Greetings, and welcome to the DocGo acquisition of Hicuity Health. At this time, all participants are in a 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 zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mike Cole. Thank you. You may begin.
Thank you, operator, and thank you all for joining the call today. 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 "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. 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, the risk that the cost savings and synergies from the transaction may not be fully realized or may take longer than anticipated to be realized, disruption to the parties' businesses as a result of the transaction and associated integration activities, reputational risk, and potential adverse reactions of Hicuity Health or DocGo customers, employees, vendors, contractors, or other business partners, including those resulting from the announcement or completion of the transaction, the extent to which Hicuity Health's business will perform consistent with management's expectations and projections, accuracy of projections, and those other risks discussed in our risk factors and elsewhere in DocGo's annual report on Form 10-K, quarterly reports on Form 10-Q, Form 8-K disclosing this transaction, and other reports and statements filed by DocGo with the SEC to which your attention is directed.
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 certain financial forecasts related to Hicuity Health and the transaction. These projections have not been audited and should not be relied on as being necessarily indicative of future results. The assumptions and estimates underlying the prospective financial information are inherently uncertain and subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in this presentation. Accordingly, there can be no assurance that the prospective results are indicative of future performance of Hicuity Health, or that actual results, including on a combined basis with DocGo, will not differ materially from those included in this presentation.
Disclosure of the prospective financial information on this call should not be regarded as a representation by any person that the results contained in this prospective financial information will be achieved. 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, I will now turn the call over to Lee Bienstock, CEO of DocGo. Lee, please go ahead.
Thank you all for joining us today. I am excited to share more about our acquisition of Hicuity Health and what we hope this combination will mean for our customers, our patients, and of course, our shareholders. We have spent the last several years building our capability to bring high-quality care to patients where they need it. Hicuity Health adds an important dimension to that vision, remotely supporting patients inside the hospital and connecting that care with the care they receive when they return home. Joining me are Andrea Clegg, Hicuity's Chief Financial Officer, and Dr. John Kazianis, Hicuity's Vice President and Senior Medical Director. Andrea, maybe give us a little background on yourself.
Thank you, Lee. I have spent the last 20 years leading tech-enabled healthcare services companies to create new and innovative healthcare solutions in both the public and private arenas. I have been with Hicuity Health for over 10 years as CFO, and I am very excited to see these two great companies come together to continue their missions and improve patient care and access in this country. Now, I would like you to meet Dr. Kazianis.
I am Dr. John Kazianis, Vice President and Senior Medical Director at Hicuity Health, where I lead our Tele-ICU program. I have been with Hicuity for over 10 years. I am a board-certified intensivist, pulmonologist, and internist. I am excited to be here today to discuss how Hicuity's clinical capabilities complement DocGo and the opportunities we see across the continuum of care. Lee?
Thanks so much. We are so excited to welcome you to the team, and we are so excited to welcome the entire Hicuity Health team into the DocGo family. Andrea and John both bring an important perspective on the Hicuity business and the clinical model behind it, and I am pleased to have them here with us today as we walk through our vision for this acquisition and the opportunities that we believe will unlock. Afterwards, we will then take your questions. Let me start with some data that highlights the need we are addressing. The U.S. population continues to age. The population of adults 65 and older is growing at a rate that is nearly 10 x faster than working-age adults, resulting in more individuals who need ongoing support across multiple settings.
A recent study points to a shortage of approximately 400,000 nurses by 2030, and another predicts a shortage of 141,000 physicians by 2038. This is absolutely a challenge that the healthcare system needs to solve. At the same time, more than 71% of physicians reported using telehealth in 2024, nearly 3x the rate in 2018. Our health system partners are managing rising demand with limited clinical resources and significant financial pressure. Think of it. As the need is rising, the availability of clinicians is declining. We need solutions that can help them provide care more efficiently and focus their precious resources on individuals who require high-acuity care. These trends are driving the need for integrated care platforms that leverage technology to extend clinical capacity, meeting patients where they are, and expanding the classical care delivery model.
This creates a significant opportunity for DocGo to deploy our vertically integrated technology, our clinical teams, our workflows, our holistic service offerings to extend the reach of our clinical teams and, of course, deliver care across multiple settings. Now, Andrea, maybe tell us a bit more about Hicuity Health.
Absolutely. Hicuity is a tech-enabled healthcare services provider delivering 24/7 care to acutely ill patients in the hospital, post-acute, and at-home care venues. Our team of 450 clinicians supports over 260 care facilities operating in more than 30 states. We monitor 4,700 patient beds that serve 160,000 patients annually. On a trailing 12-month basis, Hicuity generated revenues of approximately $65 million and $4.5 million in adjusted EBITDA. Our revenues over the trailing 12-month period were led by our Tele-ICU, Virtual Nursing, and Remote Telemetry Monitoring service lines. Tele-ICU remains our largest service line and includes physicians, nurse practitioner, and nursing support for intensive care unit patients. We also provide centralized telemetry monitoring and virtual patient observation services.
We have also extended our capabilities beyond traditional care facilities by participating in the newer Hospital at Home programs, where we remotely monitor hospital-level patients with chronic conditions in the comfort of their own home. Underlying our services is Hicuity's proprietary technology platform, Hicuity Health HUB. The HUB brings together clinical information from the hospital EMR and bedside technology, along with integrated audio and video communications, clinical alerts, and care team workflows, all within a common platform, with the goal of providing optimal patient care and tailored coordination with the bedside care team. This combination of technology, clinical expertise, and a flexible delivery model provides an important foundation for the integration we are planning with DocGo.
Thanks, Andrea. With that overview, I'd like now to walk through the transaction structure. The merger agreement provides for DocGo to acquire Hicuity primarily in exchange for assuming $52 million of Hicuity's existing indebtedness held by Perceptive Advisors. The debt matures in December 2029 and carries an interest rate of SOFR plus 7.5 percentage points. In addition, we will issue 2% of DocGo's fully diluted common stock at closing to Hicuity's preferred shareholder, Concord Health Partners. Hicuity's preferred shareholder, Concord, would receive an additional 3.5% of our common stock if our market capitalization reaches $250 million within three years of closing, subject to the agreement's terms. Perceptive has also committed up to $50 million of additional debt financing in tranches on like terms.
Perceptive will also receive a warrant of 4 million shares of common stock with an exercise price of $0.5039. We expect the first $12.5 million of the $50 million I mentioned will be funded this week in connection with the effectiveness of DocGo's MSA with Hicuity. Another $12.5 million is tied to closing. The remaining $25 million of the $50 million I mentioned is available to use through 2027 if desired, provided we maintain at least $130 million in trailing 12-month mobile health revenue. To put that in perspective, to put the $130 million in perspective, on a combined basis, DocGo and Hicuity currently have approximately $155 million of trailing 12-month mobile health revenue. Of course, we intend to use this fresh capital judiciously and responsibly while executing our integration plan and improving the cash-generating capacity of our combined business. All right.
This slide captures the heart of the opportunity. DocGo has built capabilities in medical transportation, mobile health, remote monitoring, and virtual care in the home. SteadyMD, which we acquired at the end of last year, added our nationwide virtual care network. Hicuity brings virtual acute care, including Tele-ICU, Hospital at Home, and virtual nursing for patients in the home, which Andrea mentioned earlier. Together, all those capabilities give us the foundation to create a vertically integrated offering that supports more of the patient journey. Think about a patient recovering from a serious illness for a second. In the hospital, Hicuity's virtual clinicians can support the bedside care team. When the patient is ready for discharge, DocGo can help coordinate transportation and the transition home. Once at home, one of our mobile clinicians can then visit the patient with a virtual provider overseeing the care.
If additional acute monitoring is required at home when we're not with the patient, we can provide that as well. All in all, our combined offering with Hicuity Health will have the ability to provide virtual care in the hospital and in the home, monitor the patients when we're not on site, and visit them at home when needed. Virtual, remote, in-person, at scale, highly differentiated. That's the integrated model we're building, an offering where each step supports the patient's care team and care plan, with the goal of making those transitions more coordinated. All managed on a single connected technology backbone, which can have a profound impact on the patient's journey, which is really what this is all about.
For our health system and insurance payer customers, this means access to a broader set of capabilities through a partner that understands both the hospital environment and care in the home. For DocGo, it deepens our customer relationships and supports patients over a longer period of time. Combining DocGo and Hicuity will enable us to expand our care offering across a broader range of settings, connect patient care from hospital to the home, and differentiate from other point solution providers with a more comprehensive care delivery platform. This is something we're really excited about. Both Hicuity and DocGo bring substantial health system relationships to this combination. You can see a portion, just a portion of those customer rosters here. Hicuity customers may have a need for medical transportation, mobile health, or remote monitoring. DocGo customers may benefit from Hicuity's virtual acute care capabilities.
Together, we can also explore how to support their Hospital at Home programs. The starting point is the customer's need. It always is. DocGo and Hicuity each have existing relationships where our teams understand and have earned the trust of our customers. This gives us a foundation to discuss additional services with them, and exploratory conversations are already underway. We had a promising discussion with one of our long-term medical transportation customers about the possibility of bringing Hicuity's Tele-ICU services to them to help relieve the clinical burden at some of their rural healthcare locations. We've also had a preliminary discussion with one of Hicuity's large health system customers about the possibility of offering DocGo's mobile health services to portions of their patient population.
It's important to note that the logos on this slide, while impressive, only represent, as I mentioned, a portion of a premier list of health services providers that we've been building long-standing relationships with over the past decade. We believe these relationships will give us a running start for our ability to cross-sell our vertically integrated offering. We're optimistic that our combined expanded offering will fill gaps in health systems' clinical offerings and increase access to quality healthcare for their patients. We're looking forward to sharing more with you as these opportunities take shape. Regarding our strategic and integration plans for the acquisition. Above all, our integration strategy starts with supporting the clinical model that makes Hicuity valuable to its customers. Beyond that, we see opportunities in three key areas. First, operating efficiency, combining shared corporate functions and improving procurement and vendor pricing.
Second, technology and clinical coordination, aligning infrastructure and workflows so our virtual, mobile, and in-home teams can work together more efficiently. The objective is to make it easier to deliver the right service in the right setting. Third, growth. Introducing a broader range of capabilities to our existing customers and supporting programs such as Hospital at Home. What excites me is how these synergies work together. Greater scale and combined purchasing power gives us opportunities to improve margins. Connecting our technology and clinical teams should increase productivity as well as improving coordination for patients. More specifically, operating scale can help us reduce SG&A as a percentage of our revenue. Procurement savings can lower our cost to serve. Aligning our technology and workflows can help our clinical teams support more patients, while better clinical coordination strengthens the quality and continuity of care.
The more effective and compelling our suite of services, the greater our opportunity to grow, especially with customers who already know and trust us. That is the opportunity for DocGo. Serve more of our customers' needs, support patients through more of their care journey, and ultimately turn that broader reach into profitable growth. To that end, we have already identified approximately $4.3 million in incremental annual cost savings, with additional upside still under evaluation. This slide breaks down where we see those savings coming from. The largest opportunity is approximately $2.3 million in clinical productivity and staffing optimization. That means aligning resources with demand and improving workflows so our clinicians can use their time more effectively. Another approximately $1.5 million comes from clinical leadership and organizational optimization. Creating clear accountability, streamlining management, and reducing duplication as we bring the businesses together.
We have also identified approximately $500,000 in savings from optimizing our operating footprint and facilities. Across all three areas, our focus is on building a more efficient business while preserving the clinical expertise and quality of care that our customers have come to rely on. Beyond these identified opportunities, we are evaluating additional savings across vendors, procurement, insurance, technology, staffing, and other workflows. As we develop the integration plan, we will have a clearer view of the size and timing of those opportunities. These are annual savings opportunities that we expect to capture as the integration progresses. For DocGo, we believe this will help us achieve and maintain profitability and provide a more efficient platform to support our growth. That is what we are focused on, translating the strategic value of this combination into measurable financial results. All right, diving deeper on the future state of our Virtual Care Anywhere platform.
Dr. John, why do not you walk us through this one?
Absolutely, thanks, Lee. Beyond the opportunity to drive operating efficiencies, we also see significant potential to create value by bringing together Hicuity Health and DocGo's complementary clinical capabilities to create a robust care delivery platform. Hicuity brings 20 years of experience delivering technology-enabled acute and complex care, primarily in facility-based settings. Our services include Tele-ICU with both physician and virtual nursing capabilities, centralized inpatient telemetry monitoring, and virtual patient safety services. More recently, we have extended that expertise beyond the traditional hospital walls through Hospital at Home and in-home monitoring of patients with chronic conditions. That evolution makes Hicuity a natural fit with DocGo's broader Virtual Care Anywhere vision. DocGo has expertise in mobile health, in-home virtual care, remote patient monitoring, and mobile phlebotomy.
Bringing these capabilities together creates the opportunity to extend the combined organization's reach across more care settings, from the hospital to the home, including both acute and chronic care management. For our hospital and health system partners, that creates the opportunity to access a broader range of inpatient and outpatient capabilities through a single organization, simplifying how they source and integrate services while bringing value across the continuum of care. Lee?
Thanks, John. Love that. Think about what that means for a patient. Support from a virtual clinical team in the hospital, a clinician visiting at home after discharge, and remote monitoring of the patient at home in between visits. Our goal is to connect those services around the patient's needs and the care team's treatment plan. That's a meaningful expansion of what we can offer our health system partners. The timeline at the bottom shows how we plan to bring the companies together. At closing, our first priority is continuity, making sure customers, clinicians, and patients continue to receive the support they depend on. The first 100 days focus on operational integration, bringing teams together and streamlining systems and workflows. During year one, we expect to build on that foundation through commercial expansion, introducing more of our combined capabilities to existing and new customers.
Over time, the goal is a unified platform that connects hospital-based and home-based care. Each phase moves us toward that vision while preserving the clinical strengths we each bring to the table. I think it's important we spend a moment on the technology, because it's central to how we make all this work. As I previously shared, DocGo's proprietary platform coordinates the resources needed to deliver care in the field. It helps match the right vehicle and clinician to what the patient needs, optimizes routing, and gives our teams real-time visibility. We're excited to add the power of the Hicuity HUB to our health tech stack. Dr. John, maybe take a minute to share how this technology empowers Hicuity's clinicians to deliver the range of services that you provide.
Absolutely. The HUB was built to allow our clinical teams to manage complex virtual care at scale. It brings together thousands of patients across more than 260 facilities into a single real-time clinical environment. I would like to highlight that the HUB has evolved iteratively over many years, shaped by the experience of our frontline clinicians, feedback from our hospital partners, and the vision of our software and technology teams. At a high level, the HUB does three things: It creates visibility into patients and their needs, coordinates care for our clinicians, and measures impact of our services. First, it creates visibility by aggregating data from the electronic medical record, bedside monitoring devices, and other data sources from our hospital partners. It allows our clinical teams to know when a new patient enters our environment, identifies changes in a patient's condition, and prioritize where and when clinical attention is needed.
Second, it coordinates care. The HUB serves as a workflow engine, generating configurable alerts, assigning tasks, coordinating activity across multiple clinicians while providing integrated audio and video communication capabilities. This allows us to create structured and scalable clinical workflows, but most importantly, to customize those workflows around the unique needs, staffing models, and clinical priorities of hospital and health system partners. Third, the HUB allows us to measure impact. The platform captures operational and service performance metrics, as well as clinical outcomes and rates of adherences to clinical best practices. The ability to demonstrate not only what services were delivered, but the patient outcomes that our service is providing, is an important part of the value proposition to our partners.
As we think about Virtual Care Anywhere, the HUB provides an important technology foundation for delivering and coordinating care, measuring its impact, and ultimately demonstrating the value of that care at scale. Lee?
Thanks, Dr. John. The technology aspect of what we are building is really, really crucial to delivering the care that our customers have come to love from us. As you can see, both DocGo and Hicuity have built those technology platforms that improve how care is delivered for our respective customers and their patients. Bringing those capabilities together is, as I mentioned, crucial and allow us to better leverage limited clinical resources across a much broader range of patient needs. That is the shared DNA between DocGo and Hicuity, and it is one of the reasons I am so excited about this combination. Let us talk about the timeline to close. This slide lays out the path from signing through closing and integration. In August, we shared that we signed the Hicuity merger agreement and received the financing commitment from Perceptive.
We expect the MSA will become effective this week, which will provide us with access to the initial $12.5 million tranche of funding. We are currently targeting a November closing for Hicuity, subject to the completion of a state filing, at which point the second tranche of $12.5 million of funding will be available. Our teams are already deep in efforts on a detailed integration plan so that we are prepared to move quickly once the transaction closes. Following closing, our first priority will be business continuity for customers, patients, and clinicians. From there, we will focus on capturing the operating efficiencies we have identified, aligning our technology and clinical workflows, and beginning to pursue the commercial opportunities created by the combination. That work will continue into 2027.
The objective is a disciplined integration that protects what Hicuity does well, delivers the expected synergies, and builds the connected hospital-to-home platform we have been discussing today. We have done this before. One of the reasons we are so excited about the profitability and growth potential of Hicuity is due to the similar benefits we have realized with our October 2025 acquisition of virtual care provider SteadyMD. Since our acquisition of SteadyMD, we have seen considerable progress in key areas of the business. Telehealth volume increased 60% between the fourth quarter of 2025, when we acquired SteadyMD, and the second quarter of 2026, and clinical headcount grew from 499 at year-end to 866 as of September 14, an increase of 74%. We are in the process of further integrating and optimizing existing business lines in our care gap closure programs by having SteadyMD clinicians provide oversight for these visits.
At acquisition, SteadyMD had approximately $25 million in trailing 12-month revenue, and we currently expect SteadyMD to have approximately $36 million for 2026, or 44% higher. We are also seeing improved profitability. SteadyMD had a negative adjusted EBITDA margin at acquisition, and we currently expect approximately 5% for 2026, expanding to 10% by the end of 2027 as the business scales. Our continued success with the SteadyMD acquisition is a good model for us as we approach the Hicuity acquisition and has reinforced for us the importance of adding clinical capacity to meet demand and using shared infrastructure and automation to improve efficiency and profitability. We are bringing that experience to Hicuity with an integration plan designed for its business and its customers, concurrent with improved growth and, of course, profitability. Health systems have a lot on their plate.
They are working to care for more patients, support their clinical teams, and manage costs, doing it all at the same time. That is why bringing these capabilities together is so compelling. Hicuity’s virtual clinicians can extend the reach of hospital teams facing staffing shortages, while DocGo’s mobile and in-home services can help health systems care for appropriate patients beyond the hospital, preserving capacity for patients who need to be there. Connecting those services also gives us an opportunity to address fragmentation, which is so desperately needed. We can help build a more coordinated transition from hospital care to a home visit, to remote monitoring, and to ongoing support. For patients, that means better access and better continuity. For health systems, it means more ways to support their patients and use their clinical resources more efficiently. That is what makes this combination strategically important for DocGo.
We're building capabilities around the priorities that matter most to our customers: staffing, capacity, coordination, cost, and access. The better we can help them address those priorities, the more valuable we become as a partner and the greater our opportunity to build lasting relationships and profitable growth. I'll close with the mission that has guided us throughout DocGo's journey, bringing high-quality, highly accessible care to patients where and when they need it. Hicuity expands our ability to pursue that mission alongside the health systems and clinical teams who care for these patients every day. I'm excited about what we can build together, and I'm grateful to the clinicians, the operational teams, and our support staff who make it all possible. Where we're needed, we go.
The Hicuity acquisition expands DocGo's vertically integrated care offering with high acuity virtual care, proprietary technology, and an expanded ability to care for patients across the entire continuum of care, from the hospital to the home. This is an inflection point for our company, and I'm excited about the possibilities and growth prospects of our expanded offering. I want to take this opportunity to thank you for your continued support and now open the floor up for questions.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue. You may press star two if you'd 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. One moment please while we poll for questions. Our first question comes from Ryan MacDonald with Needham & Company. Your line is now live.
Hi. Thanks for taking my questions and for hosting the call, Lee. Maybe to start from a strategic perspective, it sounds like you mentioned you've had some conversations already with health system customers across, on both the Hicuity and on the DocGo side. Just curious about sort of the potential appetite and value that you think you can see from a cross-selling opportunity. If you could go as far as to talk about the number of, let's call it, individual point solutions that you could help a health system narrow down or consolidate by going onto the combined Hicuity and DocGo platform moving forward. Thanks.
Absolutely. It's great to hear from you, Ryan, and always appreciate the question. As you mentioned, I think it first starts with our customers. So Hicuity's customer base are health systems, hospitals, and they work with over 260 different hospitals across the country. Then of course, we work with hospital systems and our medical transportation monitoring businesses. There is absolutely, as I shared in the presentation, there's absolutely an opportunity for us to approach Hicuity's customer base and offer some of the suite of services like medical transportation and patient monitoring that we currently offer on the DocGo platform, offer that to Hicuity's customer base. Then of course, have the ability to bring Hicuity's suite of services to our customer base that we currently work with. We've already undergone a look at Hicuity's customer base.
We've looked at our customer base, and we think there's a good opportunity to approach both with a more comprehensive suite of services that help patients both while they're in the hospital and in the ICU, and then also when they're home. So that's a big driving force for us. As I mentioned, we have started to have conversations, right? Some of the hospitals that we provide medical transportation for, as an example, have staffing shortages, have a hard time staffing their ICUs. So we think there's an opportunity for us to introduce Hicuity's platform to them. We've also had conversations with some of Hicuity's hospital systems that are providing care in the home, Hospital at Home programs, as an example, virtual nursing programs in the home. Sometimes they'll call out for service providers to come into the home.
Of course, we provide a suite of in-home services. So we think that ability to provide both solutions in the hospital and then, of course, in between the hospital with medical transportation and then in the home, is going to provide a more comprehensive platform to our customers and to Hicuity's customers. Again, Hicuity works with hundreds of hospitals, and we do too. So there's going to be a nice opportunity for us to approach, over time, those customers. As I mentioned, we've even started to have some of those conversations to help us pressure test that hypothesis, and we're quite confident about it.
Makes sense. As we think about the timeline here, I think you mentioned targeting a November closing of the deal. First 100 days really focused on operational integration. As we think about that $4.3 million target of cost synergies or cost savings from the acquisition, should we be looking at a mid to late Q1 as a timeframe to being able to realize those cost savings? Or how should we think about the timeline to achieving that $4.3 million target?
Yeah. I am glad you asked about that as well, Ryan. I think the timeline, we are really going to take the next, call it, next couple months and weeks here to really put together a very strong integration plan, which we are going to start to implement as we exit the year. I think some of those savings, as I mentioned, will start to accrete in Q1, as you mentioned, but some will take longer as we go throughout the year next year. That is part of our phased approach. I think when we think about the integration, it is very important for us, first off, to have that continuity of care for our customers and the patients. That is the first piece.
We want to make sure that our customers and our patients really continue to receive the same high level of service, both from DocGo and Hicuity as they have come to expect. That is the other piece of shared DNA. I mentioned the technology platforms and the tech background of both companies is shared DNA, but also the delivering the customer delight and delivering high quality to patients also is shared DNA, and we want to make sure that we do not disrupt that in any way, shape, form, or fashion. That is the first piece.
Then we are going to integrate pieces as we go to make sure that we are achieving the savings that we think this opportunity and this acquisition really brings to both companies to make us more profitable, both, but combined, more profitable and also scale and grow the offering, like I was touching on in your first question, Ryan. I think Q1 2027, that is going to be the start. I think the full amount comes into play in the back half of next year. Wonderful. Rob, do we have other questions on the live?
Yes. Our next question comes from David Larsen with BTIG. Your line is now live.
Hi. Thanks very much for the webinar. It's very helpful and informative. Can you talk a little bit more about Hicuity? What has the historical revenue growth rate been? I used to cover a company I think that's in this space, SOC Telemed. If you can maybe compare yourselves to them, how you're the same or different. Then just thoughts on expanding into the home from being in the acute care environment. Thanks.
Wonderful. Thanks David for the question as always. I'm going to kick over the first portion of your question to Andrea to talk a little bit about the portion of Hicuity's revenue in the home, in the hospital, and then I'll address the second part of your question, which is really our ability to scale more and more of those services in the home.
Got it. Hi, David.
Can you hear me?
Nice to talk. Yep, I am here.
Perfect. Thank you.
Hicuity's revenue growth for this year compared to last year has been relatively flat at around $65 million. We have had good traction in some of our newer service lines that have offset some non-renewals in our ICU service line. We are very happy the newer service lines are performing so well. Of the $65 million, roughly $29 million is ICU, $20 million is Hospital at Home, and $14 million is in our telemetry and vitals monitoring service lines.
Perfect.
Go ahead, David, please.
The $20 million Hospital at Home, that's a little bit higher than I expected. Is that growing more rapidly than other parts of the business?
It has been. One customer accounts for predominantly all of that revenue and is our largest client. That client has grown 20% year-over-year. We operate four different regions of their Hospital at Home program, where we provide virtual nursing to their acute patients. We're really happy, they're really happy, and we continue to grow with them.
Do you have any conversations with health plans? Are any health plans clients of yours?
This customer has its own captive insurance company, so that is close to a health plan. But no, we do not have direct contracts with health plans at this time.
Okay, because I would think Hospital at Home, it costs less money, it is more convenient for the patient.
The members have higher satisfaction levels. It can improve star ratings, and it is generally the way the market is moving. It does not surprise me-
Correct.
-that it is growing faster than the rest of the business. Okay. Thanks very much. I did not mean to interrupt you, Lee.
Oh, absolutely, David. That's helpful. I think it's important to note, we have hospital systems as customers, and we have insurance companies as customers, but we're also seeing, again, in this particular instance that Andrea is describing, there's also these sort of what's called payviders, right? They're both payers and providers at the same time. We're seeing that obviously as a growing trend. A lot of health systems are vertically integrating. In this example and others, we have hospital systems that are also at risk, also paying, if you will, for the total cost of care. In that regard, it's exactly as you're describing. They have incentive to deliver services for cheaper, to do so and expand their capacity by utilizing care in the home, and that's obviously exactly what you're touching on.
It's exactly what Andrea was describing as well with that particular health systems also has a big payvider component to it. Our goal really is, as I've shared on many calls, our goal really is to help treat patients where they are, help them achieve better health, better health outcomes, and over time, lower the total cost of care for everybody, for the system, the insurance company, the payviders, the hospital systems, and of course, we'll succeed in that. To answer your question specifically about our ability to extend services into the home, as Andrea was mentioning, this particular customer we have a Hospital at Home support program that we're doing with them. I think there's opportunity for us to be able to meet those patients.
Today, Hicuity does it virtually, and I think there's an opportunity for us to expand access to those very same patients, both in person, right? So meeting them in their home, not just virtually, but also in person when it's needed to do lab work, blood draw, to close gaps in care, and so we're excited to explore that. We think there's an opportunity for us not only to help a Hospital at Home programs virtually, which Hicuity is doing successfully, but also for us to bring those in-home services, mobile phlebotomy and care gap closure, primary care services, to help more holistically treat that patient. I think that should be something that hospital systems, payviders, insurance companies should be very interested in.
Great. Thanks.
There are no further audio questions. At this point, I'd like to turn the call back over to your host, Lee Bienstock, for any web questions.
Great. Thank you so much, Rob. I see some questions here in the chat that we'll also walk through. The first question is, what are the synergies between Hicuity and our current tech platform, and how is the integration going? I think we touched a little bit on Ryan MacDonald's question regarding the integration plans. I think as I mentioned, our near term objective is to maintain that business continuity and continue to deliver that high quality service. The way we think about it is there's essentially two groups of integration opportunities that we think we can unlock here. The first is we're going to look to combine our back office technology stack. There's the back office technology stack that enables our teams to operate and provides a lot of logistics backbone.
Then there's the front of the house tech stack that our customers use. I think we're going to look to combine the back office tech stack, so our internal ticketing systems, our workflows, our cloud hosting infrastructure as examples, our IT support and licensure, our human resources, our HRIS systems. We're going to look to integrate those as expeditiously as possible to unlock savings and streamline the operation. Again, our customers and patients won't feel it, but it'll make our teams more efficient, integrating those back-office tech components that we've already identified and we're already at work planning. We're going to look to do those very quickly, as I mentioned, as we close out this year and into next year, unlock those savings.
The customer-facing platforms, so that's Hicuity's HUB, DocGo's Dara logistics and routing platforms, all of those that our hospital system customers use, that our clinician teams use to provide the services to our customers. Those tech stacks are going to operate on their own for now. We want to make sure that our future goal is really to find and plan a very smart way to bring both of those together into a single operating platform that provides a unified end-to-end view of the patient journey. But that's going to take some more strategic planning, product roadmap outlining and mapping and focusing on the engineering we're going to need to orchestrate that. I think that will happen sort of in Q3 and Q4 timeline of next year. That's the way we think about it.
There are some quick things we can do that don't impact our customer workflows, that don't impact patient-facing platforms. Those, we're going to look to integrate very expeditiously, unlock all those benefits and all those savings, and increase the profitability there. Then be very thoughtful, meticulous, and methodical on how we integrate the front-facing platforms like the HUB and our DocGo Dara logistics platform that our hospital systems use to make sure that we're doing it very seamlessly, and there are no hiccups with our customer experience. That's the way we think about that. Thank you for that question. We have a question in here around our typical, can you discuss what a typical contract for Hicuity looks like from a duration perspective and renewal history? Is there a revenue model for Hicuity? How does it charge for its services? Andrea, maybe you can take that one.
Yes. Got it. Our contracts have initial fixed terms of generally two years to three years. Some are longer. So there's that fixed initial term with auto-renew provisions. That's across all of our service lines. Our renewal rate history is what service companies typically experience. It bounces around from year to year, but over a 10-year average, we're in a mid-80% renewal rate for those contracts that come up for renewal. Then how do we get paid? We are paid by our clients. At the end of the day, there are different models for different service lines, but we do not bear any of the professional fee reimbursement risk. For instance, in the ICU, we are paid either per patient admitted to the ICU or per bed. Same with telemetry monitoring. We will charge on a per-bed basis or per patient per day in some cases.
For Hospital at Home, we provide a shift rate. We provide so many nurses, and there is a contracted nursing rate for that shift. So that is how we bill.
Great. Thank you, Andrea.
Okay. We have a couple questions in here relating to the debt being provided by Perceptive. One question is asking about the interest rate on the debt. Another question here, given the current losses from DocGo's operations, how confident are you that cash will be received and DocGo will stop burning cash in 2027 so that DocGo will be in position to pay the debt of Hicuity? So two questions relating to debt, both the rate and how we intend to pay both the debt service and how to repay the debt. First off, on the interest rate, the interest rate is SOFR plus 7.5 percentage points. That's the interest rate on the debt, both the portion we are assuming from the transaction, the historical Hicuity debt, and any of the tranches that we draw down as additional financing being provided by Perceptive.
In terms of the debt service, there's really a few key points there. First off, as Andrea mentioned in the presentation, Hicuity comes to us with $4.5 million of adjusted EBITDA. So that's adding to our path to profitability and of course, will help service the debt. That's one. Number two, I think we've mentioned on previous calls that DocGo expects to exit the year on a profitable run rate. So both of those combination, both the profitability that Hicuity is bringing, and by the way, we expect to effectuate additional synergies and additional avenues to increase that profitability. But again, the trailing 12 months for Hicuity is at $4.5 million of adjusted EBITDA. Both that and DocGo entering next year on a profitable run rate gives us the ability to pay down the debt and service the debt.
I'll also say that of course, as we have the ability to pay down the debt, the balance of the debt such as funds that come in that are owed to us. There's a question in here which I'll get to in a minute about New York City's HPD still has an outstanding balance with us that we expect to collect here. As we close out the year, as those funds come in from New York City and other strategic initiatives we're evaluating, we're going to look to pay down the debt balance as well and do that. We don't expect to carry this debt long-term.
We're going to look for opportunities for us, both not only to service the debt from increasing profitability of the companies, and as they integrate, increasing the profitability of the combined company, but also as cash comes in from some of the strategic initiatives we're evaluating, as New York City pays down that balance and those funds come in, we're going to look to utilize that to pay down the balance of the debt as well. So that's our plan, and I think that gives a good snapshot of the way we're thinking about it, as well as how the debt is structured. Since I touched on it, there is a question here about how much is expected payment due from New York City to DocGo and when will it arrive. As I mentioned, that's obviously something we've talked about over the months and quarters here.
So, as I mentioned, HPD, which is New York City's Department of Housing Preservation and Development, still owes us roughly $13 million from the work we did on the migrant program, caring for the asylum seekers that were arriving here in New York City. We are in active discussions with them on this outstanding balance, and they are asking for some additional documentation, which we have been very quick to provide that they want to see from us. We still expect to see payments from them in Q4 of this year. We will continue to keep you updated on that. Just on that $13 million of that outstanding balance, just to put that in context, we have collected about 98% of the New York City receivable to date. Again, this is the last remaining piece of a much larger portion that we have been successful in collecting on.
Turning back to some of the additional questions in here. There is a question here about, could there be future opportunity to expand to beyond other countries. I think our focus right now is our existing footprint here in the U.S. Virtually, we service patients in all 50 states, and so I think we are going to continue to expand on that. As I mentioned in the presentation, we have been successful in expanding on that with our SteadyMD acquisition. Hicuity serves patients throughout the entire country virtually, and we are absolutely going to look to scale that efficiently in all 50 states.
I will say we also have, of course, footprint and operations, physical operations in states across the country, primarily in the Northeast and the West Coast, where we go to patients' homes, where we go and visit patients for mobile phlebotomy, where we go into patients' homes to close care gaps. We are going to look to expand those operations in the states where we already operate that physical footprint in. To summarize it, scale and expand virtually in all 50 states and scale the physical footprint that we already have here in the U.S. is going to be our primary focus. We do operate and have 600 great team members in the U.K. where we serve medical transportation and mobile health throughout the U.K., and we are going to continue to support that team and expand that team and look to drive more efficiency in that operation as well.
I think that is the footprint that we are going to be focused on. Virtually all 50 states here in the U.S., continue to expand in the states we have physical presence in today and continue to support our customers there and scale with those customers and new customers in those states where we have physical presence, and then, of course, continue to support and drive profitability in our U.K. operation. That is our plan for the question relating to expanding to other countries. I think that is our key focus. We have a question in here. Thanks for all the questions. These are great. Are there any synergies between Hicuity and SteadyMD, or would they remain separate and distinct subsidiaries? I think there are absolutely synergies. Both are virtual care platforms, and so I think there is going to be an opportunity to effectuate synergies.
I think in some cases, Hicuity provides higher acuity care, so we can bring some of that opportunity to SteadyMD's customers, which produces more preventative diagnostic digital health type care. I think there's going to be an opportunity for us to collaborate, streamline workflows, for us to have the medical groups come together and collaborate. Ultimately, again, we're going to make sure that the main synergies are going to come operationally how we go to market, how we serve patients, less so on the clinical side. On the clinical side, we're going to continue to scale Hicuity's high acuity services and then SteadyMD's more preventative care services, but share in workflows, back end systems. As an example, one area that we've targeted is going to be on our medical records platform, streamlining that, as I mentioned, sort of more of a back office function.
Nevertheless, we're going to look to streamline that operationally between the two groups. We definitely think there's opportunities to cross-sell, opportunities to go to market together, and operationally ways that we can effectuate savings. Okay. We have a great question in here relating to given $240 million of revenue is EBITDA positive, is there consideration to retire some operations that are not profitable? This is a question that touches on comments I made I believe it was last week, during a fireside chat at the Morgan Stanley Global Healthcare Conference relating to $240 million of our roughly $300 million plus of revenue that we have within the company, it's important to note is EBITDA positive. Adjusted EBITDA contribution positive today. A comment I made, and we're continuing to implement this, is we're continuing to look at operations or markets that are not EBITDA contributions.
That smaller percentage of our overall revenue that's coming from EBITDA loss making operations or markets. Our plan is to ensure that every single one of those markets and divisions are EBITDA contribution as we head into next year. Either we will sunset markets or operations that aren't, and we're in the process of implementing improvements on portions of our markets and contracts that will allow us to enter next year with each of our markets and businesses on an EBITDA contribution basis. That is our plan, that is our commitment. That is what I shared during that Morgan Stanley Global Healthcare Conference fireside chat. That's what this question is touching on, and that's absolutely the plan as we close out this year and as we head into next year. Okay. I think we have time maybe for one more question.
I'm going to touch on an area perhaps that we haven't gotten a chance to talk about yet. Just give me a moment here to peruse through the questions. I think we've touched on almost every area. There is a question in here, does DocGo plan to smart size by selling off some assets in underperforming areas to focus on growth areas? I think this question touches a little bit on the question I just answered, which is again, our goal is to continue to increase profitability for the overall company, is to focus on businesses and markets and service lines that are not EBITDA contribution to increase their profitability. Then of course, as everything I've mentioned that the company has done a strategic review and we continue to look at opportunities to streamline the business.
As opportunities come in, we'll continue to be opportunistic, as we always have in driving value for the business, driving long-term growth for the business, driving the ability to serve more and more patients with higher and higher quality and acuity care. That's our north star. I think over time, you're seeing us implement path to profitability plans, implement efficiency and operational plans, also scale the business. We're committed to scaling the areas of the business that are EBITDA contribution positive to address areas of the business that aren't set us up nicely as we close out this year head into next year. We're incredibly excited. We're incredibly excited to welcome the Hicuity team their suite of services that they offer.
We really feel like it will allow us to help our customers most importantly, help patients really receive the care they need. The marketplace desperately needs it. There are fewer clinicians. The need is increasing. There's areas of our country that don't have good access to care, that need virtual offerings. There are patients that don't have the ability to get to the care they need. As we go through the acquisition, we're going to integrate those services, allow us to provide more care to patients, then put the combined businesses, Hicuity and DocGo, on an efficient path to exit the year, again, profitable achieve greater levels of profitability value as we go through 2027, as we implement the integration plan. Thank you so much for joining us.
We're looking forward to speaking with you again on our next earnings call, as opportunities come up, sharing more about our plans our progress. Until then, be well.
This concludes today's conference. You may disconnect your lines at this time, we thank you for your participation.