Core Insights - Gamu Dave Innocent Pasi is a seasoned financial professional with extensive experience in financial analysis and investment research [1] - He has a strong background in analyzing financial statements, capital markets, and macro-economics, providing actionable trading ideas and investment recommendations [1] - Gamu is recognized for his quantitative and qualitative analytical skills, simplifying complex financial concepts for broader audiences [1] - He is passionate about financial inclusion, sustainability, and generating measurable social impact through Responsible Investment and ESG principles [1] - Currently, Gamu is focused on building a new international investment portfolio and sharing insights with the global investing community [1]

[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)

[Executive Summary & Financial Highlights](index=1&type=section&id=executive_summary_and_financial_highlights) CareCloud achieved its first positive GAAP EPS since IPO, reporting strong Q2 and YTD 2025 financial growth, driven by AI and acquisitions [Second Quarter 2025 Financial Highlights](index=1&type=section&id=second_quarter_2025_financial_highlights) CareCloud achieved its first positive GAAP EPS since IPO in Q2 2025, with significant GAAP net income growth despite a slight revenue decrease | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | GAAP Net Income | $2.9 million | $1.7 million | +73% | | GAAP EPS | $0.04 | ($0.14) | Positive | | Adjusted Net Income | $3.3 million | $3.0 million | | | Adjusted EBITDA | $6.5 million | $6.4 million | | | Revenue | $27.4 million | $28.1 million | -2.5% | [Year-to-Date 2025 Financial Highlights](index=1&type=section&id=year_to_date_2025_financial_highlights) YTD 2025, CareCloud achieved substantial GAAP net income growth, positive GAAP EPS, and strong increases in Adjusted EBITDA and Free Cash Flow, with modest revenue growth | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | GAAP Net Income | $4.9 million | $1.4 million | +238% | | GAAP EPS | $0.02 | ($0.24) | Positive | | Adjusted Net Income | $5.6 million | $3.2 million | | | Adjusted EBITDA | $12.1 million | $10.1 million | +20% | | Free Cash Flow | $9.0 million | $4.9 million | +85% | | Revenue | $55.0 million | $54.1 million | +1.7% | [Recent Strategic Updates](index=1&type=section&id=recent_strategic_updates) CareCloud achieved its first positive GAAP EPS since its 2014 IPO, launched an AI Center of Excellence, and reignited its acquisition strategy with two completed deals - 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) Management highlighted CareCloud's strategic AI advancements, sustained financial strength, and successful turnaround, emphasizing positive GAAP EPS and growth through acquisitions - 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 reported outstanding Series A and B Preferred Stock and common stock, with preferred shares accruing 8.75% dividends and redeemable at the Company's option | 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 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 | | :--- | :--- | | Revenue | $111 – $114 million | | Adjusted EBITDA | $26 – $28 million | | 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 webcast and audio replay options available - 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, provides disclosures on forward-looking statements, and offers an overview of the company's role as a healthcare technology and AI solutions leader [Use of Non-GAAP Financial Measures Disclosure](index=3&type=section&id=use_of_non_gaap_financial_measures_disclosure) CareCloud uses non-GAAP financial measures, as defined by SEC Regulation G, to supplement GAAP performance, providing additional insight into underlying business operations - 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 subject to substantial risks and uncertainties that could materially affect actual results, with no obligation for the company to update them - 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, enhancing financial and operational performance and improving patient experience - 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) CareCloud's financial statements for Q2 and YTD 2025 reflect improved profitability, increased cash, and a stronger balance sheet, reversing prior year losses and demonstrating operational efficiency [Condensed Consolidated Balance Sheets](index=5&type=section&id=condensed_consolidated_balance_sheets) CareCloud's June 30, 2025 balance sheet shows increased total assets and shareholders' equity, driven by higher cash, with decreased total liabilities 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 | $5,145 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=condensed_consolidated_statements_of_operations) For Q2 and YTD 2025, CareCloud showed strong profitability improvements, achieving positive GAAP net income and EPS, reversing prior year losses, with modest revenue changes | Metric ($ 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 | ($0.24) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=condensed_consolidated_statements_of_cash_flows) For the six months ended June 30, 2025, CareCloud significantly increased net cash from operating activities, resulting in a higher cash balance after investing and financing activities | Metric ($ 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 | $2,617 | [Non-GAAP Financial Measures Reconciliation & Explanation](index=8&type=section&id=non_gaap_financial_measures_reconciliation_and_explanation) This section provides reconciliations for Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, and Free Cash Flow, explaining their importance for evaluating CareCloud's operational performance [Adjusted EBITDA Reconciliation](index=8&type=section&id=adjusted_ebitda_reconciliation) CareCloud's Adjusted EBITDA increased for both Q2 and YTD 2025, reflecting improved operational performance after adjusting for non-cash and non-recurring items | Metric ($ 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 | $10,076 | [Non-GAAP Adjusted Operating Income Reconciliation](index=9&type=section&id=non_gaap_adjusted_operating_income_reconciliation) CareCloud reported increased Non-GAAP Adjusted Operating Income and Margin for Q2 and YTD 2025, indicating stronger core operational efficiency by excluding certain non-cash and non-recurring expenses | Metric ($ 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 | $3,844 | | Non-GAAP Adjusted Operating Margin | 12.2% | 11.6% | 10.3% | 7.1% | [Non-GAAP Adjusted Net Income Reconciliation](index=9&type=section&id=non_gaap_adjusted_net_income_reconciliation) CareCloud's Non-GAAP Adjusted Net Income and Adjusted EPS grew for Q2 and YTD 2025, reflecting improved profitability after specific non-GAAP adjustments | Metric ($ 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 | $0.20 | [Free Cash Flow Reconciliation](index=10&type=section&id=free_cash_flow_reconciliation) CareCloud significantly increased Free Cash Flow for both Q2 and YTD 2025, demonstrating enhanced ability to generate cash from operations after capital expenditures | Metric ($ 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 measures like Adjusted EBITDA, Operating Income, Net Income, and Free Cash Flow to clarify operational trends, aiding management in performance evaluation, decision-making, and strategic planning - 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 Points - CareCloud, Inc. held its 2025 Annual Shareholders' Meeting on May 27, 2025, where shareholders re-elected Anne Busquet, Bill Korn, and Lawrence Sharnak to the Board for another two-year term [1][2] - Shareholders approved the advisory compensation for the Company's named executive officers as disclosed in the 2025 Proxy Statement [1][7] - Rosenberg Rich Baker Berman, P.A. was appointed as the independent registered public accounting firm for the year ending December 31, 2025 [1][7] Group 1 - Anne Busquet has over 30 years of executive experience with American Express and Interactive Corp [2] - Bill Korn served as Chief Financial Officer for 10 years before retiring in October 2023 [2] - Lawrence Sharnak held various senior leadership roles at American Express for more than 30 years [2] Group 2 - CareCloud provides technology-enabled solutions aimed at improving financial and operational performance, streamlining clinical workflows, and enhancing patient experience [4] - The Company serves over 40,000 providers, helping them improve patient care while reducing administrative burdens and operating costs [4]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents CareCloud, Inc.'s unaudited condensed consolidated financial statements and management's analysis for the reporting period [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents CareCloud, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, and detailed accounting notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and shareholders' equity | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :---------------------- | :--------- | | Cash | 6,805 | 5,145 | 1,660 | 32.26% | | Accounts receivable - net | 13,887 | 12,774 | 1,113 | 8.71% | | Total current assets | 28,617 | 24,800 | 3,817 | 15.39% | | TOTAL ASSETS | 73,556 | 71,614 | 1,942 | 2.71% | | Total current liabilities | 16,949 | 19,580 | (2,631) | -13.44% | | Total liabilities | 19,379 | 21,840 | (2,461) | -11.27% | | Total shareholders' equity | 54,177 | 49,774 | 4,403 | 8.85% | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss over specific periods, reflecting operational performance | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------- | :--------- | | NET REVENUE | 27,632 | 25,962 | 1,670 | 6.43% | | Total operating expenses | 25,613 | 25,833 | (220) | -0.85% | | OPERATING INCOME | 2,019 | 129 | 1,890 | 1465.12% | | INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | 1,989 | (202) | 2,191 | -1084.65% | | NET INCOME (LOSS) | 1,948 | (241) | 2,189 | -908.30% | | Preferred stock dividend | 2,811 | 1,312 | 1,499 | 114.25% | | NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | (863) | (1,553) | 690 | -44.43% | | Net loss per common share: basic and diluted | (0.04) | (0.10) | 0.06 | -60.00% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the company's net income or loss and other comprehensive income or loss, showing total comprehensive income | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change ($ in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------- | | NET INCOME (LOSS) | 1,948 | (241) | 2,189 | | Foreign currency translation adjustment | (58) | 28 | (86) | | COMPREHENSIVE INCOME (LOSS) | 1,890 | (213) | 2,103 | [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section outlines changes in shareholders' equity, including net income, preferred stock conversions, and dividend declarations - Total shareholders' equity increased from **$49,774 thousand** at January 1, 2025, to **$54,177 thousand** at March 31, 2025, driven by net income and conversion of preferred stock[28](index=28&type=chunk) - The Company converted **3,541,701 shares of Series A Preferred Stock** into **25,981,248 shares of common stock** during the three months ended March 31, 2025, including accrued dividends[28](index=28&type=chunk) - Preferred stock dividends of **$2,811 thousand** were earned and declared for the three months ended March 31, 2025, compared to **$1,312 thousand** (restated) for the same period in 2024[28](index=28&type=chunk)[29](index=29&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------- | :--------- | | Net cash provided by operating activities | 5,113 | 4,066 | 1,047 | 25.75% | | Net cash used in investing activities | (1,510) | (1,868) | 358 | -19.16% | | Net cash used in financing activities | (1,932) | (1,374) | (558) | 40.61% | | NET INCREASE IN CASH | 1,660 | 807 | 853 | 105.70% | | CASH - End of the period | 6,805 | 4,138 | 2,667 | 64.45% | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1. ORGANIZATION AND BUSINESS](index=12&type=section&id=Note%201.%20ORGANIZATION%20AND%20BUSINESS) This note describes CareCloud, Inc.'s core business as a healthcare technology provider and its operational structure - CareCloud, Inc. is a leading provider of technology-enabled services and solutions for healthcare revenue cycle management, offering proprietary cloud-based solutions to healthcare providers across the U.S.[36](index=36&type=chunk) - The company's portfolio includes technology-enabled business solutions (AI-driven RCM), cloud-based software (practice management, patient engagement), digital health services (value-based care, remote patient care), healthcare IT professional services & staffing, and medical practice management services[37](index=37&type=chunk) - CareCloud maintains corporate offices in New Jersey and offshore offices in Pakistan and Sri Lanka for client support[38](index=38&type=chunk) [Note 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=Note%202.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of financial statement preparation and summarizes the significant accounting policies applied by the company - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial reporting and Regulation S-X, Rule 8-03, and include all necessary adjustments[39](index=39&type=chunk) - No changes to significant accounting policies occurred during the three months ended March 31, 2025, from the disclosures in the Annual Report on Form 10-K/A for 2024[41](index=41&type=chunk) - Recent accounting pronouncements, including ASU 2023-01 (Leases), ASU 2023-06 (Disclosure Improvements), ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Taxes), ASU 2024-02 (Codification Improvements), ASU 2024-03 and ASU 2025-01 (Expense Disaggregation Disclosures), are discussed, with most not expected to have a material impact on financial statements, primarily affecting disclosures[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)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) [Note 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=14&type=section&id=Note%203.%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) This note provides a breakdown of the company's prepaid expenses and other current assets as of the reporting dates | Category | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :---------------------- | :------------------------------- | :------------------------------- | | Prepayments to vendors | 1,459 | 1,099 | | Prepaid credit card | 601 | - | | Prepaid insurance | 399 | 494 | | Prepaid commissions | 217 | 243 | | Other | 167 | 121 | | Total | 2,843 | 1,957 | [Note 4. GOODWILL AND INTANGIBLE ASSETS-NET](index=14&type=section&id=Note%204.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS-NET) This note details the company's goodwill and net intangible assets, including changes due to amortization and acquisitions - Goodwill remained stable at **$19,186 thousand** for both March 31, 2025, and December 31, 2024, with approximately **$90,000** allocated to the Medical Practice Management segment and the balance to Healthcare IT[52](index=52&type=chunk)[53](index=53&type=chunk) | Intangible Asset Category | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :-------------------------- | :------------------------------- | :------------------------------- | | Contracts and relationships acquired | 47,726 | 47,597 | | Capitalized software | 35,913 | 35,108 | | Non-compete agreements | 1,236 | 1,236 | | Other intangible assets | 8,417 | 8,417 | | Total intangible assets | 93,292 | 92,358 | | Less: Accumulated amortization | 76,415 | 73,660 | | Intangible assets - net | 16,877 | 18,698 | - Amortization expense for intangible assets decreased to **$2.8 million** for Q1 2025 from **$3.4 million** for Q1 2024, with a weighted-average amortization period of approximately **two years**[54](index=54&type=chunk) [Note 5. NET LOSS PER COMMON SHARE](index=15&type=section&id=Note%205.%20NET%20LOSS%20PER%20COMMON%20SHARE) This note presents the calculation of net loss per common share, including the impact of preferred stock dividends | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 (Restated) | | :-------------------------------------------------- | :-------------------------------- | :--------------------------------------- | | Net loss attributable to common shareholders ($ in thousands) | (863) | (1,553) | | Weighted-average common shares used to compute basic and diluted loss per share | 23,813,943 | 16,014,309 | | Net loss attributable to common shareholders per share - basic and diluted | (0.04) | (0.10) | - Net loss attributable to common shareholders improved from **$(1,553) thousand** in Q1 2024 to **$(863) thousand** in Q1 2025, reflecting a decrease in loss per share from **$(0.10)** to **$(0.04)**[56](index=56&type=chunk) - The dividend payable at March 31, 2025, was **$1,299 thousand**, representing two months of declared but unpaid dividends, compared to **$5,438 thousand** at December 31, 2024 (four months)[19](index=19&type=chunk)[57](index=57&type=chunk) [Note 6. ACCRUED EXPENSES AND DEBT](index=15&type=section&id=Note%206.%20ACCRUED%20EXPENSES%20AND%20DEBT) This note details the company's accrued expenses and debt obligations, including its revolving line of credit | Category | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :---------------------- | :------------------------------- | :------------------------------- | | Accrued expenses | 3,271 | 3,528 | | Payable to managed practices | 1,385 | 1,116 | | Taxes and other | 346 | 307 | | Total | 5,002 | 4,951 | - The Company's revolving line of credit with SVB was reduced to **$10 million** in October 2024, with no borrowings outstanding as of March 31, 2025[60](index=60&type=chunk)[61](index=61&type=chunk) - CareCloud was in compliance with all covenants of its SVB credit agreement as of March 31, 2025, and December 31, 2024[62](index=62&type=chunk) [Note 7. LEASES](index=16&type=section&id=Note%207.%20LEASES) This note provides information on the company's operating leases, including right-of-use assets, liabilities, and lease costs - The Company has operating leases for office and temporary living space, as well as office equipment, with ROU assets and liabilities recorded on the balance sheet[64](index=64&type=chunk) | Lease Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | | Operating lease ROU assets, net | 3,097 | 3,133 | | Current operating lease liabilities | 1,355 | 1,287 | | Non-current operating lease liabilities | 1,776 | 1,847 | | Total operating lease liabilities | 3,131 | 3,134 | | Weighted average remaining lease term (years) | 5.0 | 5.0 | | Weighted average discount rate | 13.8% | 14.2% | | Lease Expense Category | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :--------------------- | :--------------------------------------- | :--------------------------------------- | | Operating lease cost | 576 | 637 | | Short-term lease cost | 5 | 4 | | Variable lease cost | 7 | 5 | | Total - net lease cost | 588 | 646 | [Note 8. COMMITMENTS AND CONTINGENCIES](index=18&type=section&id=Note%208.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's various commitments and contingent liabilities, including legal claims and settlements - The Company settled a legal claim with Ramapo Anesthesiologists, PC for **$117,000** in Q1 2024, with CareCloud's portion being **$32,000**[71](index=71&type=chunk) - A former customer's complaint for **$750,000** in damages was settled for **$200,000** in July 2024, after the Company's cross-claim for **$21,698** was awarded[72](index=72&type=chunk) - Another dispute with a former customer was settled for **$100,000** in January 2025, which was accrued at December 31, 2024[74](index=74&type=chunk) [Note 9. RELATED PARTIES](index=19&type=section&id=Note%209.%20RELATED%20PARTIES) This note details transactions and relationships with related parties, including sales, rent expenses, and consulting agreements - Sales to a related party (wife of Executive Chairman) were **$20,000** in Q1 2025 and **$24,000** in Q1 2024, with an accounts receivable balance of **$5,000** at March 31, 2025[77](index=77&type=chunk) - Related party rent expense for corporate offices, temporary housing, and offshore facilities from the Executive Chairman was approximately **$71,000** in Q1 2025 and **$70,000** in Q1 2024[78](index=78&type=chunk) - A consulting agreement with an entity owned by a former non-independent director (now Co-CEO) involved issuance of Series B Preferred Stock and monthly payments, which was terminated April 30, 2024[80](index=80&type=chunk) [Note 10. RESTRUCTURING COSTS](index=20&type=section&id=Note%2010.%20RESTRUCTURING%20COSTS) This note outlines the company's restructuring efforts, including workforce reductions and associated one-time termination benefits - The Company committed to a workforce reduction in October 2023 to align resources and improve profitability in the Healthcare IT segment[84](index=84&type=chunk) - Restructuring expenses of **$114,000** were incurred during Q1 2025, following **$606,000** in 2024 and **$645,000** in 2023, primarily for one-time termination benefits[85](index=85&type=chunk)[86](index=86&type=chunk) [Note 11. SHAREHOLDERS' EQUITY](index=20&type=section&id=Note%2011.%20SHAREHOLDERS'%20EQUITY) This note details changes in shareholders' equity, including preferred stock dividends, authorized shares, and stock conversions - Monthly cash dividends for Series A and Series B Preferred Stock were suspended in December 2023, reducing deferred payments from **$1.3 million** to **$1.1 million** per month after a September 2024 amendment to Series A dividend rate[87](index=87&type=chunk)[88](index=88&type=chunk) - In January 2025, common stock shareholders approved an increase in authorized common shares from **35 million** to **85 million**[89](index=89&type=chunk) - Dividends resumed in February 2025, with two months of payments declared. On March 6, 2025, the Board converted **3,541,701 Series A Preferred Stock shares** into common stock, reducing monthly cash dividends to approximately **$455,000**[90](index=90&type=chunk)[91](index=91&type=chunk) [Note 12. REVENUE](index=22&type=section&id=Note%2012.%20REVENUE) This note describes the company's revenue recognition policies and provides a breakdown of revenue by source - Revenue is recognized as performance obligations are satisfied, typically as a percentage of collected payments for revenue cycle management services or over time for software and professional services[94](index=94&type=chunk) | Revenue Source | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Technology-enabled business solutions | 17,705 | 17,283 | | Professional services | 5,891 | 4,422 | | Printing and mailing services | 879 | 861 | | Group purchasing services | 168 | 155 | | Medical practice management services | 2,989 | 3,241 | | Total | 27,632 | 25,962 | - The estimated future revenue from remaining revenue cycle management performance obligations was approximately **$3.5 million** as of March 31, 2025, expected to be recognized over the next three months[117](index=117&type=chunk) [Note 13. STOCK-BASED COMPENSATION](index=26&type=section&id=Note%2013.%20STOCK-BASED%20COMPENSATION) This note details the company's stock-based compensation plans, including available shares for grant and related expenses - As of March 31, 2025, **499,683 shares of common stock** and **16,000 shares of Series B Preferred Stock** were available for grant under the Equity Incentive Plan[124](index=124&type=chunk) | RSU Activity (Shares) | Common Stock | Series A Preferred Stock | Series B Preferred Stock | | :-------------------------------- | :----------- | :----------------------- | :----------------------- | | Outstanding and unvested at Jan 1, 2025 | 242,500 | - | 19,199 | | Vested | (88,300) | - | - | | Outstanding and unvested at Mar 31, 2025 | 154,200 | - | 19,199 | | Outstanding and unvested at Jan 1, 2024 | 753,495 | - | 57,199 | | Granted | - | - | 34,000 | | Vested | (326,501) | - | (14,000) | | Forfeited | (217,115) | - | (24,000) | | Outstanding and unvested at Mar 31, 2024 | 209,879 | - | 53,199 | | Stock-Based Compensation Expense (Benefit) | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Direct operating costs | - | (45) | | General and administrative | 105 | (696) | | Research and development | 3 | 54 | | Selling and marketing | - | (21) | | Total stock-based compensation expense (benefit) | 108 | (708) | [Note 14. INCOME TAXES](index=28&type=section&id=Note%2014.%20INCOME%20TAXES) This note provides information on the company's income tax expense, deferred tax assets, and valuation allowances - Income tax expense was **$41,000** for Q1 2025 (state and foreign taxes) and **$39,000** for Q1 2024 (state and foreign taxes), with no deferred income tax for either period[131](index=131&type=chunk) - A valuation allowance has been recorded 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) [Note 15. FAIR VALUE OF FINANCIAL INSTRUMENTS](index=28&type=section&id=Note%2015.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note discusses the fair value measurements of the company's financial instruments, categorized by valuation input levels - The Company held no Level 1 financial instruments at March 31, 2025, or December 31, 2024[134](index=134&type=chunk) - Level 2 financial instruments include notes payable, carried at cost approximating fair value[135](index=135&type=chunk) - Level 3 instruments include contingent consideration related to a completed acquisition, valued at **$107,000** at March 31, 2025, based on discounted cash flow analysis[136](index=136&type=chunk)[137](index=137&type=chunk) [Note 16. SEGMENT REPORTING](index=28&type=section&id=Note%2016.%20SEGMENT%20REPORTING) This note provides financial information for CareCloud's two reportable segments: Healthcare IT and Medical Practice Management - CareCloud operates two reportable segments: Healthcare IT (RCM, SaaS, other services) and Medical Practice Management (management of three medical practices)[138](index=138&type=chunk)[141](index=141&type=chunk) | Segment Performance (Q1 2025, $ in thousands) | Healthcare IT | Medical Practice Management | Total | | :------------------------------------ | :------------ | :-------------------------- | :---- | | Net revenue | 24,643 | 2,989 | 27,632 | | Total operating expenses | 20,744 | 3,291 | 24,035 | | Segment operating income (loss) | 3,899 | (302) | 3,597 | | Segment Performance (Q1 2024, $ in thousands) | Healthcare IT | Medical Practice Management | Total | | :------------------------------------ | :------------ | :-------------------------- | :---- | | Net revenue | 22,721 | 3,241 | 25,962 | | Total operating expenses | 21,965 | 3,162 | 25,127 | | Segment operating income | 756 | 79 | 835 | [Note 17. RESTATEMENT](index=31&type=section&id=Note%2017.%20RESTATEMENT) This note explains the restatement of prior period financial statements, specifically regarding preferred stock dividends - The Q1 2024 condensed consolidated statement of operations was restated to include **$1.3 million** of earned but undeclared preferred stock dividends for March 2024[143](index=143&type=chunk)[144](index=144&type=chunk) | Metric (Q1 2024, $ in thousands, except per share) | Before Restatement | Restatement Adjustments | After Restatement | | :------------------------------------------------- | :----------------- | :---------------------- | :---------------- | | Preferred stock dividend | 5 | 1,307 | 1,312 | | Net loss attributable to common shareholders | (246) | (1,307) | (1,553) | | Net loss per common share: basic and diluted | (0.02) | (0.08) | (0.10) | [Note 18. SUBSEQUENT EVENTS](index=31&type=section&id=Note%2018.%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - In April 2025, the Company acquired an audiology-focused revenue cycle management company, with consideration to be paid over **3.5 years** based on collected revenue[146](index=146&type=chunk) - A Form S-3 was filed and became effective on April 24, 2025, allowing the Company to sell various securities in the public market[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&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 operational results, covering risks, business overview, key performance measures, revenue, expenses, and liquidity [Financial Risks](index=32&type=section&id=Financial%20Risks) This section highlights specific financial risks faced by the company, particularly concerning cash balances and deposit insurance - CareCloud maintains cash balances at Silicon Valley Bank exceeding FDIC insurance limits and holds approximately **$790,000** in offshore banks in Pakistan and Sri Lanka without deposit insurance[150](index=150&type=chunk) [Overview](index=32&type=section&id=Overview) This section provides a general overview of CareCloud's business, its services, competitive advantages, and technological integrations - CareCloud is a healthcare IT company providing technology-enabled RCM and cloud-based solutions (EHR, PM, BI, telehealth, PXM) to healthcare providers across the U.S.[151](index=151&type=chunk) - The company leverages proprietary software and a highly educated offshore workforce (approximately **3,400 team members** at **17% of U.S. cost**) in Pakistan and Sri Lanka, providing a competitive cost advantage[154](index=154&type=chunk)[156](index=156&type=chunk) - CareCloud has integrated AI into its products, including CareCloud cirrusAI for clinical decision support, virtual support, and AI-driven appeals, enhancing workflows and revenue management[153](index=153&type=chunk)[155](index=155&type=chunk) [Key Performance Measures](index=34&type=section&id=Key%20Performance%20Measures) This section discusses the non-GAAP financial measures used by management to evaluate the company's underlying business performance - Management uses non-GAAP financial measures like Adjusted EBITDA, Adjusted Operating Income, and Adjusted Net Income to analyze underlying business results, excluding items such as stock-based compensation, depreciation, amortization, and restructuring costs[157](index=157&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) | Non-GAAP Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------- | :--------- | | Adjusted EBITDA | 5,595 | 3,687 | 1,908 | 51.75% | | Non-GAAP adjusted operating income | 2,342 | 595 | 1,747 | 293.61% | | Non-GAAP adjusted operating margin | 8.5% | 2.3% | 6.2% | 269.57% | | Non-GAAP adjusted net income | 2,290 | 220 | 2,070 | 940.91% | | Non-GAAP adjusted earnings per share | 0.05 | 0.01 | 0.04 | 400.00% | [Key Metrics](index=37&type=section&id=Key%20Metrics) This section presents key operational metrics, including the number of providers and medical practices served by CareCloud - As of March 31, 2025 and 2024, CareCloud served an estimated **40,000 providers** across approximately **2,600 independent medical practices and hospitals**, plus about **150 non-medical practice service organizations**[166](index=166&type=chunk) [Sources of Revenue](index=37&type=section&id=Sources%20of%20Revenue) This section breaks down the company's revenue by source, including technology-enabled solutions, other IT services, and medical practice management - Technology-enabled business solutions (subscription-based RCM, EHR, practice management software) accounted for approximately **64% of revenue** in Q1 2025 (down from **67%** in Q1 2024)[167](index=167&type=chunk) - Other healthcare IT services (printing, mailing, group purchasing, professional services) contributed approximately **25% of revenue** in Q1 2025 (up from **21%** in Q1 2024)[167](index=167&type=chunk) - Medical practice management services generated approximately **11% of revenue** in Q1 2025 (down from **12%** in Q1 2024), based on costs plus a percentage of operating profit[168](index=168&type=chunk) [Operating Expenses](index=37&type=section&id=Operating%20Expenses) This section describes the various categories of operating expenses, including direct costs, selling, general, administrative, and R&D - Direct operating costs primarily include salaries, benefits for service personnel, claims processing, and costs to operate managed practices[169](index=169&type=chunk) - Selling and marketing expenses cover compensation, commissions, travel, and advertising[170](index=170&type=chunk) - General and administrative expenses consist of administrative personnel costs, facility leases, insurance, software licenses, and professional fees[170](index=170&type=chunk) - Research and development expenses are mainly personnel, software, and third-party contractor costs[171](index=171&type=chunk) - Depreciation and amortization expenses are charged over estimated asset lives (**3-5 years** for depreciation, **3-12 years** for amortization of intangibles)[172](index=172&type=chunk) - Restructuring costs are primarily severance and separation costs from operational optimization[173](index=173&type=chunk) - Interest and other income (expense) includes interest on investments, late fees, debt interest, and foreign currency transaction gains/losses[174](index=174&type=chunk) - Income tax provision reflects state minimum and foreign income taxes, with a valuation allowance against deferred tax assets due to historical losses[175](index=175&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the company's critical accounting policies and estimates, particularly regarding capitalized software and policy changes - The carrying amount of internally-developed capitalized software in use decreased from **$12.3 million** at December 31, 2024, to **$10.5 million** at March 31, 2025, as amortization exceeded new capitalization[177](index=177&type=chunk) - No material changes occurred in critical accounting policies and estimates from those described in the 2024 Annual Report on Form 10-K/A[178](index=178&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section compares CareCloud's financial performance for Q1 2025 against Q1 2024, detailing changes in revenue, expenses, and profitability | Metric | Q1 2025 (% of Revenue) | Q1 2024 (% of Revenue) | | :-------------------------- | :--------------------- | :--------------------- | | Net revenue | 100.0% | 100.0% | | Direct operating costs | 56.0% | 58.5% | | Selling and marketing | 4.1% | 6.8% | | General and administrative | 15.7% | 14.4% | | Research and development | 4.4% | 3.5% | | Depreciation and amortization | 12.1% | 15.1% | | Restructuring costs | 0.4% | 1.2% | | Total operating expenses | 92.7% | 99.5% | | Operating income | 7.3% | 0.5% | | Net income (loss) | 7.1% | (0.9%) | - Net revenue increased by **$1.7 million (6%)** to **$27.6 million** in Q1 2025, driven by a **$1.5 million** increase in professional services and a **$422,000** increase in technology-enabled business solutions, partially offset by a **$252,000** decrease in medical practice management services[180](index=180&type=chunk)[181](index=181&type=chunk) - Total operating expenses decreased by **$220,000 (1%)** to **$25.6 million** in Q1 2025, primarily due to a **$639,000 (36%)** decrease in selling and marketing expenses and a **$651,000 (19%)** decrease in amortization expense, partially offset by increases in general and administrative (**$611,000 or 16%**) and research and development (**$322,000 or 35%**) expenses[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[187](index=187&type=chunk) - Operating income significantly increased to **$2.0 million** in Q1 2025 from **$129,000** in Q1 2024, and net income improved to **$1.9 million** from a net loss of **$(241) thousand**[21](index=21&type=chunk) - Interest expense decreased by **$307,000 (84%)** to **$58,000** in Q1 2025, mainly due to lower interest on the line of credit[190](index=190&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations, including cash position and capital management - As of March 31, 2025, the Company had **$6.8 million** in cash and **$11.7 million** in net working capital[194](index=194&type=chunk) - Cash provided by operations increased by **$1.0 million (26%)** to **$5.1 million** in Q1 2025, while cash used in investing activities decreased by **$358,000 (19%)** to **$1.5 million**[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - Cash used in financing activities increased by **$558,000 (41%)** to **$1.9 million** in Q1 2025, primarily due to **$1.7 million** in preferred stock dividends paid[199](index=199&type=chunk)[202](index=202&type=chunk) - The Company expects sufficient liquidity for the next twelve months, supported by efforts to improve profitability, manage expenses, and grow revenue[196](index=196&type=chunk) [Contractual Obligations and Commitments](index=42&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations and commitments, including credit lines and operating leases - The Company's contractual obligations include its line of credit, with all covenants in compliance as of March 31, 2025, and operating leases for property and equipment[203](index=203&type=chunk) [Off-Balance Sheet Arrangements](index=42&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements or unconsolidated entities for the reporting periods - As of March 31, 2025, and 2024, CareCloud had no relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=42&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 - CareCloud is a smaller reporting company and is not required to provide information under this item[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with Co-CEOs and Interim CFO participation, evaluated disclosure controls and procedures as effective on March 31, 2025, with no material changes to internal control over financial reporting except for a process improvement - CareCloud's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025[206](index=206&type=chunk)[208](index=208&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter, except for a process improvement to disclosure controls and procedures[209](index=209&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the detailed discussion of legal proceedings within Note 8, Commitments And Contingencies, of the Condensed Consolidated Financial Statements - Legal proceedings are discussed in detail in Note 8, Commitments And Contingencies, of the Notes to Condensed Consolidated Financial Statements[211](index=211&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) This section refers to comprehensive risk factors in the Annual Report on Form 10-K/A and highlights risks related to maintaining cash balances exceeding 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[212](index=212&type=chunk) - A specific risk highlighted is maintaining cash balances at financial institutions, such as Silicon Valley Bank, in amounts exceeding federally insured limits, which could be impacted by volatility in the banking system[150](index=150&type=chunk)[213](index=213&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) This item is not applicable to CareCloud, Inc. for the reporting period - This item is not applicable[214](index=214&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Board suspended monthly cash dividends for Series A and B Preferred Stock in December 2023, resulting in approximately **$7.3 million** in arrears, with payments resuming in February 2025 and applied to the earliest outstanding amounts - Monthly cash dividends for Series A and Series B Preferred Stock were suspended on December 11, 2023[215](index=215&type=chunk) - The suspension led to approximately **$7.3 million** in dividends in arrears as of the filing date[215](index=215&type=chunk) - Dividend payments resumed in February 2025, with one month of dividends in arrears paid each in February, March, and April, applied to the oldest outstanding amounts[215](index=215&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to CareCloud, Inc. for the reporting period - This item is not applicable[216](index=216&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) During the quarter ended March 31, 2025, none of the Company's directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025[217](index=217&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications from executive officers (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350) and XBRL interactive data files - Exhibits include certifications from Co-Principal Executive Officers and Interim Chief Financial Officer (31.1, 31.2, 31.3, 32.1*, 32.2*, 32.3*) and XBRL interactive data files (101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF, 104)[218](index=218&type=chunk) [Signatures](index=45&type=section&id=Signatures) The report is duly signed on behalf of CareCloud, Inc. by its Co-Chief Executive Officers, A. Hadi Chaudhry and Stephen Snyder, and Interim Chief Financial Officer and Corporate Controller, Norman S. Roth, on May 6, 2025 - The report was signed 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 May 6, 2025[222](index=222&type=chunk)

Executive Summary [Q1 2025 Performance Highlights](index=1&type=section&id=Q1%202025%20Performance%20Highlights) CareCloud reported strong financial results for Q1 2025, demonstrating significant year-over-year growth in revenue, GAAP net income, and Adjusted EBITDA, alongside a healthy cash balance and net working capital | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :-------------------------- | :---------- | :---------- | :----------- | | Revenue | $27.6 million | $26.0 million | +6% | | GAAP Net Income (Loss) | $1.9 million | $(241,000) | Turnaround to profit | | Adjusted EBITDA | $5.6 million | $3.7 million | +52% | | Adjusted Net Income | $2.3 million | N/A | N/A | | Adjusted Net Income Per Share | $0.05 | N/A | N/A | | Cash Balance (as of March 31, 2025) | $6.8 million | N/A | N/A | | Net Working Capital (as of March 31, 2025) | $11.7 million | N/A | N/A | [Recent Strategic Initiatives](index=1&type=section&id=Recent%20Strategic%20Initiatives) CareCloud has actively pursued strategic initiatives in Q1 2025, focusing on AI innovation, capital structure optimization, and growth through acquisitions - Launched an AI Center of Excellence, onboarding over **50 AI professionals** with a goal to scale to **500 by Q4 2025**, fully self-funded through operating cash flows[4](index=4&type=chunk) - Completed the conversion of **3.5 million Series A preferred shares** into **26 million common shares**, reducing annual dividend commitment by approximately **$7.7 million** and strengthening cash flow and capital structure[4](index=4&type=chunk) - Resumed payments of preferred dividends in February 2025, funded by internally-generated free cash flow[4](index=4&type=chunk)[5](index=5&type=chunk) - Reignited acquisition strategy, completing **two strategic acquisitions** in March and April 2025, with additional opportunities under evaluation[4](index=4&type=chunk) [Management's Perspective](index=1&type=section&id=Management%27s%20Perspective) Management emphasized the pivotal role of AI in CareCloud's evolution, aiming to automate clinical workflows, optimize revenue cycle management, and improve patient outcomes, highlighting continued momentum driven by AI innovation and strategic acquisitions - Co-CEO A. Hadi Chaudhry stated the AI Center of Excellence is a pivotal moment, creating real-world solutions to automate clinical workflows, optimize revenue cycle management, and improve patient outcomes, driving sustainable profitability[3](index=3&type=chunk) - Co-CEO Stephen Snyder noted continued momentum and strength in 2025, with recent acquisitions and the AI Center of Excellence positioning CareCloud to lead market shifts[3](index=3&type=chunk) - Interim CFO Norman Roth highlighted the **fourth consecutive quarter of positive GAAP net income**, increased revenue and adjusted EBITDA, and the resumption of preferred stock dividends from free cash flow, with reinvestment for future growth[5](index=5&type=chunk) Financial Results [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, CareCloud's balance sheet shows an increase in total assets and shareholders' equity compared to December 31, 2024, while total liabilities decreased, reflecting improved financial health | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change | | :-------------------------- | :-------------------------------- | :--------------------------------- | :----- | | Total Assets | $73,556 | $71,614 | +$1,942 | | Total Liabilities | $19,379 | $21,840 | -$2,461 | | Total Shareholders' Equity | $54,177 | $49,774 | +$4,403 | | Cash | $6,805 | $5,145 | +$1,660 | | Accounts Receivable - net | $13,887 | $12,774 | +$1,113 | | Dividend Payable | $1,299 | $5,438 | -$4,139 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) CareCloud achieved significant improvements in its Q1 2025 operating results, moving from a net loss to a net income year-over-year, driven by revenue growth and improved operating efficiency | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change (YoY) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | :----------- | | Net Revenue | $27,632 | $25,962 | +$1,670 | | Total Operating Expenses | $25,613 | $25,833 | -$220 | | Operating Income | $2,019 | $129 | +$1,890 | | Income (Loss) Before Income Taxes | $1,989 | $(202) | Turnaround to profit | | Net Income (Loss) | $1,948 | $(241) | Turnaround to profit | | Preferred Stock Dividend | $2,811 | $1,312 | +$1,499 | | Net Loss Attributable to Common Shareholders | $(863) | $(1,553) | -$690 | | Net Loss Per Common Share: Basic and Diluted | $(0.04) | $(0.10) | -$0.06 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) CareCloud demonstrated strong cash generation from operating activities in Q1 2025, leading to a substantial net increase in cash, despite increased cash usage in financing activities due to preferred stock dividends | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change (YoY) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | :----------- | | Net Cash Provided by Operating Activities | $5,113 | $4,066 | +$1,047 | | Net Cash Used in Investing Activities | $(1,510) | $(1,868) | +$358 | | Net Cash Used in Financing Activities | $(1,932) | $(1,374) | -$558 | | Net Increase in Cash | $1,660 | $807 | +$853 | | Cash - End of the Period | $6,805 | $4,138 | +$2,667 | - Supplemental noncash activities included the conversion of **$2,435 thousand of preferred stock and accrued dividends** to common stock in Q1 2025[27](index=27&type=chunk) Capital Structure and 2025 Guidance [Capital Structure](index=2&type=section&id=Capital%20Structure) As of March 31, 2025, CareCloud had a defined structure of preferred stock, with Series A shares significantly reduced due to conversion, and both Series A and B accruing dividends at a fixed rate - Outstanding shares as of March 31, 2025: **984,530 shares of Series A Preferred Stock** and **1,511,372 shares of non-convertible Series B Preferred Stock**[6](index=6&type=chunk) - Both Series A and B shares accrue dividends at **8.75% per annum**, based on a **$25.00 per share liquidation preference** (**$2.1875 annually per share**)[6](index=6&type=chunk) - Preferred stock is redeemable at the Company's option once dividends are current[6](index=6&type=chunk) [2025 Financial Guidance](index=2&type=section&id=2025%20Financial%20Guidance) CareCloud reconfirmed its earnings guidance for the full fiscal year ending December 31, 2025, projecting continued growth in revenue, Adjusted EBITDA, and Net Income Per Share | Metric | 2025 Guidance | | :-------------------- | :------------------- | | Revenue | $111 – $114 million | | Adjusted EBITDA | $26 – $28 million | | Net Income Per Share (EPS) | $0.10 - $0.13 | - Revenue guidance is based on expectations from existing clients, organic growth from new client additions, and anticipated small tuck-in acquisitions[7](index=7&type=chunk) - Adjusted EBITDA guidance reflects improvements from the Company's cost reduction efforts[8](index=8&type=chunk) Non-GAAP Financial Measures [Introduction to Non-GAAP Measures](index=3&type=section&id=Introduction%20to%20Non-GAAP%20Measures) CareCloud utilizes non-GAAP financial measures to provide investors with supplemental information regarding the underlying performance of its business operations, believing these measures offer a clearer view of short-term and long-term financial and operational trends by excluding certain non-cash or non-recurring items - Non-GAAP measures are used to understand short-term and long-term financial and operational trends by considering the impact of certain non-cash or non-recurring items[40](index=40&type=chunk) - Management uses these measures to evaluate operating performance, compare against past periods, make operating decisions, and for strategic planning[40](index=40&type=chunk) - Investors are reminded to consider non-GAAP measures in addition to, and not as a substitute for, GAAP financial performance measures[29](index=29&type=chunk) [Reconciliation of Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section provides detailed reconciliations of CareCloud's key non-GAAP financial measures—Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, and Free Cash Flow—to their most directly comparable GAAP counterparts, illustrating the adjustments made for non-cash and non-recurring items [Adjusted EBITDA Reconciliation](index=8&type=section&id=Adjusted%20EBITDA%20Reconciliation) | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | GAAP Net Income (Loss) | $1,948 | $(241) | | Provision for income taxes | $41 | $39 | | Net interest expense | $16 | $338 | | Foreign exchange loss (gain) / other expense | $19 | $(5) | | Stock-based compensation expense (benefit) | $108 | $(708) | | Depreciation and amortization | $3,337 | $3,930 | | Transaction and integration costs | $12 | $12 | | Restructuring costs | $114 | $322 | | **Adjusted EBITDA** | **$5,595** | **$3,687** | [Adjusted Operating Income Reconciliation](index=9&type=section&id=Adjusted%20Operating%20Income%20Reconciliation) | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | GAAP Operating Income | $2,019 | $129 | | GAAP Operating Margin | 7.3% | 0.5% | | Stock-based compensation expense (benefit) | $108 | $(708) | | Amortization of purchased intangible assets | $89 | $840 | | Transaction and integration costs | $12 | $12 | | Restructuring costs | $114 | $322 | | **Non-GAAP Adjusted Operating Income** | **$2,342** | **$595** | | **Non-GAAP Adjusted Operating Margin** | **8.5%** | **2.3%** | [Adjusted Net Income Reconciliation](index=9&type=section&id=Adjusted%20Net%20Income%20Reconciliation) | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | GAAP Net Income (Loss) | $1,948 | $(241) | | Foreign exchange loss (gain) / other expense | $19 | $(5) | | Stock-based compensation expense (benefit) | $108 | $(708) | | Amortization of purchased intangible assets | $89 | $840 | | Transaction and integration costs | $12 | $12 | | Restructuring costs | $114 | $322 | | **Non-GAAP Adjusted Net Income** | **$2,290** | **$220** | | End-of-period common shares | 42,321,129 | 16,118,492 | | **Non-GAAP Adjusted Net Income Per Share** | **$0.05** | **$0.01** | | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | GAAP net loss attributable to common shareholders, per share | $(0.04) | $(0.10) | | Impact of preferred stock dividend | $0.09 | $0.08 | | Net income (loss) per end-of-period share | $0.05 | $(0.02) | | Foreign exchange loss (gain) / other expense | $0.00 | $0.00 | | Stock-based compensation expense (benefit) | $0.00 | $(0.04) | | Amortization of purchased intangible assets | $0.00 | $0.05 | | Transaction and integration costs | $0.00 | $0.00 | | Restructuring costs | $0.00 | $0.02 | | **Non-GAAP adjusted earnings per share** | **$0.05** | **$0.01** | [Free Cash Flow Reconciliation](index=10&type=section&id=Free%20Cash%20Flow%20Reconciliation) | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | Net cash provided by operating activities | $5,113 | $4,066 | | Purchases of property and equipment | $(624) | $(298) | | Capitalized software and other intangible assets | $(846) | $(1,570) | | **Free Cash Flow** | **$3,643** | **$2,198** | [Explanation of Non-GAAP Measures](index=10&type=section&id=Explanation%20of%20Non-GAAP%20Measures) CareCloud defines and explains its non-GAAP financial measures, including Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, and Free Cash Flow, detailing the specific items excluded and the rationale behind these adjustments to provide a clearer view of ongoing operational performance - Adjusted EBITDA is defined as GAAP net income (loss) before income taxes, net interest expense, foreign exchange loss (gain) / other expense, stock-based compensation, depreciation and amortization, transaction and integration costs, and restructuring costs[41](index=41&type=chunk) - Non-GAAP Adjusted Operating Income excludes stock-based compensation, amortization of purchased intangible assets, transaction and integration costs, and restructuring costs from GAAP operating income[42](index=42&type=chunk) - Non-GAAP Adjusted Net Income excludes foreign exchange loss (gain) / other expense, stock-based compensation, amortization of purchased intangible assets, transaction and integration costs, and restructuring costs from GAAP net income (loss)[43](index=43&type=chunk) - Free Cash Flow is defined as net cash provided by operating activities less cash used for purchases of property and equipment and capitalized software and other intangible assets[44](index=44&type=chunk) - Exclusions like foreign exchange loss/gain, stock-based compensation, amortization of purchased intangibles, transaction/integration costs, and restructuring costs are made because they are either non-cash, non-operating, or non-recurring, and do not reflect ongoing operational performance[46](index=46&type=chunk)[47](index=47&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) Company Overview and Disclosures [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future events, financial performance, and growth, which are subject to various risks and uncertainties outside the company's control, and the company does not undertake to update them - Statements relate to anticipated future events, results of operations, or financial performance, identifiable by terms like 'may,' 'expects,' 'plans,' 'believes,' 'estimates,' or 'forecasts'[13](index=13&type=chunk) - Operations involve risks and uncertainties, many outside control, which could materially affect results and whether forward-looking statements prove correct[14](index=14&type=chunk) - These are predictions, uncertain, and involve substantial known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[15](index=15&type=chunk) - The company does not assume any obligations to update forward-looking statements to reflect events or circumstances after the date they were made[16](index=16&type=chunk) [About CareCloud](index=4&type=section&id=About%20CareCloud) CareCloud is a leader in healthcare technology and generative AI solutions, providing a suite of technology-enabled solutions to over 40,000 providers, aiming to enhance financial and operational performance, streamline clinical workflows, and improve patient experience - CareCloud brings disciplined innovation and generative AI solutions to the business of healthcare[18](index=18&type=chunk) - Its solutions help clients increase financial and operational performance, streamline clinical workflows, and improve the patient experience[18](index=18&type=chunk) - Over **40,000 providers** rely on CareCloud for 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[18](index=18&type=chunk) [Investor Information](index=4&type=section&id=Investor%20Information) CareCloud provides various channels for investors to access information, including its investor relations website, social media, and direct contact details for company management - Additional information, video presentations, press releases, and investor presentations are available on ir.carecloud.com[19](index=19&type=chunk) - Investors can follow CareCloud on LinkedIn, X, and Facebook[19](index=19&type=chunk) - Contact information for Interim CFO Norman Roth and Co-CEO Stephen Snyder is provided for company and investor inquiries[20](index=20&type=chunk) Conference Call Information CareCloud hosted a conference call to discuss its Q1 2025 results, providing access via live webcast and an audio-only option, with replays available afterward - CareCloud management hosted a conference call on **May 6, 2025, at 8:30 a.m. Eastern Time** to discuss Q1 2025 results[9](index=9&type=chunk) - The live webcast and presentation slides were accessible at ir.carecloud.com/events[9](index=9&type=chunk) - An audio-only option was available by dialing **201-389-0920**, referencing 'CareCloud First Quarter 2025 Results Conference Call'[9](index=9&type=chunk) - A replay of the conference call and slides is available approximately three hours after the call at the same link, with an audio-only replay accessible by dialing **412-317-6671** and providing access code **13753440**[10](index=10&type=chunk)

Core Viewpoint - CareCloud, Inc. has declared monthly cash dividends for its Series A and Series B Preferred Stocks for March and April 2025, reflecting the company's commitment to returning value to shareholders [1][2]. Dividend Details - The monthly dividend for Series A Preferred Stock is $0.18229 per share for both March and April 2025, with an additional payment of $0.04688 per share [2]. - The monthly dividend for Series B Preferred Stock is also $0.18229 per share for both March and April 2025 [2][3]. - The ex-dividend and record dates for both series are March 31, 2025, and April 30, 2025, respectively, with payment dates set for April 15, 2025, and May 15, 2025 [2][4]. Preferred Stock Information - Series A Preferred Stock has a cumulative cash dividend rate of 8.75% per annum based on a $25.00 liquidation preference, equating to $2.1875 per annum per share [2][3]. - Series B Preferred Stock also has a cumulative cash dividend rate of 8.75% per annum based on a $25.00 liquidation preference, equating to $2.1875 per annum per share [3]. - The Series A Preferred Stock was converted into common stock on March 6, 2025, leading to its voluntary delisting from the Nasdaq Global Market [5]. Redemption Options - The company has the option to redeem Series A Preferred Stock at a price of $25.00 per share, plus any accumulated and unpaid dividends, with a notice period of 30 to 60 days [5]. - For Series B Preferred Stock, the redemption prices vary based on the date, starting at $25.50 per share for redemptions on or after February 15, 2025 [6].