CareCloud, Inc.

Ladies and gentlemen, greetings and welcome to the CareCloud Inc. First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kristen Rotti, Corporate Counsel. Please go ahead.

Good morning, everyone. Welcome to CareCloud's first quarter 2025 conference call. On today's call are Mahmood Haque, our founder and executive chairman, co-chief executive officers Stephen Schneider and Hadi Chaudhry, and Norman Roth, our interim chief financial officer and corporate controller. Before we begin, I would like to remind you that certain statements made during this conference call are forward-looking statements within the meeting of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. other than statements of historical fact, made during this conference 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, approximately, upcoming, belief, estimate, or similar terminology in 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 to 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 in factors that could cause actual results to differ materially from those forward-looking statements. For anyone who dialed into the call by telephone, you may want to download our first quarter 2025 earnings presentation. Please visit our investor relations site, ir.carecloud.com. Click on news and events and click IR calendar. Click on first quarter 2025 results conference 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 first quarter results and for a reconciliation of these non-GAAP performance measures to our GAAP financial results. With that said, I'll now turn the call over to our co-CEO, Stephen Schneider. Stephen?

Thank you, Kristen, and good morning, everyone. Thank you again, everyone, for joining us today for CareCloud's first quarter 2025 earnings call. We are very pleased to report continued strength and momentum in Q1, building on the record-setting year we had in 2024. Our continued focus on operational discipline, innovation through AI, and strategic execution is yielding tangible results. Today, I'll walk you through our first quarter highlights, growth outlook, and the early returns we're seeing from our strategic initiatives, including our return to M&A. Let's begin with a look at our financial performance for the quarter. Revenue for the first quarter was $27.6 million, an increase from $26 million during the same period last year. This growth reflects ongoing demand for our integrated AI-enabled RCM solutions, and we believe it sets us on the path for achieving our four-year guidance. We are also reporting gap net income of $1.9 million, a meaningful turnaround from the net loss of $241,000 in Q1 2024. And adjusted EBITDA rose to $5.6 million, up 52% year over year. These results underscore the impact of our cost management initiatives, and operational streamlining, together with our ability to scale profitably while continuing to invest in innovation. This profitability is the result of deliberate structural improvements we've made across the business. We continue to benefit from a streamlined global workforce and reduce vendor reliance. Further, our automation initiatives have helped expand our historical margins and improve efficiency across our operations. This refreshed cost structure forms a strong foundation we can build on as we expand, enabling long-term profitable growth. Turning to our capital structure, in March 2025, we executed a mandatory conversion of a significant portion of our Series A preferred stock into common stock. This conversion reduced our outstanding Series A shares from 4.5 million to less than 1 million shares, materially strengthening our capital structure and providing greater financial flexibility by reducing our dividend obligations. To illustrate this increased financial flexibility, consider the contrast between our dividend obligations and free cash flow over the last year. For instance, in Q1 2024, our quarterly dividend obligation stood at approximately $3.9 million, while free cash flow totaled just $2.2 million, meaning we were obligated to pay out more in preferred dividends than we were generating in free cash flow. In Q1 2025, that picture has changed dramatically. Following the Series A conversion, Our dividend obligation has decreased from $3.9 million to approximately $1.5 million per quarter, while our free cash flow, for example, increased $3.6 million during the same quarter. This reversal not only highlights the financial benefit of the conversion, but it also underscores our increased ability to reinvest in the business and fuel future growth. Even with a portion of the Series A remaining, the reduction in dividend obligations has already begun to create financial headroom for reinvestment in strategic initiatives. As we look at the path ahead, we are particularly excited about our AI initiative. Last month, we officially launched our AI Center of Excellence, beginning with over 50 AI professionals and targeting a team of 500 by the end of the year. This DualSure initiative is fully self-funded through operating cash flow, and it focuses on four key areas. Automating, coding, claims, and documentation, predicting denials and revenue risk, enhancing patient and provider engagement, and finally embedding AI across our EHR and RCM platforms. As Hadi will describe shortly, we believe this initiative positions CareCloud at the forefront of intelligent healthcare automation and AI, reducing administrative burdens on providers while enabling scalable, real-world performance improvements across the care continuum. Let's now turn to another core element of our growth strategy, acquisitions. In early 2025, we completed two strategic acquisitions, Mesa Billing in February and Revenue Medical Management in April. These transactions mark our return to M&A after nearly four years and signal a renewed focus on disciplined, accretive growth through acquisitions. Since going public in 2014, we have completed approximately 20 acquisitions And in many ways, we have built CareCloud through pursuing and executing on this strategy. These types of transactions have allowed us to cost-effectively acquire customers, typically at a lower cost than direct sales, while realizing synergies through integration into our global team and proprietary technology. Revenue medical management expands our footprint into the audiology and hearing health market, a large and growing specialty care segment with limited outsource RCM adoption. MESA billing, while also small, further validates the opportunities that exist in the acquisition market. Both deals are expected to be accreted within 90 days. Importantly, consideration is tied to retained revenue and paid quarterly, ensuring financial discipline and strong alignment with long-term value creation. With our enhanced financial position, operational readiness, and AI-driven platform, we'll continue to actively evaluate targets that are well priced and aligned with our strategic priorities. In summary, Q1 2025 reflects a continuation of the transformation that defined our performance in 2024. We delivered strong financial results executed a significant step forward in restructuring our capital base, reentered the M&A market with our disciplined approach, and launched a bold new AI initiative that will shape the next chapter of our growth. With this strong start to the year and conviction regarding our strategic initiatives, we remain confident in our ability to drive sustainable value for our shareholders and clients alike. I'll now turn the floor over to Hadi. Hadi?