Greetings, and welcome to the CareCloud Fourth Quarter 2024 Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kristen Rothe, Corporate Counsel for CareCloud. Thank you. You may begin.

Good morning, everyone. Welcome to CareCloud's fourth quarter 2024 conference call. On today's call are Mahmud Haq, our Founder and Executive Chairman; Hadi Chaudhry, our Co-Chief Executive Officer and Director; Stephen Snyder, our Co-Chief Executive 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 conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. All statements other than statements of historical fact made during this conference 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 the 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. These 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 our reports filed with the Securities and Exchange Commission, where you'll find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward-looking statements. For anyone who dialed into the call by telephone, you may want to download our fourth quarter 2024 earnings presentation. Please visit our Investor Relations site, ir.carecloud.com. Click on News & Events, then click IR Calendar, click on Fourth Quarter 2024 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 fourth quarter results and 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 Co-CEO, Stephen Snyder. Stephen?

Thank you, Kristen, and thanks, everyone, for joining us today on the fourth quarter 2024 earnings call. Over the past year, our team has remained focused on executing our strategic initiatives, driving operational efficiencies and delivering strong financial performance. As a result, we have achieved record-breaking profitability and taken meaningful steps to position the company for continued success in 2025 and beyond. Today, I'll walk you through our key accomplishments, our strategic outlook, provide some information regarding our recent Series A preferred stock conversion, and talk about the opportunities ahead as we continue to scale our business and drive long-term value for our shareholders. First, in 2024, we successfully executed on our core priorities, leading to the strongest year of profitability in our company's history. Free cash flow reached record levels, demonstrating our disciplined approach to efficiency and operational excellence. Adjusted EBITDA rose to $24.1 million, a 56% increase year-over-year, and net income surged to an all-time high of $7.9 million in spite of modest decline in revenue. Additionally, we generated $13.2 million in free cash flow, a year-over-year increase of nearly 250%, reinforcing our ability to drive sustained profitability. Notably, we achieved neutral earnings per share in Q4 2024, a pivotal milestone that signals our progress towards sustained profitability. Looking ahead to 2025, we anticipate positive earnings per share for the first time since we went public in 2014, a milestone that reflects the strength of our business transformation and operational discipline. These results reflect a focused effort on streamlining operations, cost cutting, and leveraging our proprietary AI technology. By reducing reliance on third-party contractors and optimizing our global workforce, we have strengthened our margins while maintaining scalability. The financial discipline we've maintained has put us in an excellent position as we move into 2025. Building on this momentum,…

Thank you, Steve, and good morning, everyone. I'm excited to speak with you today about the technological advancements that are shaping CareCloud's future, particularly in AI-driven automation. 2024 was our most profitable year in company's history, driven by our commitment to operational efficiency and disciplined execution, resulting in record free cash flow even as we navigated a slight revenue decline. Today, I will walk you through how our innovation in AI, automation, and new products, including specialty-based EHR solutions, are driving efficiency, enhancing provider workflows, and positioning CareCloud for sustained innovation and growth in 2025 and beyond. Throughout 2024, we advanced CareCloud cirrusAI, our flagship AI-powered solution that streamlines administrative tasks and clinical documentation, enabling providers to focus on patient care. A key component, cirrusAI Notes transcribes structures and integrates patient-provider conversations directly into the EHR, reducing manual charting while enhancing documentation accuracy. Unlike third-party solutions, cirrusAI Notes is fully embedded within the CareCloud EHR, ensuring a seamless workflow with no need for toggling between systems. This quarter, we expanded cirrusAI Notes to support multiple specialties, including OB-GYN, general practice, emergency medicine, family practice, and pain management, ensuring that a wide range of providers benefit from our AI-powered charting tools. Additionally, we strengthened sales and marketing efforts for cirrusAI Notes, positioning it as a key driver of innovation and growth. The first phase of rollout has already demonstrated commercial viability with early adopters seeing its value. While we are in the early stages of adoption, we remain optimistic that cirrusAI Notes will play a pivotal role in AI-powered efficiency and clinical workflows, reinforcing CareCloud's commitment to advancing healthcare technology. As we noted in our last earnings call, cirrusAI continues to enhance EHR, practice management, and RCM systems through AI-driven automation, significantly improving efficiencies across clinical and financial workflows. Key advancements…

Thanks, Hadi, and thanks, everyone, for joining our call today. As you have just heard, we had a strong quarter and have accomplished the goals we set for ourselves this year. In particular, we are now generating record levels of free cash flow and resume paying dividends on our preferred shares, which started this past February ahead of what we previously announced. We will realize more than $10 million annual cash savings on Series A preferred stock dividends as compared to our dividend obligations as they existed prior to the September 11 proxy. Additionally, we satisfied $11.4 million of accrued but unpaid dividends as a result of the recent conversion. Further, as we previously announced, we have fully repaid our Silicon Valley Bank line of credit at the end of the third quarter 2024 with internally generated profits and cash flows and are now bank debt free. We generated $13.2 million of free cash flow for last year and used $10 million to repay our line of credit. Today, we have all of our $10 million line of credit facility available to us. The key to growing our free cash flow has been reducing expenses and growing our GAAP net income. Fourth quarter 2024 GAAP net income was $3.3 million as compared to a net loss of $43.7 million in the same period last year, of which $42 million was due to the goodwill impairment. This is our third consecutive quarter returning to positive GAAP net income and our largest quarterly net income since Q4 2021. Revenue for the fourth quarter 2024 was $28.2 million compared to $28.4 million for the fourth quarter of 2023. Recurring technology-enabled business solution revenues during fourth quarter 2024 were $24.8 million, essentially flat with fourth quarter 2023, while non-recurring professional services revenues from medSR…

Thank you, Norm. I want to extend my sincere gratitude to our employees, clients and shareholders for their trust, dedication and support. Their collective efforts have been instrumental in driving our success and positioning CareCloud for long-term growth. As we move forward, we remain committed to financial strength, innovation and sustainable growth, reinforcing our position as a leader in AI-driven healthcare solutions. By leveraging advanced automation and intelligent technology, we are shaping the future of healthcare, ensuring that we continue to create value for our clients, shareholders and investors. With that, operator, please open the floor for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Michael Kim with Zacks Small-Cap Research. Please proceed with your question.

Hey, everyone. Good morning, and thanks for taking my questions. Just first, appreciate the revenue and EBITDA guidance for this year, but focusing on the top-line, I guess, the midpoint suggests modest revenue growth year-over-year. So just curious as to how you're thinking about sort of the mix of growth drivers looking forward, across engaging new clients, introducing new services and/or tapping into new markets? Thanks.

Great. Thanks for the question, Michael. To your point, for 2024, we were very pleased to be able to report the highest net income, highest adjusted EBITDA, highest cash flow in our history. And as we look at this year, we believe that we're really poised to be able to continue to advance along all of those metrics. And in particular, maybe we'll start actually with EPS. So, for this year, we expect EPS to be between $0.10 and $0.13, which is particularly significant because it represents the first anticipated positive EPS for the company since we went public in 2014. So, as we think about it, this really reflects the strength of our business transformation that we've been talking about during 2024. Also the benefits of the AI automation that Hadi has been talking about together with the benefits associated with the recent Series A preferred stock conversion, which has further strengthened our capital structure and eliminated dividend obligations. If we move for a minute, Michael, then to adjusted EBITDA, again, we're projecting this year $26 million to $28 million in adjusted EBITDA. Again, reflecting this disciplined approach that we've been taking to cost management and also the investment that we're making to innovation. And then finally, if we're thinking about revenue, we anticipate revenue in the range of about $111 million to $114 million, which represents -- while, of course, Q1, you'll recall, represents typically seasonally low level of revenue due to the reset of deductibles. On the -- for the full year, we anticipate this year actually having a revenue increase after a few years of revenue declines. So, we believe those declines are behind us and we're excited about being able to be in a position where we're actually increasing revenue this year. I think those -- as we look at the opportunity sets that we have before us, some of those increases will come from upsells, so RCM and digital health upsells to our existing client base. Some of them will come from net new opportunities, including those that leverage the specialty-specific EHR products that Hadi was talking about a moment ago and other solutions along the lines of RCM. Life sciences will represent some additional adds. RCM with AI solutions being sold by the medSR team in particular in the small hospitals represent some additional. And then finally, some tuck-ins associated with a focus on RCM client bases that we acquire. And that acquisition of RCM client bases is really very consistent with our historical patterns in the past, being able to grow from a very attractive cost of customer acquisition through those acquisitions. So again, if we think overall in terms of 2025 guidance, it really reflects the strategic shift back into growth, while continuing to approach the overall spend responsibly and represents also the stronger capital structure.

Got it. That's very helpful. And then, maybe just to follow-up on your comments on the M&A side, it sounds -- it's great to see the engine starting to turn back on, if you will. Just any perspective on sort of the pipeline, how that might be building more broadly? And then, any insights into what you might be seeing in terms of buyer and seller expectations as it relates to valuations? Thanks.

Sure. Certainly, good question. Again, you'll recall, we announced in early March an acquisition, albeit a very small acquisition, but we are really signaling to the market that we believe that we're back in the acquisition business as it were. We've re-entered the acquisition market. And with this most recent transaction, we're really going to be pursuing the overall strategic vision that we've had really since we went public back in 2014. So, there are many smaller and mid-sized medical billing companies, particularly those that have struggled to scale and to adapt to automation. And these companies continue to be looking for partners like CareCloud that have -- CareCloud has, of course, a more sophisticated technology and operational infrastructure. So, there's a real opportunity for these businesses to partner with or to be acquired by a company like CareCloud and to be able to realize the benefits associated with our technology and our global model. If we think about our existing client base, Michael, over [8%] (ph) of our existing clients joined us initially through acquisitions, and we've completed about 20 or 25 acquisitions so far in our company's history. So, acquisitions have really been a key part of our DNA, have been a cornerstone to our overall growth strategy and have allowed us again to be able to acquire customer bases at a very attractive customer acquisition cost. So, we believe the opportunity is a phenomenal one and we continue to pursue that this year. As the year progresses, we'll continue to take a very disciplined approach. Just we want to make sure that any deals that we pursue are accretive and align with our long-term objectives. But to your question from a valuation expectation perspective, what we've seen in the market is really a gradual return toward the lower multiples that we saw in the pre-COVID era. Some sellers, of course, continue to have inflated expectations as you would imagine, based upon the more recent revenue multiples, but again, we're beginning to see more rational pricing and expectations from a seller's perspective and particularly from companies that really recognize this need to partner with a larger platform like CareCloud in order to stay competitive. So, as a buyer, our focus really remains upon these value-driven acquisitions. So, we're not chasing deals with aggressive multiples, but we're instead target businesses where we know we can offer significant upside to the clients and can also provide AI and technology automation and operational efficiencies that enhance the overall client experience. So, we think that from an acquisitions perspective, this year will especially the second half of the year will be -- that will be a key driver of our overall growth this year.

That's great. Very helpful. Thanks for taking my questions.

Thank you.

Thank you. Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.

Good morning. Thank you for taking our questions. So, I wondered if you could talk a little bit about your user base and talk a little bit about expanding the user base coupled with expanding the offerings and the types of customers that you've had and what you're seeing with the current customer base as far as where it's headed.

For sure, yeah, and thank you for the question, Jeff. So, in terms of the user base, the user base, of course, from a specialty perspective continues to be diversified with about one-third of the overall customers practicing in primary care and then the balance coming from a wide variety of different specialties and subspecialties. Geographically, it's distributed throughout the country. So, we do business, of course, in all 50 states with the heaviest concentrations of clients in New Jersey, New York, California, Florida and also the West. So, just on a high level, that's a little bit of an overview in terms of our overall customer base. From the perspective of the services that our customers use, the majority of our customers are leveraging our integrated platform. So, the EHR and the RCM and the PM in an integrated model, we, of course, have clients that are leveraging other solutions on a standalone basis, but the majority are using our overall integrated solution. So, for us, the real upside in the opportunities in that existing base relate primarily to being able to sell a variety of different solutions, including digital health, that's RPM and CCM, into this existing base and also being able to take HER-only users and being able to upsell them, so that they're all leveraging our revenue cycle management solutions. And then finally, being able to rollout AI across the entirety of that base. So, I don't know if that addressed your question exactly or not. If not, I'd be happy to zero-in on a different area.

No, that's super helpful. And then, as a follow-up, can we talk about the 2025 guide? So, I'm assuming as it stands now, you're not factoring any M&A. And then, maybe could you talk about how that may look as far as customers, number of customers, and factoring in some of the attrition versus addition?

For sure. Maybe I'll get started on that and then Norm or Hadi can jump in. So, with regard -- if we kind of just step back for a moment, so [first] (ph) year from an acquisition perspective, we really do see acquisitions playing a key role in terms of the overall growth. So, especially as the year progresses. But of course, based upon the revenue that we've provided, that revenue doesn't contemplate any material acquisitions during the year. And if in fact there's a material acquisition during the year, it really contemplates that material acquisition happening relatively late in the year where the revenue being added by that acquisition would be pretty minimal. Instead, it really contemplates traditional organic growth combined with some relatively small tuck-in opportunities. In terms of the overall client base, again, for -- because of -- whether it be consolidation or practices or providers retiring and the like, there's always a natural attrition related to that base with regard to our base and any other service providers who are similarly situated. So, part of these adds really relates to replacing that natural attrition that occurs and then the net growth comes from being able to close opportunities above and beyond the [attrited] (ph) business.

Perfect. Thanks for taking our questions.

Thanks, Jeff.

Thank you. [Operator Instructions] Our next question comes from the line of Allen Klee with Maxim Group. Please proceed with your question.

Yes. Hi. I had questions on the preferred stocks. The Series A forced conversion, tell me if I understand this right, and if you can explain it. It looks like you forced conversion on 3.5 million or so of the preferred As, but I believe there was around 4.5 million outstanding. So, of the remaining close to 1 million shares, does -- what happens with that? Does that still -- is that still outstanding and still pay an 8.75% dividend or -- and can that be redeemed? And then, kind of going forward like on the Series B, you -- on the Series B, will you be paying at a higher rate than what you've lowered it to, to try to catch up on the amount that was not paid in the prior year? And, if so, how long -- how much is that and how long you have to pay it at the higher rate to get that to fully catch up on that? And maybe just if you could then just say what the preferred -- the total preferred dividends that you expect to pay in the March quarter, and then, what you expect it to be for the quarters going forward after that? Thank you.

Of course. Thanks, Allen, for the question. So, I think your question is about both the As and the Bs. So, maybe just for a moment, if it's okay with you, if you'll indulge us, let me just step back and talk about the conversion and then I can talk about the specific numbers you were talking about, the 4.5 million and the 3.5 million and then the 1 million that's left over and redemption and the like. So, again, if we step back, for us, it was really very important to ensure that the preferred shareholders, the preferred A we're talking about in this context now, were treated fairly and had the opportunity to participate equally in the company's long-term growth. And this is why if we go back to September of last year, this is why the Board proposed through the proxy a structure in that proxy that provided for change of control protections so that As could not be acquired and left outstanding. Together with conversion and that conversion -- unlike many other companies that have been in our position, that conversion wasn't simply a multiple of the much lower market price, but it was really a conversion that would make the preferred shareholders whole by having the conversion occur at the full redemption price of $25. So, if we kind of think about the what, the when and the why, first in terms of the what, to your point, it was a mandatory conversion. It was approved of by an overwhelming majority of the Series A preferred shareholders back in September of 2024. And because there's been a little bit of confusion, let me just talk about the mechanics of that -- of the overall conversion. [It involve] (ph) the Series A preferred shares being, again,…

Thank you.

Did I address everything, Allen? Sure.

Just, what will be the preferred dividend total payment in the March quarter, and then, what do you expect it to be in the quarters thereafter?

Okay, fair enough. And on an annualized basis going forward, it'll be about $5.5 million roughly. And I'm sorry, but you asked another question, not the annualize dividend, you asked for what period?

So, in the first quarter, it's two-thirds of that, because it's two months. And then, in the following quarters, it's annualized of -- it's a quarter of $5.5 million. Is that the way to think about it?

Yeah. On a monthly basis, it'll be about $450,000 roughly on a monthly basis, and that's both the As and the Bs. So, if we think about the fact that conversion happened here in the midst of the quarter, that will be, Norm, roughly?

So, yeah, so the payment for March would be about $500,000 and that would go forward because remember the As are getting the 11% up until the time we catch up to September 11, then the payment will drop to $450,000 a month after that. But if you remember, in February, we made a larger payment because we had all the As and Bs outstanding at that time.

And Allen, again, from the perspective of the conversion, relative to all the As, of course, who were converted over, we caught them all up in terms of the dividends right up until March 5th or 6th when we actually convert it. So, there won't be any cash payment relative to those particular investors because we've already paid them in kind at the time of the conversion.

Okay. Thank you.

Thank you.

Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Rothe for any final comments.

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

Thank you.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.