CareCloud, Inc. Q1 FY2025 earnings call

• Strong Q1 2025 performance with continued growth, building on 2024's record year.
• Revenue growth reflects demand for integrated AI-enabled RCM solutions. GAAP net income turned positive, adjusted EBITDA increased due to cost management and operational streamlining.
• In March 2025, a mandatory conversion of Series A preferred stock strengthened the capital structure, reducing dividend obligations and providing financial flexibility.
• Launched the AI Center of Excellence with over 50 AI professionals, targeting 500 by year-end, focusing on automating, coding, claims, etc., fully self-funded by operating cash flow.
• Completed two strategic acquisitions in February and April 2025 (MesaBilling and RevNu Medical Management), marking return to M&A, expected to be accretive within 90 days.
• AI solutions like cirrusAI notes, voice, and assist showing progress, with cirrusAI notes gaining traction for streamlining documentation, cirrusAI voice in evaluation with healthcare organizations, and cirrusAI assist embedded in EHR for clinical support.

For the first quarter of 2025, CareCloud reported revenue of $27.6 million, an increase from $26 million in the same period of 2024. GAAP net income was $1.9 million, a turnaround from the net loss of $241,000 in Q1 2024. Adjusted EBITDA rose to $5.6 million, up 52% year-over-year. Recurring technology-enabled business solution revenue was $17.7 million in Q1 2025, up approximately $400,000 from Q1 2024, while non-recurring professional services revenue from medSR increased approximately $1.5 million. Revenue contribution details: Recurring technology-enabled business solutions made up a significant portion, with medSR contributing to the non-recurring professional services growth.

• Full year 2025 revenue is anticipated to be approximately $111 million to $114 million, primarily from existing clients with small organic growth and small tuck-in acquisitions.
• Adjusted EBITDA is expected to be between $26 million and $28 million for 2025, reflecting cost reduction efforts and investment in the AI Center of Excellence.
• GAAP earnings per share are expected to be $0.10 to $0.13, the first positive GAAP EPS after dividends since going public in 2014.

Forward-looking statements are subject to various risks and uncertainties beyond control that could cause actual results to differ materially from contemplated. These include risks related to market conditions, operational challenges, and uncertainties in achieving strategic initiatives like AI development and M&A integration.

Q: Could you go into detail on key factors for revenue growth in Q1 2025 and how the quarter compared to expectations?

A: Revenue growth was driven by demand for AI-enabled RCM solutions, medSR having a large project in Q1, and focus on up-selling existing clients and net new opportunities from specialty-specific EHRs. The quarter was better than expected as it provided evidence of moving back into growth after focusing on capital structure refresh last year.

Q: Could you update on capital allocation priorities between reinvesting for growth and M&A opportunities?

A: Priorities include reinvesting in the business, particularly in AI with scaling the AI Center of Excellence for generative AI automation. Also actively pursuing tuck-in acquisitions aligned with existing capabilities and client base, which are a cost-efficient way to acquire customers and drive growth.

Q: Comment on remote patient monitoring and chronic care management, cost of goods sold sustainability, sales/marketing trends, and tax rate?

A: RPM and CCM showed year-over-year growth but remain a small portion of revenue. COGS percentage declined and is expected to be sustainable with AI driving efficiency. Sales/marketing expense impact may not be directly tied to growth from acquisitions. Tax rate is expected to stay low due to sufficient NOLs, resulting in mainly state minimum tax.