Norman Rosenberg: So we’re typically and we refer to our capital-light model, of course, where we typically will try to lease instead of buy but that equation has changed. As you know, David, right, we’re looking at our cost of capital versus what the cost of leasing is and interest rates are going up. I would say in this year, I think we — in 2022, I think we spent about 3 million in change on CapEx. I would expect a somewhat similar number.
David Grossman: And that includes capitalized software?
Norman Rosenberg: That would include a little bit of capitalized software here.
David Grossman: Great. All right, guys, thanks.
Operator: Thank you. Our next question is from Richard Close with Canaccord Genuity. Please proceed with your question.
Richard Close: Thanks for the follow-up question. Anthony, when you were talking about Dollar General, you had mentioned something with respect to fee-for-service and going forward in the future, you want to be fully in the leased rate model. Can you talk a little bit about that in terms of how you expect like a relationship maybe like Dollar General to move to the leased hour model as well?
Anthony Capone: Yes, a great question. So there’s two approaches. The primary one is to take on a similar kind of way that the ambulance 911 system works, which DocGo is not really involved in the ambulance 911 system any significant degree, but that works by the county subsidizes the ambulances, because the county needs ambulance services. Without ambulance services, people will get far worse health care. If you go to a county as well and you say, well, in your county you have no health care institutions are very, very minimal and primary but not urgent or vice versa. Are you willing to lease this for us for a very, very small amount, because keep in mind, they’re only paying the difference between what we collect on insurance versus the daily minimum, which sometimes can be nothing?
Are you willing to lease this model so that you do have health care in your county? And when you pair that together with the prominence and the respect that the Dollar General has in the community, you bring the two together and you basically provide a service to the county where the county is willing for relatively low cost to guarantee that their citizens, they have access to high quality health care both in the primary and urgent side. The second approach is you’re going to payers, and you go to payers and they’re the ones that are going to pay for that leased hour model, which we have examples of that today as well. Not with Dollar General, but we have examples elsewhere in our organization where the payers pay on a leased hour basis. So those are the two approaches as we continue to expand these pilots.
Richard Close: And with the counties, have you had those conversations already and they’re being well received?
Anthony Capone: Yes, I’ve had a couple of them in the local areas, and I think they’re very well understood. It’s also important to understand how small the dollar figure is. So part of the reason why they’re well understood or well received is because an ambulance contract is oftentimes many, many millions of dollars to a local municipality. And that’s because the collection rates on these ambulance services are very, very low, which is why DocGo stays out of 911. But in this case, the collection rates are actually very high. We already see it right now in our ability to fee-for-service. We just don’t want to take risk on demand. So the actual amount the county has to face is very, very low. So the sell is much, much easier for them to have very high quality service.
Richard Close: Okay. Thank you.
Operator: Thank you. Our next question is from Pito Chickering with Deutsche Bank. Please proceed with your question.
Kieran Ryan: Hi, guys. You’ve got Kieran Ryan on for Pito. Thanks for taking the question. First off, I just wanted to confirm this upfront. I believe the last time I checked you weren’t including the leased hour contracts in the KPIs for your transportation business. I was just wondering now that you’re taking — you’re kind of putting a bigger focus on the leased hour contracts with the very large one coming through this year, are you going to alter that? How you report those KPIs or anything else to allow us to kind of better track the progress there?
Anthony Capone: An interesting suggestion. I think there’s a lot of logic to it. You have to take it back and see what that means. Are we doing leased hour on revenue or number of trips or number of shifts or number of hours? There’s a bunch of different ways that you can look at that. But it’s certainly an interesting measurement that we focus on internally. So we’ll discuss it and look back, but I think it makes a lot of sense.
Norman Rosenberg: Hi, Kieran. This is Norm. I’ll just add to that. I think that as long as the fee-for-service remains a somewhat significant piece of the business, we will probably continue to track our trip count and our APC. And it becomes very important for us also as a way to explain why the transport margins have gone up very, very nicely, both sequentially and year-over-year, because our APC is higher, right? It’s not by accident. We’re running higher acuity trips, more advanced life saving trips or critical care trips, it’s made a very, very big difference. And it’s definitely one of the things that’s driving margin and something that was part of the plan. What you will notice is when you do the math, if you look at overtime, if you look at the trip count multiplied by the average price per trip, and then you’ll look at that and compare it to the total amount of transport revenue, you’ll see that that explain — the fee-per-service piece explains a smaller and smaller proportion of the overall revenue from transport with the rest being from the leased hour model.
Anthony Capone: I’ll just add one more point, which is we’ve shared. Every new contract on the transportation side that we signed is a leased hour contract. So we’re not adding any fee-for-service contracts going forward. They are all leased hour contracts moving forward.
Kieran Ryan: That’s super helpful. Thank you. And just one quick follow up. You mentioned that you’ve incorporated the roll off of the PHE in your guidance. Can you just give us a little bit more color on the mechanics on how exactly that impacts the business? Thank you.
Anthony Capone: I’m going to show my ignorance here. PHE is –?
