CARECLOUD(CCLDP) - 2025 Q1 - Quarterly Results

Executive Summary Q1 2025 Performance Highlights 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 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] - Completed the conversion of 3.5 million Series A preferred shares into 26 million common shares, reducing annual dividend commitment by approximately $7.7 million and strengthening cash flow and capital structure[4] - Resumed payments of preferred dividends in February 2025, funded by internally-generated free cash flow[4][5] - Reignited acquisition strategy, completing two strategic acquisitions in March and April 2025, with additional opportunities under evaluation[4] Management's Perspective Management emphasized the pivotal role of AI in CareCloud's evolution, aiming to automate clinical workflows, optimize revenue cycle management, and improve patient outcomes, highlighting continued momentum driven by AI innovation and strategic acquisitions - Co-CEO A. Hadi Chaudhry stated the AI Center of Excellence is a pivotal moment, creating real-world solutions to automate clinical workflows, optimize revenue cycle management, and improve patient outcomes, driving sustainable profitability[3] - Co-CEO Stephen Snyder noted continued momentum and strength in 2025, with recent acquisitions and the AI Center of Excellence positioning CareCloud to lead market shifts[3] - Interim CFO Norman Roth highlighted the fourth consecutive quarter of positive GAAP net income, increased revenue and adjusted EBITDA, and the resumption of preferred stock dividends from free cash flow, with reinvestment for future growth[5] Financial Results Condensed Consolidated Balance Sheets As of March 31, 2025, CareCloud's balance sheet shows an increase in total assets and shareholders' equity compared to December 31, 2024, while total liabilities decreased, reflecting improved financial health | Metric | March 31, 2025 ($ 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 | -$4,139 | Condensed Consolidated Statements of Operations CareCloud achieved significant improvements in its Q1 2025 operating results, moving from a net loss to a net income year-over-year, driven by revenue growth and improved operating efficiency | Metric | Three Months Ended March 31, 2025 ($ 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) | -$0.06 | Condensed Consolidated Statements of Cash Flows CareCloud demonstrated strong cash generation from operating activities in Q1 2025, leading to a substantial net increase in cash, despite increased cash usage in financing activities due to preferred stock dividends | Metric | Three Months Ended March 31, 2025 ($ 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] Capital Structure and 2025 Guidance Capital Structure 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] - 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] - Preferred stock is redeemable at the Company's option once dividends are current[6] 2025 Financial Guidance 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 - $0.13 | - Revenue guidance is based on expectations from existing clients, organic growth from new client additions, and anticipated small tuck-in acquisitions[7] - Adjusted EBITDA guidance reflects improvements from the Company's cost reduction efforts[8] Non-GAAP Financial Measures Introduction to Non-GAAP Measures CareCloud utilizes non-GAAP financial measures to provide investors with supplemental information regarding the underlying performance of its business operations, believing these measures offer a clearer view of short-term and long-term financial and operational trends by excluding certain non-cash or non-recurring items - Non-GAAP measures are used to understand short-term and long-term financial and operational trends by considering the impact of certain non-cash or non-recurring items[40] - Management uses these measures to evaluate operating performance, compare against past periods, make operating decisions, and for strategic planning[40] - Investors are reminded to consider non-GAAP measures in addition to, and not as a substitute for, GAAP financial performance measures[29] Reconciliation of Non-GAAP Measures This section provides detailed reconciliations of CareCloud's key non-GAAP financial measures—Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, and Free Cash Flow—to their most directly comparable GAAP counterparts, illustrating the adjustments made for non-cash and non-recurring items Adjusted EBITDA Reconciliation | Metric | Three Months Ended March 31, 2025 ($ 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 | $3,687 | Adjusted Operating Income Reconciliation | Metric | Three Months Ended March 31, 2025 ($ 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 | $595 | | Non-GAAP Adjusted Operating Margin | 8.5% | 2.3% | Adjusted Net Income Reconciliation | Metric | Three Months Ended March 31, 2025 ($ 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 | $0.01 | Free Cash Flow Reconciliation | Metric | Three Months Ended March 31, 2025 ($ 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 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] - 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] - 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] - 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] - 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][47][49][50][51][52] Company Overview and Disclosures Forward-Looking Statements 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] - Operations involve risks and uncertainties, many outside control, which could materially affect results and whether forward-looking statements prove correct[14] - These are predictions, uncertain, and involve substantial known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[15] - The company does not assume any obligations to update forward-looking statements to reflect events or circumstances after the date they were made[16] About CareCloud 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] - Its solutions help clients increase financial and operational performance, streamline clinical workflows, and improve the patient experience[18] - 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] Investor Information 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] - Investors can follow CareCloud on LinkedIn, X, and Facebook[19] - Contact information for Interim CFO Norman Roth and Co-CEO Stephen Snyder is provided for company and investor inquiries[20] 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] - The live webcast and presentation slides were accessible at ir.carecloud.com/events[9] - An audio-only option was available by dialing 201-389-0920, referencing 'CareCloud First Quarter 2025 Results Conference Call'[9] - 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]