DocGo offers mobile health and medical transportation services for various health care providers in the U.S. and the United Kingdom. In that capacity, the Company purports to leverage its proprietary technology platform to “provide [its] services in collaboration with leading healthcare organizations, via long-term relationships that are intended to drive meaningful revenue, help provide efficient and effective capital allocation and create low-risk opportunities for significant growth.”
In November 2022, DocGo announced that Defendant Anthony Capone (“Capone”) would be succeeding Defendant Stan Vashovsky (“Vashovsky”) as Chief Executive Officer (“CEO”) effective January 1, 2023. In a press release detailing the leadership transition, Defendant Vashovsky was quoted stating, in relevant part, “[w]e are very fortunate to have someone with [Defendant Capone’s] skill set and track record to take the reigns as CEO next year, and I have every confidence in the continued growth and success of this company.”
In spring 2023, several thousand international migrants arrived in New York City seeking, among other things, employment and/or asylum. In response, New York City Mayor Eric Adams (“Mayor Adams”) announced a new policy calling for the city to relocate migrants outside of New York City’s five boroughs. To oversee the relocation program, New York City awarded DocGo a no-bid $432 million contract (the “Relocation Contract”) that took effect in early May 2023. The contract required DocGo to house migrants and provide them with services including case management, medical care, food, transportation, lodging, and round-the-clock security.
The Complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) DocGo’s executive hiring processes were inadequate to fully review and vet the professional and academic backgrounds of job candidates; (ii) the foregoing increased the likelihood of disruptive executive turnover; (iii) contrary to its representations to investors, DocGo had overstated the efficacy of its mobile health and medical transportation services, the very services contemplated by the Relocation Contract; (iv) all of the foregoing, once revealed, was likely to subject DocGo to significant reputational and/or regulatory scrutiny that would negatively impact the Company’s financial position and/or prospects; and (v) as a result, the Company’s public statements were materially false and misleading at all relevant times.
On July 30, 2023, the New York Times published an article reporting on a “rocky” start to DocGo’s migrant relocation efforts in New York City. The New York Times article reported that asylum-seekers have complained of threats and “broken promises” after New York City awarded DocGo the Relocation Contract. Specifically, the article stated that “[l]ocal authorities have expressed frustration at the lack of coordination between DocGo and agencies that could provide services to the migrants; local security guards hired by DocGo have repeatedly threatened the migrants; and finding steady work has been nearly impossible[.]” DocGo’s $432 million contract nearly matches the Company’s total 2022 revenue of roughly $441 million.
Following publication of the New York Times article, DocGo’s stock price fell $0.53 per share, or 6.29%, to close at $7.89 per share on July 31, 2023.
Then, on August 22, 2023, the Albany Times Union published an article reporting that the New York Attorney General (“AG”) had opened an investigation into DocGo and cautioned the Company to cease limiting migrants’ speech or movement. Specifically, the AG’s Civil Rights Bureau sent a letter sent to DocGo’s attorneys detailing “serious concerns” it had regarding potential violations of state and federal laws in its handling of the Relocation Contract.
Then, on September 6, 2023, New York City Comptroller Brad Lander (“Comptroller Lander”) announced that his office was declining to approve the Relocation Contract. Comptroller Lander noted in a letter to Department of Housing & Preservation Development commissioner Adolfo Carrión Jr. that his decision to reject the Relocation Contract was “due to numerous outstanding concerns” including “[i]nsufficient budget detail to justify over $432 million in contract value,” “[i]nconclusive reasoning as to the selection of the vendor and contradictory statements about their fiscal ability to provide contracted services,” “[i]nadequate vendor responsibility determination, contract oversight and subsequent questions about proper service delivery,” and “[i]nadequate information regarding the selection of subcontractors.” Mayor Adams had the authority to proceed with the Relocation Contract over Comptroller Lander’s objections and ultimately did so.
On this news, DocGo’s stock price fell $0.61 per share, or 7.47%, to close at $7.55 per share on September 6, 2023.
Then, on September 14, 2023, the Albany Times Union published an article reporting that Defendant Capone had falsified portions of his professional biography regarding his educational history. On the following day, September 15, 2023, DocGo disclosed Capone’s resignation as CEO in a filing with the Securities and Exchange Commission.
On this news, DocGo’s stock price fell $0.76 per share, or 11.76%, to close at $5.70 per share on September 15, 2023.
Finally, on September 18, 2023, Comptroller Lander announced that his office was commencing a real-time audit of operations and invoices incurred by DocGo in connection with the Relocation Contract. Specifically, Comptroller Lander noted that his office has “serious concerns about the selection of this vendor and its performance of contract duties.”
On this news, DocGo’s stock price fell $0.41 per share, or 7.19%, to close at $5.29 per share on September 18, 2023.