[Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future financial performance, operating expenditures, growth, profitability, business outlook, increased sales and marketing expenses, and expected results from acquisitions. These statements are subject to substantial known and unknown risks and uncertainties - The report contains forward-looking statements regarding future financial performance, operating expenditures, growth, profitability, business outlook, increased sales and marketing expenses, and expected results from acquisitions. These statements are subject to **substantial known and unknown risks and uncertainties**[12](index=12&type=chunk)[13](index=13&type=chunk) - Key risks include managing growth and integrating acquired businesses, retaining clients and revenue, maintaining offshore operations (Pakistan, Sri Lanka) for cost efficiency, keeping pace with the rapidly changing healthcare industry, ensuring compliance with regulations, protecting confidential information, developing new technologies, attracting and retaining key personnel, realizing cost savings from restructuring, complying with credit agreement covenants, ability to pay preferred stock dividends, incorporating AI faster than competitors, and competing with larger companies[13](index=13&type=chunk)[16](index=16&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, shareholders' equity, and cash flows, along with detailed notes explaining the company's financial position, performance, and accounting policies for the periods ended June 30, 2025, and 2024 [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, shareholders' equity, and cash flows, along with detailed notes explaining the company's financial position, performance, and accounting policies for the periods ended June 30, 2025, and 2024 [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Cash | $10,440 | $5,145 | | Accounts receivable - net | 13,563 | 12,774 | | Total current assets | 31,090 | 24,800 | | TOTAL ASSETS | $75,244 | $71,614 | | LIABILITIES (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Accounts payable | $4,215 | $4,565 | | Accrued compensation | 3,324 | 1,817 | | Dividend payable | 714 | 5,438 | | Total current liabilities | 16,240 | 19,580 | | Total liabilities | 19,168 | 21,840 | | SHAREHOLDERS' EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total shareholders' equity | $56,076 | $49,774 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $75,244 | $71,614 | - Total assets increased by **$3,630 thousand (5.07%)** from December 31, 2024, to June 30, 2025. Total liabilities decreased by **$2,672 thousand (12.23%)** in the same period, while total shareholders' equity increased by **$6,302 thousand (12.66%)**[18](index=18&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement reports the company's financial performance over specific periods, detailing revenues, expenses, and net income | (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | NET REVENUE | $27,377 | $28,090 | $55,009 | $54,052 | | Total operating expenses | 24,381 | 25,819 | 49,994 | 51,652 | | OPERATING INCOME | 2,996 | 2,271 | 5,015 | 2,400 | | INCOME BEFORE PROVISION FOR INCOME TAXES | 2,944 | 1,713 | 4,933 | 1,511 | | NET INCOME | $2,902 | $1,674 | $4,850 | $1,433 | | Preferred stock dividend | 1,365 | 3,923 | 4,176 | 5,235 | | NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $1,537 | $(2,249) | $674 | $(3,802) | | Net income (loss) per common share: basic and diluted | $0.04 | $(0.14) | $0.02 | $(0.24) | - Net revenue for the three months ended June 30, 2025, decreased by **3% YoY**, while for the six months, it increased by **2% YoY**. Operating income significantly increased for both periods, with a **31.9% increase** for the three months and a **108.96% increase** for the six months YoY. Net income attributable to common shareholders turned positive for both periods in 2025, compared to losses in 2024[20](index=20&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents the total change in equity from non-owner sources, including net income and other comprehensive income items | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | NET INCOME | $2,902 | $1,674 | $4,850 | $1,433 | | Foreign currency translation adjustment | (101) | (68) | (159) | (40) | | COMPREHENSIVE INCOME | $2,801 | $1,606 | $4,691 | $1,393 | - Comprehensive income increased significantly, by **74.41%** for the three months and **236.75%** for the six months ended June 30, 2025, compared to the same periods in 2024, primarily driven by higher net income[23](index=23&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This statement details changes in the equity section of the balance sheet, including net income, dividends, and stock transactions - Total shareholders' equity increased from **$49,774 thousand** at January 1, 2025, to **$56,076 thousand** at June 30, 2025. This increase was primarily driven by net income of **$4,850 thousand** and the conversion of preferred stock and accrued dividends to common stock, adding **$2,435 thousand** to additional paid-in capital[26](index=26&type=chunk) - For the six months ended June 30, 2025, the Company declared six months of dividends and paid five months of dividends on the Preferred Shares. No dividends were declared or paid during the six months ended June 30, 2024[27](index=27&type=chunk)[28](index=28&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by the company across operating, investing, and financing activities | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | OPERATING ACTIVITIES: Net income | $4,850 | $1,433 | | Net cash provided by operating activities | 12,521 | 8,345 | | INVESTING ACTIVITIES: Purchases of property and equipment | (1,786) | (425) | | Capitalized software and other intangible assets | (1,677) | (3,046) | | Net cash used in investing activities | (3,503) | (3,471) | | FINANCING ACTIVITIES: Preferred stock dividends paid | (3,317) | - | | Repayment of line of credit | - | (5,000) | | Net cash used in financing activities | (3,694) | (5,512) | | NET INCREASE (DECREASE) IN CASH | 5,295 | (714) | | CASH - End of the period | $10,440 | $2,617 | - Net cash provided by operating activities increased by **$4,176 thousand (50%)** for the six months ended June 30, 2025, compared to the same period in 2024. Net cash used in financing activities decreased by **$1,818 thousand (33%)** due to no line of credit repayments in 2025, despite preferred stock dividend payments[31](index=31&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. ORGANIZATION AND BUSINESS](index=13&type=section&id=1.%20ORGANIZATION%20AND%20BUSINESS) This note describes CareCloud, Inc.'s core business as a healthcare IT provider and its operational structure, including offshore locations - CareCloud, Inc. is a leading provider of technology-enabled services and generative AI solutions for healthcare providers, offering revenue cycle management, cloud-based software, digital health services, healthcare IT professional services & staffing, and medical practice management services[33](index=33&type=chunk)[34](index=34&type=chunk) - The company maintains corporate offices in New Jersey and client support teams throughout the U.S., with offshore offices in Pakistan, Azad Jammu and Kashmir, and Sri Lanka[35](index=35&type=chunk) [2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=2.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the accounting principles used for the unaudited financial statements and discusses recent accounting pronouncements - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim reporting, requiring estimates and assumptions. No changes to significant accounting policies occurred during the six months ended June 30, 2025[36](index=36&type=chunk)[38](index=38&type=chunk) - Recent accounting pronouncements include ASU 2023-01 (Leases), ASU 2023-06 (Disclosure Improvements), ASU 2023-07 (Segment Reporting, adopted by the Company), ASU 2023-09 (Income Taxes), ASU 2024-02 (Codification Improvements), ASU 2024-03 (Expense Disaggregation Disclosures), and ASU 2025-01 (Clarifying Effective Date for ASU 2024-03). Most are not expected to have a material impact on financial statements, with some affecting disclosures[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [3. PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=15&type=section&id=3.%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) This note details the composition and changes in prepaid expenses and other current assets, including prepayments to vendors and prepaid credit card balances | (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Prepayments to vendors | $1,567 | $1,099 | | Prepaid credit card | 545 | - | | Prepaid insurance | 167 | 494 | | Prepaid commissions | 183 | 243 | | Other | 131 | 121 | | Total | $2,593 | $1,957 | - Prepaid expenses and other current assets increased by **$636 thousand (32.5%)** from December 31, 2024, to June 30, 2025, primarily due to an increase in prepayments to vendors and the introduction of a prepaid credit card balance[47](index=47&type=chunk) [4. ACQUISITION](index=15&type=section&id=4.%20ACQUISITION) This note describes the acquisition of RevNu Medical Management, including the consideration, purchase price allocation, and impact on revenue - On April 1, 2025, CareCloud acquired certain assets of RevNu Medical Management, a provider of audiology and hearing aid billing/revenue cycle IT solutions. The acquisition was accounted for as a business combination[48](index=48&type=chunk)[49](index=49&type=chunk) - Total consideration for the RevNu acquisition was approximately **$649 thousand**, consisting of contingent consideration based on future revenue performance. The preliminary purchase price allocation included **$14 thousand** in contract assets, **$629 thousand** in customer relationships, and **$6 thousand** in goodwill[50](index=50&type=chunk)[51](index=51&type=chunk) - Revenue earned from RevNu clients was approximately **$333 thousand** for the three and six months ended June 30, 2025. The acquisition expanded CareCloud's customer base and presence in the healthcare IT industry[52](index=52&type=chunk)[53](index=53&type=chunk) [5. GOODWILL AND INTANGIBLE ASSETS-NET](index=16&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS-NET) This note details the changes in goodwill and intangible assets, including the impact of acquisitions and amortization expense - Goodwill increased by **$6 thousand** to **$19,192 thousand** at June 30, 2025, primarily from the RevNu acquisition, with most allocated to the Healthcare IT segment[56](index=56&type=chunk)[57](index=57&type=chunk) | Intangible Assets – Net (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Contracts and relationships acquired | $48,355 | $47,597 | | Capitalized software | 36,660 | 35,108 | | Total intangible assets | 94,668 | 92,358 | | Less: Accumulated amortization | 79,156 | 73,660 | | Intangible assets - net | $15,512 | $18,698 | - Amortization expense was approximately **$2,800 thousand** for the three months and **$5,600 thousand** for the six months ended June 30, 2025, a decrease of **13%** and **16%** respectively, compared to 2024, due to previously acquired customer relationships becoming fully amortized[58](index=58&type=chunk)[183](index=183&type=chunk) [6. NET INCOME (LOSS) PER COMMON SHARE](index=17&type=section&id=6.%20NET%20INCOME%20(LOSS)%20PER%20COMMON%20SHARE) This note presents the calculation of basic and diluted net income (loss) per common share, highlighting the impact of preferred stock dividends | (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common shareholders | $1,537 | $(2,249) | $674 | $(3,802) | | Weighted-average common shares | 42,321,629 | 16,132,420 | 33,118,912 | 16,073,364 | | Net income (loss) per common share: basic and diluted | $0.04 | $(0.14) | $0.02 | $(0.24) | - Net income per common share improved significantly, turning positive in 2025 (**$0.04** for Q2, **$0.02** for H1) compared to losses in 2024 (**$0.14** for Q2, **$0.24** for H1). This includes preferred stock dividends of **$1,400 thousand** (Q2 2025) and **$4,200 thousand** (H1 2025)[60](index=60&type=chunk) [7. ACCRUED EXPENSES AND DEBT](index=18&type=section&id=7.%20ACCRUED%20EXPENSES%20AND%20DEBT) This note details accrued expenses, the company's revolving line of credit, and significant reductions in interest expense | Accrued Expenses (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Accrued expenses | $3,034 | $3,528 | | Payable to managed practices | 1,593 | 1,116 | | Taxes and other | 282 | 307 | | Total | $4,909 | $4,951 | - The Company has a revolving line of credit with Silicon Valley Bank, reduced to **$10,000 thousand** in October 2024, with an unused borrowing base of approximately **$9,500 thousand** at June 30, 2025. No borrowings were outstanding under the facility at June 30, 2025, compared to **$5,000 thousand** outstanding at June 30, 2024[62](index=62&type=chunk)[195](index=195&type=chunk) - Interest expense on the line of credit decreased significantly to approximately **$13 thousand** (Q2 2025) and **$25 thousand** (H1 2025), from **$616 thousand** (Q2 2024) and **$906 thousand** (H1 2024), due to no borrowings in 2025. The Company was in compliance with all covenants at June 30, 2025[63](index=63&type=chunk)[64](index=64&type=chunk) [8. LEASES](index=18&type=section&id=8.%20LEASES) This note provides details on lease expenses, right-of-use assets, and lease liabilities, including cash payments and sublease income | Lease Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $522 | $620 | $1,098 | $1,257 | | Short-term lease cost | - | - | 5 | 4 | | Variable lease cost | 4 | 7 | 11 | 12 | | Total - net lease cost | $526 | $627 | $1,114 | $1,273 | | Operating Leases (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Operating lease ROU assets, net | $3,058 | $3,133 | | Current operating lease liabilities | $1,294 | $1,287 | | Non-current operating lease liabilities | 1,785 | 1,847 | | Total operating lease liabilities | $3,079 | $3,134 | | Weighted average remaining lease term (in years) | 4.8 | 5.0 | | Weighted average discount rate | 13.8% | 14.2% | - Cash paid for operating leases was **$1,082 thousand** for the six months ended June 30, 2025, a decrease from **$1,277 thousand** in the prior year. Sublease income decreased from **$56 thousand** (H1 2024) to **$13 thousand** (H1 2025)[72](index=72&type=chunk) [9. COMMITMENTS AND CONTINGENCIES](index=20&type=section&id=9.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines various legal settlements and management's assessment of their potential impact on the company's financial position - The Company settled several legal disputes: a **$117 thousand** arbitration award to Ramapo Anesthesiologists (Company's portion **$32 thousand**), a **$200 thousand** settlement for a former customer's mishandling claim, a **$316 thousand** settlement for transition-related costs from a prior acquisition, a **$100 thousand** settlement for a Massachusetts State Court complaint, and a **$29 thousand** settlement for a New York Supreme Court complaint[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - Management believes no current legal proceedings would individually or collectively have a material adverse effect on the company's business, consolidated results of operations, financial position, or cash flows[78](index=78&type=chunk) [10. RELATED PARTIES](index=21&type=section&id=10.%20RELATED%20PARTIES) This note discloses transactions with related parties, including sales, rent expenses, and consulting agreements with directors and executives - Sales to a related party (Executive Chairman's wife) were approximately **$31 thousand** (Q2 2025) and **$51 thousand** (H1 2025), with an accounts receivable balance of **$9 thousand** at June 30, 2025[79](index=79&type=chunk) - Related party rent expense from the Executive Chairman for corporate offices and temporary housing was approximately **$71 thousand** (Q2 2025) and **$142 thousand** (H1 2025). The Company spent **$838 thousand** (H1 2025) to upgrade these leased facilities[80](index=80&type=chunk) - Consulting agreements with entities owned by a former non-independent director (who became Co-CEO) and a Board member were in place, involving preferred stock issuance and monthly fees for services like investor relations and acquisition assistance[82](index=82&type=chunk)[83](index=83&type=chunk) [11. RESTRUCTURING COSTS](index=22&type=section&id=11.%20RESTRUCTURING%20COSTS) This note details the workforce reduction initiative in the Healthcare IT segment, including estimated and incurred restructuring expenses - The Company committed to workforce reduction in the Healthcare IT segment in October 2023 to align resources and improve profitability. Total estimated expenses are **$1,500 thousand**, with **$137 thousand** incurred during the six months ended June 30, 2025[85](index=85&type=chunk)[86](index=86&type=chunk) | Restructuring Costs (in thousands) | Six Months Ended June 30, 2025 | | :--------------------------------- | :----------------------------- | | Balance as of January 1, 2025 | $- | | Additions | 137 | | Payments and other adjustments | (137) | | Balance as of June 30, 2025 | $- | [12. SHAREHOLDERS' EQUITY](index=23&type=section&id=12.%20SHAREHOLDERS'%20EQUITY) This note discusses changes in preferred stock dividends, common share authorization, and the conversion of preferred stock to common stock - The Board suspended monthly cash dividends for Series A and B Preferred Stock in December 2023, resuming payments in February 2025. The Series A Preferred Stock dividend rate was amended from **11% to 8.75%** in September 2024[88](index=88&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk) - In January 2025, authorized common shares increased from **35,000 thousand to 85,000 thousand**. On March 6, 2025, the Board converted **3,541,701 shares** of Series A Preferred Stock into common stock, reducing monthly cash dividends to approximately **$455 thousand**[90](index=90&type=chunk)[92](index=92&type=chunk) - As of June 30, 2025, total undeclared dividends amounted to approximately **$7,100 thousand**, representing accumulated but undeclared dividends due to preferred shareholders[93](index=93&type=chunk) [13. REVENUE](index=23&type=section&id=13.%20REVENUE) This note details revenue recognition policies and disaggregates revenue by service type, along with changes in contract assets and deferred revenue - Revenue is recognized in accordance with ASC 606, primarily from technology-enabled business solutions (revenue cycle management, SaaS), professional services, printing and mailing, group purchasing, and medical practice management services[94](index=94&type=chunk)[97](index=97&type=chunk) | Revenue Disaggregation (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Healthcare IT: Technology-enabled business solutions | $18,991 | $19,034 | $36,696 | $36,317 | | Healthcare IT: Professional services | 4,076 | 4,491 | 9,967 | 8,913 | | Medical Practice Management: Medical practice management services | 3,300 | 3,510 | 6,290 | 6,751 | | Total | $27,377 | $28,090 | $55,009 | $54,052 | - The contract asset decreased by **$411 thousand** during the six months ended June 30, 2025, to **$3,955 thousand**, while deferred revenue (current and long-term) increased from **$1,599 thousand** to **$1,863 thousand**. Deferred commissions were **$257 thousand** at June 30, 2025[119](index=119&type=chunk)[120](index=120&type=chunk) [14. STOCK-BASED COMPENSATION](index=28&type=section&id=14.%20STOCK-BASED%20COMPENSATION) This note provides information on shares available for grant under the equity incentive plan, RSU transactions, and stock-based compensation expense - As of June 30, 2025, **499,683 shares** of common stock and **16,000 shares** of Series B Preferred Stock were available for grant under the Equity Incentive Plan[124](index=124&type=chunk) | RSU Transactions (Shares) | Common Stock | Series A Preferred Stock | Series B Preferred Stock | | :------------------------ | :----------- | :----------------------- | :----------------------- | | Outstanding and unvested at January 1, 2025 | 242,500 | - | 19,199 | | Vested | (89,700) | - | - | | Outstanding and unvested at June 30, 2025 | 152,800 | - | 19,199 | | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative | $111 | $268 | $216 | $(428) | | Total stock-based compensation expense (benefit) | $111 | $265 | $219 | $(443) | [15. INCOME TAXES](index=29&type=section&id=15.%20INCOME%20TAXES) This note details income tax expense, the valuation allowance against deferred tax assets, and the expected impact of recent tax legislation - Income tax expense for the three months ended June 30, 2025, was **$42 thousand** (state **$30 thousand**, foreign **$12 thousand**), and for the six months, **$83 thousand** (state **$60 thousand**, foreign **$23 thousand**). There was no deferred income tax for these periods[130](index=130&type=chunk) - A valuation allowance has been recorded against all federal and state deferred tax assets at June 30, 2025, and December 31, 2024, due to historical losses and uncertainty regarding sufficient future U.S. taxable income[133](index=133&type=chunk) - The recently signed One Big Beautiful Bill Act (OBBBA) is not expected to have a material impact on the Company's consolidated financial statements[134](index=134&type=chunk) [16. FAIR VALUE OF FINANCIAL INSTRUMENTS](index=30&type=section&id=16.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note categorizes fair value measurements into Level 1, 2, and 3, identifying notes payable as Level 2 and contingent consideration as Level 3 - The Company categorizes fair value measurements into Level 1 (unadjusted quoted prices), Level 2 (quoted prices for similar instruments), and Level 3 (significant unobservable inputs). Notes payable are Level 2, and contingent consideration is a Level 3 instrument[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) | Contingent Consideration (in thousands) | Six Months Ended June 30, 2025 | | :------------------------------------ | :----------------------------- | | Balance - January 1 | $- | | Acquisitions | 756 | | Balance - June 30 | $756 | [17. SEGMENT REPORTING](index=30&type=section&id=17.%20SEGMENT%20REPORTING) This note defines CareCloud's two reportable segments, Healthcare IT and Medical Practice Management, and presents their financial performance - CareCloud operates in two reportable segments: Healthcare IT (revenue cycle management, SaaS solutions) and Medical Practice Management (management of three medical practices). The CODM evaluates performance based on revenue, operating expenses, and operating income (loss)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) | Six Months Ended June 30, 2025 (in thousands) | Healthcare IT | Medical Practice Management | Total | | :-------------------------------------------- | :------------ | :-------------------------- | :---- | | Net revenue | $48,719 | $6,290 | $55,009 | | Segment operating income (loss) | $8,417 | $(378) | $8,039 | | Three Months Ended June 30, 2025 (in thousands) | Healthcare IT | Medical Practice Management | Total | | :--------------------------------------------- | :------------ | :-------------------------- | :---- | | Net revenue | $24,077 | $3,300 | $27,377 | | Segment operating income (loss) | $4,518 | $(76) | $4,442 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on CareCloud's financial condition and results of operations, including an overview of the business, key performance measures, detailed analysis of revenue and expenses, liquidity, and capital resources for the three and six months ended June 30, 2025, and 2024 [Financial Risks](index=33&type=section&id=Financial%20Risks) This section highlights the financial risks associated with maintaining cash balances in excess of FDIC insurance limits and in foreign banks without deposit insurance - The Company maintains cash balances at Silicon Valley Bank (SVB) in excess of FDIC insurance limits and approximately **$1,200 thousand** in foreign banks (Pakistan and Sri Lanka) without deposit insurance, posing a risk from banking system volatility[147](index=147&type=chunk) [Overview](index=33&type=section&id=Overview) This section provides a general description of CareCloud's business as a healthcare IT company, its AI solutions, and its operational model leveraging an offshore workforce - CareCloud is a healthcare IT company providing technology-enabled revenue cycle management and cloud-based solutions (EHR, PM, AI, PXM, telehealth) to healthcare providers. Its AI solutions, branded 'cirrusAI', enhance clinical decision-making, streamline workflows, and optimize revenue management[148](index=148&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) - The company leverages a proprietary software platform and a highly educated, specialized offshore workforce (approximately **3,600 team members** in Pakistan and Sri Lanka) to offer competitive pricing, with offshore operations accounting for **18%** of total expenses for the six months ended June 30, 2025[150](index=150&type=chunk)[152](index=152&type=chunk) [Key Performance Measures](index=35&type=section&id=Key%20Performance%20Measures) This section discusses management's use of non-GAAP financial measures like Adjusted EBITDA, Adjusted Operating Income, and Adjusted Net Income to evaluate performance - Management uses non-GAAP financial measures like Adjusted EBITDA, Adjusted Operating Income, and Adjusted Net Income to assess performance, providing an alternative view to GAAP measures[153](index=153&type=chunk)[155](index=155&type=chunk) | Adjusted EBITDA (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Adjusted EBITDA | $6,529 | $6,389 | $12,124 | $10,076 | | Non-GAAP Adjusted Operating Income (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP adjusted operating income | $3,334 | $3,249 | $5,676 | $3,844 | | Non-GAAP adjusted operating margin | 12.2% | 11.6% | 10.3% | 7.1% | | Non-GAAP Adjusted Net Income (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP adjusted net income | $3,281 | $2,958 | $5,571 | $3,178 | | Non-GAAP adjusted earnings per share | $0.07 | $0.18 | $0.13 | $0.20 | [Sources of Revenue](index=37&type=section&id=Sources%20of%20Revenue) This section breaks down the company's revenue by source, primarily subscription-based technology-enabled business solutions and medical practice management services - The primary revenue source is subscription-based technology-enabled business solutions (Healthcare IT segment), accounting for approximately **69%** (Q2 2025) and **67%** (H1 2025) of total revenue. Other healthcare IT services contributed **19%** (Q2 2025) and **22%** (H1 2025)[163](index=163&type=chunk) - Medical practice management services generated approximately **12%** of total revenue for both the three and six months ended June 30, 2025 and 2024[164](index=164&type=chunk) [Operating Expenses](index=38&type=section&id=Operating%20Expenses) This section defines the components of operating expenses, including direct operating costs, selling and marketing, general and administrative, R&D, depreciation, amortization, and restructuring costs - Direct operating costs include salaries, benefits, claims processing, and costs to operate managed practices. Selling and marketing expenses cover compensation, commissions, travel, and advertising. General and administrative expenses include administrative personnel costs, facility leases, insurance, software licenses, and professional fees[165](index=165&type=chunk)[166](index=166&type=chunk) - Research and development expenses primarily consist of personnel, software, and third-party contractor costs. Depreciation is straight-line over 3-5 years, while amortization is accelerated or straight-line over 3-12 years for intangible assets. Restructuring costs are mainly severance and separation costs[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) [Interest and Other Income (Expense) - net](index=38&type=section&id=Interest%20and%20Other%20Income%20(Expense)%20-%20net) This section explains the sources of interest income and expense, along with foreign currency transaction gains or losses - Interest income is from temporary cash investments and late fees. Interest expense is from the line of credit and term loans. Other income (expense) - net primarily reflects foreign currency transaction gains or losses from revaluing intercompany accounts[170](index=170&type=chunk) [Income Taxes](index=38&type=section&id=Income%20Taxes) This section describes the estimation of income taxes and the application of a valuation allowance against deferred tax assets due to historical losses - Income taxes are estimated based on operations in each jurisdiction. A valuation allowance is recorded against all deferred tax assets due to historical losses and uncertainty regarding sufficient future U.S. taxable income[171](index=171&type=chunk) [Critical Accounting Policies and Estimates](index=39&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to critical accounting policies and notes the decrease in the carrying amount of internally-developed capitalized software - No material changes occurred in critical accounting policies and estimates from those described in the Annual Report on Form 10-K/A. The carrying amount of internally-developed capitalized software decreased to **$8,700 thousand** at June 30, 2025, from **$12,300 thousand** at December 31, 2024, as amortization exceeded new capitalization[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) This section provides a detailed comparative analysis of the company's revenues and expenses for the three and six months ended June 30, 2025, and 2024 | Consolidated Results as % of Total Revenue | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | 100.0% | 100.0% | 100.0% | 100.0% | | Total operating expenses | 89.1% | 91.9% | 90.9% | 95.5% | | Operating income | 10.9% | 8.1% | 9.1% | 4.5% | | Net income | 10.6% | 6.1% | 8.8% | 2.8% | | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change Amount | Change Percent | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change Amount | Change Percent | | :------------- | :------------------------------- | :------------------------------- | :------------ | :------------- | :----------------------------- | :----------------------------- | :------------ | :------------- | | Net revenue | $27,377 | $28,090 | $(713) | (3%) | $55,009 | $54,052 | $957 | 2% | | Direct operating costs | $14,480 | $15,242 | $(762) | (5%) | $29,944 | $30,419 | $(475) | (2%) | | Selling and marketing | 1,118 | 1,664 | (546) | (33%) | 2,249 | 3,434 | (1,185) | (35%) | | General and administrative | 4,358 | 4,028 | 330 | 8% | 8,690 | 7,749 | 941 | 12% | | Research and development | 1,020 | 1,055 | (35) | (3%) | 2,255 | 1,968 | 287 | 15% | | Depreciation | 594 | 503 | 91 | 18% | 1,155 | 1,006 | 149 | 15% | | Amortization | 2,788 | 3,211 | (423) | (13%) | 5,564 | 6,638 | (1,074) | (16%) | | Restructuring costs | 23 | 116 | (93) | (80%) | 137 | 438 | (301) | (69%) | | Interest income | $51 | $24 | $27 | 113% | $93 | $51 | $42 | 82% | | Interest expense | (68) | (288) | (220) | (76%) | (126) | (653) | (527) | (81%) | | Other expense - net | (35) | (294) | 259 | 88% | (49) | (287) | 238 | (83%) | | Income tax provision | 42 | 39 | 3 | 8% | 83 | 78 | 5 | 6% | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, working capital, cash flow from operations, and management's plans to ensure sufficient liquidity for the next twelve months - As of June 30, 2025, the Company had **$10,400 thousand** in cash and **$14,900 thousand** in net working capital. Cash provided by operations was **$12,500 thousand** for the six months ended June 30, 2025, leading to a **$5,300 thousand** increase in cash[191](index=191&type=chunk) - Management's plan to improve liquidity includes payroll and operating expense reductions, which were substantially implemented in fiscal 2023 and 2024, and further cost reductions are expected throughout 2025. The Company expects sufficient liquidity for the next twelve months[192](index=192&type=chunk)[193](index=193&type=chunk) | Cash Flows (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change Amount | Change Percent | | :------------------------ | :----------------------------- | :----------------------------- | :------------ | :------------- | | Net cash provided by operating activities | $12,521 | $8,345 | $4,176 | 50% | | Net cash used in investing activities | (3,503) | (3,471) | (32) | (1%) | | Net cash used in financing activities | (3,694) | (5,512) | 1,818 | 33% | | Net increase (decrease) in cash | $5,295 | $(714) | $6,009 | 842% | [Contractual Obligations and Commitments](index=43&type=section&id=Contractual%20Obligations%20and%20Commitments) This section briefly mentions the company's contractual obligations under its line of credit and operating leases, confirming compliance with covenants - The Company has contractual obligations under its line of credit and operating leases, and was in compliance with all covenants as of June 30, 2025. Further details are in the Annual Report on Form 10-K/A[200](index=200&type=chunk) [Off-Balance Sheet Arrangements](index=43&type=section&id=Off-Balance%20Sheet%20Arrangements) This section states that the company did not have any off-balance sheet arrangements during the reporting periods - As of June 30, 2025, and 2024, the Company did not have any off-balance sheet arrangements[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, CareCloud is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide information under this item[202](index=202&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms that management assessed the effectiveness of disclosure controls and procedures as of June 30, 2025 - Management, with the participation of Co-Chief Executive Officers and Interim Chief Financial Officer, concluded that the disclosure controls and procedures were effective as of June 30, 2025[203](index=203&type=chunk)[205](index=205&type=chunk) [Changes in Internal Control Over Financial Reporting](index=44&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting and notes future attestation requirements - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[206](index=206&type=chunk) - For the year ending December 31, 2025, the Company will be required to have an attestation by its independent registered public accounting firm regarding the effectiveness of its internal controls over financial reporting and will become an accelerated filer[207](index=207&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers various other information not included in the financial statements, such as legal proceedings, risk factors, and equity security sales [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 of the Condensed Consolidated Financial Statements for a discussion of legal proceedings - Refer to Note 9, 'Commitments And Contingencies,' in the Notes to Condensed Consolidated Financial Statements for details on legal proceedings[209](index=209&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the Annual Report on Form 10-K/A for a comprehensive list of risk factors and highlights the specific risk associated with maintaining cash balances at financial institutions in excess of federally insured limits - Readers should consider risk factors discussed in Part I—Item 1A. 'Risk Factors' in the Annual Report on Form 10-K/A filed on April 3, 2025[210](index=210&type=chunk) - A specific risk highlighted is maintaining cash at financial institutions, often in balances exceeding federally insured limits, which could be adversely impacted by volatility in the banking system[211](index=211&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the Company for the reporting period - Not applicable[212](index=212&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section discusses the suspension and subsequent resumption of preferred stock dividends, the amendment of the Series A Preferred Stock dividend rate, and the conversion of Series A Preferred Stock, resulting in approximately **$7,100 thousand** in dividends in arrears - The Board suspended monthly cash dividends for Series A and B Preferred Stock starting December 15, 2023. The dividend rate on Series A Preferred Stock changed from **11.00% to 8.75%** in September 2024[213](index=213&type=chunk) - The Company resumed monthly dividend payments in February 2025. Due to the conversion of most Series A Preferred Stock in March 2025, dividends on converted shares were settled. As of the filing date, approximately **$7,100 thousand** in dividends are in arrears[213](index=213&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - Not applicable[214](index=214&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) This section reports that no directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - None of the Company's directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[215](index=215&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including certifications and XBRL interactive data files | Exhibit Number | Exhibit Description | | :------------- | :------------------ | | 31.1 | Certification of Co-Principal Executive Officer | | 31.2 | Certification of Co-Principal Executive Officer | | 31.3 | Certification of Principal Financial Officer | | 32.1* | Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | | 32.2* | Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | | 32.3* | Certification of Interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350 | | 101.INS | XBRL Instance | | 104 | Cover Page Interactive Data File | [Signatures](index=47&type=section&id=Signatures) This section contains the official signatures of the Company's Co-Chief Executive Officers and Interim Chief Financial Officer, certifying the filing of the report - The report is duly signed on behalf of CareCloud, Inc. by A. Hadi Chaudhry (Co-Chief Executive Officer), Stephen Snyder (Co-Chief Executive Officer), and Norman S. Roth (Interim Chief Financial Officer and Corporate Controller) on August 5, 2025[219](index=219&type=chunk)[220](index=220&type=chunk)

Financial Data and Key Metrics Changes - CareCloud achieved GAAP net income of $2,900,000, a 73% improvement from $1,700,000 in the same period last year [6] - The company reported its first positive GAAP earnings per share at $0.04 compared to a loss of $0.14 per share in 2024 [6] - Year-to-date GAAP net income reached $4,900,000, more than tripling the amount reported in 2024 [7] - Adjusted EBITDA stood at $12,100,000, a 20% increase year over year [7] - Free cash flow reached $9,000,000, up 85% over the same period [7] - Revenue for the second quarter was $27,400,000, down approximately $700,000 year over year due to a one-time non-recurring revenue item in Q2 2024 [26] - Non-GAAP adjusted net income for the second quarter was $3,300,000 or $0.07 per share [27] Business Line Data and Key Metrics Changes - CareCloud Wellness generated approximately $1,000,000 in revenue for the quarter and approximately $1,800,000 for the first six months of the year [26] - The company reported positive GAAP operating income of $3,000,000 compared to $2,300,000 in Q2 2024 [26] Market Data and Key Metrics Changes - CareCloud has received ONC Health IT certification for its Talk EHR platform tailored specifically for critical access hospitals, opening access to a market of over 1,500,000,000 across more than 1,300 rural hospitals [22][23] Company Strategy and Development Direction - The company is focused on AI-driven innovation, operational discipline, and sustainable growth, marking a continuation of the transformation initiated in 2024 [5] - CareCloud is actively using AI to enhance provider and patient experiences while improving internal operations and cost structures [8][9] - The company has returned to a more active posture in M&A, completing two acquisitions this year aligned with its focus on specialty AI-powered revenue cycle management [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver profitability at scale and to lead the next wave of intelligent healthcare delivery [12] - The management team emphasized the importance of maintaining financial discipline and shareholder alignment, having declared nine consecutive months of preferred dividend payments funded entirely from free cash flow [10] - The company anticipates continued positive EPS and modest revenue increases in the second half of the year [75] Other Important Information - The AI Center of Excellence is fully operational, with 100 full-time AI professionals and 100 interns onboarded [13][14] - The company is embedding intelligence into its platform to improve operational efficiency and scalability [24] Q&A Session Summary Question: How does the company view the spend on the AI Center of Excellence relative to potential revenue opportunities? - Management indicated a threefold focus: generating incremental revenue, enhancing product competitiveness, and optimizing back-office operations [35] Question: How is the company approaching sales for new offerings targeting specialized practices? - The company sees opportunities in providing end-to-end solutions for specialty practices, particularly in areas where existing EHRs lack next-generation capabilities [39][41] Question: How did MedAssar Remote Patient Monitoring and Chronic Care Management perform? - Management reported stable revenue for MedAssar, with RPM expected to contribute about 5% or less to overall revenue [45][46] Question: What is the company's outlook on M&A and funding capacity? - The company is seeing an active M&A environment and believes it is well-positioned to pursue strategic acquisitions funded through internally generated cash flow and an untapped credit facility [54][56]

Q2 2025 Performance Highlights - Net income increased by 73%[20] - Free cash flow increased by 102%[20] - Earnings per share became positive for the first time[20] Financial Results - Q2 2025 revenue was $27.4 million compared to $28.1 million in Q2 2024[43] - Q2 2025 net income was $2.9 million compared to $1.7 million in Q2 2024[43] - Q2 2025 adjusted EBITDA was $6.5 million compared to $6.4 million in Q2 2024[43] - Q2 2025 earnings per share was $0.04 compared to -$0.14 in Q2 2024[43] - Q2 2025 free cash flow was $5.4 million compared to $2.7 million in Q2 2024[43] - Year-to-date 2025 revenue was $55.0 million compared to $54.1 million in year-to-date 2024[46] - Year-to-date 2025 net income was $4.9 million compared to $1.4 million in year-to-date 2024[46] - Year-to-date 2025 adjusted EBITDA was $12.1 million compared to $10.1 million in year-to-date 2024[46] - Year-to-date 2025 earnings per share was $0.02 compared to -$0.24 in year-to-date 2024[46] - Year-to-date 2025 free cash flow was $9.0 million compared to $4.9 million in year-to-date 2024[46] 2025 Guidance - Revenue guidance is $111 million to $114 million[27] - Adjusted EBITDA guidance is $26 million to $28 million[27] - Earnings per share guidance is $0.10 to $0.13[27]

[Executive Summary & Financial Highlights](index=1&type=section&id=executive_summary_and_financial_highlights) CareCloud achieved its first positive GAAP EPS quarter since IPO, with significant year-to-date financial growth and strategic advancements in AI and acquisitions [Second Quarter 2025 Financial Highlights](index=1&type=section&id=second_quarter_2025_financial_highlights) CareCloud reported its first quarter of positive GAAP EPS since going public, with significant increases in GAAP net income and positive GAAP EPS for Q2 2025 compared to Q2 2024, despite a slight decrease in revenue | Metric | Q2 2025 ($ in millions) | Q2 2024 ($ in millions) | Change | | :--- | :--- | :--- | :--- | | GAAP Net Income | 2.9 | 1.7 | +73% | | GAAP EPS | $0.04 | ($0.14) | Positive | | Adjusted Net Income | 3.3 | 3.0 | | | Adjusted EBITDA | 6.5 | 6.4 | | | Revenue | 27.4 | 28.1 | -2.5% | [Year-to-Date 2025 Financial Highlights](index=1&type=section&id=year_to_date_2025_financial_highlights) For the first half of 2025, CareCloud achieved substantial growth in GAAP net income, positive GAAP EPS, and strong increases in Adjusted EBITDA and Free Cash Flow compared to the same period last year, alongside a modest revenue increase | Metric | YTD 2025 ($ in millions) | YTD 2024 ($ in millions) | Change | | :--- | :--- | :--- | :--- | | GAAP Net Income | 4.9 | 1.4 | +238% | | GAAP EPS | $0.02 | ($0.24) | Positive | | Adjusted Net Income | 5.6 | 3.2 | | | Adjusted EBITDA | 12.1 | 10.1 | +20% | | Free Cash Flow | 9.0 | 4.9 | +85% | | Revenue | 55.0 | 54.1 | +1.7% | [Recent Strategic Updates](index=1&type=section&id=recent_strategic_updates) CareCloud achieved a historic financial milestone with its first positive GAAP EPS quarter since its 2014 IPO, launched an AI Center of Excellence scaling to 500 team members, and reignited its acquisition strategy with two completed deals and more under evaluation - Financial Achievement: **First quarter of positive GAAP EPS** in CareCloud's history since going public in 2014[4](index=4&type=chunk) - AI Center of Excellence: Now live and scaling to **500 team members** by year-end, with dedicated teams driving product innovation[4](index=4&type=chunk) - Acquisition Strategy Reignited: Completed **two acquisitions** so far this year, with additional acquisition opportunities actively under evaluation[4](index=4&type=chunk) [Management Commentary](index=2&type=section&id=management_commentary) CareCloud's co-CEOs and Interim CFO highlighted the company's strategic advancements in AI, sustained financial strength, and successful turnaround. They emphasized the pivotal role of the AI Center of Excellence in driving operational efficiency and healthcare transformation, the achievement of positive GAAP EPS, and continued growth through acquisitions and reinvestment of free cash flow - The launch of the AI Center of Excellence is a pivotal moment, aiming to build one of the largest dedicated healthcare AI teams globally to automate clinical workflows, optimize revenue cycle management, and improve patient outcomes[5](index=5&type=chunk) - CareCloud achieved **positive GAAP EPS in Q2 2025**, marking the first time in the Company's history since going public in 2014, demonstrating continued momentum and financial strength[5](index=5&type=chunk) - The company announced its **fifth consecutive quarter of positive GAAP net income** and an increase in year-to-date revenue, adjusted EBITDA, and free cash flow year-over-year, while consistently paying preferred stock dividends and reinvesting for future growth[5](index=5&type=chunk) [Capital Structure Overview](index=2&type=section&id=capital_structure_overview) As of June 30, 2025, CareCloud had specific numbers of Series A and B Preferred Stock and common stock outstanding. Both preferred stock series accrue dividends at 8.75% per annum and are redeemable at the Company's option once dividends are current | Stock Type | Shares Outstanding (June 30, 2025) | | :--- | :--- | | Series A Preferred Stock | 984,530 | | Series B Preferred Stock | 1,511,372 | | Common Stock | 42,322,039 | - Series A and B Preferred Stock accrue dividends at **8.75% per annum** (**$2.1875 annually per share**) and are redeemable at the Company's option once preferred stock dividends are current[6](index=6&type=chunk) [2025 Financial Guidance](index=2&type=section&id=2025_financial_guidance) CareCloud reconfirmed its full-year 2025 earnings guidance, projecting revenue between $111 million and $114 million, Adjusted EBITDA between $26 million and $28 million, and GAAP EPS between $0.10 and $0.13 | Metric | 2025 Guidance ($ in millions) | | :--- | :--- | | Revenue | 111 – 114 | | Adjusted EBITDA | 26 – 28 | | GAAP Net Income Per Share (EPS) | $0.10 – $0.13 | - Revenue guidance is based on expectations from existing clients, organic growth from new client additions, and anticipated small tuck-in acquisitions[7](index=7&type=chunk) - Adjusted EBITDA guidance reflects improvements from the Company's cost reduction efforts[8](index=8&type=chunk) [Conference Call Details](index=3&type=section&id=conference_call_details) CareCloud management hosted a conference call on August 5, 2025, at 8:30 a.m. ET to discuss first-half 2025 results, with live webcast and audio-only options available, and a replay accessible afterward - CareCloud management hosted a conference call on **August 5, 2025, at 8:30 a.m. Eastern Time** to discuss the first half of 2025 results[9](index=9&type=chunk) - The live webcast and related presentation slides were accessible at ir.carecloud.com/events, with an audio-only option available by dialing **201-389-0920**[9](index=9&type=chunk) - A replay of the conference call and presentation slides became available approximately three hours after the call's conclusion at the same link, with an audio-only replay option[10](index=10&type=chunk) [Corporate Information & Disclosures](index=3&type=section&id=corporate_information_and_disclosures) This section outlines CareCloud's use of non-GAAP financial measures, disclaims forward-looking statements, and provides an overview of the company's healthcare technology and AI solutions [Use of Non-GAAP Financial Measures Disclosure](index=3&type=section&id=use_of_non_gaap_financial_measures_disclosure) CareCloud utilizes non-GAAP financial measures, as defined by SEC Regulation G, to provide supplemental information on underlying business performance, emphasizing that these measures should be considered in addition to, not as a substitute for, GAAP financial performance - CareCloud uses and discusses non-GAAP financial measures, as defined by **SEC Regulation G**, in its earnings releases and presentations[11](index=11&type=chunk) - These non-GAAP measures provide useful supplemental information regarding underlying business operations but should be considered in addition to, and not as a substitute for, GAAP financial performance measures[11](index=11&type=chunk) - Reconciliations between non-GAAP and comparable GAAP financial measures are included in the press release after the condensed consolidated financial statements[11](index=11&type=chunk) [Forward-Looking Statements Disclosure](index=3&type=section&id=forward_looking_statements_disclosure) This press release contains forward-looking statements regarding future events, operations, and financial performance, which are subject to substantial known and unknown risks and uncertainties that could materially affect actual results. The company does not undertake to update these statements - The press release contains forward-looking statements relating to anticipated future events, results of operations, or financial performance, identifiable by terms such as 'expects,' 'plans,' 'anticipates,' or 'believes'[12](index=12&type=chunk) - These statements are neither historical facts nor assurances of future performance, involving substantial known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[14](index=14&type=chunk) - The Company does not assume any obligation to update the forward-looking statements to reflect events or circumstances that occur or exist after the date on which they were made[15](index=15&type=chunk) [About CareCloud](index=4&type=section&id=about_carecloud) CareCloud is a healthcare technology leader providing generative AI solutions to over 40,000 providers, aiming to enhance financial and operational performance, streamline clinical workflows, and improve patient experience through a suite of technology-enabled solutions - CareCloud is a leader in healthcare technology and generative AI solutions, helping clients increase financial and operational performance, streamline clinical workflows, and improve the patient experience[16](index=16&type=chunk) - The company serves more than **40,000 providers** with products and services including revenue cycle management (RCM), practice management (PM), electronic health records (EHR), artificial intelligence (AI), business intelligence (BI), patient experience management (PXM), and digital health[16](index=16&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=condensed_consolidated_financial_statements) This section presents CareCloud's condensed consolidated balance sheets, statements of operations, and cash flows, highlighting key financial positions and performance metrics [Condensed Consolidated Balance Sheets](index=5&type=section&id=condensed_consolidated_balance_sheets) CareCloud's balance sheet as of June 30, 2025, shows an increase in total assets and shareholders' equity, driven by a significant rise in cash, while total liabilities decreased compared to December 31, 2024 | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | Total Assets | $75,244 | $71,614 | | Total Liabilities | $19,168 | $21,840 | | Total Shareholders' Equity | $56,076 | $49,774 | | Cash | $10,440 | $5,145 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=condensed_consolidated_statements_of_operations) For Q2 2025 and YTD 2025, CareCloud demonstrated strong improvements in profitability, achieving positive GAAP net income and EPS, reversing prior year losses, despite a slight dip in Q2 revenue but an increase in YTD revenue | Metric ($ in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $27,377 | $28,090 | $55,009 | $54,052 | | Operating Income | $2,996 | $2,271 | $5,015 | $2,400 | | Net Income | $2,902 | $1,674 | $4,850 | $1,433 | | Net Income (Loss) Attributable to Common Shareholders | $1,537 | ($2,249) | $674 | ($3,802) | | Net Income (Loss) Per Common Share | $0.04 | ($0.14) | $0.02 | ($0.24) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=condensed_consolidated_statements_of_cash_flows) For the six months ended June 30, 2025, CareCloud significantly increased net cash provided by operating activities and ended the period with a higher cash balance, while managing investing and financing activities | Metric ($ in thousands) | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $12,521 | $8,345 | | Net cash used in investing activities | ($3,503) | ($3,471) | | Net cash used in financing activities | ($3,694) | ($5,512) | | Cash - End of the period | $10,440 | $2,617 | [Non-GAAP Financial Measures Reconciliation & Explanation](index=8&type=section&id=non_gaap_financial_measures_reconciliation_and_explanation) This section provides reconciliations for non-GAAP financial measures such as Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, and Free Cash Flow, along with their definitions and management's rationale for their use [Adjusted EBITDA Reconciliation](index=8&type=section&id=adjusted_ebitda_reconciliation) CareCloud's Adjusted EBITDA increased for both Q2 and YTD 2025 compared to the prior year periods, reflecting improved operational performance after adjusting for non-cash and non-recurring items | Metric ($ in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Income | $2,902 | $1,674 | $4,850 | $1,433 | | Adjusted EBITDA | $6,529 | $6,389 | $12,124 | $10,076 | [Non-GAAP Adjusted Operating Income Reconciliation](index=9&type=section&id=non_gaap_adjusted_operating_income_reconciliation) CareCloud reported an increase in Non-GAAP Adjusted Operating Income and Adjusted Operating Margin for both Q2 and YTD 2025, indicating stronger core operational efficiency when excluding certain non-cash and non-recurring expenses | Metric ($ in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP Operating Income | $2,996 | $2,271 | $5,015 | $2,400 | | GAAP Operating Margin | 10.9% | 8.1% | 9.1% | 4.4% | | Non-GAAP Adjusted Operating Income | $3,334 | $3,249 | $5,676 | $3,844 | | Non-GAAP Adjusted Operating Margin | 12.2% | 11.6% | 10.3% | 7.1% | [Non-GAAP Adjusted Net Income Reconciliation](index=9&type=section&id=non_gaap_adjusted_net_income_reconciliation) CareCloud's Non-GAAP Adjusted Net Income and Adjusted Earnings Per Share showed growth for Q2 and YTD 2025, reflecting improved profitability after accounting for specific non-GAAP adjustments | Metric ($ in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Income | $2,902 | $1,674 | $4,850 | $1,433 | | Non-GAAP Adjusted Net Income | $3,281 | $2,958 | $5,571 | $3,178 | | Non-GAAP Adjusted Earnings Per Share | $0.07 | $0.18 | $0.13 | $0.20 | [Free Cash Flow Reconciliation](index=10&type=section&id=free_cash_flow_reconciliation) CareCloud significantly increased its Free Cash Flow for both Q2 and YTD 2025, demonstrating enhanced ability to generate cash from operations after capital expenditures | Metric ($ in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $7,408 | $4,279 | $12,521 | $8,345 | | Free Cash Flow | $5,415 | $2,676 | $9,018 | $4,874 | [Explanation of Non-GAAP Financial Measures](index=10&type=section&id=explanation_of_non_gaap_financial_measures) CareCloud uses non-GAAP financial measures like Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, and Free Cash Flow to provide a clearer understanding of operational trends by excluding non-cash or non-recurring items. These measures aid management in evaluating performance, making decisions, and strategic planning, and are considered important indicators of operational strength - Management uses non-GAAP financial measures to understand short-term and long-term financial and operational trends, evaluate operating performance, make operating decisions, and serve as a basis for strategic planning[36](index=36&type=chunk) - Adjusted EBITDA is defined as GAAP net income (loss) before provision for income taxes, net interest expense, other (income) expense, stock-based compensation expense, depreciation and amortization, integration costs, transaction costs, impairment charges, and changes in contingent consideration[37](index=37&type=chunk) - Free cash flow measures the ability to generate additional cash from business operations and is considered an important financial measure for evaluating performance, though it does not represent residual cash available for discretionary expenditures[48](index=48&type=chunk)

Core Insights - CareCloud, Inc. has reported its first quarter of positive GAAP EPS in its history since going public, indicating a significant milestone in financial performance [1][6][9] - The company has launched an AI Center of Excellence aimed at enhancing operational efficiency and driving innovation in healthcare technology [5][6][7] - CareCloud's financial results show strong growth, with a GAAP net income of $2.9 million for Q2 2025, a 73% increase from Q2 2024 [6][7] Financial Performance - GAAP net income for Q2 2025 was $2.9 million, up from $1.7 million in Q2 2024, representing a 73% increase [6] - Positive GAAP EPS of $0.04 per share compared to a negative GAAP EPS of ($0.14) per share in Q2 2024 [6] - Revenue for Q2 2025 was $27.4 million, slightly down from $28.1 million in Q2 2024 [6] - Year-to-date revenue for 2025 reached $55.0 million, compared to $54.1 million in the same period last year [6] Strategic Initiatives - The AI Center of Excellence is expected to scale to 500 team members by year-end, focusing on automating clinical workflows and optimizing revenue cycle management [5][6] - CareCloud has completed two acquisitions in 2025 and is actively evaluating additional opportunities to enhance its market position [6][7] - The company continues to pay preferred stock dividends monthly from internally generated free cash flow, demonstrating financial stability [7] Guidance and Future Outlook - CareCloud reaffirms its revenue guidance for 2025, expecting between $111 million and $114 million [9][10] - Adjusted EBITDA is projected to be between $26 million and $28 million for the full year 2025 [10] - GAAP EPS is anticipated to be in the range of $0.10 to $0.13 for the fiscal year ending December 31, 2025 [9][10]

Core Insights - CareCloud, Inc. has achieved ONC Health IT Certification for its electronic health record (EHR) platform specifically for Critical Access Hospitals (CAHs), marking a significant milestone in its strategic entry into the inpatient EHR market [1][2] - The certification opens access to a market opportunity exceeding $1.5 billion, with over 1,300 CAHs looking for modern, cloud-based EHR systems tailored to their operational and clinical needs [2][3] - A study indicates that more than half of rural and CAHs plan to replace their legacy EHR systems by 2026, prioritizing cost predictability, cloud deployment, interoperability, and reduced IT burden [3] Company Strategy - CareCloud's certified EHR solution is designed to meet the specific needs of CAHs, offering flexibility, compliance, and embedded AI tools at a sustainable cost [3][4] - The company aims to modernize rural healthcare by providing a cloud-based platform that addresses the clinical, operational, and regulatory needs of rural hospitals, helping them transition from outdated systems [4][5] - CareCloud's mission includes supporting healthcare providers across the full continuum of care with a comprehensive suite of cloud-based technology and AI solutions [5][6]

Core Viewpoint - CareCloud, Inc. has launched a fully integrated, AI-driven dermatology EHR aimed at enhancing clinical workflows, patient engagement, and financial outcomes for dermatology practices, addressing the $9 billion dermatology services market in the U.S. [1][2] Company Overview - CareCloud is a leader in healthcare technology and generative AI solutions, providing tools to improve operational performance and streamline clinical workflows for over 40,000 providers [6]. Product Features - The new Dermatology EHR includes AI-powered charting with customizable templates, advanced image management, integrated telehealth, and patient portal features to enhance patient engagement [3][4]. - It offers optimized billing and revenue cycle management (RCM) with dermatology-specific coding and automated claim scrubbing, ensuring maximum reimbursements [4]. Market Position - The dermatology services sector is a significant part of the U.S. healthcare market, valued at approximately $9 billion in 2024, indicating a strong demand for efficient technology solutions [2]. - CareCloud's Dermatology EHR is designed to replace outdated systems, thereby improving efficiency and focusing more on patient care [2]. Availability - The CareCloud Dermatology EHR is now available for dermatology providers across the nation, with options for personalized demos [5].

Core Insights - CareCloud, Inc. will release its financial results for the second quarter ended June 30, 2025, before the market opens on August 5, 2025 [1] - A conference call for investors will follow at 8:30 a.m. Eastern Time on the same day [1] Company Overview - CareCloud is a leader in AI-powered healthcare technology and revenue cycle management solutions, serving medical practices and health systems across the nation [1] - The company offers a suite of solutions aimed at improving financial and operational performance, streamlining clinical workflows, and enhancing patient experience [4] - More than 40,000 providers rely on CareCloud to improve patient care while reducing administrative burdens and operating costs [4]

Core Insights - CareCloud, Inc. experienced a stock price increase of approximately 70% in Q2 2025, positioning it among the top gainers in the Russell Microcap Index [1][2] - The company was officially added to the Russell Microcap Index effective June 30, 2025, reflecting its growing visibility and investor confidence [2] - Co-CEO Stephen Snyder highlighted the company's focus on AI innovation, targeted acquisitions, and a strengthened capital structure as key drivers for long-term growth [3] Company Performance - CareCloud's disciplined execution is expected to lead to continued momentum into the second half of 2025 [4] - The company launched a new AI Center of Excellence and resumed M&A activity targeting high-potential verticals [9] - CareCloud completed the conversion of 3.5 million Series A Preferred shares into Common Stock and ended the quarter with over $10 million in cash [9] Company Overview - CareCloud is a leading provider of healthcare technology solutions, offering a comprehensive suite of revenue cycle, practice management, and patient engagement solutions supported by AI technologies [5]

Core Insights - CareCloud, Inc. has been added to the Russell Microcap® Index, effective June 30, 2025, highlighting its growing recognition in the healthcare technology sector [1][3] - The company's common stock price increased by approximately 70% during Q2 2025, driven by key developments including the launch of an AI Center of Excellence and a strong cash position of around $10 million [2] Company Developments - The launch of CareCloud's AI Center of Excellence is a significant milestone aimed at enhancing its technological capabilities [2] - The company resumed acquisition activities in targeted growth areas, indicating a strategic focus on expansion [2] - Approximately 3.5 million shares of Series A Preferred Stock were converted into Common Stock on March 6, 2025, reflecting a shift in capital structure [2] Financial Performance - CareCloud reported a strong cash position of approximately $10 million at the end of Q2 2025, which supports its operational and strategic initiatives [2] - The inclusion in the Russell Microcap Index serves as a benchmark for performance in the U.S. small-cap equity market, potentially attracting more institutional investors [3]