CareCloud, Inc. Q1 FY2024 earnings call

• Focused on increasing profitability and free cash flow. Since October 2023, identified ~$22 million annualized cost reduction, with ~75% of $22 million reductions already acted on. Cash from operations increased to $4.1 million vs $1 million in Q1 2023, adjusted EBITDA was $3.7 million. - Introduced CareCloud cirrusAI solutions, including a generative AI-based appeals product and a virtual support assistant. The CareCloud cirrusAI guide has over 400 customers interested, facilitating thousands of recommendations. - Launched cirrusAI Notes, a solution for transcription of provider-patient interactions, in pilot phase with plans to roll out to existing customer base. - Steve Snyder returned as President, leveraging the team's technology expertise, AI, integrated global workforce, and core competencies for integration and cost rationalization.

In the first quarter, CareCloud had revenue of $26 million. The digital health offering saw revenue grow nearly 4x year-over-year. Med SR, a project-based professional services business, had lower nonrecurring revenue contributing to the year-over-year revenue decline. Absolute terms: Revenue was $26 million for Q1 2024. Digital health revenue grew significantly, while Med SR's nonrecurring revenue was lower.

• Expect revenue of $118 million to $120 million and adjusted EBITDA of $21 million to $23 million for 2024. - Anticipate steady quarterly revenue growth throughout the year. - Focus on profitability and free cash flow, with plans to continue repaying the credit line from cash flow, aiming to see several more months of positive cash flow before discussing reinstating preferred stock dividends.

• Forward-looking statements are subject to a variety of risks and uncertainties beyond control, which could cause actual results to differ materially from forward-looking statements. - Risks related to the execution of cost reduction initiatives and the impact of third-party partnerships on R&D development.

Q: Could you talk about yesterday's press release and the capital structure update?

A: The Board thought it important to provide disclosure regarding an indication of interest, with Citizens JMP selected to analyze the capital structure. Changes to the capital structure would protect the company and shareholders' best interests.

Q: Any color on the party making the indication of interest?

A: It was a leading PE fund.

Q: Comments on the line of credit?

A: Credit line is $8 million, focus on repaying from cash flow, need several more months of positive cash flow before discussing reinstating dividends, $2 million paid down to date.

Q: Examples of cost takeout?

A: Reduction of R&D vendors, about $7 million annualized savings related to IT and R&D capabilities, eliminating redundancies in vendors and personnel.

Q: Revenue trajectory and AI products?

A: Revenue expected to increase each quarter, digital health offering growing, AI products like cirrusAI Notes in pilot with revenue expected in second half, but hard to predict exact dollar amount.

Q: 10-Q filing and share count?

A: 10-Q to be filed tonight at 4:30 after market close, common share count is ~16.1 million.

Q: Update on CareCloud PRIME and CareCloud Wellness?

A: CareCloud PRIME transition to production continues, CareCloud Wellness revenue increased almost 4x year-over-year with momentum.

Q: Commentary on Med SR and opportunities?

A: Med SR has softness, but RCM revenue growth expected through Meditech relationships and other revenue drivers, dependency on Meditech's growth for revenue expansion.

Q: Positioning of cirrus Notes?

A: A technology plus service play, first target market is existing client base, roll out to them before new sales.