0 Q1 2022 Results Nasdaq Global Market: MTBC, MTBCP, MTBCO Safe Harbor Statements This presentation contains forward-looking statements within the meaning of the federal securities laws. These statements relate to anticipated future events, future results of operations or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "anticipate", "believe", "continue", "could", "estimate", "expect", "goals", "intend", "likely", "may", "might", "plan", "poten ...

[Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) Forward-looking statements in this report are subject to substantial risks and uncertainties that may cause actual results to differ materially - Forward-looking statements in this report are predictions subject to substantial known and unknown risks and uncertainties, which may cause actual results to differ materially[9](index=9&type=chunk)[10](index=10&type=chunk) - **Key risk factors** include managing growth, retaining clients, maintaining offshore operations, adapting to the rapidly changing healthcare industry, regulatory compliance, data privacy, technology development, attracting and retaining key personnel, complying with debt covenants, paying preferred dividends, competition, the impact of the COVID-19 pandemic, and market acceptance of products and services[10](index=10&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements and related management discussion and analysis [Item 1. Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents CareCloud's unaudited consolidated financial statements and detailed notes for Q1 2022 and 2021 [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased slightly, while liabilities decreased, leading to a **4.45%** rise in shareholders' equity | Metric | March 31, 2022 ($ in thousands) | December 31, 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :---------------------- | :------------------------------ | :--------------------------------- | :---------------------- | :--------- | | Total Assets | 141,215 | 140,848 | 367 | 0.26% | | Total Liabilities | 38,922 | 42,917 | (3,995) | -9.31% | | Total Shareholders' Equity | 102,293 | 97,931 | 4,362 | 4.45% | - Total assets increased slightly by **$367 thousand**, while total liabilities decreased by **nearly $4 million**, leading to a **4.45% increase** in total shareholders' equity from December 31, 2021, to March 31, 2022[15](index=15&type=chunk)[16](index=16&type=chunk) [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) Net income of **$1.14 million** in Q1 2022 marks a significant turnaround from a net loss in Q1 2021 | Metric (Three Months Ended March 31) | 2022 ($ in thousands) | 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Net Revenue | 35,341 | 29,768 | 5,573 | 18.72% | | Total Operating Expenses | 34,125 | 31,449 | 2,676 | 8.51% | | Operating Income (Loss) | 1,216 | (1,681) | 2,897 | -172.34% | | Net Income (Loss) | 1,140 | (1,964) | 3,104 | -158.04% | | Net Loss Attributable to Common Shareholders | (2,897) | (5,092) | 2,195 | -43.11% | | Net Loss Per Common Share (Basic & Diluted) | (0.19) | (0.36) | 0.17 | -47.22% | - The company achieved a net income of **$1.14 million** in Q1 2022, a significant turnaround from a net loss of **$1.96 million** in Q1 2021, driven by an **18.72% increase** in net revenue[20](index=20&type=chunk) - Net loss per common share improved by **47.22%**, from **($0.36)** in Q1 2021 to **($0.19)** in Q1 2022[20](index=20&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Comprehensive income shifted from a loss in Q1 2021 to an income of **$885 thousand** in Q1 2022 | Metric (Three Months Ended March 31) | 2022 ($ in thousands) | 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Net Income (Loss) | 1,140 | (1,964) | 3,104 | -158.04% | | Foreign Currency Translation Adjustment | (255) | 345 | (600) | -173.91% | | Comprehensive Income (Loss) | 885 | (1,619) | 2,504 | -154.66% | - Comprehensive income shifted from a loss of **$1.619 million** in Q1 2021 to an income of **$885 thousand** in Q1 2022, despite a negative foreign currency translation adjustment of **$255 thousand**[21](index=21&type=chunk) [Consolidated Statements of Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity increased to **$102.293 million** by March 31, 2022, driven by net income and preferred stock activity | Metric (Three Months Ended March 31, 2022) | Amount ($ in thousands) | | :----------------------------------------- | :---------------------- | | Balance - January 1, 2022 | 97,931 | | Net Income | 1,140 | | Foreign currency translation adjustment | (255) | | Stock-based compensation | 887 | | Redemption of Series A Preferred Stock | (20,000) | | Issuance of Series B Preferred Stock | 26,638 | | Preferred stock dividends | (4,037) | | Balance - March 31, 2022 | 102,293 | - Shareholders' equity increased to **$102.293 million** by March 31, 2022, primarily due to the net income and the net effect of issuing Series B Preferred Stock (**$26.638 million**) and redeeming Series A Preferred Stock (**$20 million**)[24](index=24&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly increased by **222%** in Q1 2022, with financing activities shifting to a net outflow | Metric (Three Months Ended March 31) | 2022 ($ in thousands) | 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Net Cash Provided by Operating Activities | 3,087 | 958 | 2,129 | 222.23% | | Net Cash Used in Investing Activities | (2,797) | (2,219) | (578) | 26.05% | | Net Cash (Used in) Provided by Financing Activities | (342) | 1,157 | (1,499) | -129.56% | | Net (Decrease) Increase in Cash and Restricted Cash | (204) | 70 | (274) | -391.43% | - Net cash provided by operating activities significantly increased by **222%** to **$3.087 million** in Q1 2022, compared to **$958 thousand** in Q1 2021[29](index=29&type=chunk)[217](index=217&type=chunk) - Financing activities shifted from providing **$1.157 million** in cash in Q1 2021 to using **$342 thousand** in Q1 2022, primarily due to the net effect of Series B Preferred Stock issuance and Series A redemption[29](index=29&type=chunk)[221](index=221&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain the company's organization, accounting policies, acquisitions, debt, leases, and other financial disclosures [1. ORGANIZATION AND BUSINESS](index=12&type=section&id=1.%20ORGANIZATION%20AND%20BUSINESS) CareCloud, Inc. is a healthcare IT company providing cloud-based solutions and services, expanded through strategic acquisitions - CareCloud, Inc. is a **healthcare information technology company** providing proprietary cloud-based solutions (RCM, PM, EHR, telehealth, PXM) and related business services to healthcare providers and hospitals in the U.S., with offshore offices in Pakistan and Sri Lanka[31](index=31&type=chunk) - The company has expanded through **acquisitions**, including CareCloud Corporation (2020), Meridian Billing Management Co. (2020), and MedMatica Consulting Associates Inc. / Santa Rosa Staffing, Inc. (2021)[33](index=33&type=chunk)[34](index=34&type=chunk) [2. BASIS OF PRESENTATION](index=12&type=section&id=2.%20BASIS%20OF%20PRESENTATION) Unaudited consolidated financial statements are prepared under **GAAP** for interim reporting, relying on management's estimates and assumptions - The unaudited consolidated financial statements are prepared in accordance with **GAAP** for interim reporting, relying on management's estimates and assumptions[35](index=35&type=chunk) - The company adopted ASU 2019-12 (Simplifying the Accounting for Income Taxes) effective January 1, 2021, with **no material impact** on financial statements[40](index=40&type=chunk) - The company is currently evaluating the potential impact of **ASU 2016-13 (Credit Losses)** and **ASU 2021-08 (Business Combinations)** for future fiscal years[39](index=39&type=chunk)[42](index=42&type=chunk) [3. ACQUISITIONS](index=13&type=section&id=3.%20ACQUISITIONS) The MedMatica and SRS acquisition in June 2021 for **$10 million** cash expanded consulting services, contributing **$7.3 million** in Q1 2022 revenue - In June 2021, CareCloud acquired MedMatica and SRS for **$10 million cash** plus a **$3.8 million working capital adjustment**, with potential earn-outs up to **$13 million** based on EBITDA and revenue targets[43](index=43&type=chunk) - The acquisition expanded consulting services in healthcare IT, practice management, and RCM, contributing approximately **$7.3 million in revenue** for the three months ended March 31, 2022[45](index=45&type=chunk)[50](index=50&type=chunk) | Metric | March 31, 2022 ($ in thousands) | December 31, 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------- | :------------------------------ | :--------------------------------- | :---------------------- | :--------- | | Contingent Consideration (Fair Value) | 2,490 | 3,090 | (600) | -19.42% | [4. GOODWILL AND INTANGIBLE ASSETS-NET](index=15&type=section&id=4.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS-NET) Goodwill remained stable, while net intangible assets decreased slightly due to approximately **$2.5 million** in Q1 2022 amortization expense | Metric | March 31, 2022 ($ in thousands) | December 31, 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------- | :------------------------------ | :--------------------------------- | :---------------------- | :--------- | | Goodwill (Ending Gross Balance) | 61,186 | 61,186 | 0 | 0.00% | | Intangible Assets - Net | 30,487 | 30,778 | (291) | -0.94% | | Accumulated Amortization | 42,129 | 39,647 | 2,482 | 6.26% | - Amortization expense for intangible assets was approximately **$2.5 million** for Q1 2022, with a weighted-average amortization period of **three years**[55](index=55&type=chunk) | Year Ending December 31 | Scheduled Amortization ($ in thousands) | | :---------------------- | :-------------------------------------- | | 2022 (nine months) | 10,272 | | 2023 | 10,786 | | 2024 | 6,765 | | 2025 | 1,314 | | 2026 | 300 | | Thereafter | 1,050 | | Total | 30,487 | [5. NET LOSS PER COMMON SHARE](index=16&type=section&id=5.%20NET%20LOSS%20PER%20COMMON%20SHARE) Net loss per common share (basic and diluted) improved to **($0.19)** in Q1 2022 from **($0.36)** in Q1 2021 | Metric (Three Months Ended March 31) | 2022 ($ in thousands, except per share) | 2021 ($ in thousands, except per share) | Change ($) | Change (%) | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | :--------- | :--------- | | Net Loss Attributable to Common Shareholders | (2,897) | (5,092) | 2,195 | -43.11% | | Weighted-Average Common Shares | 14,992,147 | 14,084,749 | 907,398 | 6.44% | | Net Loss Per Common Share (Basic & Diluted) | (0.19) | (0.36) | 0.17 | -47.22% | - The net loss per common share (basic and diluted) improved to **($0.19)** in Q1 2022 from **($0.36)** in Q1 2021[57](index=57&type=chunk) [6. DEBT](index=17&type=section&id=6.%20DEBT) The company has a **$20 million** revolving line of credit with SVB, with **$6 million** borrowed in Q1 2022 and subsequently repaid - The company has a **$20 million** revolving line of credit with Silicon Valley Bank (SVB); **$6 million** was borrowed as of March 31, 2022, and subsequently repaid in early April[59](index=59&type=chunk) - The SVB credit agreement was modified in January 2022 to allow for the issuance of Series B Preferred Stock and the redemption of Series A Preferred Stock[61](index=61&type=chunk) - The company was in **compliance** with all SVB debt covenants as of March 31, 2022, and 2021[60](index=60&type=chunk) [7. LEASES](index=17&type=section&id=7.%20LEASES) Total net lease cost decreased by **5.90%** in Q1 2022, with cash paid for operating leases also showing a reduction | Metric (Three Months Ended March 31) | 2022 ($ in thousands) | 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Total Net Lease Cost | 1,021 | 1,085 | (64) | -5.90% | | Metric (Operating Leases) | March 31, 2022 | December 31, 2021 | | :------------------------------------ | :------------- | :---------------- | | Operating Lease ROU Assets, Net ($ in thousands) | 6,507 | 6,940 | | Total Operating Lease Liabilities ($ in thousands) | 7,732 | 8,508 | | Weighted Average Remaining Lease Term (years) | 4.54 | 4.26 | | Weighted Average Discount Rate | 6.74% | 6.76% | - Cash paid for operating leases decreased to **$1.212 million** in Q1 2022 from **$1.396 million** in Q1 2021[74](index=74&type=chunk) [8. COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) A subsidiary faces an arbitration claim for **$9.8 million to $10.8 million** related to a billing services agreement breach - MAC, a subsidiary, is involved in an arbitration proceeding with RPRWC, which alleges breach of a billing services agreement and claims damages ranging from **$9.8 million to $10.8 million**; MAC plans to vigorously defend against the claim[79](index=79&type=chunk)[80](index=80&type=chunk) - The company settled a pre-acquisition civil investigation related to CareCloud Health, Inc. for **$4.2 million** in April 2021, which was substantially covered by escrowed funds[81](index=81&type=chunk) [9. RELATED PARTIES](index=20&type=section&id=9.%20RELATED%20PARTIES) Related party transactions include sales of **$5,000** and rent expense of **$51,000** in Q1 2022, primarily with the Executive Chairman's wife - The company had sales of approximately **$5,000** to a related party (wife of the Executive Chairman) in Q1 2022[83](index=83&type=chunk) - Related party rent expense for Q1 2022 was approximately **$51,000** for corporate offices and other facilities leased from the Executive Chairman[86](index=86&type=chunk) - talkMD Clinicians, PA, a variable interest entity controlled by the company and formed by the Executive Chairman's wife for telehealth services, has not yet commenced operations[89](index=89&type=chunk) [10. SHAREHOLDERS' EQUITY](index=21&type=section&id=10.%20SHAREHOLDERS%27%20EQUITY) In Q1 2022, the company generated **$26.6 million** from Series B Preferred Stock issuance, using **$20 million** to redeem Series A Preferred Stock - In Q1 2022, the company sold **1,150,372 shares** of Series B Preferred Stock, generating **$26.6 million** in net proceeds[90](index=90&type=chunk) - A portion of the proceeds (**$20 million**) was used to redeem **800,000 shares** of Series A Preferred Stock at **$25.00 per share**[90](index=90&type=chunk) - The company has 'at-the-market' facilities to sell up to **$35 million** of Series B Preferred Stock and **$50 million** of common stock[92](index=92&type=chunk) [11. REVENUE](index=22&type=section&id=11.%20REVENUE) Revenue is recognized from five primary sources, with professional services revenue seeing a substantial **1247.49%** increase in Q1 2022 - Revenue is recognized in accordance with ASC 606 from five primary sources: technology-enabled business solutions, professional services, printing and mailing, group purchasing, and medical practice management services[95](index=95&type=chunk)[98](index=98&type=chunk) | Revenue Source (Three Months Ended March 31) | 2022 ($ in thousands) | 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :------------------------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Technology-enabled business solutions | 23,242 | 25,845 | (2,603) | -10.07% | | Professional services | 8,314 | 617 | 7,697 | 1247.49% | | Printing and mailing services | 463 | 383 | 80 | 20.89% | | Group purchasing services | 134 | 188 | (54) | -28.72% | | Medical practice management services | 3,188 | 2,735 | 453 | 16.56% | | Total Net Revenue | 35,341 | 29,768 | 5,573 | 18.72% | - Professional services revenue saw a substantial increase of **1247.49%** year-over-year, reaching **$8.314 million** in Q1 2022[102](index=102&type=chunk) [12. STOCK-BASED COMPENSATION](index=25&type=section&id=12.%20STOCK-BASED%20COMPENSATION) Total stock-based compensation expense decreased by **29.99%** to **$887 thousand** in Q1 2022, despite new RSU grants - In Q1 2022, **360,398 common stock RSUs** and **34,000 Series B Preferred Stock RSUs** were granted under the Equity Incentive Plan[126](index=126&type=chunk) | Stock-Based Compensation Expense (Three Months Ended March 31) | 2022 ($ in thousands) | 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Direct operating costs | 217 | 305 | (88) | -28.85% | | General and administrative | 380 | 624 | (244) | -39.10% | | Research and development | 70 | 137 | (67) | -48.91% | | Selling and marketing | 220 | 201 | 19 | 9.45% | | Total Stock-Based Compensation Expense | 887 | 1,267 | (380) | -29.99% | - Total stock-based compensation expense decreased by **29.99%** to **$887 thousand** in Q1 2022 from **$1.267 million** in Q1 2021[128](index=128&type=chunk) [13. INCOME TAXES](index=26&type=section&id=13.%20INCOME%20TAXES) The company recorded an income tax expense of **$64 thousand** in Q1 2022, primarily due to state minimum and foreign income taxes | Income Tax (Three Months Ended March 31) | 2022 ($ in thousands) | 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :--------------------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Income Tax Provision (Benefit) | 64 | (1) | 65 | -6500.00% | - The company recorded an income tax expense of **$64 thousand** in Q1 2022, compared to a benefit of **$1 thousand** in Q1 2021, primarily due to state minimum and foreign income taxes[129](index=129&type=chunk)[131](index=131&type=chunk) - A **valuation allowance is maintained** against federal and state deferred tax assets due to historical cumulative losses and uncertainty regarding future U.S. taxable income[133](index=133&type=chunk)[186](index=186&type=chunk) [14. FAIR VALUE OF FINANCIAL INSTRUMENTS](index=27&type=section&id=14.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) Contingent consideration, a Level 3 financial instrument, was valued at **$2.49 million** as of March 31, 2022, using a Monte Carlo simulation - The company's Level 3 financial instrument, contingent consideration related to acquisitions, was valued at **$2.49 million** as of March 31, 2022, using a Monte Carlo simulation model[136](index=136&type=chunk)[138](index=138&type=chunk) | Contingent Consideration (Level 3) | March 31, 2022 ($ in thousands) | January 1, 2022 ($ in thousands) | Change ($ in thousands) | Change (%) | | :--------------------------------- | :------------------------------ | :------------------------------- | :---------------------- | :--------- | | Balance | 2,490 | 3,090 | (600) | -19.42% | [15. SEGMENT REPORTING](index=28&type=section&id=15.%20SEGMENT%20REPORTING) The company operates in two segments: **Healthcare IT** and **Medical Practice Management**, with Healthcare IT generating most revenue and operating income - The company operates in two reportable segments: **Healthcare IT** (revenue cycle management, SaaS solutions) and **Medical Practice Management** (management of three medical practices)[140](index=140&type=chunk)[141](index=141&type=chunk) | Segment (Three Months Ended March 31, 2022) | Net Revenue ($ in thousands) | Operating Income (Loss) ($ in thousands) | | :------------------------------------------ | :--------------------------- | :--------------------------------------- | | Healthcare IT | 32,153 | 2,971 | | Medical Practice Management | 3,188 | (7) | | Unallocated Corporate Expenses | — | (1,748) | | Total | 35,341 | 1,216 | | Segment (Three Months Ended March 31, 2021) | Net Revenue ($ in thousands) | Operating Income (Loss) ($ in thousands) | | :------------------------------------------ | :--------------------------- | :--------------------------------------- | | Healthcare IT | 27,033 | (55) | | Medical Practice Management | 2,735 | 52 | | Unallocated Corporate Expenses | — | (1,678) | | Total | 29,768 | (1,681) | [16. SUBSEQUENT EVENT](index=28&type=section&id=16.%20SUBSEQUENT%20EVENT) Effective April 1, 2022, the company established a new wholly-owned subsidiary, MTBC Bagh (Private) Limited, in Azad Jammu and Kashmir - Effective April 1, 2022, the company created a **new wholly-owned subsidiary**, MTBC Bagh (Private) Limited, in Azad Jammu and Kashmir to manage local operations[144](index=144&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 financial condition and results, highlighting revenue growth, operating income shift, and key performance measures [COVID-19 Pandemic](index=29&type=section&id=COVID-19%20Pandemic) The COVID-19 pandemic did not materially adversely affect Q1 2022 financial results, though economic and health conditions remain uncertain - The COVID-19 pandemic **did not materially adversely affect** the company's consolidated financial results and operations during Q1 2022, but economic and health conditions remain uncertain[148](index=148&type=chunk)[150](index=150&type=chunk) - The company expanded its **telehealth operations** as an alternative to office visits, though the extent of its use by physicians varies[148](index=148&type=chunk) [Overview](index=29&type=section&id=Overview) CareCloud provides an integrated SaaS platform to approximately **40,000 providers**, leveraging proprietary software and a global workforce for competitive pricing - CareCloud provides an integrated SaaS platform including RCM, PM, EHR, business intelligence, telehealth, and PXM solutions to healthcare providers and hospitals[151](index=151&type=chunk) - The company serves an estimated **40,000 providers** across approximately **2,600 independent medical practices and hospitals**, and **200 non-medical practice clients**[158](index=158&type=chunk) - Competitive pricing is achieved by leveraging **proprietary software and a global workforce**, including approximately **3,400 offshore team members** in Pakistan and Sri Lanka, whose labor costs are **significantly lower** than in the U.S[157](index=157&type=chunk)[164](index=164&type=chunk) [Key Performance Measures (Non-GAAP)](index=31&type=section&id=Key%20Performance%20Measures) Management uses non-GAAP metrics like Adjusted EBITDA and Adjusted Operating Income to analyze underlying business results, showing significant increases in Q1 2022 - Management uses non-GAAP financial measures such as Adjusted EBITDA, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income, and Adjusted Net Income Per Share to analyze underlying business results, excluding specific non-operating and non-cash items[165](index=165&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk) | Non-GAAP Metric (Three Months Ended March 31) | 2022 ($ in thousands, except per share) | 2021 ($ in thousands, except per share) | Change ($ in thousands) | Change (%) | | :-------------------------------------------- | :-------------------------------------- | :-------------------------------------- | :---------------------- | :--------- | | Adjusted EBITDA | 4,730 | 3,691 | 1,039 | 28.15% | | Non-GAAP Adjusted Operating Income | 3,568 | 2,971 | 597 | 20.09% | | Non-GAAP Adjusted Operating Margin | 10.1% | 10.0% | 0.1% | 1.00% | | Non-GAAP Adjusted Net Income | 3,472 | 2,896 | 576 | 19.90% | | Non-GAAP Adjusted Diluted Earnings Per Share | 0.22 | 0.17 | 0.05 | 29.41% | - Adjusted EBITDA increased by **28.15%** to **$4.73 million**, and Non-GAAP Adjusted Operating Income increased by **20.09%** to **$3.568 million** in Q1 2022[169](index=169&type=chunk) [Key Metrics](index=34&type=section&id=Key%20Metrics) As of March 31, 2022, the company served an estimated **40,000 providers** across **2,600 medical practices and hospitals**, plus **200 non-medical clients** - As of March 31, 2022, the company provided services to an estimated **40,000 providers** across approximately **2,600 independent medical practices and hospitals**, and served about **200 non-medical practice clients**[176](index=176&type=chunk) [Sources of Revenue](index=35&type=section&id=Sources%20of%20Revenue) Subscription-based technology solutions accounted for **66% of Q1 2022 revenues**, with medical practice management consistently contributing **9%** - Subscription-based technology-enabled business solutions (RCM, EHR, PM) accounted for **66%** of Q1 2022 revenues, while other healthcare IT services (professional services, printing/mailing, group purchasing) contributed **25%**[178](index=178&type=chunk) - Medical practice management services consistently generated **9%** of total revenue in both Q1 2022 and Q1 2021[179](index=179&type=chunk) [Operating Expenses](index=35&type=section&id=Operating%20Expenses) Operating expenses primarily include salaries, benefits, claims processing, and R&D, with amortization charged over three to twelve years for intangible assets - Direct operating costs primarily include salaries, benefits, claims processing, and costs to operate managed practices[180](index=180&type=chunk) - Research and development expense consists mainly of personnel-related costs, software expense, and third-party contractor costs[182](index=182&type=chunk) - Amortization expense is charged over three to twelve years for most intangible assets, including customer contracts and medical practice management clients[183](index=183&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant judgments for leases and capitalized software costs, with **$13.1 million** in internally-developed software in use - Critical accounting policies involve significant judgments and estimates for leases (ROU assets, lease liabilities, incremental borrowing rates) and capitalized software costs (capitalization criteria, useful lives)[187](index=187&type=chunk)[189](index=189&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) - Costs for internally-developed software are capitalized during the application development stage when new or additional functionality is probable and amortized over an estimated three-year useful life[194](index=194&type=chunk)[195](index=195&type=chunk) - As of March 31, 2022, the carrying amount of internally-developed capitalized software in use was **$13.1 million**, reflecting continued investment in proprietary technology[197](index=197&type=chunk) [Results of Operations (Comparison of the three months ended March 31, 2022 and 2021)](index=38&type=section&id=Results%20of%20Operations%20%28Comparison%20of%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021%29) Net revenue increased by **19%** to **$35.341 million**, with a significant decrease in research and development expense due to capitalization | Metric (Three Months Ended March 31) | 2022 ($ in thousands) | 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Net Revenue | 35,341 | 29,768 | 5,573 | 19% | | Direct Operating Costs | 22,673 | 18,060 | 4,613 | 26% | | Selling and Marketing | 2,384 | 1,890 | 494 | 26% | | General and Administrative | 5,585 | 5,624 | (39) | -1% | | Research and Development | 985 | 2,026 | (1,041) | -51% | | Change in Contingent Consideration | (600) | 0 | (600) | -100% | | Depreciation and Amortization | 2,940 | 2,831 | 109 | 4% | | Net Loss on Lease Termination, Impairment and Unoccupied Lease Charges | 158 | 1,018 | (860) | -84% | | Total Operating Expenses | 34,125 | 31,449 | 2,676 | 9% | | Operating Income (Loss) | 1,216 | (1,681) | 2,897 | -172% | - Net revenue increased by **19%** to **$35.341 million**, with approximately **$7.3 million** attributed to the medSR acquisition[201](index=201&type=chunk) - Research and development expense decreased by **51%** due to a shift from maintenance to new technology development, with **$2.3 million capitalized** in Q1 2022[206](index=206&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the company had **$10.1 million** in cash and **$8.7 million** in positive working capital, with significant preferred stock transactions - As of March 31, 2022, the company had **$10.1 million** in cash and restricted cash and **$8.7 million** in positive working capital[215](index=215&type=chunk) | Cash Flow (Three Months Ended March 31) | 2022 ($ in thousands) | 2021 ($ in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Net Cash Provided by Operating Activities | 3,087 | 958 | 2,129 | 222% | | Net Cash Used in Investing Activities | (2,797) | (2,219) | (578) | 26% | | Net Cash (Used in) Provided by Financing Activities | (342) | 1,157 | (1,499) | -130% | - The company received **$26.6 million** in net proceeds from the sale of Series B Preferred Stock and used **$20 million** to redeem Series A Preferred Stock[215](index=215&type=chunk)[221](index=221&type=chunk) [Contractual Obligations and Commitments](index=41&type=section&id=Contractual%20Obligations%20and%20Commitments) The company has contractual obligations under its SVB line of credit and operating leases, remaining in compliance with all covenants - The company has contractual obligations under its SVB line of credit and operating leases for property and equipment, and was in compliance with all SVB covenants as of March 31, 2022[222](index=222&type=chunk) [Off-Balance Sheet Arrangements](index=41&type=section&id=Off-Balance%20Sheet%20Arrangements) As of March 31, 2022, the company had no off-balance sheet arrangements, though a controlled variable interest entity has not yet commenced operations - As of March 31, 2022, the company had no relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements, though talkMD Clinicians, PA, a controlled variable interest entity, has not yet commenced operations[223](index=223&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, CareCloud, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The company is **exempt** from providing quantitative and qualitative disclosures about market risk as it qualifies as a **smaller reporting company**[224](index=224&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of March 31, 2022, due to a material weakness in internal control over financial reporting, though remediation was completed [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective as of March 31, 2022, due to a material weakness in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of March 31, 2022, due to a **material weakness** in internal control over financial reporting[228](index=228&type=chunk) - The **material weakness** was attributed to a **lack of controls** over the completeness and accuracy of key inputs related to non-routine transactions[228](index=228&type=chunk) [Changes in Internal Control Over Financial Reporting](index=42&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the most recent fiscal quarter - **No changes** in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[229](index=229&type=chunk) [Remediation of a Material Weakness in Internal Control over Financial Reporting](index=42&type=section&id=Remediation%20of%20a%20Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) Remediation measures, including enhanced processes and controls for non-routine transactions, were completed as of March 31, 2022 - **Remediation measures**, including enhanced processes and controls with more detailed reviews and increased communication for non-routine transactions, were **completed as of March 31, 2022**, to address the material weakness[230](index=230&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other miscellaneous information and exhibits [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings are incorporated by reference from **Note 8, Commitments and Contingencies**, in the Consolidated Financial Statements - Legal proceedings are detailed in **Note 8** of the Consolidated Financial Statements, primarily concerning an arbitration claim against a subsidiary (MAC)[233](index=233&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) Readers are referred to the comprehensive discussion of risk factors in the **Annual Report on Form 10-K**, which may be impacted by the pandemic - Readers should carefully consider the risk factors discussed in the **Annual Report on Form 10-K**, which may be further impacted by the coronavirus pandemic[234](index=234&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In March 2022, the company redeemed **800,000 shares** of Series A Preferred Stock at an average price of **$25.1375 per share** | Metric (March 2022) | Value | | :----------------------------------- | :----------- | | Total Series A Preferred Stock Redeemed | 800,000 shares | | Average Price Paid Per Share | $25.1375 | - The redemption of **800,000 shares** of Series A Preferred Stock was announced on **February 15, 2022**, and completed on **March 18, 2022**[235](index=235&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company - This item is **not applicable** to the company[236](index=236&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is **not applicable** to the company[237](index=237&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company - This item is **not applicable** to the company[238](index=238&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the **Sixth Loan Modification Agreement with SVB** and various XBRL interactive data files - Exhibits include the **Sixth Loan Modification Agreement with SVB (Exhibit 10.19)** and **certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2)**[240](index=240&type=chunk) - **XBRL Instance, Taxonomy Extension Schema, Calculation Linkbase, Label Linkbase, Presentation Linkbase, and Definition Linkbase** are included as exhibits[240](index=240&type=chunk) [Signatures](index=45&type=section&id=Signatures) The report was signed on **May 9, 2022**, by the Chief Executive Officer and Chief Financial Officer of CareCloud, Inc - The report was signed on **May 9, 2022**, by A. Hadi Chaudhry, Chief Executive Officer, and Bill Korn, Chief Financial Officer, on behalf of CareCloud, Inc[245](index=245&type=chunk)

CareCloud, Inc. (MTBC) Q4 2021 Earnings Conference Call March 14, 2022 8:30 AM ET Company Participants Kim Blanche - General Counsel Hadi Chaudhry - CEO & President Bill Korn - CFO Mahmud Haq - Founder & Executive Chairman Karl Johnson - President of CareCloud Force Conference Call Participants Jeffrey Cohen - Ladenburg Thalmann Marc Wiesenberger - B. Riley Securities Allen Klee - Maxim Group Kevin Dede - H.C. Wainwright Disclaimer*: This transcript is designed to be used alongside the freely available audi ...

0 Q4 and Full Year 2021 Results Nasdaq Global Market: MTBC, MTBCP, MTBCO Safe Harbor Statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements relate to anticipated future events, future results of operations or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "anticipate", "believe", "continue", "could", "estima ...

Part I [Item 1. Business](index=8&type=section&id=Item%201.%20Business) CareCloud, Inc. provides comprehensive cloud-based healthcare IT solutions and business services, leveraging a global workforce [Overview](index=8&type=section&id=Overview) CareCloud offers proprietary cloud-based EHR and RCM solutions and services to enhance healthcare provider performance - The company's core business provides technology-enabled solutions including **Electronic Health Records (EHRs)**, **Practice Management (PM) software**, **Patient Experience Management (PXM)**, **Robotic Processing Automation (RPA)**, **Telehealth**, and **Revenue Cycle Management (RCM) services**[26](index=26&type=chunk)[27](index=27&type=chunk) - CareCloud also provides medical practice management services, supplying facilities, equipment, staff, and administrative support[28](index=28&type=chunk) [Market Overview and Opportunity](index=9&type=section&id=Market%20Overview%20and%20Opportunity) The U.S. healthcare IT market, driven by value-based care and regulatory complexity, offers opportunities for CareCloud U.S. Healthcare IT Market Size and Growth (2019 Estimates) | Market Segment | Estimated Size (2019) | Compound Annual Growth Rate (CAGR) | | :--- | :--- | :--- | | Total Healthcare IT | ~$177 billion | - | | Revenue Cycle Management (RCM) | ~$87 billion | 12% | | Electronic Health Record (EHR) | ~$40 billion | 6% | | Analytics and AI | ~$30 billion | 27% | | Telehealth | ~$20 billion | 17% | - Market opportunities for CareCloud arise from the industry's shift to **value-based reimbursement**, evolving **regulatory requirements**, and increasing **patient consumerism**[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) [Business Strategy](index=10&type=section&id=Business%20Strategy) CareCloud's strategy focuses on market leadership in integrated SaaS and business services, leveraging a global workforce for growth - The company's multi-faceted strategy includes providing an **integrated solution suite**, continuously **enhancing solutions**, expanding into **new markets**, growing the **client base**, **up-selling services**, leveraging a **cost-effective offshore workforce**, and pursuing **acquisitions**[43](index=43&type=chunk)[45](index=45&type=chunk)[51](index=51&type=chunk) [Offerings and Clients](index=12&type=section&id=Offerings%20and%20Clients) CareCloud's portfolio spans six strategic areas, serving approximately **40,000 providers** across **2,600 practices** and hospitals - The company's product and service portfolio is structured across six key areas: **Cloud-based Software**, **Technology-enabled Services**, **Apps and App Ecosystem**, **Premier Healthcare IT Consulting & Staffing (medSR)**, **On-demand Workforce (CareCloud Force)**, and **Additional Business Services**[57](index=57&type=chunk)[58](index=58&type=chunk)[62](index=62&type=chunk) - As of December 31, 2021, CareCloud served approximately **40,000 providers** in about **2,600 medical practices and hospitals** across **80 specialties** and **50 states**[70](index=70&type=chunk) [Growth, Competition, and Employees](index=14&type=section&id=Growth%2C%20Competition%2C%20and%20Employees) CareCloud's growth strategy combines organic sales, partnerships, and acquisitions, leveraging its proprietary software and offshore workforce for competitive advantage - The company's growth strategy relies on three main levers: **organic growth** via direct sales, **channel partners**, and **acquisitions** of complementary businesses[75](index=75&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - CareCloud's competitive advantage stems from delivering solutions at competitive prices by leveraging **proprietary software** and a global team, including an **offshore workforce of approximately 3,400 members** with significantly lower labor costs[82](index=82&type=chunk) - As of December 2021, the company employed approximately **4,100 full-time people worldwide**[84](index=84&type=chunk) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks to CareCloud's business, including acquisition strategy, operations, regulatory compliance, and stock ownership [Risks Related to Our Acquisition Strategy](index=17&type=section&id=Risks%20Related%20to%20Our%20Acquisition%20Strategy) CareCloud's acquisition strategy poses risks including ineffective growth management, customer retention, unforeseen liabilities, and potential dilutive equity or increased debt - The company's acquisition strategy is a key risk, presenting challenges in **integrating software and services**, **assimilating new employees**, and **diverting management resources**[92](index=92&type=chunk) - There is a risk of being unable to **retain customers from acquired businesses**, as contracts often allow termination on short notice[93](index=93&type=chunk) - Future acquisitions may result in **dilutive equity issuances**, **debt incurrence**, and **increased amortization expenses**, adversely affecting financial results[99](index=99&type=chunk) [Risks Related to Our Business](index=18&type=section&id=Risks%20Related%20to%20Our%20Business) CareCloud faces business risks including COVID-19 impact, intense competition, offshore operations dependence, technological advancement, security breaches, and a history of losses - The **COVID-19 pandemic** poses a risk, as approximately **60% of revenue** is tied to customer cash collections, which can decline with reduced patient visits[102](index=102&type=chunk) - Business success is heavily dependent on **offshore operations in Pakistan and Sri Lanka**, where approximately **3,400 employees** are located, making operations vulnerable to political or social unrest[111](index=111&type=chunk)[112](index=112&type=chunk) - The company has a history of operating and net losses, reporting a **net loss of $8.8 million in 2020**, despite achieving **net income of $2.8 million in 2021**, with future profitability not guaranteed[124](index=124&type=chunk) - A **material weakness in internal controls over financial reporting** was identified due to a lack of controls over the completeness and accuracy of key inputs for a non-routine transaction[177](index=177&type=chunk) [Regulatory Risks](index=30&type=section&id=Regulatory%20Risks) Operating in the heavily regulated healthcare industry, CareCloud faces significant regulatory risks, including compliance with complex laws and maintaining EHR certification - The company is subject to complex healthcare regulations, including the **federal Anti-Kickback Statute (AKS)** and **False Claims Act (FCA)**, with potential for substantial civil and criminal penalties for violations[189](index=189&type=chunk) - As a business associate, the company must comply with **HIPAA and HITECH Act provisions**; a breach of protected health information could lead to significant liabilities, including **civil penalties of up to $1.5 million per incident**[197](index=197&type=chunk)[199](index=199&type=chunk) - The company must maintain **EHR solution certification** under the HITECH Act for customers to qualify for government incentives; failure to do so would adversely affect the business[192](index=192&type=chunk)[194](index=194&type=chunk) [Risks Related to Ownership of Our Common and Preferred Stock](index=34&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20and%20Preferred%20Stock) Stockholders face risks including stock price volatility, Executive Chairman Mahmud Haq's **30.1% control**, no common stock dividends, and for preferred stockholders, junior ranking to debt and potential dividend non-payment - Executive Chairman Mahmud Haq beneficially owns **30.1% of outstanding common stock**, granting him significant control over stockholder-approved matters, including director elections[214](index=214&type=chunk) - The company does not intend to pay **cash dividends on common stock**, making capital appreciation the sole potential source of gain for common stockholders[219](index=219&type=chunk) - Series A and B preferred stock rank **junior to all company indebtedness**; in bankruptcy or liquidation, assets are available to preferred stockholders only after all creditors are paid[227](index=227&type=chunk) - Preferred stock dividend payments are contingent on **compliance with SVB loan covenants**; a default could prohibit payments[230](index=230&type=chunk)[231](index=231&type=chunk) [Item 2. Properties](index=39&type=section&id=Item%202.%20Properties) CareCloud's headquarters are in Somerset, New Jersey, with significant leased office space in the U.S., Pakistan, and Sri Lanka, all deemed adequate - The company's principal executive offices are in **Somerset, New Jersey**, leasing approximately **152,000 sq. ft. in 16 U.S. locations** and **47,000 sq. ft. for pediatric offices**[251](index=251&type=chunk) - Significant office and server facility space is leased in **Islamabad, Bagh, and Karachi, Pakistan**, and in **Sri Lanka** to support offshore operations[252](index=252&type=chunk) [Item 3. Legal Proceedings](index=39&type=section&id=Item%203.%20Legal%20Proceedings) CareCloud's subsidiary, MAC, is in arbitration with RPRWC over an alleged billing services breach, with damages claimed up to **$10.8 million**, which MAC intends to vigorously defend - The company's subsidiary, **MTBC Acquisition Corp. (MAC)**, is in arbitration with **Randolph Pain Relief and Wellness Center (RPRWC)** over an alleged contract breach by an acquired predecessor company[254](index=254&type=chunk)[257](index=257&type=chunk) - RPRWC's damage claim has fluctuated, with a recent expert estimate between **$9.8 million and $10.8 million**, and the arbitration hearing is scheduled for April 2022[258](index=258&type=chunk) - MAC believes the allegations lack merit and plans to **vigorously defend** against the claim, anticipating any potential loss to be substantially less than the amount claimed[259](index=259&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=40&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "MTBC", with approximately **7,800 holders**; no cash dividends are anticipated due to lender restrictions - The company's common stock is listed on the **Nasdaq Global Market** under the symbol **"MTBC"**[263](index=263&type=chunk) - The company has not paid **cash dividends on common stock** since its 2014 IPO and does not plan to, as restricted by its credit agreement with SVB[266](index=266&type=chunk) Securities Authorized for Issuance under Equity Compensation Plan (as of Dec 31, 2021) | Plan Category | Securities to be Issued Upon Vesting | Securities Remaining for Future Issuance | | :--- | :--- | :--- | | Common Stock Plan | 331,039 | 1,191,383 | | Preferred Stock Plan | 34,000 | 320,065 | | **Total** | **365,039** | **1,511,448** | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes CareCloud's 2021 financial performance, highlighting **33% revenue growth to $139.6 million**, a shift from **$8.8 million net loss to $2.8 million net income**, and **Adjusted EBITDA growth to $22.1 million** [Key Performance Measures (Non-GAAP)](index=43&type=section&id=Key%20Performance%20Measures%20%28Non-GAAP%29) Management uses non-GAAP measures like Adjusted EBITDA and adjusted net income, with **Adjusted EBITDA reaching $22.1 million** and **adjusted net income rising to $18.5 million** in 2021 Adjusted EBITDA Reconciliation | Metric | 2021 ($ in thousands) | 2020 ($ in thousands) | | :--- | :--- | :--- | | GAAP Net Income (Loss) | 2,836 | (8,813) | | Adjustments | 19,283 | 19,684 | | **Adjusted EBITDA** | **22,119** | **10,871** | Non-GAAP Adjusted Net Income Reconciliation | Metric | 2021 ($ in thousands) | 2020 ($ in thousands) | | :--- | :--- | :--- | | GAAP Net Income (Loss) | 2,836 | (8,813) | | Adjustments | 15,661 | 17,272 | | **Non-GAAP Adjusted Net Income** | **18,497** | **8,459** | Non-GAAP Adjusted Earnings Per Share | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Non-GAAP Adjusted EPS | $1.24 | $0.63 | | Non-GAAP Adjusted Diluted EPS | $1.19 | $0.50 | [Results of Operations](index=54&type=section&id=Results%20of%20Operations) For 2021, net revenue increased **33% to $139.6 million**, driven by acquisitions, resulting in an operating income of **$3.5 million** and a net income of **$2.8 million** Comparison of Results of Operations (2021 vs. 2020) | Metric ($ in thousands) | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | 139,599 | 105,122 | 33% | | Total Operating Expenses | 136,070 | 113,393 | 20% | | Operating Income (Loss) | 3,529 | (8,271) | N/A | | Net Income (Loss) | 2,836 | (8,813) | N/A | - The **33% revenue growth in 2021** was primarily driven by contributions from the **CCH, Meridian, and medSR acquisitions**[332](index=332&type=chunk) - Research and development expense decreased by **53% to $4.4 million in 2021** from **$9.3 million in 2020**, due to increased capitalized software projects and offshore maintenance resources[336](index=336&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) CareCloud's liquidity improved significantly in 2021, with **cash from operations turning positive at $13.3 million**, **$10.3 million in cash**, and **$6.0 million in positive working capital** Summary of Cash Flows (2021 vs. 2020) | Cash Flow Activity ($ in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 13,334 | (892) | | Net cash used in investing activities | (23,146) | (31,469) | | Net cash (used in) provided by financing activities | (519) | 33,422 | - The significant improvement in operating cash flow was driven by **higher net income** and **changes in working capital**, despite increased operating expenses from acquisitions[357](index=357&type=chunk) - Cash used in investing activities decreased due to lower cash paid for acquisitions in **2021 ($12.6 million for medSR)** compared to **2020 ($23.7 million for CareCloud and Meridian)**[360](index=360&type=chunk) [Item 9A. Controls and Procedures](index=59&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were **not effective as of December 31, 2021**, due to a **material weakness in internal control over financial reporting** - Management concluded that **disclosure controls and procedures were not effective** as of December 31, 2021, due to a **material weakness in internal control over financial reporting**[370](index=370&type=chunk) - A **material weakness** was identified related to a lack of controls over the completeness and accuracy of key inputs for a non-routine transaction, which did not result in misstatements to filed financial statements[375](index=375&type=chunk)[420](index=420&type=chunk) - The company has a **remediation plan** to add controls for increased precision in reviewing key inputs for non-routine transactions, expected to be completed before the end of 2022[379](index=379&type=chunk) Part III [Items 10-14](index=61&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) Information for Items 10-14 (Directors, Executive Compensation, Security Ownership, Related Transactions, and Accountant Fees) is incorporated by reference from the forthcoming 2022 Proxy Statement - Information for **Directors, Executive Compensation, Security Ownership, Related Transactions, and Accountant Fees** is incorporated by reference from the forthcoming **2022 Proxy Statement**[384](index=384&type=chunk)[385](index=385&type=chunk)[388](index=388&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=62&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the 10-K, including consolidated financial statements for 2021 and 2020, and an index of exhibits - This section contains the company's **audited consolidated financial statements** for the fiscal years ended **December 31, 2021 and 2020**[390](index=390&type=chunk) - An extensive list of **exhibits** is provided, including acquisition agreements, corporate governance documents, material contracts, and certifications[391](index=391&type=chunk) [Consolidated Financial Statements and Notes](index=68&type=section&id=Consolidated%20Financial%20Statements%20and%20Notes) The audited consolidated financial statements present CareCloud's financial position and results, highlighting **total assets of $140.8 million**, **net income of $2.8 million in 2021**, and an **adverse auditor opinion on internal controls** Consolidated Balance Sheet Highlights (as of Dec 31) | Metric ($ in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Total Current Assets | 35,559 | 44,819 | | Total Assets | 140,848 | 137,999 | | Total Current Liabilities | 29,562 | 29,024 | | Total Liabilities | 42,917 | 36,754 | | Total Shareholders' Equity | 97,931 | 101,245 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | Metric ($ in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net Revenue | 139,599 | 105,122 | | Operating Income (Loss) | 3,529 | (8,271) | | Net Income (Loss) | 2,836 | (8,813) | | Net Loss Attributable to Common Shareholders | (11,216) | (22,690) | - The independent auditor, **Grant Thornton LLP**, issued an **adverse opinion on the company's internal control over financial reporting** as of December 31, 2021, due to a **material weakness** related to controls over a non-routine transaction[402](index=402&type=chunk)[418](index=418&type=chunk)

CareCloud, Inc. (MTBC) Q3 2021 Earnings Conference Call November 4, 2021 8:30 AM ET Company Participants Kimberly Blanche - General Counsel, VP of Compliance & Secretary Mahmud Haq - Founder and Executive Chairman Hadi Chaudhry - Chief Executive Officer, President, and Director Stephen Snyder - Chief Strategy Officer and Director Bill Korn - Chief Financial Officer Jerry Howell - CEO of MedMatica Conference Call Participants Jeffrey Cohen - Ladenburg Thalmann & Co. Allen Klee - Maxim Group Marc Wiesenberg ...

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's analysis for the period ended September 30, 2021 [Item 1. Condensed Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, highlighting significant revenue growth and improved net income driven by acquisitions [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$142.5 million** by September 30, 2021, primarily due to goodwill and intangible assets from acquisitions, while liabilities also rose Condensed Consolidated Balance Sheet Highlights ($ in thousands) | Account | Sep 30, 2021 (Unaudited) | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $8,313 | $20,925 | | Accounts receivable - net | $18,094 | $12,089 | | Intangible assets - net | $32,143 | $29,978 | | Goodwill | $60,661 | $49,291 | | **Total Assets** | **$142,509** | **$137,999** | | **Liabilities & Equity** | | | | Total current liabilities | $26,465 | $29,024 | | Borrowings under line of credit | $6,000 | $- | | Contingent consideration | $6,500 | $- | | **Total Liabilities** | **$45,458** | **$36,754** | | **Total Shareholders' Equity** | **$97,051** | **$101,245** | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net revenue for Q3 2021 increased **21%** to **$38.3 million**, leading to an operating income of **$1.4 million** and reduced net loss per common share Statement of Operations Summary ($ in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | **$38,304** | **$31,639** | **$102,137** | **$73,085** | | Operating Income (Loss) | $1,425 | $(1,235) | $(362) | $(8,682) | | Net Income (Loss) | $1,505 | $(1,673) | $(686) | $(8,968) | | Net Loss Attributable to Common Shareholders | $(2,137) | $(5,903) | $(11,094) | $(19,118) | | Net loss per common share | $(0.15) | $(0.46) | $(0.77) | $(1.53) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated **$7.2 million** in cash for the nine months ended September 30, 2021, offsetting significant cash used in investing activities for acquisitions Cash Flow Summary for Nine Months Ended Sep 30 ($ in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $7,210 | $(4,333) | | Net cash used in investing activities | $(19,851) | $(28,772) | | Net cash provided by financing activities | $1,272 | $36,139 | | **Net (Decrease) Increase in Cash** | **$(11,612)** | **$2,846** | [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover the company's healthcare IT business, recent acquisitions like medSR, accounting policies, and disaggregated revenue sources, showing growth in professional services - The company operates as a healthcare information technology firm providing a suite of proprietary cloud-based solutions, including RCM, PM, and EHR, to healthcare providers across the U.S. It leverages offshore offices in Pakistan and Sri Lanka for client support and operations[30](index=30&type=chunk) - On June 1, 2021, the company acquired MedMatica and its subsidiary SRS (renamed medSR) for **$10 million in cash** plus a working capital adjustment and potential earn-outs up to **$13 million**, expanding specialty consulting services[41](index=41&type=chunk)[42](index=42&type=chunk) Disaggregation of Revenue (Nine Months Ended Sep 30, $ in thousands) | Revenue Source | 2021 | 2020 | | :--- | :--- | :--- | | Technology-enabled business solutions | $80,075 | $61,138 | | Professional services | $10,978 | $1,278 | | Medical practice management services | $9,341 | $8,926 | | Other | $1,743 | $1,743 | | **Total** | **$102,137** | **$73,085** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **40% revenue growth** for the first nine months of 2021 to acquisitions, achieving **$16.0 million in Adjusted EBITDA** and maintaining solid liquidity [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Net revenue for Q3 2021 increased **21%** to **$38.3 million**, with nine-month revenue up **40%** to **$102.1 million**, primarily due to acquisitions and reduced R&D expenses - Revenue for the nine months ended September 30, 2021, includes approximately **$63.1 million** from customers acquired in the medSR, CCH, and Meridian acquisitions[218](index=218&type=chunk) - Research and development expense decreased by **79% in Q3 2021** and **37% in the nine-month period** year-over-year, due to capitalizing **$5.3 million** in development costs for new technology[222](index=222&type=chunk) Operating Expenses Comparison (Nine Months Ended Sep 30, $ in thousands) | Expense Category | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Direct operating costs | $62,719 | $45,842 | 37% | | Selling and marketing | $6,469 | $4,778 | 35% | | General and administrative | $17,814 | $17,176 | 4% | | Research and development | $4,328 | $6,846 | (37)% | | **Total operating expenses** | **$102,499** | **$81,767** | **25%** | [Key Performance Measures](index=37&type=section&id=Key%20Performance%20Measures) Adjusted EBITDA for the nine months ended September 30, 2021, significantly increased to **$16.0 million** from **$5.2 million** in the prior year, driven by revenue growth and cost management Adjusted EBITDA Reconciliation ($ in thousands) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | GAAP net income (loss) | $1,505 | $(1,673) | $(686) | $(8,968) | | Stock-based compensation | $1,004 | $1,763 | $4,006 | $4,951 | | Depreciation & amortization | $3,547 | $3,206 | $9,505 | $6,944 | | Transaction & integration costs | $269 | $609 | $1,118 | $1,709 | | Other adjustments | $269 | $(11) | $1,585 | $532 | | **Adjusted EBITDA** | **$6,674** | **$4,214** | **$16,018** | **$5,170** | [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with **$9.3 million in cash** and **$9.9 million in working capital**, supported by **$7.2 million** in operating cash flow and an increased **$20 million** credit facility - The company generated positive cash flow from operations of **$7.2 million** for the nine months ended September 30, 2021[234](index=234&type=chunk)[240](index=240&type=chunk) - During the first quarter of 2021, the exercise of 858,000 warrants provided net proceeds of approximately **$6.4 million**[236](index=236&type=chunk) - The company's credit line with Silicon Valley Bank (SVB) was increased from **$10 million to $20 million** and extended through October 2023[80](index=80&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the registrant is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company defined by 17 C.F.R. 229.10(f)(1), the registrant is not required to provide the information requested under this item[248](index=248&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[251](index=251&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[252](index=252&type=chunk) [PART II. OTHER INFORMATION](index=49&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides details on legal proceedings, risk factors, equity sales, and exhibits filed with the report [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company's subsidiary, MTBC Acquisition Corp., is involved in an arbitration proceeding with RPRWC, facing claimed damages of approximately **$11 million** plus costs - The company is involved in an arbitration demand filed by Randolph Pain Relief and Wellness Center ("RPRWC") against its subsidiary, MTBC Acquisition Corp. ("MAC")[96](index=96&type=chunk) - RPRWC's claimed damages have fluctuated, most recently estimated at approximately **$11 million** plus costs, which MAC intends to vigorously defend against[98](index=98&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported, with investors directed to the Annual Report on Form 10-K for a comprehensive discussion - The report directs investors to the Risk Factors section of the Annual Report on Form 10-K filed on February 25, 2021, for a comprehensive discussion of potential risks[257](index=257&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the current reporting period - Not applicable[258](index=258&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL interactive data files - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and XBRL data files (Exhibits 101 series)[262](index=262&type=chunk)

Financial Data and Key Metrics Changes - CareCloud reported record revenue of $34.1 million for Q2 2021, a 74% increase from $14.5 million in Q2 2020, and 6% above the previous all-time high [37] - The annual revenue run rate is now $136 million, which is 29% higher than 2020 and 111% higher than 2019 [37] - The net loss for Q2 2021 was $227,000, significantly reduced from a net loss of $4.8 million in the same period last year [38] - Adjusted EBITDA for Q2 2021 was $5.7 million, representing 17% of revenue, a substantial increase from $191,000 in Q2 2020 [40] Business Line Data and Key Metrics Changes - Approximately 81% of revenue in the first half of 2021 was driven by technology assets, with 52% from clients using the full technology suite [41][42] - The company is focusing on expanding its service offerings, including revenue cycle management and robotic process automation, to existing clients [56] Market Data and Key Metrics Changes - The company is experiencing a shift towards telehealth services, with 63% of practices reporting frequent to occasional telehealth use post-COVID, down from 93% during the pandemic [66] - The company is targeting larger multi-specialty hospital groups and specialties with higher average revenue per claim, such as orthopedics [60] Company Strategy and Development Direction - CareCloud is focused on integrating and cross-selling acquired assets while driving organic growth [7] - The recent acquisition of medSR aims to accelerate growth in the hospital market, which has not been a significant focus previously [18][19] - The company plans to leverage partnerships with existing EHR vendors rather than compete directly against them [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued strong momentum in the second half of 2021, raising full-year revenue guidance to $135 to $138 million [46] - The company anticipates its seventh consecutive year of annual revenue growth of 25% or more [47] - Management noted that the operating environment is returning to pre-COVID levels, with a mix of telehealth services continuing to be utilized [64] Other Important Information - The company has increased its investment in sales and marketing significantly, from $1.5 million in 2019 to $6.6 million in 2020, with plans for a further 30% to 40% increase [25] - Cash flow from operations for Q2 2021 was approximately $1.1 million, but would have been $5.1 million without a one-time payment related to a previous acquisition [45] Q&A Session Summary Question: Can you discuss the commercial organization and sales pipeline? - Management indicated steady sales and upsell activities, with optimism about increasing overall sales bookings for the year [52][53] Question: How normalized is the operating environment regarding COVID? - Management noted that patient volumes are almost back to pre-COVID levels, with a significant increase in telehealth utilization during the pandemic [64][66] Question: What is the impact of the recent acquisition of medSR? - The acquisition is expected to enhance capabilities in the hospital market, with a focus on cross-selling revenue cycle management services [19][84] Question: How is CareCloud addressing cybersecurity concerns? - The company has contracted an external security firm to monitor network traffic and ensure compliance with industry standards [88] Question: What challenges exist in accessing decision-makers in the hospital market? - Management acknowledged the difficulty in reaching decision-makers but emphasized the importance of leveraging established relationships through the medSR acquisition [21][100]

0 Q2 2021 Results Nasdaq Global Market: MTBC, MTBCP Safe Harbor Statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements relate to anticipated future events, future results of operations or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "anticipate", "believe", "continue", "could", "estimate", "expect", "goals ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-36529 CareCloud, Inc. (Exact name of registrant as specified in its charter) Delaware 22-3832302 (State or other jurisdiction of ...