVID testing-related revenue is estimated to be approximately $110 million. For 2022, we're taking a conservative approach and are not including in our projections any COVID testing revenue after the end of the second quarter.
However, we see strong demand from our customers from both mobile health and transportation services and are comfortable issuing a full year guidance of $400 million-$420 million for 2022. This represents a 26%-32% increase over 2021, or a 65% increase if we exclude non-recurring COVID testing revenue from the second half of both years. Taking a step back, for those who may not be familiar with our story, DocGo is a leading provider of last mile healthcare delivery services. What does that mean? We deliver high-quality, highly affordable healthcare services to patients where they are when they need it most. We operate in two distinct divisions, mobile health and mobile transport.
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 non-traditional settings. What differentiates our mobile health business is DocGo's use of highly trained licensed practical nurses and paramedics who work under physician licenses in our network of medical practices across the United States. This allows our clinicians to work under a much broader scope of practice than how they've been used in the past. This innovative model has enabled DocGo to build a large, cost-efficient labor force to facilitate a host of medical treatments that are traditionally provided by more expensive nurses, physician assistants, nurse practitioners, and medical doctors.
This approach has enabled DocGo to significantly scale up our medical workforce during a national labor shortage and facilitate a wide range of high-quality medical treatments and interventions to patients at a much lower cost. By leveraging this workforce to provide care to patients in their homes, their offices, and in non-traditional settings, we help avoid costly and unnecessary visits to the emergency room. Our services include bedside procedures, preventative care, medicine administration, monitoring, and various vaccinations, EKGs, ultrasounds, infusion therapy, and much, much more.
We contract directly with government agencies, corporations, and hospital systems and then provide services directly to their members, and we get paid by the contracting agency instead of the patient. As mentioned, we employ a large number of licensed practical nurses and paramedics in addition to regular nurses, PAs, and MDs who are used primarily for training and to provide medical supervision. I think it is important worth noting we employ the majority of our practitioners. They are not contractors. We believe this leads to a more satisfied customer and loyal employees and ultimately better care for our patients.
A key metric that demonstrates our employee satisfaction is DocGo's stellar ratings on leading internet employment portals. Hundreds of employees have left ratings of their experience working for our company, and we enjoy a 4.2 rating on Glassdoor and a 4.1 on Indeed, scores that are far higher than our competitors. We have provided mobile health solutions in 29 states and are licensed to provide these services in even more markets across the United States. Given the very low penetration rate in our industry currently, there remains a significant amount of greenfield opportunity for us to pursue while in parallel continuing to grow in our established markets.
Between 2019 and 2021, our total revenue, excluding COVID testing, grew at a compound annual growth rate of 182%, reaching $207 million in 2021 compared to just $48.3 million in 2019. This stellar growth is driven by the inclusion of revenues from several large, new and expanded mobile health contracts and the continued growth and geographic expansion of our transportation business. One very notable contract that we announced in January that will help drive future growth is with Aetna in New York and New Jersey. This multi-year contract gives us the opportunity to offer unique on-demand medical services to the total population of more than 2.5 million people. This is a significant opportunity for us, even if we convert just a small percentage of these patients to our in-demand at-home services.
One of the new services we're most excited about is our direct-to-consumer offering. As medical co-pays and deductibles continue to increase, we see an opportunity to provide cost-effective treatment alternatives directly to patients who are seeking medical treatment for non-emergency conditions. We are in early stages of piloting this B2C offering and have plans to take the learnings from this pilot and expand these services to a number of markets in 2022. One of the unique aspects of our mobile health service is our purpose-built technology platform that plugs seamlessly into existing healthcare ecosystems and provides 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 healthcare records from well-known leaders in the field, such as Epic and Allscripts, ensuring that all patient information is in a single repository. In addition to resulting in better coordination of care and superior patient experience, these complex EMR integrations provide DocGo with a significant competitive advantage.
Our other offerings in medical transportation, which basically refers to providing Uber-like on-demand ambulance patient transfer solutions between clinical settings. This is not 911 emergency work. Our fleet of 300+ ambulances provide pre-scheduled high acuity medical transportation. While we have a small number of wheelchair vans and medical sedans, 99% of our transportation revenue comes from high-margin ambulance transport. We've developed a CapEx-light model for our ambulances, where we lease vehicles through GE Capital for five-year terms. At the end of the lease period, we're able to return our vehicles and upgrade to the latest models.
We maintain partnerships with some of the largest and highly regarded healthcare providers in the industry, including Fresenius, Jefferson, and UCHealth, as well as Northwell and HCA. These long-term multi-year contracts are increasingly moving away from fee-for-service agreements to a lease hour model, where we provide vehicles, equipment, and staff for a daily fee. This provides our customers with dedicated resources to help expedite patient transfers, a rebate feature to help them lower costs as they increase scheduled efficiency and provides us with better revenue predictability and gross margin performance. Via our strategic partner relationships with Fresenius, Jefferson, and others, we are contracted for over $500 million in potential revenue.
Between 2019 and 2021, revenue in medical transport business grew at a compound annual growth rate of 35%, reaching $84 million for the full year 2021, or just about 26% of our total revenue. We currently provide medical transportation services in 11 states with additional licenses pending. At this point, I'd like to hit on a few operational highlights from the quarter. We announced a partnership with Carnival, the world's largest cruise line, to deploy medical teams on ships to augment existing medical staff. This is in addition to the embarkation services that we already provide in which we are expanding to additional ports. We announced a partnership with Visiting Physician Services to provide in-home non-emergency services to older adults and homebound patients in New Jersey and the surrounding tri-state area.
Visiting Physician Services is the largest geriatric house call practice in New Jersey, and this partnership will allow them to serve a larger patient base with faster response times. We introduced additional services, including mobile health to residents in San Diego, California, and a mobile Suboxone treatment for street homelessness in New York. These are just a few examples of the diverse range of services that we offer. Turning to market opportunity. The U.S. addressable market for our services is significant and largely untapped.
Virtual healthcare has seen rapid growth in recent years, propelled in large part by COVID. In addition to being a tailwind for our 2021 business performance, the relationships we've established have enabled us to prove the value of DocGo's mobile health services with a range of new customers and expand those relationships, in many cases, to include additional service offerings. It has been estimated that $250 billion or approximately 20% of all Medicare, Medicaid, and commercial outpatient office and home health spend could be virtual.
However, some $80 billion of this virtual care requires some form of physical follow-up, and currently, there is no broadly available at-home solution for in-person clinical services. In addition, the medical transportation industry is highly fragmented and growing steadily due to the aging of the population as well as a greater prevalence of chronic disease. Combining the opportunities we see in both mobile health and transportation, we estimate the TAM for our services in the United States alone to be approximately $102 billion. Similarly, a recent report by McKinsey concluded that up to $265 billion in medical care currently delivered in healthcare facilities will be shifted to home-based care by 2025.
This represents a quarter of total expenditures for both the Medicare Fee-for-Service and Medicare Advantage programs. This represents a 3 x - 4 x increase as compared to today, and companies like DocGo who are able to provide care in the home stand to be among the biggest beneficiaries of this shift. Clearly, we have barely scratched the surface, but with the investments that we have made, particularly in the area of technology, we believe we have created a significant competitive advantage. At this point, I'd like to turn the call over to our CFO, Andre Oberholzer, for a review of our financials.
Thank you, Stan. Good morning. Total company revenue for the fourth quarter of 2021 amounted to just over $121 million, representing growth of 289% as compared to the $31 million reported for the fourth quarter of 2020. The year-over-year revenue growth was driven mainly by the contribution of revenue from several new and expanded mobile health contracts. Mobile health revenue for the fourth quarter of 2021 amounted to $102.6 million, as compared to $15.8 million in Q4 of 2020, up approximately 6.5x . Medical transportation revenue amounted to $80.7 million, up 21% from $15.4 million in Q4 of 2020.
It is important to note that excluding COVID testing-related revenue from Q4 of both years, Q4 revenue still tripled year-over-year, reflecting strong momentum in our core businesses. Adjusted EBITDA grew to $17.3 million in the fourth quarter of 2021, even with significant investments made in regional expansion and infrastructure versus an adjusted EBITDA loss of $2.9 million in the prior year quarter. Net income amounted to $20.3 million in the fourth quarter of 2021, which represents a substantial improvement over the net loss of $4.4 million in the fourth quarter of the prior year. This reflects the strong increase in revenue during the fourth quarter, while certain overhead costs remain in line with prior periods, allowing a larger proportion of additional revenue to drop to the bottom line.
I also want to point out that net income in Q4 2021 includes a gain of $5.2 million relating to the remeasurement of warrant liabilities, which has no impact on cash flow or operations. Turning now to our full-year results. Total company revenue for fiscal 2021 amounted to $318.7 million, representing growth of 239% over $94.1 million reported for fiscal 2020, and it reflects a 4.5% improvement versus our prior guidance. Mobile health revenue for fiscal 2021 amounted to $234.4 million, up 659% from $31 million in the prior year. Medical transportation revenue amounted to $84.3 million, up 33% from $63.1 million versus fiscal 2020.
Gross margin for fiscal 2021 was 34.4%, representing a 100 basis point improvement from 33.4% in 2020. The increase in gross margin was largely due to a shift in revenue mix towards higher margin mobile health revenues. Margins were negatively impacted by more expensive subcontracted or agency labor, an increase over time during the launch of several mobile health projects in an expedited fashion, and to a lesser extent, increased labor rates. As new markets mature, we expect to see improved margins. Generally speaking, we experience lower margins during the launch of new projects as we focus on a timely launch of operations and usually relying on higher priced subcontracted labor. Once we get past that initial launch period, we are able to drive margins higher to target margins as we are able to schedule more efficiently with DocGo employees.
In 2021, adjusted EBITDA grew to approximately $25.1 million or 7.9% of revenue even with all of the investments we've made in regional expansion and corporate infrastructure. This compares to an adjusted EBITDA loss of $8.1 million in 2020. As a reminder, adjusted EBITDA is a non-GAAP measure representing earnings before interest, taxes, depreciation, amortization, and also adding back stock compensation and the impact of the warrant liability revaluation, as well as adding back non-recurring expenses incurred in connection with our public listing. Please refer to our earnings release for a reconciliation of adjusted EBITDA to net income. Net income amounted to $19.2 million during fiscal 2021, which represents a substantial improvement over the net loss of $14.8 million in 2020.
Net income for 2021 included a $5.2 million gain from the revaluation of the warrant liability. Excluding this non-cash and non-operational item, our operational net income amounted to $14 million or 4.4% of revenue for the year. As of December 31, 2021, our cash and cash equivalents totaled $175.5 million. Total proceeds to the company from the public listing amounted to approximately $158 million net of transaction expenses. Note that we have insignificant debt of approximately only $2 million. Finally, to support our growth, we hired over 900 new employees in Q4 of 2021, bringing total hires for calendar year 2021 to over 2,300, and the total number of medical providers to over 3,800 as of year-end. Now turning to 2022 outlook.
Stan mentioned earlier we anticipate fiscal 2022 revenues to amount to approximately $400 million-$420 million, and we estimate adjusted EBITDA within a range of $35 million-$41 million. At the midpoint, adjusted EBITDA is estimated at 9.4% of revenues in 2022 versus 7.9% in 2021. In terms of segments, we expect that the mobile health segment should continue to contribute approximately 70%-75% of revenues, with medical transportation as the remainder. That concludes my remarks. At this time, we ask the operator to open the call for questions.
Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star two 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 keys. Once again, that is star one to register questions at this time. Our first question is coming from Mike Latimore of Northland Capital. Please go ahead.
Great. Thanks, and congratulations on the great year there. I guess just two questions. On the medical mobility or mobile transport side of things, can you talk a little bit about the growth rate you might see there, the catalyst for maybe a little bit of accelerating growth on that side of the business? Second question is just on gross margin. Maybe give a little guidance on where you see gross margin going this year.
Yeah, Mike, sure. In terms of transportation and the accelerating growth, you know, that's largely dependent on the amount of licenses we can secure throughout the various states. We made an announcement a few weeks ago. We acquired two new licenses. We hope to do at least five, possibly seven new markets in 2022. We have several LOIs out with small organizations to acquire their current licenses. As you know, with our business model, we don't just go into a market and start looking for business. You know, before we even issue an LOI, before we make any considerations of acquisition, first thing we tend to do is look at how many Fresenius locations are in that market, how many of those patients are patients that we can actually serve.
We build out a detailed pro forma, and then if it makes sense, we go all in and try to make an offer to buy out that license. This gives us some visibility into the kind of revenue or profits we can generate in that market. Our goal is also to, you know, once we sign and we get that license secured, we wanna get revenue generating as quickly as possible, usually within a couple of weeks. To answer your question, hopefully add another five-seven markets in 2022. In terms of growth, we tend to grow our transportation business at a rate about 35%, maybe 40% per year. We've been doing that consistently for several years. Don't see any reason why that trend should change anytime soon.
If we're lucky, and if we can get our hands on more licenses, you know, we can definitely look to accelerate that. We're definitely not capital constrained in any fashion. You know, we have plenty of capital, plenty of cash on the books to do those transactions. Anyways, they tend to be small. As we've spoken about in the past, when we acquire these licenses, they have no limitation to the amount of vehicles that we can deploy. You know, we can launch one ambulance or 1,000 ambulances. An operator's license, there's no limitation on those. In terms of gross margin, you know, there is some loss of margin in the first 90 days or so when we do a mobile health project.
The reason for that is, we very often need to start up very quickly. A lot of times it's in remote locations where we may not have a presence. We'll go ahead and work with one of our 30-plus medical staffing agencies that we have contracts with. They will provide the temporary personnel. We provide the more advanced medical trained personnel to train them, to get them ready for the project that we're launching. With almost all of our staffing agreements, we have the ability to convert those employees to W-2 after day 60 or after day 90 for no fees.
We'll very often give up some margin in the very beginning by using an agency, but by day 60, by day 90, we ultimately, you know, our goal is to convert those to W-2 employees and not have the temp agency provide the staffing any longer. After day 90, in mobile health, our target is about 51%-52% gross margin. That's our target on a go-forward basis whenever we do a mobile health project. Sometimes they're a little bit more profitable, depending on the type of services that we're performing in that contract. Our target gross margin in mobile health is about 52%, 51%-52%, and in transportation it's about 40%-43%.
Great. Thank you.
Sure, Mike.
Thank you. Our next question is coming from Sarah James of Barclays. Please go ahead.
Hi, guys. This is Steve Braun on for Sarah. Just had a question on the COVID revenue assumption in 2022. Just wanted to see. You said that it was 65% growth excluding the second half of revenue from 2021 and I guess like 2022. I just wanted to see like how much you're assuming and then like if you can give us a split between 1Q and 2Q.
At this point, you know, for 1Q and 2Q, we see COVID testing or we're anticipating COVID testing will start to subside. It's kinda hard for us to give you any real accurate data because frankly, we have not received that many notifications to reduce them just yet, but we very much expect that we will start receiving those notifications shortly. I don't wanna share any information that's not accurate. We are assuming come end of second quarter, COVID testing revenue goes to zero. I you know do believe there will be some continuous COVID testing beyond the second quarter. Keep in mind, Steve, we do not do consumer testing. You know, almost all of our business is municipal.
You know, we work for counties, cities and states. You know, it's quite unlikely that you know, municipalities will remove all municipal testing while COVID still exists. We are taking a very conservative approach, and in our forecasting for going forward in our guidance, we're just simply gonna assume worst case scenario, COVID testing July 1 goes to zero, and that revenue will be replaced and added on by other mobile health services.
Okay. Great. Thank you.
Sure, Steve.
Thank you. The next question is coming from Ryan MacDonald of Needham & Company. Please go ahead.
Stan and Andre, thanks for taking my questions, and congrats on a great finish to a really strong year. Stan, really wanna talk first about the demand environment and perhaps what you're seeing. Maybe you could parse it out between sort of municipalities and health systems. You know, on the health system side, are you seeing any sort of tailwind from demand given the severe staffing shortages that these systems are going through right now and how that might be impacting the business as we think about the 2022 outlook?
Hey, Ryan. Great to hear from you again. Yeah, I mean, look, demand is going strong. You know, there are staffing shortages throughout the country. I think hospitals throughout the nation, nursing homes, urgent cares are all short-staffed. They all need more nurses. They need physician assistants. That it would be almost irresponsible for us to further add to that strain. That is the reason why we want a different model. You know, we firmly believe that, you know, nurses and physician assistants, nurse practitioners spend a big portion of their day doing skills and tests that are well below their level of training.
You know, so rather than spending top dollar doing basic, you know, tests and procedures, our approach is that we'll hire a licensed practitioner like an LPN and then up-train them to do those types of services. It's a lot more cost-effective and doesn't add strain to the existing staffing shortages that we're seeing throughout the country. So the demand on the municipalities are going strong. We have probably what I would like to say, one of the most advanced comprehensive homelessness programs in the nation. We have contracts in Pennsylvania and New York for those programs and now in discussion to do a pilot in California. We presented to Chicago and several other municipalities on that program, getting a lot of great media from it. You know, the municipality demand is strong.
It's not just in the area of homelessness. There are other municipal areas where we provide mobile urgent care units to lower income communities that have difficulty getting quality access to medical services other than hospitals. The mobile urgent care units are getting quite popular. You know, overall demand on municipality and healthcare systems is just going strong. You know, hospitals are always looking to add additional services, and giving their patients opportunities to come into the hospital or be treated for certain things at home is very well received. We do that with several hospitals throughout the nation. It is being very well received by their customers.
On a weekly basis, we're constantly presenting the program to new hospital systems that are interested to learn about the offering. Overall, you know, maybe the medical community initially was a little bit skeptical about three years ago when we started this work. You know, can you really, you know, uptrain LPNs? I think we've proven with remarkable results that, you know, the answer is a strong yes. You can use lower wage medical professionals to do a lot of these very basic testing procedures that in the past have been done by higher skilled medical professionals. For medical systems to offer, you know, the additional, call it, you know, higher end level of service by giving patients the option of a clinician going to their home is being extremely well received.
The overall answer is, you know, really strong demand. You know, our salespeople are very busy, which is always a good thing. That, you know, besides just local municipalities and local hospitals, you know, we're also participating in large state and federal RFPs, you know, using that same concept of, you know, lower skilled licensed practitioners, uptrained to do certain types of services, clinical services. You know, we have several big, you know, RFPs that are out. You know, I should note those, these are RFPs that in the past we probably would not have participated in due to working capital requirements.
You know, we just didn't have the, you know, large amounts of cash needed to support those types of contracts. You know, as Andre mentioned, we have plenty of cash on the books. You know, we wanna put that money to work. You know, we're now out there and aggressively going for these really large federal, state, municipal type contracts. You know, hopefully, if we're lucky, 2022, we'll get a couple of those big awards.
Excellent. That's really helpful color, Stan. I appreciate that. As a follow-up, perhaps for Andre, you know, great to see the strong performance here in gross margin and that lease hour model starting to sort of flow through into the model in fourth quarter. As we think about fiscal 2022 and some of the assumptions around what the implied guidance there might be for gross margin, can you talk about how sort of lease hour continues to flow through the model, but then also, you know, we're in an environment now where we're seeing fuel costs rise, you know, quite significantly. So just remind us of what the potential impact that has on the gross margin outlook as well. Thanks.
Sure. I'll start with the last one first on fuel, because that's quite a popular question. In our guidance that we talked about earlier, we assume that fuel price will be about $4.30 a gallon for this year. Year to date, it's running about $3.71, so we're safe a little bit against the guidance that we've given. If we assume that gas prices go up by another dollar to an average of $5.30, that will cost us about $1.5 million in additional fuel costs, which is about 39-40 basis points on gross margin. It's an impact, but it's not as significant as maybe some other industries like airlines. In terms of gross margin, Stan mentioned, you know, for transportation in a mature market, we trend towards the 40%, you know, high 30%s-40% range.
For mobile health, you know, 50%-51% gross margin. In 2021, you will note that we are not on that track, and that's part of the reason for that is what Stan also mentioned and I mentioned, that when we launch all these new projects and we have a short window to launch the project because there's a demand, we go out and hire agency staff and some subcontractors, and that basically impacts margins. We expect that to improve by a couple of points during 2022, because we have less expedited projects on a larger base of revenue. You know, we see that we're gonna trend towards, you know, the goal of, you know, getting to long-term margins of, on the average, 50%.
It's helpful color. Congrats again on amazing quarter.
Thank you. Again, just to clarify, the long-term goal that we discussed in prior guidance is, you know, three-five years out, just to clarify.
Thank you. The next question is coming from David Grossman of Stifel. Please go ahead.
Thank you. Good morning. I'm wondering, Stan, if you could talk. I know you don't disclose a backlog number or anything like that, but maybe you could discuss just a little bit about, you know, the visibility that you have going into the year based on, you know, the contracts that you actually have in hand or perhaps some of the recurring revenue that you typically get.
Sure, David. Good to hear from you again. You know, when we look into 2022 and guidance and incremental revenue, we go through quite an exhausting process with all senior management. You know, basically, it's a ground up approach, and we take several things into consideration. There are about five key points that we take into consideration when we come up with our number. You know, we frankly don't finalize the process until everyone is in agreement, you know, that this is a number that we can get behind. The five points that we take into consideration is one, additional revenue from existing mobile health contracts.
These are contracts that are already in place, relationships that we're already servicing, that have come forward to us to talk about expansion of existing programs. You know, two is mobile health contracts that are already contracted and are in the pipeline to be implemented. These are contracts that are signed, contracts that are funded, but have a start date of 30, 60, 90 days out to begin capturing revenue. Thirdly, mobile health contracts that are in the pipeline with greater than a 75% probability of closing. You know, we use Salesforce, you know, so we go through Salesforce, and different stages of contracts are given a probability of closing percentage.
Once they hit 75, which is usually past the point of us providing a proposal and receiving some indication of acceptance, we take those types of agreements and attribute those to, you know, to the pipeline. We look at transportation expansion. We look at markets that we've already secured but have not launched in, but we've already completed pro formas on because we know what's waiting for us in terms of Fresenius and other customers. We also look at our license pipeline and with high probability feel comfortable that we'll be closing some of those licenses and include that, you know, those locations in our pro forma. Finally, number five is some small non-significant or non-material M&A opportunities.
When you buy sometimes these little companies, there may be some dragging call it revenues that come along with them. We take those five factors, we go through an exhaustive process of, you know, going through every, you know, a lot of detail on every one of those, and then we come up with an annual number that we can all get behind. It's a process that takes time, months, but at the end of the day, the entire management team is behind it and that's how we've come up with the numbers that we shared earlier for 2022.
I guess in that context, plus, you know, your thoughts about COVID, you know, the cadence of the quarters in 2022, you know, are probably pretty difficult for all of us to predict. Is there any guidance you can give us in terms of how to think about the cadence of both, you know, revenue and EBITDA as the year progresses, given this kind of unusual year that we're in?
Yeah. It's, you know, definitely what I would call an unusual year, because we do expect COVID testing to drop off over Q1 and Q2. You know, ultimately, you know, taking the most conservative approach and seeing it go to zero come July 1, and a lot of that work being replaced by other mobile health contracts that we've either secured or are about to secure. So it's, you know, a little bit difficult for us to kinda go quarter by quarter, because it is what I would call some of this revenue transition year for us. You know, what we could share is that we've gone through this, you know, five-step process, and, you know, we've, you know, I think you know our historical performance.
In eight quarters, we've never missed guidance, never missed budget. Don't expect and don't hope, you know, that we never do going forward. We feel quite confident about the numbers that we've shared with you. Some people may think it's too conservative. As a company, we tend to be more on the conservative side of things, and if we see that the year is shaping up better after each quarter, we'll go ahead and raise that guidance after the quarter. But I do agree with you. You know, it is difficult, you know, to, you know, kind of project out on a quarter-by-quarter basis and give more detail other than we've already provided.
Right. Maybe I can just ask it a different way. Is it logical to think that based on the parameters that you're using relative to COVID, that we would see sequential declines in revenue for March and June, and then reestablish that as the base to increase revenue sequentially in the back half of the year? And listen, if you can't comment, you can't comment, but just curious if that's at least a logical assumption to use as we think about 2022.
I think it's safe to say that as COVID testing revenue starts dropping off, that we have a healthy backlog of agreements that would capitalize on that available labor workforce to start on new projects. That is ultimately our goal. We're, you know, our challenge is to time it well. We secure new agreements. We have a good idea in terms of what COVID testing revenue, when COVID testing revenue will start dropping off, and then we use that workforce to take on and to get new contracts.
All right. Got it. Thanks for that. I wanted to make sure I understood. Andre, I think you said that there was a $5.2 million, was it a gain? I'm sorry, I just didn't get the exact description of what that was in the fourth quarter. Would you mind just repeating that?
Yeah, sure. No problem. Basically, net income as well as just its EBITDA for the year and for the quarter. As a matter of fact, there's a $5.2 million gain on the warrant liability. When we merged with Motion way back in November, when it went effective, we inherited that warrant liability for outstanding warrants. At the date of the transaction, Motion stock was priced at $10 a share, so you basically value the warrants at $10 a share. At the end of December, when we closed the year and the quarter, the stock price was down in the $6 range, $6.50 that delta, that $3.5 is basically a reduction of the warrant liability.
That's just mark to market. We owe the. It's a lower liability. [audio distortion] The mix that you're gonna get is, you know, we obviously wanna see our price trading above $10. You're gonna have it going the other way. That's why we call it out, that it's a non-cash, non-operational. It's just an accounting item, just like, you know, stock option, you know, treatment. It's a non-cash item.
Right. When you [audio distortion] 'cause I think you . Right.
Sorry, go ahead.
I think, I guess going back to January, you pre-announced your, you know, your quarter, yet you exceeded that. What is the difference between that and what you actually reported? I think it was about $108 million. What is the difference between those two numbers? You know, what came in unexpectedly, I guess, that you were able to outperform what you pre-announced in January?
We had several, you know, new projects that started in November, December timeframe. Not to bore you with some accounting lingo, but it's called a 606 calculation to determine . Based on your revenue that you book, what will you ultimately collect. When you have a new project, you don't have any history on collection for that specific project. We made some estimates that, you know, instead of booking 100% of revenue, we book a lower percentage of revenue because we had to project that there will be a lower cash collection from that customer because we have no experience. Then as we got into January, February and, you know, finalizing the audit, we got paid on some of those projects. Now suddenly that reserve that you set aside for potential short payment or non-payment, suddenly you take that reserve back into income.
It's just a standard audit process, you know, looking at subsequent receipts on the receivables that you have on the balance sheet. That was, you know, the major really factor was the 606 calculation.
Got it.
That's standard. It's not unusual. It's not an unusual transaction. It's a standard process at the end of every quarter and at the end of a fiscal year.
Right. If I could, just one last one. Can you just give us some sense of what to use for the share count in 2022, given 2021's kind of an unusual year and the non-GAAP adjustments also for 2022 to the extent you have visibility on them?
In terms of share count, we have 100 million outstanding shares at the end of December. There are 6 million warrants out there. About half is public and half is still private warrants. On a fully diluted basis, it's 106 million. We have about 5 million of an earn-out related to the transaction. That if we hit certain price points then, the selling shareholders, quote-unquote, will be earning the 5 million earn-out shares. At this point in time, you know, I think the first earn-out piece is at $11.50 a share. You know, that's, you know, the stuff to project when we're gonna earn those 5 million shares.
There's about 6 million outstanding shares related to stock options that are not vested, all of them. Four-year vesting is our standard vesting program. That's those are the buckets. About 100 million outstanding now. 6 million warrants for sure. 5 million potential earn-out in the future, and then about 6 million stock options. Some is vested and some is not vested. Does that help?
Okay, got it. Yeah, it does. Then how about the non-GAAP adjustments? Any sense for those in 2022?
Going forward, non-GAAP adjustments will still be stock compensation because that's always an expense that we book every quarter. There will be a warrant true-up as long as we have the warrants outstanding on the balance sheet. And I just said earlier, if the stock price goes above $10, you know, we'll have a nice loss, but we will be happy that the stock price is up. And then the other adjustment we had in 2021 was related to the listing of the company. We won't have that going forward. It will be standard EBITDA plus stock option compensation plus warrant liability throughout.
Got it. Great. All right, guys. Thanks very much.
Thank you, David.
You're welcome.
Thank you. Our next question is coming from Richard Close of Canaccord Genuity. Please go ahead.
Yeah. Thanks for the question. Congratulations on a strong year. I just wanted to, you know, clarify, what was the COVID revenue in 2021? Did you say it was $110 million?
That is correct.
Richard-
Sorry, go ahead.
Go ahead, Andre.
I was just gonna say, yes, we estimate that the COVID testing-related revenue was about $110 million. The reason we say we estimate it, because some people ask, "Why don't you know the specific number?" Stan mentioned earlier that we don't really do consumer testing. Almost, you know, 100% is contracts with municipalities or states. We get paid for a shift, for a whole shift for the labor. Our margins is covered by the shift. Whether we do one test or 10 tests on that shift, in some cases we don't really get anything extra. In other cases, we get a little bit more. Our contracts started as testing, and then we started adding vaccines, you know, multiple types of vaccines and then some other services. On our labor contracts, testing is commingled with other revenue.
We had to go through contracts, and we estimate that was about $110 million for 2021.
Okay.
Richard, you know, a good way to look at it is, you know, we try to structure our agreements for a flat fee by the day. If we're doing a pre-op service in the patient's home and you're doing an EKG, blood work, vital signs, and a COVID test, we get paid by the day. Maybe a nominal up charges for different things that we do, $5, $10 nominal up charges. It's how do you kind of separate out just that COVID test in that scenario?
You know, it's a little bit challenging. It's simpler when you have just a contract that only has COVID. Some of the work that we do has COVID as a, you know, one of many services that we do under a daily rate. It's a little challenging, but you know, I think Andre and the team did a good job of getting to a ballpark figure.
Okay. Then just to be clear on the guidance, because you gave some, you know, you gave the guidance and then you said what the growth is if you exclude it from the second half because in 2022 you're expecting no COVID testing revenue in the second half. I just wanna be clear, you know, what is the assumption for COVID in the first half? Did you know, call out a specific, you know, millions of dollars number that you're expecting or?
We have not. You know, the reason for that is because, you know, one, we don't wanna communicate a set of numbers, a group of numbers that we're not, you know, basically, you know, absolutely certain about. Although COVID testing in municipalities, the volumes have decreased, some of the agreement personnel have been lowered, but frankly, we don't know when we get a phone call from a municipality and they ask us to reduce the staffing because the need is no longer there or the need is substantially reduced. You know, we're basically, you know, saying that first half of the year will be on a similar trajectory as the first half of last year.
You know, phasing out during you know more towards Q2 and ultimately going to zero in beginning of Q3. You know, it wouldn't be call it you know professional of us to just take guesses on how the states and municipalities are gonna be doing reductions during Q1 and Q2. We just internally kind of you know budget it out on a gradual reduction to a zero you know come July 1.
Okay. Just hitting on Fresenius for a little bit. I know in the filings, you know, you previously disclosed the amount of revenue associated with that client or that partner, I should say. What are you expecting in 2022 or what specifically was the revenue associated with Fresenius in 2021? Your thoughts on expansion of that relationship in 2022.
You know, again, we don't disclose numbers specific to, you know, to a client, to a customer. But what I would say is we've pretty much doubled the revenue in 2021 compared to 2020 with Fresenius. I think as long as we can secure our licenses in new markets, we hope that, you know, we'll continue to, you know, closely double the revenue number with them, year after year. I mean, that's what I would love to see happen. I don't think it's a far stretch to assume that. You know, the relationship with Fresenius is going strong. They are in all 50 states.
They have 2,400 clinics. You know, all of which have certain amounts of patients that go by private ambulance service, and those are patients that we service and get compensated quite well for. We love that business because it's, you know, recurring, it's, you know, steady, and we can, you know, forecast it with a very high degree of accuracy. In addition to the transportation services, you know, we are looking at other, call it mobile health opportunities that we can deliver to Fresenius and some of their patients.
You know, those conversations are ongoing. There's discussion about pilots until things just become a little bit more concrete on their, you know, in terms of expansion into other opportunities beyond transport, you know, we're really not gonna go into that detail until there's a contract that's signed, and we'll be thrilled to communicate that with everybody.
Okay. Maybe just a clarification. I believe Andre said mobility is expected to be 25%-30% of revenue in 2022. That's correct?
That's correct. Yes.
Okay. Stan, you said five-seven new markets expected for transportation in 2022?
I'm sorry, Richard. Can you repeat that question?
Did you say five-seven new markets for transportation?
Yeah
in 2022?
Yeah. We've got two new markets licenses that we've already secured and kind of started the soft launch on early on in the year. We've probably got close to six LOIs out today. I think it's you know very realistic to assume we'll get into five-seven more transportation markets by the end of the year.
Are those two licenses you secured the acquisition you did in Maryland and Pennsylvania and whatnot?
That's correct. Yep.
Okay. With respect to EMR integration, you called that out. Is there thoughts on getting Cerner or Oracle, I guess now, integration or does that matter?
Yeah. I mean, we have integration with quite a few large EMRs, particularly Epic and Allscripts. We've done some work with Cerner in the past. You know, what really drives that is just our customer needs and customer demands. The depth of that integration with Epic, you know, we've gone really deep. You know, I would say the majority of our large customers are on Epic. Northwell, which is an Allscripts client, we've got good integration with that product there. We've done some basic integration with Cerner. We can definitely go much deeper, but you know, that's really dictated by the customer and the level of integration that they'd like us to complete with them.
You know, one of the things that I probably should call out, these integrations are not easy to accomplish. If we called on our own, you know, to an Epic representative, we probably wouldn't make it past the reception desk. The only reason why we've been successful with these integrations and why we're probably one of the very few, if not the only company that has accomplished them, is because our long-term contracts with the hospitals allow the hospitals to actually call the EMR provider and insist on the integration. It's Jefferson, you know, that's making the call to Epic. It's UCHealth. It's Northwell.
When the call comes from them, being that they're a substantial sized customer, you know, Epic steps up and helps get that completed. Allscripts steps up and helps get that completed. It's really these long-term, you know, quality relationships that we have with our hospital systems that will allow for these in-depth integrations. It's not just Epic or Cerner. I mean, there's about 20 different EMRs, smaller ones, you know, that we've also done some level of integration with. It definitely strengthens our IP that we own.
Okay. Question with respect to Aetna, you called that out, that's a new, you know, channel for you guys, I guess, or a new customer base in the payer side. I assume there's some marketing and onboarding costs associated with, you know, driving revenue on that business that's different than your normal mobile health business. Can you talk a little bit about that, how we should think about-
Yeah
sort of profitability or go-to-market, you know, to ramp the revenue there?
Well, you know, great question, Richard. I mean, the reality is, you know, one of the things I'm most excited about in 2022 is us entering the direct-to-consumer market. You know, with high co-pays, high deductibles, you know, we see consumers be willing to pay a nominal amount and get concierge-like services in their home. We've launched the service with a partnership out of Canada. The pilot is doing super well. We're now laying the groundwork, you know, to launch that service in the United States. The Aetna agreement is the first, call it major, contract that we signed, that is a D2C type of an offering. You know, we don't have a lot of information, that we can share yet about that program.
That entire initiative is being headed by Aaron Severs at our company. Aaron is a proven executive with lots of success behind him, and the entire B2C offering is something that he is leading for us. Preliminary testing of call it selected customers that we service one-offs have provided you know really good feedback and very high satisfaction levels. What you basically are seeing is the foundation for a future direct-to-consumer offering. There's gonna be a lot of learning. There's gonna be a lot of development that goes into that program. We are tapping you know if successful we're gonna tap into a huge TAM you know that the company will benefit from for many years going forward.
We don't have that much information that we can publicly share yet other than, you know, we are all in on the direct-to-consumer offering. Aetna is one of the first that we signed in preparation for that. We have ongoing conversations with several other large national payers to offer that service with. As we get more results out of our Canada program, you know, we'll definitely share it with you. As we get ready to launch that service officially in the United States beyond the pilot, you know, we'll definitely share that with everyone.
Thank you. This brings us to the end of our question and answer session as we are out of time. I would like to turn the floor back over to Mr. Vashovsky for closing comments.
Yeah. Thank you. Well, that concludes our call for this morning. We hope you found the call to be informative. We hope we were successful in conveying our enthusiasm for the year and beyond. We have significant opportunities in front of us, and I look forward to a very successful and exciting year. This is gonna conclude our call, and I really wanna thank everyone for joining. Have a great day, everyone.
Ladies and gentlemen, thank you for your participation and interest in DocGo. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.