CCLDP CareCloud Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 13, 2024

 

CARECLOUD, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		001-36529		22-3832302
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

7 Clyde Road, Somerset, New Jersey, 08873

(Address of principal executive offices, zip code)

 

(732) 873-5133

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		CCLD		Nasdaq Global Market
11% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share		CCLDP		Nasdaq Global Market
8.75% Series B Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share		CCLDO		Nasdaq Global Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On August 13, 2024, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information furnished pursuant to Item 2.02 of this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 7.01 Regulation FD Disclosure.

 

On August 13, 2024, the Registrant provided slides to accompany its earnings presentation, a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

 

The information furnished pursuant to Item 7.01 of this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1	Press release dated August 13, 2024.
99.2	Slide presentation dated August 13, 2024.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURE(S)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

		CareCloud, Inc.
Date:	August 13, 2024	By:	/s/ A. Hadi Chaudhry
			A. Hadi Chaudhry
			Chief Executive Officer

 

 

 

Exhibit 99.1

 

CareCloud Reports Second Quarter 2024 Results

 

Continued Focus on Profitability and Free Cash Flow

 

SOMERSET, N.J. August 13, 2024 (GLOBE NEWSWIRE) - CareCloud, Inc. (Nasdaq: CCLD, CCLDO, CCLDP), a leader in healthcare technology and generative AI solutions for medical practices and health systems nationwide, announced financial and operational results for the quarter ended June 30, 2024. The Company’s management will conduct a conference call with related slides today at 8:30 a.m. Eastern Time to discuss these results and management’s outlook for the year.

 

Second Quarter 2024 Highlights

 

	●	GAAP net income of $1.7 million, compared to a net loss of $1.8 million in Q2 2023
	●	Adjusted net income of $3.0 million, or $0.18 per share
	●	Adjusted EBITDA of $6.4 million, compared to $3.8 million in Q2 2023, an increase of 67%
	●	Revenue of $28.1 million, compared to $29.4 million in Q2 2023

 

Year-to-date 2024 Highlights

 

	●	GAAP net income of $1.4 million, compared to a net loss of $2.2 million in the same period last year
	●	Adjusted net income of $3.2 million, or $0.20 per share
	●	Adjusted EBITDA of $10.1 million, compared to $8.1 million in the same period last year, an increase of 25%
	●	Free cash flow of $4.9 million, compared to $1.3 million in the same period last year, an increase of 265%
	●	Revenue of $54.1 million, compared to $59.4 million in the same period last year

 

Recent Operational Highlights

 

	●	Identified approximately $26 million in annualized expense reductions since the initiative began in October 2023, of which $20 million in cost savings will be realized this year
	●	Reduced our $25 million credit facility balance from $10 million to $2.5 million as of today, representing a drawn balance of only 10% of our line
	●	Announced that Glass Lewis, a leading proxy vote advisory firm, has recommended a “yes” vote on CareCloud’s Series A Preferred Stock Special Proxy

 

“We have achieved our target of improving profitability as evidenced by the fact that we have paid down our credit facility balance to only $2.5 million as of today – and we expect to further improve profitability and reduce this balance to zero in the months to come,” said A. Hadi Chaudhry, CEO of CareCloud. “Additionally, we have continued to actively expand our use of generative AI, which further drives operating efficiencies as we simultaneously strengthen the foundation of our platform.”

 

“As a team, we are succeeding at our goal of transforming our cost structure, positioning us to eliminate debt, resume dividends at the appropriate time and invest in CareCloud’s future growth,” said Stephen Snyder, President of CareCloud. “We are pleased to report that we have improved year-over-year free cash flow by 265% and reported our first positive GAAP net income since 2022.”

 

 

Second Quarter 2024 Financial Results

 

Revenue for the second quarter 2024 was $28.1 million, compared to $29.4 million for the second quarter of 2023.

 

Second quarter 2024 GAAP net income was $1.7 million, as compared to a net loss of ($1.8 million) in the same period last year. GAAP net loss was $0.14 per share, based on the net loss attributable to common shareholders, which takes into account the preferred stock dividends earned, whether or not they were declared or paid during the quarter.

 

Adjusted EBITDA for the second quarter 2024 was $6.4 million, or 23% of revenue, compared to $3.8 million in the same period last year.

 

Norman Roth, Interim Chief Financial Officer and Corporate Controller, commented “this is the first positive GAAP net income and the highest quarterly adjusted EBITDA we have reported in two years. We were able to use the profits and cash flows we generated to reduce the outstanding balance on our Silicon Valley Bank line of credit by 75% since the end of the year. This gives us additional financial flexibility.”

 

Six Month 2024 Financial Results

 

Revenue for the first six months of 2024 was $54.1 million, compared to $59.4 million in the first six months of 2023.

 

For the first six months of 2024, the Company’s GAAP net income was $1.4 million, compared to a GAAP net loss of $2.2 million in the first six months of 2023.

 

During this period, adjusted EBITDA was $10.1 million, an increase of $2.0 million from $8.1 million in the same period last year.

 

Cash Balances and Capital

 

As of June 30, 2024, the Company had approximately $2.6 million of cash. Net working capital was $674,000. During the first six months of 2024, cash flow from operations was approximately $8.3 million, compared to $7.4 million in the same period last year, a 12% increase.

 

Conference Call Information

 

CareCloud management will host a conference call today at 8:30 a.m. Eastern Time to discuss the second quarter 2024 results. The live webcast of the conference call and related presentation slides can be accessed at ir.carecloud.com/events. An audio-only option is available by dialing 201-389-0920 and referencing “CareCloud Second Quarter 2024 Earnings Call.” Investors who opt for audio-only will need to download the related slides at ir.carecloud.com/events.

 

A replay of the conference call and related presentation slides will be available approximately one hour after conclusion of the call at the same link. An audio-only option can also be accessed by dialing 412-317-6671 and providing the access code 13747693.

 

 

Use of Non-GAAP Financial Measures

 

In our earnings releases, prepared remarks, conference calls, slide presentations, and webcasts, we use and discuss non-GAAP financial measures, as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the condensed consolidated financial statements. Our earnings press releases containing such non-GAAP reconciliations can be found in the Investor Relations section of our web site at ir.carecloud.com.

 

Forward-Looking Statements

 

This press release contains various forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements relate to anticipated future events, future results of operations or future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “shall,” “should,” “could,” “intends,” “expects,” “plans,” “goals,” “projects,” “anticipates,” “believes,” “seeks,” “estimates,” “forecasts,” “predicts,” “possible,” “potential,” “target,” or “continue” or the negative of these terms or other comparable terminology.

 

Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Forward-looking statements in this press release include, without limitation, statements reflecting management’s expectations for future financial performance and operating expenditures, expected growth, profitability and business outlook, the impact of pandemics on our financial performance and business activities, and the expected results from the integration of our acquisitions.

 

These forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are only predictions, are uncertain and involve substantial known and unknown risks, uncertainties and other factors which may cause our (or our industry’s) actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all of the risks and uncertainties that could have an impact on the forward-looking statements, including without limitation, risks and uncertainties relating to the Company’s ability to manage growth, migrate newly acquired customers and retain new and existing customers, maintain cost-effective global operations, increase operational efficiency and reduce operating costs, predict and properly adjust to changes in reimbursement and other industry regulations and trends, retain the services of key personnel, develop new technologies, upgrade and adapt legacy and acquired technologies to work with evolving industry standards, compete with other companies’ products and services competitive with ours, manage and keep our information systems secure and other important risks and uncertainties referenced and discussed under the heading titled “Risk Factors” in the Company’s filings with the Securities and Exchange Commission.

 

The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligations to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

 

 

About CareCloud

 

CareCloud (Nasdaq: CCLD, CCLDP, CCLDO) brings disciplined innovation and generative AI solutions to the business of healthcare. Our suite of technology-enabled solutions helps clients increase financial and operational performance, streamline clinical workflows and improve the patient experience. More than 40,000 providers count on CareCloud to help them improve patient care while reducing administrative burdens and operating costs. Learn more about our products and services, including revenue cycle management (RCM), practice management (PM), electronic health records (EHR), business intelligence, patient experience management (PXM) and digital health, at www.carecloud.com.

 

Follow CareCloud on LinkedIn, Twitter and Facebook.

 

For additional information, please visit our website at www.carecloud.com. To listen to video presentations by CareCloud’s management team, read recent press releases and view the latest investor presentation, please visit ir.carecloud.com.

 

SOURCE CareCloud

 

Company Contact:

 

Norman Roth

Interim Chief Financial Officer and Corporate Controller

CareCloud, Inc.

nroth@carecloud.com

 

Investor Contact:

Bill Korn

ir@carecloud.com

 

 

CARECLOUD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in thousands, except share and per share amounts)

 

		June 30,				December 31,
		2024				2023
		(Unaudited)
ASSETS
Current assets:
Cash		$	2,617			$	3,331
Accounts receivable - net			13,079				11,888
Contract asset			4,800				5,094
Inventory			497				465
Current assets - related party			16				16
Prepaid expenses and other current assets			2,907				2,449
Total current assets			23,916				23,243
Property and equipment - net			5,055				5,317
Operating lease right-of-use assets			3,732				4,365
Intangible assets - net			21,497				25,074
Goodwill			19,186				19,186
Other assets			624				641
TOTAL ASSETS		$	74,010			$	77,826
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	5,448			$	5,798
Accrued compensation			2,824				3,444
Accrued expenses			6,619				5,065
Operating lease liability (current portion)			1,623				1,888
Deferred revenue (current portion)			1,224				1,380
Notes payable (current portion)			66				292
Dividend payable			5,438				5,433
Total current liabilities			23,242				23,300
Notes payable			33				37
Borrowings under line of credit			5,000				10,000
Operating lease liability			2,101				2,516
Deferred revenue			390				256
Total liabilities			30,766				36,109
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.001 par value - authorized 7,000,000 shares. Series A, issued and outstanding 4,526,231 shares at June 30, 2024 and December 31, 2023. Series B, issued and outstanding 1,482,792 and 1,468,792 shares at June 30, 2024 and December 31, 2023, respectively			6				6
Common stock, $0.001 par value - authorized 35,000,000 shares. Issued 16,885,986 and 16,620,891 shares at June 30, 2024 and December 31, 2023, respectively. Outstanding 16,145,187 and 15,880,092 shares at June 30, 2024 and December 31, 2023, respectively			17				17
Additional paid-in capital			120,840				120,706
Accumulated deficit			(73,048	)			(74,481	)
Accumulated other comprehensive loss			(3,909	)			(3,869	)
Less: 740,799 common shares held in treasury, at cost at June 30, 2024 and December 31, 2023			(662	)			(662	)
Total shareholders’ equity			43,244				41,717
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	74,010			$	77,826

 

 

CARECLOUD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

($ in thousands, except share and per share amounts)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
NET REVENUE		$	28,090			$	29,362			$	54,052			$	59,363
OPERATING EXPENSES:
Direct operating costs			15,242				17,476				30,419				35,583
Selling and marketing			1,664				2,580				3,434				5,192
General and administrative			4,028				5,916				7,749				11,036
Research and development			1,055				1,185				1,968				2,263
Depreciation and amortization			3,714				3,341				7,644				6,379
Net loss on lease terminations, unoccupied lease charges and restructuring costs			116				153				438				422
Total operating expenses			25,819				30,651				51,652				60,875
OPERATING INCOME (LOSS)			2,271				(1,289	)			2,400				(1,512	)
OTHER:
Interest income			24				52				51				72
Interest expense			(288	)			(327	)			(653	)			(477	)
Other expense - net			(294	)			(186	)			(287	)			(169	)
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES			1,713				(1,750	)			1,511				(2,086	)
Income tax provision			39				82				78				147
NET INCOME (LOSS)		$	1,674			$	(1,832	)		$	1,433			$	(2,233	)
Preferred stock dividend			3,923				3,910				5,235				7,841
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(2,249	)		$	(5,742	)		$	(3,802	)		$	(10,074	)
Net loss per common share: basic and diluted		$	(0.14	)		$	(0.37	)		$	(0.24	)		$	(0.65	)
Weighted-average common shares used to compute basic and diluted loss per share			16,132,420				15,615,760				16,073,364				15,518,965

 

 

CARECLOUD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

($ in thousands)

 

		2024				2023
OPERATING ACTIVITIES:
Net income (loss)		$	1,433			$	(2,233	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			7,818				6,663
Lease amortization			1,008				1,153
Deferred revenue			(22	)			(116	)
Provision for expected credit losses			123				302
Provision for deferred income taxes			-				64
Foreign exchange (gain) loss			(57	)			176
Interest accretion			321				325
Stock-based compensation (benefit) expense			(443	)			2,574
Changes in operating assets and liabilities:
Accounts receivable			(1,314	)			2,267
Contract asset			294				(435	)
Inventory			(32	)			(21	)
Other assets			(825	)			(318	)
Accounts payable and other liabilities			41				(2,993	)
Net cash provided by operating activities			8,345				7,408
INVESTING ACTIVITIES:
Purchases of property and equipment			(425	)			(1,621	)
Capitalized software and other intangible assets			(3,046	)			(4,456	)
Net cash used in investing activities			(3,471	)			(6,077	)
FINANCING ACTIVITIES:
Preferred stock dividends paid			-				(7,780	)
Settlement of tax withholding obligations on stock issued to employees			(184	)			(1,166	)
Repayments of notes payable			(328	)			(316	)
Proceeds from issuance of Series B Preferred Stock, net of expenses			-				1,437
Proceeds from line of credit			-				12,700
Repayment of line of credit			(5,000	)			(10,700	)
Net cash used in financing activities			(5,512	)			(5,825	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH			(76	)			(139	)
NET DECREASE IN CASH			(714	)			(4,633	)
CASH - Beginning of the period			3,331				12,299
CASH - End of the period		$	2,617			$	7,666
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
Dividends declared, not paid		$	5			$	4,120
Purchase of prepaid insurance with assumption of note		$	96			$	-
Reclass of deposits for property and equipment placed in service		$	296			$	-
SUPPLEMENTAL INFORMATION - Cash paid during the period for:
Income taxes		$	122			$	111
Interest		$	527			$	341

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

 

TO COMPARABLE GAAP MEASURES (UNAUDITED)

 

The following is a reconciliation of the non-GAAP financial measures used by us to describe our financial results determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). An explanation of these measures is also included below under the heading “Explanation of Non-GAAP Financial Measures.”

 

While management believes that these non-GAAP financial measures provide useful supplemental information to investors regarding the underlying performance of our business operations, investors are reminded to consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition, it should be noted that these non-GAAP financial measures may be different from non-GAAP measures used by other companies, and management may utilize other measures to illustrate performance in the future. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP.

 

Adjusted EBITDA to GAAP Net Income (Loss)

 

Set forth below is a reconciliation of our “adjusted EBITDA” to our GAAP net income (loss).

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
		($ in thousands)
Net revenue		$	28,090			$	29,362			$	54,052			$	59,363
GAAP net income (loss)			1,674				(1,832	)			1,433				(2,233	)
Provision for income taxes			39				82				78				147
Net interest expense			264				275				602				405
Foreign exchange loss / other expense			306				191				301				183
Stock-based compensation expense (benefit), net of restructuring costs			265				1,502				(443	)			2,574
Depreciation and amortization			3,714				3,341				7,644				6,379
Transaction and integration costs			11				107				23				179
Net loss on lease terminations, unoccupied lease charges and restructuring costs			116				153				438				422
Adjusted EBITDA		$	6,389			$	3,819			$	10,076			$	8,056

 

 

Non-GAAP Adjusted Operating Income to GAAP Operating Income (Loss)

 

Set forth below is a reconciliation of our non-GAAP “adjusted operating income” and non-GAAP “adjusted operating margin” to our GAAP operating income (loss) and GAAP operating margin.

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
		($ in thousands)
Net revenue		$	28,090			$	29,362			$	54,052			$	59,363
GAAP net income (loss)			1,674				(1,832	)			1,433				(2,233	)
Provision for income taxes			39				82				78				147
Net interest expense			264				275				602				405
Other expense - net			294				186				287				169
GAAP operating income (loss)			2,271				(1,289	)			2,400				(1,512	)
GAAP operating margin			8.1	%			(4.4	)%			4.4	%			(2.5	)%
Stock-based compensation expense (benefit), net of restructuring costs			265				1,502				(443	)			2,574
Amortization of purchased intangible assets			586				1,251				1,426				2,574
Transaction and integration costs			11				107				23				179
Net loss on lease terminations, unoccupied lease charges and restructuring costs			116				153				438				422
Non-GAAP adjusted operating income		$	3,249			$	1,724			$	3,844			$	4,237
Non-GAAP adjusted operating margin			11.6	%			5.9	%			7.1	%			7.1	%

 

Non-GAAP Adjusted Net Income to GAAP Net Income (Loss)

 

Set forth below is a reconciliation of our non-GAAP “adjusted net income” and non-GAAP “adjusted net income per share” to our GAAP net income (loss) and GAAP net loss per share.

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
		($ in thousands)
GAAP net income (loss)		$	1,674			$	(1,832	)		$	1,433			$	(2,233	)
Foreign exchange loss / other expense			306				191				301				183
Stock-based compensation expense (benefit), net of restructuring costs			265				1,502				(443	)			2,574
Amortization of purchased intangible assets			586				1,251				1,426				2,574
Transaction and integration costs			11				107				23				179
Net loss on lease terminations, unoccupied lease charges and restructuring costs			116				153				438				422
Income tax provision related to goodwill			-				38				-				64
Non-GAAP adjusted net income		$	2,958			$	1,410			$	3,178			$	3,763
End-of-period shares			16,145,187				15,628,097				16,145,187				15,628,097
Non-GAAP adjusted net income per share		$	0.18			$	0.09			$	0.20			$	0.24

 

 

For purposes of determining non-GAAP adjusted net income per share, we used the number of common shares outstanding as of June 30, 2024 and 2023.

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
GAAP net loss attributable to common shareholders, per share		$	(0.14	)		$	(0.37	)		$	(0.24	)		$	(0.65	)
Impact of preferred stock dividend			0.24				0.25				0.33				0.51
Net income (loss) per end-of-period share			0.10				(0.12	)			0.09				(0.14	)
Foreign exchange loss / other expense			0.02				0.01				0.02				0.01
Stock-based compensation expense (benefit), net of restructuring costs			0.01				0.10				(0.03	)			0.16
Amortization of purchased intangible assets			0.04				0.08				0.09				0.16
Transaction and integration costs			0.00				0.01				0.00				0.01
Net loss on lease terminations, unoccupied lease charges and restructuring costs			0.01				0.01				0.03				0.03
Income tax provision related to goodwill			-				0.00				-				0.01
Non-GAAP adjusted earnings per share		$	0.18			$	0.09			$	0.20			$	0.24
End-of-period common shares			16,145,187				15,628,097				16,145,187				15,628,097
In-the-money warrants and outstanding unvested RSUs			198,212				605,689				198,212				605,689
Total fully diluted shares			16,343,399				16,233,786				16,343,399				16,233,786
Non-GAAP adjusted diluted earnings per share		$	0.18			$	0.09			$	0.19			$	0.23

 

Net Cash Provided by Operating Activities to Free Cash Flow

 

Set forth below is a reconciliation of our non-GAAP “free cash flow” to our GAAP net cash provided by operating activities.

 

		Six Months Ended June 30,
		2024				2023
		($ in thousands)
Net cash provided by operating activities		$	8,345			$	7,408
Purchases of property and equipment			(425	)			(1,621	)
Capitalized software and other intangible assets			(3,046	)			(4,456	)
Free cash flow		$	4,874			$	1,331
Net cash used in investing activities 1		$	(3,471	)		$	(6,077	)
Net cash used in financing activities		$	(5,512	)		$	(5,825	)

 

^1. Net cash used in investing activities includes purchases of property and equipment and capitalized software and other intangible assets, which are also included in our computation of free cash flow.

 

Explanation of Non-GAAP Financial Measures

 

We report our financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, management believes that, in order to properly understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash or non-recurring items, when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in frequency and impact on continuing operations. Management also uses results of operations before such items to evaluate the operating performance of CareCloud and compare it against past periods, make operating decisions, and serve as a basis for strategic planning. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management’s ability to make useful forecasts. Management believes that these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors.

 

 

Management uses adjusted EBITDA, adjusted operating income, adjusted operating margin, and non-GAAP adjusted net income to provide an understanding of aspects of operating results before the impact of investing and financing charges and income taxes. Adjusted EBITDA may be useful to an investor in evaluating our operating performance and liquidity because this measure excludes non-cash expenses as well as expenses pertaining to investing or financing transactions. Management defines “adjusted EBITDA” as the sum of GAAP net income (loss) before provision for (benefit from) income taxes, net interest expense, other (income) expense, stock-based compensation expense, depreciation and amortization, integration costs, transaction costs, impairment charges and changes in contingent consideration.

 

Management defines “non-GAAP adjusted operating income” as the sum of GAAP operating income (loss) before stock-based compensation expense, amortization of purchased intangible assets, integration costs, transaction costs, impairment charges and changes in contingent consideration, and “non-GAAP adjusted operating margin” as non-GAAP adjusted operating income divided by net revenue.

 

Management defines “non-GAAP adjusted net income” as the sum of GAAP net income (loss) before stock-based compensation expense, amortization of purchased intangible assets, other (income) expense, integration costs, transaction costs, impairment charges, changes in contingent consideration, any tax impact related to these preceding items and income tax expense related to goodwill, and “non-GAAP adjusted net income per share” as non-GAAP adjusted net income divided by common shares outstanding at the end of the period, including the shares which were issued but are subject to forfeiture and considered contingent consideration.

 

Management considers all of these non-GAAP financial measures to be important indicators of our operational strength and performance of our business and a good measure of our historical operating trends, in particular the extent to which ongoing operations impact our overall financial performance.

 

In addition to items routinely excluded from non-GAAP EBITDA, management excludes or adjusts each of the items identified below from the applicable non-GAAP financial measure referenced above for the reasons set forth with respect to that excluded item:

 

Foreign exchange loss / other expense. Other expense is excluded because foreign currency gains and losses and other non-operating expenses are expenditures that management does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expense is partially outside of our control. Foreign currency gains and losses are based on global market factors which are unrelated to our performance during the period in which the gains and losses are recorded.

 

Stock-based compensation expense (benefit). Stock-based compensation expense (benefit) is excluded because this is primarily a non-cash expenditure that management does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expenditure is partially outside of our control because it is based on factors such as stock price, volatility, and interest rates, which may be unrelated to our performance during the period in which the expenses are incurred. Stock-based compensation expense includes cash-settled awards based on changes in the stock price.

 

 

Amortization of purchased intangible assets. Purchased intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are recorded.

 

Transaction costs. Transaction costs are upfront costs related to acquisitions and related transactions, such as brokerage fees, pre-acquisition accounting costs and legal fees, and other upfront costs related to specific transactions. Management believes that such expenses do not have a direct correlation to future business operations, and therefore, these costs are not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

 

Integration costs. Integration costs are severance payments for certain employees relating to our acquisitions and exit costs related to terminating leases and other contractual agreements. Accordingly, management believes that such expenses do not have a direct correlation to future business operations, and therefore, these costs are not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

 

Net loss on lease terminations, unoccupied lease charges and restructuring costs. Net loss on lease terminations represents the write-off of leasehold improvements and gains or losses as a result of an early lease termination. Unoccupied lease charges represent the portion of lease and related costs for vacant space not being utilized by the Company. Restructuring costs primarily consist of severance and separation costs associated with the optimization of the Company’s operations and profitability improvements. Management believes that such expenses do not have a direct correlation to future business operations, and therefore, these costs are not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

 

Income tax provision related to goodwill. Income tax provision resulting from the amortization of goodwill related to our acquisitions represents a charge (benefit) to record the tax effect resulting from amortizing goodwill over 15 years for tax purposes. Goodwill is not amortized for GAAP reporting. Any income tax expense is not anticipated to result in a cash payment.

 

Free cash flow. Management believes that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company’s financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net operating results as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, the Company’s definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our condensed consolidated statements of cash flows.

 

 

 

Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v3.24.2.u1

Cover	Aug. 13, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 13, 2024
Entity File Number	001-36529
Entity Registrant Name	CARECLOUD, INC.
Entity Central Index Key	0001582982
Entity Tax Identification Number	22-3832302
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	7 Clyde Road
Entity Address, City or Town	Somerset
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08873
City Area Code	(732)
Local Phone Number	873-5133
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock, par value $0.001 per share
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	CCLD
Security Exchange Name	NASDAQ
11% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share
Title of 12(b) Security	11% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share
Trading Symbol	CCLDP
Security Exchange Name	NASDAQ
8.75% Series B Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share
Title of 12(b) Security	8.75% Series B Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share
Trading Symbol	CCLDO
Security Exchange Name	NASDAQ

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