CareCloud Inc (CCLD) 2025 Q4 法說會逐字稿

Greetings. Welcome to CareCloud Incorporated fourth quarter 2025 results conference call. (Operator Instructions) Please note this conference is being recorded.

I will now turn the conference over to Brendan Cavello, Corporate Counsel. Please begin.

Good morning everyone. Welcome to CareCloud's fourth quarter and full year 2025 conference call. On today's call are Mahmud Haq, our founder and executive Chairman, Steven Snyder, our Chief Executive Officer, A. Hadi Chaudhury, our Chief Strategy Officer, and Norman Roth, our interim Chief Financial Officer and corporate controller.

Before we begin, I would like to remind you that certain statements made during this call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1,933 as amended and Section 21 of the Securities Exchange Act of 1,934 as amended.

All statements other than the statements of historical fact made during this call are forward-looking statements, including, without limitation statements regarding our expectations and guidance for future financial and operational performance, expected growth, business outlook, and potential organic growth and acquisition.

Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, approximately, upcoming, believe, estimate, or similar terminology, and a negative of these terms.

Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, many of which are beyond our control.

Which could cause actual results to differ materially from those contemplated in these forward-looking statements.

The statements reflect our opinions only as to the date of this presentation, and we undertake no obligation to revise these forward-looking statements in light of new information or future events.

Please refer to our press release and other reports filed with the Securities and Exchange Commission, where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from those forward-looking statements.

For anyone who dialed in the call by telephone, you may want to download our fourth quarter and full year 20, 2025 earnings presentation.

Please visit our investors relations site, Iir CareCloud.com.

Click on news and events, then click IR calendar, click on 4th quarter and full year 2025 results conference call, and download the earnings presentation.

Finally, on today's call, we may refer to certain non-GAAP financial measures.

Please refer to today's press release announcing our 4th quarter and full year results for a reconciliation of these non-GAAP performance measures to our GAAP financial results.

With that said, I'll now turn the call over to our CEO Steven Snyder. Steven.

Thanks, Brendan, and good morning, everyone. I'm pleased to report that 2025 was a transformational year for CareCloud, marked by exceptional financial performance, strategic acquisitions that expanded our market reach, and a successful launch of our flagship AI platform.

We delivered results that underscore the strength of our business model and validate our vision for the company's future.

In particular, I'm pleased to be able to talk today about our revenue growth.

The remarkable acceleration of our profitability and free cash flow.

The current status of our capital structure.

The significance of our 2025 acquisitions.

The evolution of our services offering an AI platform.

Our market position and growth drivers as we enter 2026, and our guidance for the year ahead.

First, let me start with our top-line numbers. For the full year 2025, we generated revenue of $120.5 million representing nearly 9% year over year growth.

In Q4 specifically, we achieved revenue of $34.4 million up nearly 22% year over year, demonstrating accelerating momentum as we entered this year.

Importantly, we raised our revenue guidance twice during 2025 and still exceeded the final target, a pattern that reflects the underlying health and predictability of our recurring revenue streams.

Second, as to profitability, we reported GAAP net income of $10.8 million for 2025, a year over year increase of more than 37%.

We achieved earnings per share of $0.10, marking our first full year of positive EPS since our 2014 IPO.

A remarkable milestone that reflects our multi-year transformation to sustainable profitability.

In Q4lo we posted GAAP earnings per share of $0.04.

Adjusted EBITA expanded to $27.5 million with a 23% margin, up more than 14% year over year.

But perhaps most importantly, we generated $28.6 million in GAAP operating cash flow for the full year, a 38% increase year over year, and $8.7 million in Q4 alone, up 66%.

Non-GAAP free cash flow reached approximately $20.5 million for 2025 compared to $13.2 million in 2024 and representing growth of more than 500% from 2023.

This dramatic improvement in free cash flow generation has been transformational to our financial flexibility and strategic optionality. It enabled us to resume dividends on our preferred shares at the beginning of 2025. To begin paying double dividends on our Series B preferred stock starting in 2026 to address the accumulated arrearages and to fund multiple acquisitions during 2025 entirely from free cash flow generated during that year.

Third, as to our capital structure, during 2025, we completed the conversion of approximately 80% of our Series A preferred shares in common.

The conversion eliminated more than $7 million in annual dividend obligations, and we full repaid our Provident Bank credit line by year end, entering 2026 with zero drawn on our credit line.

Reducing the complexity of our capital structure remains a core priority.

Fourth, we made significant strides during 2025 on the M&A front.

We completed multiple transactions during the year, each strategically selected to expand our capabilities and market reach.

These deals were all executed at less than 1 time revenue multiples, funded entirely through the free cash flow we generated during 2025 and resulted in zero common shareholder dilution.

The most significant of these was our august acquisition of MedSphere Systems, which brought us into the inpatient hospital market.

Through MedSphere, we added a suite of ambulatory and inpatient software products, including the number one BlackBook ranked Wellsoft Emergency Information Department system.

This was a watershed moment for CareCloud. We evolved from an ambulatory first to Care continuum company, able to support the full patient and clinician journey from outpatient clinic to emergency department to inpatient bed through the revenue cycle and into the supply chain.

Integration is well underway.

We are incorporating our AI tools into the platform and we are already seeing new customer wins under the CareCloud umbrella.

We also acquired MAPpap from the Healthcare Financial Management Association or HFMA in October of last year, alongside a long-term joint marketing agreement.

Mappa is a hospital benchmarking and performance analytics platform used by leading hospitals and integrated delivery networks to measure and compare revenue cycle metrics.

Map app identifies where a hospitals underperforming, and CareCloud's RCM and AI provide the solution.

A sales motion with built-in urgency and quantifiable ROI that we intend to scale in 2026 and beyond.

Through MedSphere and MAPAP, we now serve hospital systems and health networks, creating a natural cross-selling runway for our AI solutions and RCM services. Our 2026 growth strategy centers on penetrating these newly acquired health system customers with our RCM and AI products, exactly the kind of operating leverage that justifies these strategic investments.

5th, we have continued to position ourselves as an emerging leader in healthcare IT.

We recognize that the healthcare technology market is at an inflection point. AI adoption is moving from pilot programs to production deployment and providers are actively seeking partners who can integrate AI across their clinical and administrative workflows.

We are operating in a market with a multi-billion-dollar addressable opportunity in the US alone for our AI front desk assistant. And that is just one application in our broader AI framework. We launched Stratus AI front desk agent in December 2025 and are already seeing strong early traction.

Heidi will provide more details on our AI products and roadmap, but from a business perspective, our combination of domain expertise, distribution, and clinical data gives us a competitive mode that is extraordinarily difficult to replicate.

Sixth, let me turn to our market position and growth drivers. In 2026, we will continue to leverage our dual-platform footprint in ambulatory and inpatient markets to drive organic growth and acquisition synergies.

Our primary growth factors, ambulatory cross-selling.

Deeper hospital penetration of existing relationships and AI monetization represent a compounding opportunity that positions us for durable growth.

As we have noted in prior calls, strategic acquisitions have been a cornerstone of our growth historically, and 2025 marked the year where we reignited that momentum after a multi-year pause during which we refreshed our financial foundation, achieved sustainable profitability, and launched our AI Center of Excellence.

We were patient because we wanted to acquire from a position of strength, and that patience has paid off. All of our 2025 acquisitions follow the same discipline playbook. Acquisition purchases, non-diluted to common shareholders, structured to maintain balance sheet flexibility, and priced at attractive valuations of one time revenue or less.

What is particularly exciting now is that AI is further accelerating our acquisitionun set.

We expect to remain active in the M&A front in 2026 and beyond as we identify complementary targets that extend our reach and can benefit from our AI capabilities.

Seventh, turning to our guidance for 2026, it reflects continued growth with accelerating profitability.

We expect revenue of $128 million to $130 million and adjusted EBITDA of 29 to $31 million reflecting margin expansion.

We further expect GAAP EPS of $0.20 to $0.23 per share, which would represent an increase of more than 100% over 2025.

We have set this guidance at levels that we believe are achievable and consistent with our track record, we intend to execute against it with discipline.

As we reflect on 2025, we are humbled by the progress we have made across every dimension of our business. We exceeded previously raised revenue guidance.

We delivered our 1st year of positive EPS as a public company.

We generated exceptional free cash flow.

Growth increasing more than 500% over the last 3 years.

We executed strategic acquisitions without diluting shareholders.

We launched a transformational AI platform that is already gaining market traction.

And we strengthen our market position through acquisition-driven diversification.

Together, they represent a fundamental reposition of CareCloud as a full continuum healthcare technology platform with AI at its core.

We believe these achievements position us to deliver sustained value creation for our shareholders, clients, and employees. We are entering 2026 with more momentum, more scale, and a stronger balance sheet than at any point in time in our history, and we look forward to achieving our objectives in 2026 and beyond.

With that, I'll turn the call over to Hadi Chaudhry, our Chief Strategy Officer, who will provide more details on our acquisition strategy and product roadmap. Hadi?

Thank you, Steve. Good morning, everyone, and thank you for joining today.

He has walked you through an outstanding financial year. The performance gives us the platform to do something really important invest aggressively and deliberately in AI. My job today is to take you inside that effort, what we have built, what's working, and where we are taking it in 2026.

In April 2025, we launched CareCloud's AI Center of Excellence, a fully operational production grade initiative with one mandate build AI solutions that create measurable impact for healthcare providers. This is not a research lab or a pilot program. It is the engine behind everything in our AI portfolio.

We build this capability in-house because AI and healthcare cannot be generic. It must be trained on the right data, integrated into real clinical and administrative workflows, and designed around healthcare specific compliance and accuracy.

The AI Center of Excellence brings together engineering, data science, clinical informatics, and product development to deliver exactly that.

Let me walk you through what we have launched.

Our flagship AI product of 2025 is Stratus AI front desk agent, which reached full commercial release in December. It is an agentic AI phone receptionist wholly autonomous, operating 24 hours a day, 7 days a week, handling patient calls with natural humanlike conversation.

The scope of what it manages is significant appointment scheduling, rescheduling, and cancellations, real-time insurance eligibility verification and demographic capture, prescription refill routing, lab results, inquiries, referral requests, and automated confirmations and reminders. When a call requires human judgment, it escalates intelligently to a live staff member. The system is deeply integrated within our EHR and practice management platforms, which means there is no manual data reentry and no third-party middleware between the AI and the patient record.

Early results speak for themselves. Dr. Holden, owner of the Lung Center, shared that stratus desk agent is now handling nearly 80% of their inbound scheduling-related calls, freeing his staff to focus on more complex patient needs. There is a fundamental shift in how our practice operates, and it is exactly the outcome we designed this product to deliver.

Alongside desk agent, we have Stratus AI Voice audit, our conversational intelligence platform. Gives practice administrators and hospital operations leaders visibility into every patient phone interaction, whether handled by AI or by the staff member.

Voice audit delivers call monitoring, quality scoring, trend analysis, and patient sentiment insights. It shows what's working, where workflows are breaking down, and where there are opportunities to improve the patient experience.

Beyond patient access, we are applying AI deeply across revenue cycle management, the core of our business. AI capabilities are already active throughout our RCM operations, helping reduce claim errors, improve appeals and documentation accuracy, and increase first pass acceptance rates with pay.

Importantly, AI also allows us to shift from relying primarily on lagging indicators such as denial rates and days in accounts receivable to monitoring leading indicators earlier in the revenue cycle. By identifying potential issues at intake, eligibility verification, coding, and claim creation, we can prevent problems before a claim is ever submitted rather than reacting opera denial occurs.

Our longer-term ambition is to establish a new industry benchmark, zero touch claims, a fully automated workflow where AI manages intake, validation, submission, and pair follow-up with minimal human intervention. This enables billing teams to focus their expertise on true exceptions rather than routine processing.

We are also developing AI-driven prior authorization capabilities which represents one of the most significant administrative bottlenecks in the healthcare today. Prior auth delays drive revenue leakage, delay patient care, and consume enormous staff time. Our approach is to use AI to predict authorization requirements, pre-populate supporting documentation, and route requests automatically, reducing turnaround time and the rate of initial denials.

We are also actively developing an AI assisted medical coding product. Accurate coding is foundational to revenue cycle performance. Errors at that stage cascade into denials, delays, and lost reimbursement for clients using AI nodes. The two products work in concert, taking a clinical encounter seamlessly from documentation through accurate coding assignment.

On the clinical side, CSAI notes address documentation burden, a primary driver of physician burnout. It captures the clinical encounter and generates structured notes for physicians to review and sign off on rather than author from scratch.

It is live and in use today, and it earns clinician trust precisely because it does not TRY to replace physician judgment. It removes the administrative burden around it.

I want to spend a moment on the intersection of our acquisition strategy and our AI capabilities because I think this is one of the most compelling and underappreciated aspects of our story.

Each platform in the Metsocare portfolio is embedded in real clinical operations serving workflows previously outside CareCloud's reach, and none of them had a dedicated AI team behind them until now.

Clients across this portfolio will also benefit from access to CareCloud's ambulatory AI enabled solutions as our integration work progresses, bringing the full capability of our platform to be across the care continuum.

Our AI Center of Excellence is actively scoping AI enhancements across this portfolio, prioritizing the highest impact use cases in supply chain efficiency, emergency department workflow, and clinical documentation. As those enhancements are completed and validated, they will be made available to the clients. To be clear about sequencing, the new clients we are winning today are selecting these platforms on the strength of what they deliver right now. Our contract win with Memorial Hospital in Ohio, deploying Healthline for supply chain management is a strong signal of that underlying demand. As our AI capabilities for Helpline mature, Memorial and clients like them will be well positioned to adopt these enhancements when they are ready.

The same logic applies to WellsSoft. In January, Affinity Urgent Care in the Houston Galveston area selected Wellsoft, bringing our emergency grade documentation system into the urgent care settings for the first time. With approximately 11,000 urgent care facilities across the United States. This channel represents a meaningful expansion of our addressable market. The AI layer for Wellsoft is in development, and when it is ready, it will strengthen our competitive position in the channel considerably.

On the AI side, Mappa becomes more powerful over time. Our roadmap adds recommendations that go beyond identifying a revenue cycle GAAP to quantifying its dollar impact and surfacing the automation that closes as fastest, moving us from analytics to action, a conversation hospital CFOs are very receptive to.

The HFMA relationship also gives us distribution into hospital finance leadership that would take years to build organically, and combined with our AI roadmap for MA app, we have compelling reasons to be in those conversations in 2026.

Looking ahead, I want to be direct about what 2026 means for our AI strategy. We have spent 2025 building the AI Center of Excellence, the Stratus AI product suite, the acquisitions that expand our platform.

2026 is the year we execute. Let me walk you through our priorities.

First, we will continue expanding our AI product suite across the full platform. Spreta AI, desk agent, and voice audit are live and scaling. CitS AI notes is deployed and being integrated across the Metsofair suite. AI assisted coding and prior authorization AI are both targeted for release this year.

Second, we will execute on the cross sale opportunity at the product level. Steve outlined the strategic case Metsapphere relationships, RCM capabilities, HFMA partnership. My focus is making sure the AI products are ready to support that motion.

SS AI nodes integrated into Metaphere suite, the coding product available to hospital billing teams, and Straus AI desk agent deployable in hospital patient access centers.

Third, we will continue building the AI Center of Excellence, deepening our clinical data sets, developing proprietary models trained on healthcare-specific workflows, and partnering selectively with AI leading infrastructure providers where it helps us move faster. The principle is always the same. Healthcare native AI, built with ride guard rails, delivers better and more defensible outcomes than generic AI applied to healthcare settings.

Fourth and most importantly, we will hold ourselves accountable to client outcomes, not just product releases. The mayor of AI investment is not feature ship. It is revenue improvements, denial rate reductions, time saved per provider, patient satisfaction scores. Those are the matrics we track internally, and they are the ones we will be sharing with you as our AI business matures.

I want to close with a thought on why this moment is meaningful. Providers across every care settings are seeking purpose-built AI that integrates into the systems they already use. This is precisely what we are building across ambulatory, emergency, inpatient, and hospital billing operations. CareCloud sits as a rare intersection, long-standing relationships with over 45,000 providers across the care continuum, a fully integrated platform spanning EHR, practice management, RCM in our supply chain and hospital systems, and a dedicated AI organization focused entirely on solving healthcare operational problems. We are a profitable, growing company with a clear AI strategy and operational discipline to execute it. I look forward to sharing our progress with you throughout the year.

With that, I will turn the call over to Norm Roth, our interim CFO and corporate controller, who will walk you through the detailed financial results. Norm.

Thank you, Heidi, and thanks everyone for joining our call today. As you have just heard, we had another strong quarter and a strong finish to the year. We have accomplished and exceeded the goals we set for ourselves for 2025.

In particular, we are now generating record levels of free cash flow.

And resume paying dividends on our preferred shares, which started in February 2025, and we've also been catching up on the dividend arrearage for the Series B preferred stock.

Further, we have fully repaid our Provident Bank line of credit at the end of the year. We had borrowed funds for the MedSphere acquisition and now have the full $10 million line of credit available.

We generated $20.5 million of free cash flow in 2025, which we measure as cash from operations, less purchases of property and equipment and capitalized software and other intangible assets.

In 2025, we began seeking out acquisition opportunities, and during the year we completed 4 acquisitions. We continue to evaluate acquisition opportunities that will be accreted to the company.

The key to growing our free cash flow continues to be reducing expenses and growing our GAAP net income. Fourth quarter, 2025, GAAP net income was $2.9 million as compared to $3.3 million in the same period last year. This is our seventh consecutive quarter achieving positive GAAP net income.

Revenue for the fourth quarter 2025 was 34.4 million compared to 28.2 million for the fourth quarter of 2024.

It was approximately $7.2 million in revenue related to the MedSphere acquisition in the fourth quarter.

Adjusted EBITDA for the fourth quarter 2025 was $7.7 million or 22% of revenue compared to $7.1 million in the same period last year. This was an increase of 8% year over year.

For the full year, the story is similar with our emphasis on improving profitability, revenue for the year 2025 was $120.5 million compared to $110.8 million in 2024.

Our GAAP operating income was $11.3 million compared to $9.1 million in the same period last year, and our GAAP net income was $10.8 million compared to a GAAP net income of $7.9 million for 2024.

This was the highest GAAP net income for the company since its inception.

Non-GAAP adjusted net income was $14.4 million for $0.34 per share calculated using the end of period common shares outstanding. Since going public, this is the 1st year we have had positive full year GAAP ETS.

For the year 2025, adjusted Evada was $27.5 million an increase of 15% or $3.4 million from $24.1 million last year.

Our adjusted EBITDA for full year 2025 was also the highest amount ever achieved by the company.

During the year 2025, we generated $28.6 million of cash from operations compared to $20.6 million in the prior year and $20.5 million of free cash flow as defined.

The free cash flow amount of $20.5 million increased by 55% compared to $13.2 million in the same period last year.

As of December 31, 2025, the company had approximately $3.6 million of cash. Networking capital was approximately $1.3 million. Now that we have repaid our line of credit, free cash flow during 2026 will allow us to increase our cash balance and build additional cushion in our networking capital.

Our financial position continued to improve during the year 2025. We are happy to report strong financial results, no amounts outstanding on our line of credit, cash savings from the Series A preferred stock conversion that occurred in March 2025, and look forward to continuing to report strong results next year.

With that, I'll now turn the call over to Mahmud for his closing remarks. Mahmud.

Thank you, Norm.

2025 was a milestone year for CareCloud. We delivered strong profitability and free cash flow, expanded into the hospital market through sturgic acquisitions, and launched an AI platform that positions us well for the future. What is most exciting is that we are just getting started. We enter 2026 with strong momentum, a stronger balance sheet, and significant opportunities to drive growth across our platform. I want to thank our employees, clients, and shareholders for their continued trust and support. We remain focused on discipline, execution, innovation, and creating long-term value for all of our stakeholders. Operator, please open the line for questions.

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Allen Klee, Maxim Group.

Yes, hi, Greg Porter, so, when I'm listening to you talk, the two big themes I'm hearing, among others are your emphasis on AI and acquisitions and how you can combine them and get benefits. So could you expand a little more on how you're planning on kind of monetizing the AI in 2026? You've talked about, but I think it's important. Thanks.

For sure. And thanks for the question, Ellen. So if we step back.For those who haven't followed our story so closely, and we'll just talk about M&A first and then we'll dig a little bit deeper into the AI, questions specifically that you asked.

So, first of all, from a, from an AI from an M&A perspective, the environment today continues to be increasingly favorable. AI is a catalyst for smaller billing companies and for health care, companies that focus on delivering software products to the inpatient, also the ambulatory space, because they recognize the fact that without AI their competitive position continues to weaken in the market.

So that's driving more sellers into our pipeline than ever before. Our strategy continues to be one of patience and and discipline like we've we've followed for years. So we wait for an opportunity where the recurring revenue associated with, first of all has to be recurring revenue relationships, a portfolio of recurring relationships, revenue relationships, and then secondly, from a valuation perspective we really target valuations of between 0.6 and 1 times revenue.

That compares very favorably to the CC in our space, which is typically about 1.5 times or greater, revenue.

So we move forward with these acquisitions and then with regard to that those base.

Companies that are part of that portfolio, we aim to bring them from a status of typically break even or operating at a loss to about 25 to 30% profitability margins typically within about 9 months. So that's the base strategy you've asked about the AI overlay to that and that's where I think the whole strategy gets even more interesting. So if we think about the just as an example if we think about the MedSphere acquisition, we've purchased software products that lack that AI capability and what our team has been doing is that it's been really focused in on taking the core AI products, taking the series AI product, the Stratus AI product, taking the AI node.

Applications and the like and then weaving that and incorporating that fully into those platforms and we expect to have that done within the next couple quarters so we're able to take those platforms and to make them increasingly more attractive and platforms that as opposed to being.

As opposed to lagging behind where the space is, will be increasingly leading in their particular markets, so we see some exciting potential there. The second thing would be if we think about this from the perspective of revenue cycle companies, we now are increasingly using AI and automation. To handle a lot of the services that before were being handled by individuals here in the US or members of our of our team globally so AI and automation is increasingly assisting with the back office processing. Enabling us to further drive margins and H1y might have something else to add to that from an AI perspective.

Sure, thank you, Steve. And just to add on to what Steve has mentioned, our strategy from the AI perspective has been the same as three fours. One, continue to focus on the improvement and Implementation of AI in the back end operations whether it's the the basic denial management whether it's the automation of as an example the referrals and verification of the benefits and the like and then there are many others and the second is the the AI enablement or AI integration into the existing the product suite that we have. Whether it's our own EHR practice management platform or these other companies as Steve mentioned that we are acquiring the team continue to focus on building the AI layer to make it more attractive and and more marketable and then continue to focus on any other net new applications that we can bring to the market such as the Stratus AI FDA.

Thank you, that's very helpful. Then, it was encouraging to see, like contract wins, with new customers.

Could you talk a little about how you think, what was behind the win and how you think that's an opportunity going forward?

Well if we think about our overall sales team and our marketing team, we've expanded that team by 2 or 3 times, so we have a, an increased, team that's focused, increased size team that's focused on cross selling and also these net new opportunities. Having said that, we continue to see. The real opportunities this year being primarily in expanding the wallet share of those existing customers, many of whom we've acquired more recently through the MedSphere and the map app transactions. So through those transactions we've acquired. More than 100 new hospitals and health systems who we're working with and we see significant opportunity to sell more deeply into these existing clients by providing.

Additional services and solutions, AI products, RCM solutions, with a real focus on Stratus AI andirris AI that can add value and we believe will resonate with this market. So yes, 100% we've had some new wins. We've talked about a new Wellsoft win. Wellsoft is our, recently, number one black book ranked, EHR that's focused on the emergency departments. So we had a win there. We also had a win with regard to our supply chain, products as well. So we have those new wins, but we really think that. The real opportunity will be continuing to cross sell and upsell the existing customers.

Okay, thank You also me my last question and then I'll jump back in. The front end AI you mentioned, I think you said you launched that in, December, how do you think about, and you said it's a very large opportunity, how in terms of, how you're targeting that and early.

Indications you get of interest and any comments there?

For sure, yeah, we're going to, you're talking about our Stratus AI product and again the market opportunity is estimated to be $4 billion plus, and how can can provide a little bit more visibility with regard to the early response, but we've really been encouraged by how well that's resonated with regard to our existing base. Our sales efforts are.

Almost exclusively focused on our existing base and we're getting significant traction there but over high to your to your point, Steve.

So we are seeing a very encouraging early adoption since the launch in the commercial launch in December. While we are not disclosing a specific client count at this stage, but deployment pipeline is really robust across existing ambulatory, the client base, and we just need to tap into aggressively into the Metsaphere, client base that our team is extensively aggressively working to. Towards integrating across the across the product suite there, so at the moment we have seen an exceptional interest from our existing client base so we expect to share more specific adoption metrics as we progress through 2026.

Michael Kim, Zacks Small-Cap Research.

Hey everyone, good morning and thanks for taking my questions. So first there continues to be a lot of uncertainty in the markets as it relates to AI and the potential impacts on SAs companies. So just wondering how investors should think about CareCloud's exposure to AI, disruption versus maybe being more of an AI beneficiary.

Thanks Michael, and you're 100% right, the sell-off in the market has been significant and has not discriminated. It's, it has not discriminated between companies where there really is a more significant risk and those where there isn't. We believe that the companies that are most at risk are the horizontal Percy tools for generic workflows, things like, scheduling apps. Basic CRM things like companies like that where AI agents can replicate and fully replace that key functionality that's really fundamentally though not our business, and I was focused in particularly in the healthcare space, so healthcare IT in particular has very deep industry moats. That those horizontal fast players simply don't have, so our AI products as an example require rigorous testing, certification, approval by a government approved entity with regard to, prior to the initial launch and with regard to any fundamental changes we make to them, so the ability to.

For these new market entrances from AI companies is really very limited and we also operate under HIPAA and a whole web of other healthcare specific regulations that create substantial barriers entry.

We're also the system of record for our providers from a clinical, financial administrative perspective, and that data all lives within our existing platform and if we think about more fundamentally what our clients, in the context of leveraging us accomplish really is in large part, shifting their risk to us. They rely upon us. To securely host their data to ensure compliance, to most fundamentally produce revenue, for the practice, so our SAS offering isn't simply a standalone tool, it's really the technology backbone that drives our larger revenue cycle management services which are fully integrated with it and clients pay us based on the actual value we're producing. Because the overall overwhelming majority of our clients pay us a percentage of the practice collections for both the EHR, the technology piece, and also the RCM offering, so it's fundamentally different from many of those other companies that, are really feeling also feeling this impact.

I would say one other thing is we also have more than 25 years of proprietary data across hundreds of millions of claims and that really that information and that data informs our AI products helps us ensure coding accuracy, manage denial management, benchmarking, and the like, all things that that the new entrants in the market don't have.

So at least as we look at it, Michael, our thought is that with our evaluation being 56 times EBITDA, in spite of the fact we're generating, we generated this last year $20.5 million of free cash flow, we really trade, we continue to trade at a fraction of the valuation of the market in general and candidly, even at a fraction of the valuation of other healthcare IT peers or more than twice that.

So as the market moves away from this more indiscriminate treatment of of all companies that are working on some level with AI. And it will, we'll move from that to, we believe, a more differentiated approach between those companies that are truly threatened by AI, and those for whom AI is actually a key part of their advantage, is a key part of their ability to add additional value to the existing relationships, and we really fall into that second camp.

Got it. Makes a lot of sense. And then second, clearly earnings power and free cash flow continue to build, so just wondering what sort of assumptions you're building in as it relates to the 2026 guidance ranges and then how you think about sort of the trajectory of growth, looking out beyond next year.

So, to your point, Michael, for us, 202,025 was a milestone year. It was our first positive, we, our 1st year of producing positive EPS, since we went public back in 2014, and, we've had seven straight quarters of GAAP profitability and, free cash flow alone was up 55%. As compared to 202,024 up to 20.5 $20.5 million in, 2025, so if we think about just our EPS guidance this year of 20 to $0.23, that represents more than 100% growth, and we feel very confident about that, guidance.

Now, What's driving that that overall growth, it's really being driven in large part by the top-line growth, and, in addition that the integration savings with regard to the companies we've acquired and then really driven largely also by the AI efficiencies. And then add to that the fact that we've eliminated through the conversion in 2025 we've eliminated the more than $7.5 million of preferred dividend obligations on an annualized basis.

So the increased free cash flow really gives us flexibility to be able to fund M&A for operations and if you just look at this most recent year, we were able to acquire all four companies purely from the cash flow generated during 2025, with zero dilution to the to the common shareholders, also able to invest in our AI. Development, and then fully, resume payments relative to our Series A and Series B share shareholders, in addition to that, if you think about this year, in addition to all those things, we're also paying double dividends to clear up the arrears relative to the B's, so from a funding perspective.

Operations is really continuing to drive this flexibility and continues to open up new opportunities for us as we think even more broadly beyond 2026 and 2027, we believe that we'll continue to fundamentally expand the overall margin profile as as we continue to scale.

Michael Galantino, Chapin Davis.

Good morning, gentlemen. Hey guys, you can hear me good, thanks. I don't know what's coming through. Hey, great year, great quarter. Way to finish the year strong. I've been involved with the company for going on 9 years, and, you guys have seen a lot, we've all seen a lot of changes in the industry. I mean, we, nobody knew what AI was 9 years ago and now it's the focus of the company. You guys have done a tremendous job navigating it, specifically in the last, 2 or 3 years. I have a couple of questions. Steve, one to you on the AI front. Does it Does the AI technology and the efforts of the company, does it, save money in terms of, operationally, and, does it increase the margins, and I know you talked about the stocks that have been coming under or the software stocks that have come under significant pressure in the last, 3 or 4 months. If you can address that. And the second question is, now that you have, excess cash flow, a lot of excess cash flow, which is a great problem to have, what are the Focuses for the use of, if, of that money if there are no opportunities to make any more acquisitions this year.

Thanks, Mike. I appreciate your appreciate your questions. So maybe I'll TRY to address the first one, initially, and, if you just, if we think just if we kind of back up for a minute and think more fundamentally about the overall revenue of the company and we go back to let's say the 4th quarter of 2024 and we think about our company on an annualized basis we're at, let's say $110 million roughly. We think about where we are today, probably $125 million. All these are all very rough numbers. So we've increased the overall revenue base by about 14-15% roughly and we've done all that while actually reducing the number of employees that we have today as compared to 2024.

So I think that really more fundamentally, at least on a qualitative level, speaks to what we're able to do, and that's in large part driven by AI and automation, and as the year progresses, we'll, I believe you'll continue to see us, being able to do far more. With far less, so that that those savings and that margin we believe will continue to increase as we move forward and again in the whole scheme of things we're we're probably in the first inning so you know this is really just beginning we just launched our AI center of excellence less than a year ago so these these.

These realities, the long-term realities are yet to be fully seen in the financials, but again, based upon the numbers as we see them today, we think there's significant opportunity for us to be able to reduce, overall expenses associated with the revenue as we continue to grow it. The second thing is with regard to the use of that free cash flow, we continue to. Look for these opportunities to be able to put that that capital to work with regard to these acquisitions so acquisitions in our space again with a with a focus on being able to acquire companies from from our internally generated cash flow ideally. So that would be one key focus. The second key focus would be continuing to, as as the opportunities present themselves and as our, profit margins continue to grow, to look for opportunities to be able to continue to enhance our overall capital structure, time progresses, that would be another opportunity that we look forward to pursuing and also continuing to invest in AI.

Continuing to look for opportunities to Expand the existing capacity of our software products, and to continue to handle an increasingly larger and larger share of the responsibilities that our clients are handling today.

Thank you. Just a quick follow-up. When you guys are competing for this business, who, is your com competition? Who's out there bidding on the same business that CareCloud is right now? Are there much larger firms? Are they smaller startups or who is our direct competition for this business?

Yeah, good question, Mike. I think to answer that we probably would have to break that into, a couple different areas. So from an EHR perspective we're we're oftentimes competing against companies like, eClinicalWorks Advanced MD.

And other similar players really focused on being on the ambulatory space, so those would be two of the main companies plus Athena Health would be, a third company where there's a greater mix and a more of a focus on the integrated. Solution that involves the delivery both of software and also of the revenue cycle management services from an AI perspective the the the the playing field is wider and and it really then depends again on the products.

So for instance ourirris AI product, that product that's more focused for instance on the using the the audio and the ambient sound from the communications between the provider and the patient. The exam room to really populate the chart, many of our competitors in this space are offering very similar solutions. Some of those solutions are native. Other solutions are through a through a third-party application that integrate into their platform. From the perspective though of the product that Jay was talking about before.

Many of our competitors actually aren't offering that solution, but kind of one company maybe to think about would be Soundhound. So Soundhow has a has a product that is so it is actually very similar in many respects called Amelia, and Amelia has a. A lot of that same functionality, but somehow unlike us does not have a a vertical, does not have a vertical approach they they're a an outside player selling horizontally into the space so they don't have their own EHR for instance in which they can in which they can incorporate this product but but Soundhow is also interesting because if we look at their overall, evaluation.

It's about 20 times today, 20 times, the EV, so compare or contrast that with ours, and we think there's a lot of opportunity, for investors, once the market really understands that we have a proof of concept and we.

We are able to demonstrate real success at Voel now our solution to our existing customer base.

Terrific. Thank you, Steve.

Allen Klee, Maxim Group.

Yes, hi, just on the financials quick.

Thing, in terms of your outlook, any comments on thoughts of, cappex and capitalized software spending and, your guidance overall, does it include any unannounced acquisitions?

Good question. I'll let Norton handle the first part of that, but the answer to your second part of your question is no. It does not include any, unannounced, material acquisitions.

And when you're looking at cap and software cap, I think if you look at the, levels from this year, I think they'd be the same or maybe a little less. So, if you want to use that because you're forecast.

Okay, maybe just following up in terms of the run rate on its operating expenses. To what extent? I know you're increasing R&D, but you still anticipate utilizing AI can get you, some benefits on the expense side.

Absolutely, yeah, we do, we do, and candidly, you know. As we sit here today as compared to a year ago, we believe we can accomplish everything that we're setting up to accomplish in terms of AI, and we can accomplish it with a smaller team than we had than we had initially envisioned. There's been so much progress from an AI perspective in terms of the the key models that we use, to as as the as the girding in our overall framework that we really believe that we can increasingly achieve what we're setting out to achieve from an AI perspective with. A leaner team than we had initially envisioned, so I think there'll be less spending from from the perspective of the AI Center of Excellence and beyond that, the spend that the investments that we're making today will really continue to to make us more efficient and continue to expand margins.

With no further questions, I would like to turn the conference back over to Norman for closing remarks.

Thank you everyone for attending our call today. Have a great day.

Thank you. This will conclude today's conference. You may disconnect at this time and thank you for your participation.