CareCloud, Inc. Q4 FY2023 earnings call

• Intensified focus on operational efficiencies to improve profitability and free cash flow in 2023, with the transition expected to continue in 2024.
• Proprietary end-to-end platform is flexible and adapts to market needs, with rising demand for tech-enabled RCM, digital health, and generative AI solutions.
• In October 2023, cost reduction measures were implemented to optimize efficiency. Suspension of preferred stock dividend in December 2023 resulted in cash savings. GAAP net loss in 2023 included a $42 million goodwill impairment charge. Full year 2023 cash flow from operations was $15 million.
• Team focused on increasing profitability and free cash flow, supporting sustainable growth, and thanking employees, customers, and shareholders.

For the full year 2023, revenue was $117 million. In the fourth quarter of 2023, revenue was $28 million. Adjusted EBITDA for the full year was $15 million (13% margin), and for the fourth quarter, it was $4 million (14% margin). The wellness segment is expected to be a key driver of growth in 2024, despite not meeting expectations in 2023 but ending with strong momentum.

• 2024 revenue expected to be between $118 million and $120 million, adjusted EBITDA between $21 million and $23 million.
• Anticipate organic growth including expansion of the wellness segment to offset lost revenue from two customers from a prior acquisition.
• Q1 2024 to have normal revenue decline due to patient deductibles, with some Q1 revenue recognized in Q2.

• Cybersecurity breach at change healthcare had minimal exposure to CareCloud, but some timing-related revenue recognition issues and potential disruption to secondary collections (de minimis impact).

Q: Could you go into more detail about the 2024 guidance and the assumption for medSR, and what could cause the guidance to be lower?

A: Hadi Chaudhry mentioned focusing on bottom-line profitability, medSR is being stabilized and relationships with key players are being strengthened. Guidance is conservative, and potential lower results could come from not achieving expected growth in key relationships.

Q: Could you talk more about the AI product that creates notes and its benefits to doctors?

A: Hadi Chaudhry explained that the AI product can listen to patient-doctor conversations and convert them into notes for doctors to review and save in the chart, improving workflow and helping providers serve patients better. The product is in optimization phase with over 100 subscriptions, and they are evaluating the right time to introduce pricing.