CareCloud, Inc.

Greetings and welcome to the KCloud Second Quarter 2025 Results Conference Call. At this time, all participant lines are in the listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please signal the operator by pressing star, then zero on your telephone keypad. As a reminder, this conference is being recorded.

Good morning, everyone. Welcome to KER Cloud Second Quarter 2025 Conference Call. On today's call are Mahmood Haq, our founder and executive chairman, co-chief executive officer 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 meaning of Section 27A of the Securities Act of 1933 as amended in Section 21E of the Securities Exchange Act of 1934 as amended. All statements 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, believe, estimate, or similar terminology in the negatives 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 in 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 these forward-looking statements. For anyone who dialed into the call by telephone, you may want to download our second quarter 2025 earnings presentation. Please visit our investor relations site, .carecloud.com. Click on news and events, then click IR calendar, click on second 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 second quarter results and for 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 Snyder. Stephen.

Thank you, Kristen, and good morning, everyone. I appreciate you joining us today for Care Cloud's second quarter 2025 earnings call. I'm very pleased to report another strong quarter for Care Cloud, one that reflects not just financial stability, but meaningful strategic progress across the core pillars of our business, namely AI-driven innovation, operational discipline, and sustainable growth. These results are a continuation of the transformation we initiated in 2024, and they highlight our ability to execute in a dynamic and evolving healthcare environment. Let me start with the financials. We achieved GAAP net income of $2.9 million, an improvement of 73% from 1.7 million in the same period last year. And this was in spite of a modest -over-year revenue decline driven largely by a one-time non-recurring revenue item in Q2 2024. Importantly, this quarter marks the first time in Care Cloud's history that we've delivered positive GAAP earnings per share at 4 cents compared to a loss of 14 cents per share in Q2 of 2024. This is a remarkable accomplishment and one that we're proud of. Reporting our first positive EPS as a public company, again, is a major milestone and a clear demonstration of the traction behind our strategy. -to-date, we've generated 4.9 million in GAAP net income. More than triple the amount we reported in the first half of 2024. Adjusted EVA DA stands at $12.1 million, a 20% increase -over-year, and free cash flow reached $9 million, up 85% over the same period. These metrics underscore the scalability and efficiency of our operating model and provide us the flexibility to reinvest in growth. Based on our performance, we are pleased to reaffirm our full year 2025 guidance. We continue to expect revenue between $111 million and $114 million, adjusted EVA DA, the range of 26 million to 28 million, and GAAP earnings per share between 10 cents and 13 cents. As the tech innovation, our AI center of excellence is operational and is beginning to deliver measurable results while we continue to ramp up and broaden the team. We are actively using AI to enhance the provider and patient experience on the front end, while we're also applying it quietly on the backend to meaningfully improve our internal operations and cost structure. Across our back office and service delivery teams, we've deployed AI powered automation to reduce manual work, accelerate turnaround times and eliminate redundancies. For example, we're leveraging machine learning models to streamline claims coding, re-adjudicate denials and prioritize accounts receivable workflows. These tools are enabling our team to more efficiently manage higher volumes with fewer resources, driving productivity gains. We're also using generative AI internally to support functions like denial management, audit prep and revenue forecasting. In the past, these areas required intensive manual review and lengthy cross-functional coordination. Now with AI enhanced workflows, we're able to move quickly, reduce error rates and focus our team on higher value strategic work. Taken together, these operational efficiencies are not only expanding our margins, they're strengthening our ability to scale profitably without adding incremental costs. As we move forward, we'll continue to embed intelligence deeper into our infrastructure so we can grow faster, serve clients better and deliver stronger returns for our shareholders. We're advancing our 2025 product roadmap and gaining traction with Cirrus AI Notes and Cirrus AI Voice, solutions purpose-built to improve documentation accuracy, reduce provider burden and enhance the patient experience. These aren't just incremental tools, they represent the foundation of a broader platform strategy to embed intelligence into every layer of the care delivery process. We've also remained committed to financial discipline and shareholder alignment. Since resuming preferred dividend payments, we've declared nine consecutive months of distributions, all funded entirely from our free cashflow. That consistency reflects our operational strength and capital stewardship. On the M&A front, we've returned to a more active posture. We've completed two acquisitions this year, each aligned with our focus on specialty AI powered RCM. These tuck-ins reflect the kind of disciplined, accretive M&A that has historically been a core part of our growth strategy. And with a strong balance sheet and a scalable platform, we are well positioned to continue to actively evaluate additional opportunities. In summary, this quarter marks a pivotal moment for Care Cloud. We are delivering profitability at scale, launching differentiated AI capabilities and reigniting our acquisition engine, all while maintaining a lean, capital efficient model. We're executing from a position of strength and building a platform that we believe will lead the next wave of intelligent healthcare delivery. With that, I'll now turn the floor over to Hadi. Hadi?

Thank you, Steve, and thank you everyone for joining us. As Steve mentioned, AI is already reshaping how we operate, and I'm excited to take that conversation a level deeper. This morning, I will focus exclusively on the work we have done to bring AI from concept to execution across Care Cloud. Over the past few quarters, we have gone from planning to production, embedding AI into real-world AI, and real-world workflows that are improving efficiency, driving smarter decisions, and enhancing the experience for both providers and patients. And while the momentum around our AI products continues to build, today's calls mark an important inflection point, not only in how we scale those innovations, but also in how we expand our platform into entirely new market segments. I will begin with an update on AI progress, and later I will share significant steps we have taken to bring our intelligent cloud-based platform to a critical part of a healthcare ecosystem that has long been underserved. To ensure this AI transformation, we launched our AI Center of Excellence earlier this year, and I'm pleased to share that it's now fully operational. We have hired 100 full-time AI professionals, including machine learning engineers, data scientists, and NLP specialists. Alongside them, we have onboarded another 100 interns. Many of them are already being evaluated for full-time roles. This structure gives us the scale and flexibility to move quickly while continuously investing in talent and innovation. Importantly, we are taking a pragmatic and strategic approach to AI development. Where appropriate, we leverage 25 years of proprietary clinical and financial data to train purpose-built models tailored for healthcare. At the same time, we are also integrating market-available foundational models where they accelerate time to value, such as transcription, summarization, and conversational AI. This hybrid approach allows us to maintain control where it matters most while benefiting from innovation across the ecosystem. The result is a growing set of production-grade solutions delivered at scale without compromising performance, security, or clinical relevance. This center isn't just a hub for innovation. It's an execution engine powering the next generation of care cloud products and capabilities. On the client side, our flagship AI solution, Cirrus AI Notes and Cirrus AI Voice continue to gain traction and anchor of a broader intelligent platform strategy. Cirrus AI Notes is a fully integrated documentation assistant that reduces provider workload and improves note quality. It uses ambient listening, smart summarization, and specialty-specific logic to streamline documentation directly within the EHR. Since our last earnings call, the number of providers using Cirrus AI Notes has more than doubled. We have continued to expand specialty support, refine natural language capabilities, and improve real-time usability. While revenue contribution is still early, this product is delivering significant strategic value, enhancing provider satisfaction, increasing platform stickiness, and differentiating our offering in an increasingly crowded EHR market. Cirrus AI Voice is our AI-powered call center monitoring and auditing platform. It analyzes 100% of calls, scores each agent's performance against KPIs, and uses sentiment analysis to surface coaching opportunities and quality issues in real time. This quarter, we deployed Cirrus AI Voice internally across hundreds of our employees to improve call center performance. We have also launched it with one of our enterprise clients, where it's currently undergoing performance evaluation as part of their phased rollout. Early feedback has been very encouraging. Together, Cirrus AI Notes and Voice are foundational to our AI roadmap, built not as standalone tools, but as a part of a connected, intelligent ecosystem spanning both clinical and operational workflows. We are actively deploying AI to improve internal operations and scale more efficiently. In revenue cycle and denial management, machine learning and generative AI are streamlining claim coding, appeal generation, and AR prioritization, reducing manual work and accelerating turnaround times. We are also piloting AI tools for forecasting to support faster, data-driven decisions. These early deployments are already delivering clear productivity gains and operational leverage. Now, looking ahead to Q3, we are actively working on a broad set of AI initiatives across the organization. Among them, here are a few key projects that illustrate how we are continuing to push the boundaries of intelligent automation and patient engagement. The first one is an AI front desk agent. We are piloting a conversational AI agent capable of handling inbound calls without human intervention. It performs front office tasks like appointment scheduling, prescription refills, lab results updates, and general inquiries with a human-like voice experience. This will help reduce call volumes and improve service responsiveness. The number two, AI-enabled personal health record, a PHR. We are building an AI-powered PHR that allows patients to interact with their health data using natural language through both text and voice. A key feature is an AI voice assistant that conducts adaptive pre-visit interviews, asking context-aware questions to complete intake, assesses the patient's condition, and pre-populate clinical notes, saving time for providers and improving visit quality. Additional capabilities include smart scheduling, chart summarization, and proactive care prompts, all aimed at making healthcare more personalized, accessible, and actionable. Number three, enhanced AI denial management. We are expanding our AI-powered denial management capabilities with deeper use of generative AI to automate appeals, classify root causes, and surface pair trends, helping clients recover revenue faster and reduce future denials. These projects reflects our commitment to delivering real-world AI that improves experience, efficiency, and outcomes across the care continuum. Earlier, I mentioned that today's call represents a strategic inflection point, not only in how we scale our AI innovations, but also in how we expand the reach of our platform. I'm pleased to share that as of August 1, 2025, Care Cloud has received ONC Health IT certification for our TalkEHR platform tailored specifically for critical access hospitals. This certification enables us to support CAHs participating in Medicare and federal quality programs and allows us to bring our technology into a underserved and critically important segment of the healthcare system. Our CAH certified platform is cloud-based, AI-enabled, and designed to support inpatient, outpatient, and swing-bed workflows, delivering the same operational efficiency and regulatory compliance we are known for in the ambulatory space. This milestone opens access over $1.5 billion addressable market across more than 1,300 rural hospitals, many of which are actively seeking modern replacement for outdated, high-maintenance systems. It also reinforces a broader strategy of supporting the full continuum of care from independent practices to rural inpatient facilities to a unified, intelligent platform. To summarize, we are executing with focus and discipline across every layer of our AI strategy. From client-facing innovation to internal automation, we are embedding intelligence into the core of our platform, delivering variable improvements in experience, efficiency, and scalability. We have built the internal infrastructure, expanded into new markets, and actively developing next-generation capabilities that will further differentiate Care Cloud in the quarters ahead. Our entry into the inpatient market reinforces our commitment to serving the full continuum of care and our conviction that AI can and should power meaningful, practical improvements in how healthcare is delivered and managed. We believe we are still in the early inning of AI and healthcare, but with the foundation we have built, we are well positioned to lead. Thank you again for your time and continued support. I will now turn the call over to our interim CFO and controller, Norm Roth. Norm?

Thank you, Hadi, and thanks everyone for joining our call today. We delivered a strong quarter, reflecting the strength of our business model and the disciplined execution of our strategic priorities. Positive earnings per share and strong cash flow underscore our continued operational efficiency and financial health. During the six months ended June 30th, 2025, we generated $12.5 million of cash from operations and $9 million of free cash flow. We're proud of this accomplishment. In the second quarter, we reported revenues of $27.4 million. While down approximately $700,000 year over year, the decline was due to a one-time non-recurring revenue item in Q2 2024. Care Cloud Wellness generated approximately $1 million in revenue for the quarter and approximately $1.8 million for the first six months of this year. Our direct operating costs continue to decline and they are down approximately $760,000 from Q2 2024. Our operating expenses including GNA, R&D, and sales and marketing expenses decreased by approximately $1.4 million. In the second quarter, we reported positive gap operating income of $3 million and gap net income of $2.9 million. This compares to gap operating income of $2.3 million and gap net income of $1.7 million during Q2 2024. The gap net income per share was 4 cents based on the net income attributable to common shareholders, which takes into account the preferred stock dividends. Non-GAP adjusted net income for the second quarter 2025 was $3.3 million or 7 cents per share calculated using the -of-period common shares outstanding. We reported adjusted EBITDA of $6.5 million in the second quarter compared to $6.4 million in the same period last year. Revenue for the first six months of 2025 was $55 million compared to $54.1 million for the same period in 2024. For the first six months of 2025, the company's gap net income was $4.9 million compared to a gap net income of $1.4 million for 2024. This equates to income of 2 cents per share after subtracting the preferred stock dividends. Non-GAP adjusted net income for the first half of 2025 was $5.6 million or 13 cents per share. -to-date adjusted EBITDA was $12.1 million, an increase of $2 million from $10.1 million in the same period last year. As of June 30th, 2025, the company had approximately $10.4 million of cash. Networking capital was approximately $14.9 million. This performance gives us confidence as we enter the second half of the year. We remain focused on profitability and cashflow in delivering long-term shareholder value. We look forward to updating you later in the year. With that, I'll now turn the call over to Mahmoud for his closing remarks. Mahmoud.

Thank you, Norm. I want to take a moment to sincerely thank our employees, clients, and shareholders for their continued trust and support. This quarter marks a significant milestone for Care Cloud. Not only have we delivered our first ever positive gap earning per share since our IPO, but we have done so while continuing to invest in the future. As we look ahead, we remain committed to thoughtful execution, sustainable growth, and delivering long-term value for all our stakeholders. Operator, please open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Alan Klee with Maxim Group. Please go ahead.

Yes, hi, great quarter. Free cash flow, really standing out. I wanted to touch on your AI center of excellence and the opportunities you're creating there. How do you think about kind of the spend that you'll have and how you're thinking about that relative to the potential revenue generating opportunities? Thank you.

Good morning, Alan. Thank you for joining and for your question. As we mentioned, or the way we are trying to focus on it is three-fold. One is the top line, which is we can bring in to the market some products that can generate some incremental revenue. And the second part is making the products more competitive and AI enabled, which is an evolution the whole industry is going through. Like if it's an EHR, there are a hundred different ways we can optimize how the things can operate in the next generation with the help of an AI, whether it's the summarization of charts, whether it is the recommendations, whether it is the sorting out with the help of AI, all the different incoming documents and suggesting and recommending the next procedures, suggesting to the doctor as an example, the next prevent training, for example. And as I mentioned in our call earlier, for example, the AI agent, which can intercept the call and instead of a human being who is taking the, answering the call, simple questions such as appointment scheduling, cancellations and the like. So many of the things are some of those would be where we can have an incremental revenue, other is making the product more competitive in the market. And the third one is our back office optimization. The many tasks that we were doing manually today are in the process of being converted into an automated way or with the help of an AI, there are less and less human resources needed to perform the same task or we can perform the same task with much more efficiency. So I think the benefit is going to come in all these three areas, not just one. One is the revenue driver, the product being more competitive which eventually will result into more revenue, better sale and positioning in the market. And third one is helping us improve the margins with the help

of an AI. I hope that answers the question.

Yes, you've come out with some new products, you've talked about critical access hospitals and then some specialized EHR. Maybe can you talk about how you're approaching the, because it sounds like you're reaching out to new potential customers, how you're thinking about the sales approach to try to win the business with your new offerings.

Sure, let me start and then maybe Steve can take it from there. If you think about it, some of these specialties such as dermatology, let's take that as an example. We have many clients who are using today Care Cloud services when it comes to RCM and practice management and the like. But they may be using some other industry specific EHR who those players may have been in the industry focusing on those specific specialty areas for decades. Even though we are providing the services by integrating those systems into our platform, that's where one of the areas where we see a true opportunity where the full end to end solution can offer much better outcomes compared to an integrated version. And in many cases, those EHRs or those other platforms still lack the capabilities, the next generation of capabilities of AI and the like. So that's one of the area where we see the opportunity. And I'm sure you have more things to

add here. Thanks, Hadi. And Alan,

thanks for the question. So if we focus in particular in terms of the EHR for the inpatient space, our focus is primarily strategically on the critical access hospital space where there are 1,300 roughly critical access hospitals across the United States. And if we kind of step back and look at the data and step back even further and think about the inpatient hospital space from an EHR perspective, there's a very small universe of vendors who are focused in on this space and have the technological capability to develop an end to end solution. And there's even a smaller number that have not only the technological capability to develop an end to end solution from a clinical perspective, but also have a long track record of meeting the needs of hospitals and independent practices from a revenue cycle manager perspective. So we're excited about this. This is a pretty huge milestone in terms of our overall ability to penetrate this market and to reach out to this market. And over the next quarter, we're excited to share some additional information and some additional updates as

we move forward. Thank you. I'll ask one more question and then I'll jump back into queue

for questions. Excuse me. Could you just comment on how MEDISR, remote patient monitoring and chronic care management performed?

For sure. So if we step back for a minute, Alan, and we think about the year overall, what our strategic focus has been, it's really been, there have been four key things. First of all, to gain the leading edge in the AI space within the healthcare IT market. We've already spoken about that. Secondly would be to stabilize overall revenue. And we're excited to again, report that year to date revenue has increased. Third, it's been to further expand margins. And as we think about the margins, and we think about most specifically, the most recent quarter, of course, represents the first time in our company history where we've been able to report positive net earnings. So we've taken the momentum from last year, and we've continued that momentum into this year. And then the final thing would be to really focus on reigniting acquisitions and acquisitive activities together with continuing to expand the opportunities with regard to organic growth. So in particular, your question focused in on MetaSAR. Again, for MetaSAR, we're pleased to say that the overall revenue base has largely stable just like the larger revenue base across the company. So we expect revenue this year to be roughly equal to what it was last year. Obviously, there's still time, there's still wins to be made, but we're striving to achieve that. Likewise, from an RPM perspective, RPM is an exciting addition to the overall revenue mix. But as we've spoken about in the past, we still anticipate that the overall revenue mix will continue to be about 5% or less from RPM. And that's about

where we're tracking today. Thank you very much. Thank you. Thank you.

We have a next question from Michael Kim with Zach's Small Cap Research. Please go ahead.

Hey everyone, good morning. And thanks for taking my questions. First, maybe just to follow up on, seemingly it seems like you guys are targeting more specialized practices and being able to come to market with a fully integrated -to-end solution. So just wondering where you might be seeing incremental opportunities going forward as you sort of

look out into the future.

Certainly, thanks Michael for the question.

Certainly from the perspective of overall growth, our focus continues to be on upselling the existing revenue base. So delivering value and meeting the needs of our existing client base and looking for other opportunities, whether it be RPM or other opportunities from an upselling perspective. Together with the net new types of opportunities that you referenced that are more specialty specific, EHRs and the like. And as we lean further into the, in particular the inpatient space, we're excited about having a brand new market that we can unlock, especially the smaller healthcare facilities, the critical access hospitals, and those that are generally speaking 25 beds or less, together with the life sciences opportunities we've spoken about before. So we really see again, when we look at this year, looking at those kind of four key objectives, we're pleased to see that at least along, at least along all these four

key objectives, we're really tracking well.

Got it, thanks. And then

just in terms of M&A, just wondering what you're seeing from a competitive standpoint. And then obviously you talked about the strengthening balance sheet, but just curious how you're thinking about capacity from a funding perspective, thanks.

From a competitive perspective in the M&A space, again, we're seeing a very active environment when it comes to healthcare IT and revenue cycle management opportunities. So as we've discussed in the past, it's our belief that over the last year and a half, the overall valuations in this space have normalized, and they've normalized to something close to the valuations that were experienced pre-COVID. So that really unlocks other actionable opportunities for us here in the revenue cycle management, acquisitive space, together with the broader healthcare IT space. Also seeing some distressed companies and non-core assets of companies come to market. And in many of these cases, we really see an opportunity to take our operating model, scale and healthcare IT capabilities and to unlock some very meaningful value within these companies. You also asked about it from a funding perspective. And from a funding perspective, we're continuing to approach all these acquisitive opportunities with discipline. We're in a strong position to be able to fund these tuck-in deals through our internally generated cash flow we talked about before. We also have, of course, an untapped and un-drawn credit facility with SVB, which gives us a bit of additional flexibility. And we feel like we're in a very good position to be able to move forward and take action with regard to these opportunities as they materialize. And we're continuing to actively explore what opportunities make sense as we look to deploy our capital in a way that will drive further ROI. So broadly speaking, we're pursuing these strategic acquisitions that are financially accretive, operationally synergistic, and also aligned with our long-term growth objectives, including

the

opportunity to be able to

deploy our AI technology. Ladies and gentlemen,

the line for the speaker has got disconnected. We request you to stay online while we get him connected. Thank you.

Hey, Mike. Steve is dialing back on. Give us a moment. Let's get these kinds of people right back together. That is anothr إلى Incorporwe Cold Untold. Ladies and gentlemen, we've got the management back. Please go ahead. The TV cannot hear you. Okay, I guess he's he's got disconnected again. I'll try to connect him. Please stay on night.

Okay.

Operator. Okay, what we are waiting for for Steve.

Sorry about that. Sorry about that everyone. My apologies. A little bit of an issue here with the phone lines. So so when I dropped off there, my apologies, Michael. I was just talking about the overall strategy associated with these opportunities that we're pursuing in the acquisitive space. I can't believe it was almost done. I'm just going to mention and then I can ask them feel free to ask any follow-up questions. I was going to mention one of the acquisition that we've already spoken about some and that's the revenue med acquisition. I think that probably is a good acquisition to think about as a good reference point for those opportunities that are particularly attractive and fit well within our model. You'll recall that revenue med is focused on the hearing health space and gave us the opportunity to acquire a business that not only added the existing client base, but also gave us the opportunity to expand the scope of our existing solutions into a new subsection of the market. And that's that that particular transaction you may recall involved no money down. A hundred percent of the purchase price is based on the revenue generated over time. So again, it's the type of tuck in that really fits well. Low customer acquisition cost and immediate immediate client base and a platform that we can enhance using our broader technological and AI capabilities. And if you think about this, this represents not only a win for us from an acquisition perspective, but also represents an opportunity that we're able to move forward along in terms of organic growth. So if you think about it from the perspective of this particular acquisition, just as an example, I'll share a couple things that have happened with regard to revenue med. The largest customer in revenue med, we've been able to meet their needs and I think candidly, I believe exceed their expectations. And they've taken the one year contract that we started with and have expanded that to a three year agreement. So we believe that's a real validation of the success of this approach. We've also been able to expand the overall reach deeper into the audiology and the hearing health market. So every acquisition, of course, is different, but this one represents a really good story for you to think about in terms of what the overall acquisitive strategy is able to accomplish for us. And Michael, do you have any other questions that would be along the lines either of the acquisitions or anything else related?

No, that was very helpful. I appreciate the color there. So thanks for taking my questions.

Absolutely. Thank you.

Thank you. We have a follow up question from Alan Klee with Maxim Group. Please go ahead.

Yes, hi. It's clear, you know, with your free cash flow generation, it creates a lot of optionality and positives that you can go after. So I think that's very bullish for your outlook. Getting into your outlook, I just wanted to touch base a little. Any commentary on seasonality for 3Q and 4Q? And then it seems like you're using your AI internally could be like helping margins and maybe that can offset that along with maybe some of the new revenue contribution can offset any of the new costs related to people you're hiring at the AI data center, center of excellence. Is that the way to think about it or what color could you provide? Thank you.

Good question, Alan. And I'll let Norm jump in here and provide some additional detail. But what we think that is the right way to look at it. First of all, we'll start with the second part of your question from an AI perspective. Our focus is really on building this AI center of excellence in such a way that we are hoping to really remain and cement our role on the leading edge of healthcare IT AI. Having said that, again, this is our own internal investment. And when we think about free cash flow, we anticipate that free cash flow this year, absent additional acquisitions and things along those lines, we anticipate that free cash flow this year will meet or exceed our free cash flow last year in spite of all the additional investment. And at the same time that positions us very well from an organic growth perspective and also from an acquisitive growth perspective. From an acquisition, I mentioned that just because of the fact that that is a theme that we hear consistently when we're talking to sellers. Their realization that the market is fundamentally changing and the understanding that they have that it's essential to either leverage their own AI technology or to partner with someone like us who can help them unlock that that that AI functionality on behalf of their their clients and on behalf of their their own company on the back end in terms of reducing costs and streamlining overall operations. So that's the second part. And the first part of your question was what again?

Just thinking about seasonality of. Revenues in the second half and and then expenses.

Sure, and I'll let I'll let Norm jump jump on that and answer that. But overall, we would say again, we believe this year that that we've stabilized revenue. We believe that will have a modest increase and and from a profitability perspective. We again anticipate that will continue to generate positive EPS based upon where we're at today. Again, not withstanding any any additional changes on the like, but over and norm.

Thank you, Steven. Thanks Alan. So

yeah, I

think as we ramp up the AI Center of Excellence, that is all going to be funded from internal cash flow. It was just wrong. We expected to increase as far as seasonality. Alan, I would say if you look at Q3 and Q4 of last year, it really isn't. I would expect this year's Q3 and Q4 to mirror last year with Steve said some modest increases. You know, Q1 Q2 is you know been strong, so I would expect that

trend to continue. That's great. Thank you. Yes, sir. Please go ahead. I'm sorry, I think that's. In terms of capitalized

software, what is that focus on?

So

the CAP software is basically right now improvements to our existing platforms in the packages that we have. You know, we're always putting in, you know, modifications and just making it, you know, more AI. You know, more AI focused. So as we're making these updates, you know, GAP allows us to capitalize that and then we advertise it over a short period.

That's great. Thank you. And then with just just in general, like when you're talking to customers and you're having a lot more to offer with all these enhancements you're doing with AI, I'll just have some comments on how those conversations are going, because it sounds like you have a lot more to offer to your customers.

Yes, sure. So I think for us the advantage is since they are using already our existing platform, so our internal marketing strategy or sales strategy starts with showing them at the right places, the right communication through splash screens as an example. But if I share with you some of the numbers that for say, I know as an example, so the clients that are signing up for initially the trial period, we have seen over 75% adaption or continuation after the trial period ends. That's all very good feedback. So even though this 25% is there which are not continuing, most of that was in the initial phase where we see an opportunity that this number should even be higher than the 75%. So I think we see the more and more traction towards AI as the clients are also hearing from left, right, sideways, the AI into the healthcare. But then when they get an opportunity to at least test it out, the overwhelming majority undertakes it or accepts it or tries to use it and continue to use it. There are other small pieces like similar, you can give them the flavor of AI or summarization of the charts as an example, very rudimentary AI feature. So clients see as they start to use it, the adaption is increasing and it's all positive at the moment.

That's great. Okay. Thank you so much and congrats. Thank you.

Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Norman Roth, the CFO for the closing comments.

Thank you everyone for joining our call today. Hope you have a great day. Thanks again. Bye bye now.

Thank you, sir. Ladies and gentlemen, the conference of Care Cloud has now concluded. Thank you for your participation. You may now disconnect your lines.