DocGo's Legal Quagmire: Can the Healthcare Transport Firm Navigate Its Stormy Seas?

DocGo Inc. (NASDAQ: DCGO), a provider of medical transportation and mobile health services, finds itself at the center of a protracted legal battle that threatens to upend its business model and shareholder value. The ongoing investigation by Kahn Swick & Foti, LLC (KSF)—a law firm led by former Louisiana Attorney General Charles C. Foti, Jr.—has exposed alleged misrepresentations about its contracts, executive misconduct, and governance failures. As the case advances, investors must weigh the risks of prolonged litigation against the company’s efforts to pivot toward more sustainable revenue streams.

The Legal Storm: Misstatements and Leadership Failures

The investigation stems from September 2023 allegations that DocGo inflated the value of its contract with the U.S. Customs and Border Protection (CBP) to $4 billion, when internal documents allegedly revealed it was worth under $2 billion. Compounding these claims, the former CEO resigned after media exposed fabrications in his educational background—a misrepresentation that raised questions about leadership credibility.

A securities class action lawsuit filed by KSF and other firms accuses DocGo of violating federal securities laws by concealing material facts. In a critical ruling, a New York federal court denied the company’s motion to dismiss the case in part in March 2025, allowing key allegations to proceed. The court specifically highlighted the CEO’s “indisputably false” statements about the CBP contract, signaling that investors may have been misled about the company’s financial prospects.

Financial Struggles and Operational Shifts

While legal battles dominate headlines, DocGo’s financial performance underscores deeper challenges. In 2024, revenue fell to $616.6 million from $624.2 million in 2023, driven by the wind-down of high-margin migrant-related programs. Fourth-quarter 2024 revenue dropped to $120.8 million, a 39% decline from the prior year’s $199.2 million. Adjusted EBITDA also suffered: the company reported $60.3 million for the full year, up slightly from $54.0 million in 2023, but Q4 EBITDA plummeted to $1.1 million, down from $22.6 million in 2023.

The decline reflects the accelerated closure of NYC Health and Hospitals programs, which reduced Q4 revenue by $9 million and EBITDA by $5.3 million. To stabilize its business, DocGo is pivoting toward core mobile health services and government population health contracts. However, this transition carries risks: the company revised its 2025 adjusted EBITDA margin forecast downward to 5%, from an earlier 8%-10%, citing increased investments in technology and compliance.

Regulatory and Governance Risks

The legal case highlights systemic governance failures. KSF’s investigation focuses on whether executives breached fiduciary duties by withholding material information. Shareholders who held DCGO stock continuously since November 2021 may seek remedies for alleged mismanagement. Meanwhile, DocGo’s reliance on government contracts—particularly those tied to immigration and healthcare—exposes it to policy shifts and audit risks.

The Securities and Exchange Commission (SEC) has not yet taken formal action, but the prolonged litigation and negative publicity could deter future contracts with sensitive government agencies.

Investor Considerations: The Path Forward

For investors, the key question is whether DocGo can recover from its legal and financial setbacks. On one hand, the company’s new contracts with Veterans Affairs subcontractors and hospital systems in Texas and Mississippi suggest potential growth. Its $150 million in migrant-related receivables (as of December 2024) also hints at near-term cash inflows, though delays could strain liquidity.

On the other hand, the unresolved securities lawsuit poses a $50 million+ liability risk, based on historical settlements in similar cases. Even if DocGo prevails, the legal costs and reputational damage may deter institutional investors.

Conclusion: A High-Risk Gamble

DocGo’s future hinges on two factors: resolving the securities litigation and executing its strategic shift to core services. With the court denying motions to dismiss and KSF’s investigation ongoing, the legal risks remain elevated. Meanwhile, the company’s financials reflect operational missteps and a reliance on volatile government programs.

While DCGO’s pivot to mobile health services could stabilize its business, the stock’s valuation—currently trading at a 5.2x EV/EBITDA multiple—already prices in significant downside risk. Historically, companies facing similar regulatory battles (e.g., Valeant Pharmaceuticals) saw stock prices decline by 40%-60% until settlements were reached.

Investors should proceed with caution. Until the legal overhang is resolved and the company demonstrates consistent profitability in its core business, DCGO remains a high-risk bet.

Data as of Q2 2025. Past performance does not guarantee future results.