CareCloud, Inc. (NASDAQ:CCLD) Q4 2024 Earnings Conference Call March 13, 2025 8:30 AM ET Company Participants Kristen Rothe - Corporate Counsel Stephen Snyder - Co-Chief Executive Officer Hadi Chaudhry - Co-Chief Executive Officer & Director Norman Roth - Interim Chief Financial Officer & Corporate Controller Mahmud Haq - Founder & Executive Chairman Conference Call Participants Michael Kim - Zacks Small-Cap Research Jeffrey Cohen - Ladenburg Thalmann Allen Klee - Maxim Group Operator Greetings, and welcome ...

Financial Data and Key Metrics Changes - In 2024, the company achieved record-breaking profitability with adjusted EBITDA rising to $24.1 million, a 56% increase year over year, and net income reaching an all-time high of $7.9 million despite a modest decline in revenue [8][26] - Free cash flow reached $13.2 million, a year-over-year increase of nearly 250%, reinforcing the company's ability to drive sustained profitability [8][27] - Revenue for the fourth quarter of 2024 was $28.2 million, compared to $28.4 million in the same period of 2023, indicating a slight decline [25] Business Line Data and Key Metrics Changes - Recurring technology-enabled business solution revenues during the fourth quarter of 2024 were $24.8 million, essentially flat compared to the fourth quarter of 2023, while non-recurring professional services revenues from Medisar declined by approximately $400,000 [25] - The company anticipates revenue growth in the range of $111 million to $114 million for 2025, supported by market demand for integrated AI-driven solutions [12] Market Data and Key Metrics Changes - The specialty EHR market represents a multibillion-dollar opportunity driven by the need for tailored solutions that enhance clinical efficiency, regulatory compliance, and patient care [21] - The company is expanding its specialty-based EHR solutions and launching new AI-driven products, addressing distinct needs across various medical specialties [20][22] Company Strategy and Development Direction - The company is focused on strategic growth, efficiency, and expansion, leveraging AI-driven automation and innovations to enhance provider workflows and optimize patient outcomes [12][22] - The conversion of Series A preferred shares into common stock was a significant strategic move, aimed at simplifying the capital structure and enhancing shareholder value [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive earnings per share for the first time since going public in 2014, reflecting the strength of the business transformation and operational discipline [9][12] - The company remains committed to financial strength, innovation, and sustainable growth, reinforcing its position as a leader in AI-driven healthcare solutions [28] Other Important Information - The company has fully repaid its Silicon Valley Bank line of credit and is now bank debt-free, which has significantly improved its financial position [24][27] - The company has not completed an acquisition in almost four years, but a recent small acquisition marks its reentry into the acquisition market [15] Q&A Session Summary Question: Revenue and EBITDA guidance for the year - Management indicated that they expect revenue in the range of $111 million to $114 million, reflecting a strategic shift back into growth while maintaining responsible spending [33][35] Question: Insights on M&A pipeline and valuations - Management noted a gradual return to lower multiples seen in the pre-COVID era, with a focus on pursuing value-driven acquisitions that align with long-term objectives [39][40] Question: User base expansion and offerings - The user base is diversified, with a significant portion in primary care, and the company aims to upsell various solutions to existing clients [46][47] Question: 2025 guidance and customer attrition - The 2025 guidance does not factor in any material acquisitions, focusing instead on organic growth and small tuck-in opportunities [48][49] Question: Preferred stocks and dividends - Management explained the conversion of Series A preferred shares and the ongoing obligations related to Series B preferred shares, with expected annualized dividends of about $5.5 million [64][66]

Q4 2024 RESULTS Nasdaq Global Market: CCLD, CCLDP, CCLDO March 13, 2025 A leading provider of technology-enabled services and solutions that redefine the healthcare revenue cycle © CareCloud, Inc. 2025 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 term ...

Financial Performance - GAAP net income for full year 2024 was $7.9 million, a significant turnaround from a net loss of $48.7 million in 2023[5] - Adjusted EBITDA for full year 2024 increased by 56% to $24.1 million, up from $15.4 million in 2023[5] - Free cash flow for full year 2024 reached $13.2 million, representing a 244% increase from $3.8 million in 2023[5] - Fourth quarter 2024 GAAP net income was $3.3 million, compared to a net loss of $43.7 million in Q4 2023[8] - Adjusted EBITDA for Q4 2024 was $7.1 million, or 25% of revenue, up from $4.1 million in the same period last year[9] - Operating income for the year ended December 31, 2024, was $9,121, compared to a loss of $47,115 in 2023, indicating a significant turnaround[31] - Net income for the year ended December 31, 2024, was $7,851, compared to a net loss of $48,674 in 2023, reflecting improved financial performance[31] - GAAP net income for Q4 2024 was $3,296,000, a significant improvement compared to a loss of $43,692,000 in Q4 2023; for the year, net income was $7,851,000 compared to a loss of $48,674,000 in 2023[41] - Non-GAAP adjusted operating income for Q4 2024 was $3,940,000, up from $1,191,000 in Q4 2023, with a non-GAAP adjusted operating margin of 14.0% compared to 4.2% in the same quarter last year[39] - Non-GAAP adjusted net income for Q4 2024 was $3,871,000, compared to $835,000 in Q4 2023, resulting in a non-GAAP adjusted net income per share of $0.24 versus $0.05[41] Revenue and Cash Flow - Revenue for full year 2024 was $110.8 million, a decrease from $117.1 million in 2023[6] - Total net revenue for the year ended December 31, 2024, was $110,837, a decrease of 5.2% from $117,059 in 2023[31] - Net revenue for Q4 2024 was $28,239,000, a slight decrease from $28,416,000 in Q4 2023, while total revenue for the year decreased from $117,059,000 in 2023 to $110,837,000 in 2024[39] - Free cash flow for Q4 2024 was $2,967,000, an increase from $1,449,000 in Q4 2023, while annual free cash flow rose to $13,236,000 from $3,848,000[45] - Cash at the end of the year increased to $5,145 from $3,331, marking a 54.4% increase[33] - Net cash provided by operating activities for Q4 2024 was $5,229,000, up from $3,740,000 in Q4 2023[45] Cost Management and Liabilities - Total operating expenses for the year decreased to $101,716 in 2024 from $164,174 in 2023, a reduction of 38.0%[31] - Total liabilities decreased significantly to $21,840 in 2024 from $36,109 in 2023, a reduction of 39.4%[29] - The company’s accumulated deficit improved to $(66,630) in 2024 from $(74,481) in 2023, showing a reduction of 10.4%[29] - The conversion of 3.5 million Series A Preferred Stock into common stock will reduce annual dividend burden by $7.7 million[5] - The company reported a preferred stock dividend of $12,310 for the year ended December 31, 2024, down from $15,674 in 2023[31] - The company incurred goodwill impairment charges of $42,000,000 in Q4 2023, which did not recur in Q4 2024[39] Future Projections - The company expects 2025 revenue to be between $111 million and $114 million, based on growth from existing clients and new acquisitions[15] - Adjusted EBITDA for 2025 is projected to be between $26 million and $28 million, reflecting cost reduction efforts[16] Shareholder Information - The total number of end-of-period shares increased to 16,256,236 in Q4 2024 from 15,880,092 in Q4 2023[41] Financial Metrics - Free cash flow is considered an important financial measure for evaluating the Company's performance[61] - Free cash flow does not account for payments required for debt service and other contractual obligations[61] - The Company views free cash flow as supplemental information to its condensed consolidated statements of cash flows[61]

Core Viewpoint - CareCloud, Inc. has achieved a significant turnaround in its financial performance for the year ended December 31, 2024, returning to GAAP profitability, generating record cash flow, resuming dividends, and strengthening its balance sheet [1][4][9] Financial Performance - Full year 2024 revenue was $110.8 million, down from $117.1 million in 2023 [4][6] - GAAP net income for 2024 was $7.9 million, a recovery from a net loss of $48.7 million in 2023 [4][6] - Adjusted net income for 2024 was $10.5 million, or $0.65 per share [4][8] - Adjusted EBITDA for 2024 was $24.1 million, an increase of 56% from $15.4 million in 2023 [6][9] Fourth Quarter Performance - Fourth quarter 2024 revenue was $28.2 million, slightly down from $28.4 million in Q4 2023 [5][6] - GAAP net income for Q4 2024 was $3.3 million, compared to a net loss of $43.7 million in Q4 2023 [6][7] - Adjusted EBITDA for Q4 2024 was $7.1 million, a 73% increase from $4.1 million in the same period last year [6][7] Operational Improvements - The company has successfully transformed its cost structure, enhancing operational efficiency through AI-driven innovations [2][4] - Free cash flow for 2024 was $13.2 million, a substantial increase of 244% from $3.8 million in 2023 [6][9] Shareholder Actions - In January 2025, CareCloud increased the number of authorized common shares from 35 million to 85 million and declared two months of Preferred Stock dividends [3] - The conversion of 3.5 million shares of Series A Preferred Stock into common stock resulted in the issuance of 26 million additional common shares, reducing the annual dividend burden by $7.7 million [3][6] 2025 Guidance - For the fiscal year ending December 31, 2025, CareCloud expects revenue between $111 million and $114 million [12][13] - Adjusted EBITDA is anticipated to be between $26 million and $28 million, with net income per share projected at $0.10 to $0.13 [12][13]

Core Viewpoint - CareCloud, Inc. intends to voluntarily delist its 8.75% Series A Cumulative Redeemable Perpetual Preferred Stock from the Nasdaq Global Market due to non-compliance with listing requirements following a mandatory conversion of shares [1] Group 1: Delisting Announcement - The company will notify Nasdaq of its intent to delist the Series A Preferred Stock and expects to file a Form 25 with the SEC around March 21, 2025 [1] - The delisting is expected to be effective on or about March 31, 2025 [1] - The mandatory conversion involved converting each share of Series A Preferred Stock not held by a "material shareholder" into 7.3358 shares of common stock [1] Group 2: Company Overview - CareCloud specializes in healthcare information technology and generative AI solutions for medical practices and health systems [2] - The company offers a suite of technology-enabled solutions aimed at improving financial and operational performance, streamlining clinical workflows, and enhancing patient experience [2] - Over 40,000 providers rely on CareCloud for improving patient care while reducing administrative burdens and operating costs [2]

Core Viewpoint - CareCloud, Inc. has announced the mandatory conversion of its 8.75% Series A Cumulative Redeemable Perpetual Preferred Stock into Common Stock, which is expected to eliminate approximately $7 million in annual dividend obligations and improve the company's capital structure [1][2]. Group 1: Conversion Details - The conversion will be effective at 4:01 p.m. Eastern Time on March 6, 2025, with each share of Preferred Stock converting into 7.3358 shares of Common Stock, including all accumulated and unpaid dividends [2][3]. - Shareholders holding at least 100,000 shares of Preferred Stock will retain the right to object to the conversion if their shares are held by the company's transfer agent [3]. Group 2: Financial Implications - The conversion is anticipated to free up capital for reinvestment in growth initiatives, enhancing the company's ability to create shareholder value [2]. - The elimination of dividend obligations is expected to provide greater flexibility in managing the company's financial resources [2]. Group 3: Company Overview - CareCloud specializes in healthcare information technology and generative AI solutions, serving over 40,000 providers to improve patient care while reducing administrative burdens and operating costs [5].

Core Viewpoint - CareCloud, Inc. is resuming its acquisition strategy to enhance its position in the healthcare technology and revenue cycle management sectors, starting with the acquisition of Mesa, LLC, which was finalized on February 28, 2025 [2][3]. Group 1: Acquisition Strategy - The acquisition of Mesa, LLC marks CareCloud's first step in a renewed aggressive expansion strategy, aiming to reinforce its leadership in the healthcare billing industry [2][3]. - CareCloud has a history of successful acquisitions, having completed over 20 deals between 2012 and 2022, achieving a compound annual growth rate (CAGR) of over 30% during that period [3]. - The company is shifting back into high gear for acquisitions after a pause since Q2 2021, with MesaBilling being the starting point for this new phase [3]. Group 2: Market Context - The renewed focus on acquisitions aligns with a growing demand from medical practices for streamlined, technology-enabled financial management solutions [4]. - CareCloud plans to leverage its proprietary technology, including AI-powered revenue cycle management and automation tools, to expand its platform and serve a broader network of healthcare providers [4]. Group 3: Company Overview - CareCloud provides a suite of AI and technology-enabled solutions aimed at improving financial and operational performance, streamlining clinical workflows, and enhancing patient experiences [5]. - The company serves over 40,000 providers, helping them reduce administrative burdens and operating costs while improving patient care [5].

Core Viewpoint - CareCloud, Inc. is set to release its financial results for Q4 and the full year ended December 31, 2024, on March 13, 2025, before market opening, followed by a conference call for investors [1] Financial Results Announcement - The financial results will be disclosed before the market opens on March 13, 2025 [1] - A conference call for investors will take place at 8:30 a.m. Eastern Time on the same day [1] Accessing the Conference Call - Investors can access the live webcast of the conference call and related presentation slides at ir.carecloud.com/events [2] - An audio-only option is available by dialing 201-389-0920 and referencing "CareCloud Fourth Quarter 2024 Results Conference Call" [2] Replay Information - A replay of the conference call and related presentation slides will be available approximately three hours after the call concludes at the same link [3] - An audio-only replay can be accessed by dialing 412-317-6671 with access code 13751992 [3] Company Overview - CareCloud is a leader in healthcare technology and generative AI solutions, helping clients enhance financial and operational performance while improving patient care [4] - The company serves over 40,000 providers, offering solutions such as revenue cycle management, practice management, electronic health records, business intelligence, patient experience management, and digital health [4]

Core Points - CareCloud, Inc. has announced the transfer of funds for January 2025 dividend payments on its Series A and Series B Cumulative Redeemable Perpetual Preferred Stock [1][2] - Holders of Series A Preferred Stock will receive a dividend of 22.917 cents per share, while holders of Series B Preferred Stock will receive 18.229 cents per share, with a record date of January 31, 2025 [2][9] - The dividend payments are expected to be reflected in shareholders' brokerage accounts between February 18 and February 20, 2025 [2][9] Financial Management - The Interim Chief Financial Officer of CareCloud, Norman Roth, emphasized the company's commitment to responsible fiscal management and financial stability [3] - Dividends for both Series A and Series B Preferred Stock are cumulative and payable monthly, in arrears, on the 15th of each month or the next business day if the 15th is a bank holiday or weekend [3] Shareholder Communication - Shareholders who do not see their dividend payment by the end of the following week are encouraged to contact their broker for assistance [4] - For further inquiries, the CareCloud Investor Relations team can be reached via email [4] Company Overview - CareCloud provides a suite of AI and technology-enabled solutions aimed at improving financial and operational performance in healthcare [5] - The company serves over 40,000 providers, helping them enhance patient care while reducing administrative burdens and operating costs [5]