CareCloud, Inc. Q2 FY2025 earnings call

• AI-driven innovation: The AI Center of Excellence is operational with 100 full-time AI professionals and 100 interns. cirrusAI Notes and Voice are gaining traction, and AI is used internally for automation in claims coding, denial management, etc.
• Operational discipline: Direct operating costs decreased by approximately $760,000 from Q2 2024, and operating expenses (including G&A, R&D, and sales and marketing) decreased by approximately $1.4 million.
• Sustainable growth: Returned to active M&A, completing 2 acquisitions in 2025 aligned with specialty AI-powered RCM. Resumed preferred dividend payments with 9 consecutive months of distributions.
• New market entry: Received ONC Health IT certification for talkEHR platform for critical access hospitals, opening a $1.5 billion addressable market for rural hospitals.

In the second quarter of 2025, CareCloud reported revenues of $27.4 million, a decrease of approximately $700,000 year-over-year due to a one-time non-recurring revenue item in Q2 2024. CareCloud Wellness generated approximately $1 million in revenue for the quarter and ~$1.8 million for the first 6 months of 2025. GAAP net income was $2.9 million in Q2 2025, an improvement of 73% from $1.7 million in Q2 2024. Year-to-date, revenue was $55 million compared to $54.1 million in the same period in 2024. GAAP net income for the first 6 months of 2025 was $4.9 million compared to $1.4 million in 2024. Adjusted EBITDA was $12.1 million year-to-date, a 20% increase from the same period last year. Free cash flow reached $9 million in Q2 2025, up 85% over the same period.

Reaffirmed full-year 2025 guidance: Revenue between $111 million and $114 million, adjusted EBITDA in the range of $26 million to $28 million, and GAAP earnings per share between $0.10 and $0.13. Anticipate free cash flow this year to meet or exceed last year's despite AI investment.

Forward-looking statements are subject to a variety of risks and uncertainties beyond control, which could cause actual results to differ materially from those contemplated in forward-looking statements.

Q: How do you think about the spend in the AI Center of Excellence relative to potential revenue-generating opportunities?

A: It's three-fold: top line with incremental revenue from AI products, making existing products more AI-enabled to stay competitive, and back office optimization to improve margins.

Q: Can you talk about the sales approach for new offerings like critical access hospitals?

A: Focus on upselling existing clients, targeting specialty-specific EHRs, and leveraging the company's track record in revenue cycle management and clinical workflows.

Q: How did medSR remote patient monitoring and chronic care management perform?

A: Revenue base is largely stable, with RPM expected to continue making up less than 5% of the overall revenue mix.

Q: What's the outlook on seasonality for 3Q and 4Q?

A: Anticipate Q3 and Q4 to mirror last year with modest increases, continuing the strong trend from Q1 and Q2.

Q: Comments on customer conversations with AI enhancements?

A: Clients show strong adoption, with over 75% of trial users continuing to use cirrusAI Notes post-trial, indicating positive feedback on AI enhancements