CareCloud (ticker: CLOUD), a prominent healthcare technology firm, has reported its second quarter 2024 financial results, showcasing a strategic emphasis on profitability and cost reduction. The company launched CareCloud CirrusAI notes, an AI-driven product designed to enhance clinical documentation, which is now available for licensing. With a 154% year-over-year increase in revenue from its CareCloud Wellness program and a significant reduction in expenses projected for 2024, CareCloud is demonstrating a robust financial turnaround. The company’s second quarter revenues stood at $28.1 million, despite a slight decline from the previous year. Positive GAAP net income and cash flow marked a milestone, with $8.3 million in cash from operations and $4.9 million in free cash flow reported.
Key Takeaways
- CareCloud’s focus on reducing costs has led to the identification of $26 million in annualized savings.
- The company’s CareCloud CirrusAI notes has been well-received by pilot users and is expected to contribute to revenue growth.
- Cross-selling and upselling initiatives have been successful, particularly with the CareCloud Wellness program.
- CareCloud has repaid 75% of its credit line balance, improving financial flexibility.
- The company reported positive GAAP net income for the first time since 2022 and has a strong cash position.
- Shareholders have shown support for changes to the terms of CareCloud’s Series A preferred stock.
Company Outlook
- CareCloud anticipates significant growth in adoption and revenue from the CareCloud CirrusAI notes offering.
- The company is working towards eliminating its credit line balance and resuming preferred dividends.
- Strategies for growth include expanding wallet share with existing customers, exploring partnerships, and leveraging technology-enabled RCM solutions.
Bearish Highlights
- Revenues for the second quarter of 2024 saw a decrease of $1.3 million year-over-year.
Bullish Highlights
- CareCloud has seen a 154% increase in revenue from its CareCloud Wellness program year-over-year.
- The company expects a reduction of approximately $20 million in expenses for 2024.
- Adjusted EBITDA of $6.4 million is the highest since the second quarter of 2022.
Misses
- Despite overall growth, the second quarter revenues were slightly down compared to the previous year.
Q&A Highlights
- The company discussed the potential for growth in the medSR space and its strategy for leveraging AI-based tools.
- CareCloud sees its integrated AI platform as a key differentiator in the competitive market.
- Expansion within the existing client base is seen as the best opportunity for growth.
In conclusion, CareCloud is navigating a period of strategic growth, with its latest AI product launch and effective cost-saving measures contributing to a positive financial outlook. The company’s efforts in cross-selling, upselling, and debt reduction have positioned it for potential growth in the coming year. Despite a slight decline in quarterly revenue, CareCloud’s focus on technology-enabled solutions and its strong cash flow indicate a promising trajectory for the healthcare technology provider.
InvestingPro Insights
CareCloud’s recent financial results have impressed the market, reflecting a strategic shift towards profitability and a promising outlook. An analysis of real-time data and InvestingPro Tips provides further context to the company’s performance and prospects.
InvestingPro Data highlights a market capitalization of $36.17 million, suggesting that while CareCloud is a smaller player in the healthcare technology sector, it has a significant presence. Despite a negative P/E ratio over the last twelve months, the company’s aggressive share buyback program, as indicated by an InvestingPro Tip, underlines management’s confidence in CareCloud’s value proposition and future growth.
The company’s revenue for the last twelve months stands at $113.02 million, with a gross profit margin of nearly 40%. This robust margin showcases the company’s ability to manage costs effectively, aligning with the cost reduction strategies mentioned in the article.
InvestingPro Tips reveal that analysts are optimistic about CareCloud’s future, expecting net income to grow this year. This aligns with the company’s positive cash flow and GAAP net income reported for Q2 2024. Additionally, CareCloud is trading at a low revenue valuation multiple, which could signal a buying opportunity for investors seeking entry into the healthcare tech space.
For investors interested in exploring these dynamics further, InvestingPro offers additional insights on CareCloud. There are currently 7 more InvestingPro Tips available, providing a deeper dive into the company’s financial health and market position.
InvestingPro’s Fair Value estimate of $2.81, coupled with an analyst target of $4.5, suggests potential upside for the stock, reflecting the positive sentiment around CareCloud’s strategic initiatives and product offerings. With the launch of CareCloud CirrusAI notes and a focus on expanding wallet share, the company is poised for potential growth, resonating with the bullish highlights of the article.
Full transcript – CareCloud Inc (CCLD) Q2 2024:
Operator: Ladies and gentlemen, welcome to the CareCloud Second Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to Kristyn [ph]. Thank you. You may begin.
Unidentified Company Representative: Good morning, everyone. Welcome to CareCloud’s second quarter 2024 conference call. On today’s call are Mahmud Haq, our Founder and Executive Chairman; Hadi Chaudhry, our Chief Executive Officer and Director; Stephen Snyder, our President; and Norman Roth, our Interim Chief Financial Officer and 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 acquisitions. Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, 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 would 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.
For more detailed information on our performance and factors affecting our results, please refer to our press release and reports filed with the Securities and Exchange Commission. If you joined the call via telephone, you can download our second quarter 2024 earnings presentation on our Investor Relations site, ir.carecloud.com, under News and Events, IR calendar, second quarter 2024 results conference call. Additionally, during today’s call, we may mention non-GAAP financial measures, which can be reconciled to GAAP results in our press release.
Now, turning to our CEO Hadi Chaudhry, who will discuss our progress towards improved profitability, debt repayment, and the successful deployment of CareCloud CirrusAI notes. This innovative AI product has received positive feedback from pilot users, leading to revenue recognition in quarter three of 2024. We anticipate significant growth as more practices adopt this time-saving and efficient solution. Furthermore, our revenue growth remains strong, fueled by our diversified client base and successful upsell and cross-sell initiatives. Our CareCloud Wellness program has seen impressive revenue growth, exceeding $1 million in recognized revenue for the first time in a quarter. We are committed to expanding this revenue stream and driving long-term value for our stakeholders.
Overall, we are focused on advancing healthcare technology through innovative solutions like CareCloud CirrusAI notes and driving revenue growth through strategic client relationships and product offerings. This year marks a significant milestone for us as we strengthen our financial position and lay a solid foundation for the future. Thank you for joining our second quarter 2024 earnings call. Our primary focus remains on growing our positive free cash flow, which is essential for covering operating expenses, paying down our credit line, and eventually resuming preferred dividends. We have already made significant progress towards these goals and are committed to maintaining this positive trajectory. Looking ahead to 2025, our focus will shift towards driving growth by delivering consistent year-over-year revenue increases and enhancing profitability. We are confident that this growth will be fueled by various channels, including new sales, cross-sell and upsell opportunities, the innovation of our AI solutions, and the expansion of our CareCloud Wellness program. Additionally, we plan to leverage our strategic partnerships and high-quality healthcare data set to support industry players. We will provide more details on our growth strategy during our next earnings call. Our direct operating costs have continued to decrease, with a nearly $2.2 million decrease from Q2 2023. Operating expenses, including G&A, R&D, and sales and marketing expenses, have also decreased by $2.9 million. On an annual run rate basis, these operating expenses have decreased by over $20 million since Q1 2023. In the second quarter, we reported positive GAAP operating income of $2.3 million and GAAP net income of $1.7 million, the highest amount since Q2 2022. This is a significant improvement from the GAAP operating loss of $1.3 million and GAAP net loss of $1.8 million in Q2 2023. Our GAAP net loss per share was $0.14, taking into account preferred stock dividends earned regardless of whether they were declared or paid during the quarter.
Non-GAAP adjusted net income for the second quarter of 2024 was $3 million, or $0.18 per share. Adjusted EBITDA for the second quarter was $6.4 million, the highest since Q2 2022. Revenue for the first six months of 2024 was $54.1 million, compared to $59.4 million in the same period in 2023, with a $5.3 million decline partially attributed to medSR. The company’s GAAP net income for the first six months of 2024 was $1.4 million, compared to a GAAP net loss of $2.2 million in 2023.
As of June 30, 2024, the company had approximately $2.6 million in cash, with $674,000 in net working capital and $5 million drawn on our line of credit. The company is considering reducing the total size of the line of credit from $25 million to $10 million.
Overall, the second quarter results have put us in a strong position for the year ahead, and we look forward to continued success. Thank you to our employees, customers, and shareholders for their support. They are either acting as resellers for us or, for example, for our CareCloud Force. There are multiple partners leveraging our employees, showing interest in expansion through various marketing campaigns. We plan to invest more in outreach to find additional partners.
In terms of the pipeline value, we are focusing more on recognized revenue generated from bookings. Currently, the pipeline is over 16 million, with room for growth through cross-sell and upsell opportunities within existing client base. Year-to-date bookings have doubled from cross-sell and upsell compared to last year, with recognized revenue expected to be 50% higher.
CirrusAI has been rolled out to a couple hundred existing users, with a dozen signed up for the 30-day trial. The next product in development merges CirrusAI Guide and CirrusAI Notes to provide both recommended procedures and diagnoses based on patient-doctor conversations.
Regarding M&A, our growth strategy for 2025 is primarily focused on organic growth through expanding existing customer wallet share and partnerships. We have 25 partnerships with medical billing companies and see potential to partner with more billing companies to sell our software and offer force augmentation. We are exploring quasi-acquisitions within these partnerships to revolutionize their business models without traditional stock purchases. As the year progresses, we are fully committed to increasing our free cash flow and focusing our growth efforts on opportunities that allow us to expand cash flow. We are optimistic about the potential for growth in the second half of the year, particularly in the medSR market where we are working to expand relationships with other stakeholders. Our remote patient monitoring and wellness services are also showing positive growth, with improvements in patient engagement and adoption. As for CareCloud CirrusAI, we have been refining our results and leveraging AI technology to expand our customer base, particularly within our existing client network. We believe there is a significant opportunity for growth in the AI market, and we are well-positioned to capitalize on it. In addition to enhancing existing workflows, implementing AI can significantly save time for users. For example, using ChatGPT can reduce the time taken to write an email from 2 minutes to just 5 seconds. While this may not directly drive revenue, the improved workflow efficiency can ultimately boost a client’s overall revenue, particularly for those charged based on collection fees. Unlike competitors offering standalone AI solutions, our AI technology seamlessly integrates into existing platforms, such as EHR systems, enhancing services like transcription. This integration sets us apart in the market, as clients can easily incorporate our solutions into their current workflows without the need for separate systems. Thank you for joining our conference today, and have a great day.