CareCloud(US:CCLD)2021-08-04 16:00Company Operations - The company reported that it provides services to over 40,000 providers across approximately 2,600 independent medical practices and hospitals, representing 80 specialties in 50 states[174]. - Offshore operations in Pakistan and Sri Lanka accounted for approximately 11% of total expenses for the six months ended June 30, 2021, with personnel-related costs making up about 80% of those expenses[180]. - The company leverages its proprietary software and a team of approximately 700 U.S. health industry experts, supported by 3,300 offshore team members, to maintain competitive pricing[173]. - The company continues to expand its telehealth operations as an alternative to office visits, although not all physicians are utilizing this service to the same extent[165]. - The company served over 40,000 providers and approximately 2,600 independent medical practices and hospitals as of June 30, 2021[193]. Acquisitions - The company acquired CareCloud Corporation for $11.9 million in cash and assumed a working capital deficiency of approximately $5.1 million[177]. - The company purchased Meridian Billing Management for $11.9 million in cash and issued 200,000 shares of Series A Preferred Stock, along with warrants for 2,250,000 shares of common stock[178]. - The total consideration for the acquisition of MedMatica was $10 million in cash, with an additional earn-out of up to $8 million based on EBITDA and revenue targets[179]. - Revenue for the three months ended June 30, 2021, included approximately $21.3 million from customers acquired in the medSR, CCH, and Meridian acquisitions[217]. Financial Performance - Net revenue for Q2 2021 was $34,065,000, a 74% increase from $19,579,000 in Q2 2020[186]. - Adjusted EBITDA for Q2 2021 was $5,656,000, compared to $191,000 in Q2 2020, reflecting significant operational improvement[186]. - Adjusted operating income for Q2 2021 was $4,644,000, with an adjusted operating margin of 13.6%, compared to a loss of $165,000 and a margin of -0.8% in Q2 2020[187]. - GAAP net loss for Q2 2021 was $(227,000), significantly improved from $(4,792,000) in Q2 2020[186]. - The company reported a non-GAAP adjusted net income of $4,540,000 for Q2 2021, compared to a loss of $(351,000) in Q2 2020[190]. - Subscription-based technology-enabled business solutions accounted for approximately 80% of revenues in Q2 2021, down from 83% in Q2 2020[194]. - Medical practice management services generated approximately 8% of revenue in Q2 2021, down from 12% in Q2 2020[195]. Expenses and Costs - Direct operating costs for the three months ended June 30, 2021, were $20.5 million, up 64% from $12.6 million in the same period of 2020[218]. - Selling and marketing expenses increased by 36% to $2.2 million for the three months ended June 30, 2021, compared to $1.6 million in the same period of 2020[219]. - General and administrative expenses rose by 16% to $6.3 million for the three months ended June 30, 2021, compared to $5.4 million in the same period of 2020[220]. - Research and development expenses primarily consist of personnel-related costs and third-party contractor costs, reflecting the company's commitment to innovation[198]. - Research and development expenses decreased by 16% to $1.8 million for the three months ended June 30, 2021, compared to $2.1 million in the same period of 2020[221]. - Depreciation expense increased by 85% to $533,000 for the three months ended June 30, 2021, compared to $288,000 in the same period of 2020[222]. - Amortization expense for the three months ended June 30, 2021, was $2.6 million, a 23% increase from $2.1 million in the same period of 2020[224]. - The company incurred impairment and unoccupied lease charges of $223,000 for the three months ended June 30, 2021, compared to $63,000 in the same period of 2020, reflecting a 254% increase[218]. Cash Flow and Financing - Positive cash flow from operations was approximately $1.1 million for the three months and $2.1 million for the six months ended June 30, 2021[232]. - Capital expenditures were $1.5 million for the six months ended June 30, 2021, compared to $817,000 for the same period in 2020[240]. - Cash provided by financing activities was $3.6 million for the six months ended June 30, 2021, compared to $23.1 million for the same period in 2020[241]. - The net cash provided by operating activities increased by $5,009,000 or 171% for the six months ended June 30, 2021 compared to the same period in 2020[235]. - The net change in operating assets and liabilities was $6.9 million for the six months ended June 30, 2021[238]. - The company incurred approximately $4.2 million in cash to resolve a civil investigation related to a subsidiary acquired in 2020[236]. Tax and Interest - Interest income decreased by $2,000 or 50% to $2,000 for the three months ended June 30, 2021, and by $36,000 or 86% to $6,000 for the six months ended June 30, 2021 compared to the same periods in 2020[226]. - Interest expense decreased by $31,000 or 21% to $115,000 for the three months ended June 30, 2021, and by $81,000 or 31% to $183,000 for the six months ended June 30, 2021 compared to the same periods in 2020[227]. - Other income (expense) - net was $205,000 for the three months ended June 30, 2021, compared to a loss of $114,000 for the same period in 2020, representing a change of $319,000 or 280%[228]. - The provision for income taxes was $213,000 for the three months ended June 30, 2021, compared to a benefit of $74,000 for the same period in 2020[229]. Future Outlook - The company forecasts a return to profitability despite historical losses and has recorded a valuation allowance against all deferred tax assets as of June 30, 2021[204]. - The COVID-19 pandemic did not materially adversely affect the company's financial results during the six months ended June 30, 2021, but ongoing impacts are uncertain[165].