Wednesday, shares of DocGo Inc DCGO, a mobile medical services and transportation company, fell following the publication of a short report by Fuzzy Panda.
The short seller has accused the company of improper fraudulent billing practices, forging signatures on patient documents, and cover-ups regarding patient care issues, among other allegations.
According to Fuzzy Panda, former DocGo employees were accused of committing Medicare and insurance fraud on multiple occasions.
The short seller claims that DocGo has managed to cover up these illegal practices by firing whistleblowers or bribing them.
The report notes that DocGo experienced a significant boost in business during FY 2021 and 2022 due to the COVID-19 pandemic.
However, the report highlights that their success faced a challenge when, in May 2023, they secured a substantial one-year “no-bid” contract to serve NYC migrant asylum seekers.
Contrary to expectations, the contract drew attention to DocGo’s questionable business practices, leading to investigations.
Wednesday, DocGo, in a press release, ‘categorically rejected the purported assessment by Fuzzy Panda Research.’
The company said Fuzzy Panda is an obscure short seller motivated solely by profit.
The company also reported its fiscal year 2023 preliminary revenue of $615 million-$625 million versus a consensus of $619.24 million, in line with its previously released guidance.
DocGo expects revenue in 2024 to exceed $700 million compared to the consensus of $760.2 million.
The company clarified:
- The claims made in the “ABC” liquidation in California are not liabilities of the company and do not accurately reflect the former liabilities of the liquidated entity.
- In response to allegations about billing practices, DocGo maintains a comprehensive internal compliance program (including the internal review of claims) and is routinely audited by outside agencies.
- The report inaccurately predicts a significant decline in DocGo’s revenue for 2024, attributing it to the expiration of specific contracts with the City of New York.
- Contrary to this claim, DocGo anticipates a revenue increase in fiscal year 2024 based on the company’s multiple contracts with various municipalities, healthcare systems, and payors in the U.K. and the U.S.
Needham writes that despite the concerns raised by the negative sentiment among investors, the accusations mentioned in the short report mainly involve outdated information.
The analyst seems confident that DCGO’s growth plans for the fiscal year 2024 are unaffected and maintains the Buy rating with a price target of $14.
Price Action: DCGO shares are up 10.40% at $3.30 on the last check Thursday.