CareCloud, Inc.

Thank you. Thank you.

Good morning, everyone. Welcome to the CareCloud second quarter 2022 conference call. On today's call are Mahmud Haq, our founder and our chief executive officer, president and a director, and Bill Korn, our chief financial officer. Before we begin, I would like to remind you that certain statements made during this conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. All statements other than statements of historical performance made during this conference call are forward-looking statements, including, without limitation, statements regarding our expectations and guidance for future financial and operational performance, expected growth, Business Outlook, and potential organic growth and acquisition. Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, upcoming, believe, estimate, or similar terminology and the negative of these terms. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, Many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. These statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise these forward-looking statements in light of new information or future events. Please refer to our press release and our reports filed with the Securities and Exchange Commission where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward-looking statements. Anyone who dialed into the call by telephone, you may want to download our second quarter 2022 earnings presentation. Please visit our investor relations site, ir.carecloud.com, Scroll down to News and Events, click on Second Quarter 2022 Results Call, and download the earnings presentation. Finally, on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our Second Quarter 2022 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results. And with that said, I'll now turn the call over to our CEO, Hadi Chaudhry.

Thank you, Kim, and thanks to all of you for joining us for our second quarter earnings call. On today's call, I would like to discuss a deeper dive into CareCloud's record bookings that are a direct result of our newly launched products and heightened focus on organic growth. Our soon to be launched products for remote monitoring, A revision to our outlook that is attributable solely to a delay in our acquisition playbook. And finally, an update on our sales pipeline. To start with some highlights of the quarter, annualized recurring bookings of the new contracts of $5.5 million, excluding one-time fees, were the highest in the history of the company. Almost double what we signed last year and compares to $1.6 million in the first quarter of 2022. Revenue of $37.2 million was up 9% year-over-year. Adjusted EBITDA of $7 million increased 24% over second quarter of last year. Adjusted net income of $5.6 million increased 23% over the prior year period. Now taking a closer look at bookings, We are especially pleased with the results this quarter, which are directly correlated with our efforts to drive the organic growth that we have been speaking about the last couple of quarters. As we have discussed, our growth strategy in recent quarters has evolved from a pure consolidation playbook to one that strikes a balance of accretive acquisitions complemented by organic growth achieved through investment in sales and innovation. As mentioned, bookings from recurring sources were $5.5 million, up 97% year over year, and a record for CareCloud. Additionally, non-recurring professional services bookings of $6.7 million increased more than three times that of second quarter of 2021. due largely due to the acquisition of MedSR that was completed late in second quarter of last year. Additionally, while we want to stop short of giving bookings guidance, we have a high level of confidence that third quarter recurring bookings will meet or exceed those of second quarter and may represent another record for the company. Importantly, a meaningful component of the bookings were derived from contracts for our newly introduced CareCloud Wellness that launched last quarter. Specifically, greater than one non-professional services bookings came from our new wellness product, demonstrating terrific early reception to this solution. As a refresher, Wellness, which launched in late April, is an effective way for our practices to support the treatment and well-being of the chronically ill patient that they serve. Additionally, it is a great source of referral revenue with little to no upfront cost. Wellness's early results demonstrate that its value is clearly resonating with our physician space. While it is not the norm to get too granular around our booking metrics, we think it's important to share this information with you as it ties directly to the conversion of the robust pipeline activity that we provided a lot of details around last quarter. Most of all, it shows that our increased investment in product innovation and sales and marketing efforts are bearing fruit. Given the sensitivity around bookings and volatility by quarter, please note that investors should not expect us to provide bookings matrix every quarter. We are pleased to be launching our forthcoming Remote Patient Monitoring program this quarter. Remote Patient Monitoring, or RPM for short, is a digital health solution leveraging the Internet of Things which tracks and monitors chronic conditions and potential emergent situation close to real time. CareCloud's RPM solutions, metrics like blood pressure, glucose measurements, heart rate or pulse, weight, and sleep changes in the elderly as well as fetal monitoring can all be instantly transmitted from devices to patients' EHR. Capturing a longitudinal view of the patient across the care continuum. We plan to offer a full service to the physician, providing care managers, supplying the device, and helping to populate the EHR with data transmitted from the cloud. At a minimum, our solution promotes connectivity to healthcare data whenever and wherever it resides. And it, at best, can serve to situations and PreAmp, improving outcomes and reducing costs in the process. We are excited to continue along the path of innovation by introducing this revolutionary digital health solution to the market. We size the total market opportunity at an auto of $100 billion over the next few years. Drilling down to the medical practice level, we believe a typical practice on average can drive incremental revenue of up to one-third annually through a combination of chronic care management and monitoring, of which we can capture a meaningful percentage. We note also that the timing of our RPM product launch may coincide with CMS's favorable treatment towards the proactive management of chronic care conditions. CMS increased reimbursement for chronic care management in 2022. We believe that following additional work by the device providers, inclusive of proof points regarding adoption and improvement of outcomes, CMS may increase fees for remote monitoring in future years. These favorable rates may serve to incentivize providers to do more monitoring. With respect to our acquisition strategy, and has been the case for some time, we strive to balance accretive acquisitions that integrate well with our cloud platform and deliver value to our shareholders with a reasonable level of organic growth stemming from new customers, same-store sales, and product innovation. While we are happily exceeding expectations with respect to the organic component of our strategy, our acquisition playbook took a pause through the first half of 2022. As we outlined in our outlook in March, our 2022 guidance always contemplated a small amount of acquired growth that would be required to hit our revenue and EBITDA targets. While the acquisition pipeline remains robust and we continue to evaluate a number of opportunities, none felt compelling enough to execute from either an accretive or strategic standpoint. For one thing, private valuation expectations remain lofty, despite the slide in the public company valuations ear to date. In a recent industry report, it was noted that healthcare tech M&A was down in the first half of 2022 as acquirers struggled with valuation disconnect driven by the big step-ups resulting in lofty post-money valuations of the last couple of years. Given that our criteria for doing a deal requires us to target an ROI over three to four years, this fiscal discipline and electivity left us with a gap to meeting our full-year outlook. Meanwhile, we are hopeful that private company value in the back half of the year. In setting our guidance earlier in the year, we incorporated the anticipated time down of revenue from two customers that came to us as part of a prior acquisition. At the time of acquisition, the client in the process of merging their operations with another health system, each of whom had a different EHR mandate from whatever clients were utilizing. As such, we believe there was a risk that and while this potential attrition was factored into our guidance, our expectation was to make up the revenue with acquired growth, which is now likely pushed out to 2023. Accordingly, we now expect revenue in the range of $140 million to $143 million versus our prior expectations of $150 million to $155 million due to an expected shortfall in acquired revenue. In doing so, we are reducing our EBITDA guidance to a range of $22 million to $24 million from $24 million to $26 million previously. I want to reiterate that the fundamentals of our business remain strong, as evidenced by our record bookings. and the absence of any tuck-in acquisition is the sole driver of the guidance reduction that Bill will expand upon. Before I turn it over to Bill for his financial review, I would like to comment on the health of our sales and pipeline activity. A fair amount of detail last quarter about how our increased investment in sales and marketing and product innovation would lead to an uptick in organic growth. And we are seeing early success of this in both The funnel of pipeline opportunities as well as bookings. We are pleased that our pipeline at the end of second quarter was $40 million, a 50% increase above the $25 million we had in the prior year. Moreover, the incremental pipeline build or creation was $21 million, up 50% in the prior year period. Average contract value or deal size increased 42% over second quarter of last year, which is suggestive of two things, larger customers in the pipeline and also group of products and services being delivered across our platform. For example, enterprise accounts were 64% of the pipeline, while small accounts comprised just 16%, and mid-sized practices were the remaining 20%. Further, as an illustration of increased product density, our teams are actively working with clients representing an estimated $50 million in annualized revenue from CareCloud Wellness, which we introduced in the market just last quarter. All told, though we fell shy of our required revenue targets through the first half, the health of our pipeline, our sales motion, and booking strength has never been better in the history of our company. To summarize, We delivered record bookings in second quarter with an expectation for as good if not better in third quarter. Year-to-date, we have announced innovative digital health solutions inclusive of wellness for chronic care management and the soon-to-be-launched remote patient monitoring solution. Our sales and marketing efforts continue to ramp and early results are encouraging as evidenced by CareCloud's record bookings. We continue to work through an active acquisition pipeline with the goal of completing one or more deals in the back half of this year or early 2023. We look forward to reporting our progress to you as we navigate through the rest of 2022. Now I will turn the call over to a closer look at our second quarter results.