Q4 2024 Earnings Summary
- CareCloud expects to achieve positive earnings per share (EPS) between $0.10 and $0.13 for 2025, marking the first anticipated positive EPS since going public in 2014, reflecting the strength of their business transformation and operational discipline.
- The company anticipates revenue growth in the range of $111 million to $114 million for 2025 after a few years of revenue decline, signaling a return to growth driven by upselling existing clients, new opportunities from specialty-specific EHR products, and AI-driven solutions.
- CareCloud has re-entered the acquisitions market, planning to strategically pursue high-value acquisitions that align with its long-term vision, which could be a key driver of growth in the second half of 2025.
- The company's revenue guidance for 2025 is $111 million to $114 million, reflecting only modest growth after several years of revenue decline, indicating potential challenges in achieving significant organic growth.
- Future growth depends heavily on acquisitions, but the company acknowledges that any material acquisitions may not occur until late in the year and may contribute minimally to 2025 revenue. Additionally, high seller valuation expectations may hinder acquisition activity.
- The conversion of Series A preferred shares into common stock resulted in the issuance of approximately 26 million new common shares, significantly diluting existing common shareholders and potentially impacting shareholder value.
| Metric | YoY Change | Reason |
|---|---|---|
Total Net Revenue | ~0.6% Decline (from $28,416K to $28,239K) | A very slight decline in total net revenue reflects a near-stable overall business, likely amid minor pricing or volume adjustments; previous period performance sets a high baseline with virtually unchanged revenue. |
Operating Income | Swing from a loss of $45,145K to a profit of $3,456K | A dramatic turnaround driven by tightened cost management and improved operational efficiency, juxtaposed with the severe losses in the prior year that were partly due to adverse non-recurring expense items. |
Net Income | Improved from a loss of $43,692K to $3,296K | A robust recovery mirroring the operating income turnaround, reflecting both reduced operating losses and effective expense management compared to the previous period’s significant net loss. |
Loss on Lease Terminations, Unoccupied Lease Charges & Restructuring Costs | Increased sharply from $675K to $91,675K | A substantial surge primarily attributable to one-off restructuring costs in Q4 2024, contrasting with minimal charges in Q4 2023, indicating aggressive operational optimization measures in the current period. |
Healthcare IT Revenue | ~1.4% Decline (from $25.16M to $24.81M) | A modest contraction likely reflects market consolidation or cost and operational adjustments, maintaining a relatively stable revenue base though slightly lower than the previous period. |
Professional Services Revenue | ~16.7% Decline (from $5.27M to $4.39M) | A significant drop suggests challenges such as the loss or transition of major accounts, with the current period impacted by customer shifts compared to stronger performance in Q4 2023. |
Group Purchasing Services Revenue | Fell from $0.3M to -$0.07M | A notable reversal in this segment points to possible reclassification or adverse adjustments, contrasting with the positive albeit small revenue in Q4 2023. |
Operating Cash Flow | Increased from $3,740K to $5,229K | Improved liquidity results from enhanced operational performance and better working capital management, reflecting the company’s successful shift towards higher cash generation compared to the previous year. |
Cash Used in Financing Activities | Contracted sharply from $4,879K to $578K | A marked reduction due to lower financing outflows, including reduced reliance on debt and a switch from dividend payments to more effective capital management, a stark contrast to the high outflows in Q4 2023. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2024 | $109 million to $111 million | no current guidance | no current guidance |
Adjusted EBITDA | FY 2024 | $23 million to $25 million | no current guidance | no current guidance |
Revenue | FY 2025 | no prior guidance | $111 million to $114 million | no prior guidance |
Adjusted EBITDA | FY 2025 | no prior guidance | $26 million to $28 million | no prior guidance |
EPS | FY 2025 | no prior guidance | $0.10 to $0.13 | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | FY 2024 | $109 million to $111 million | $110.84 million (sum of Q1–Q4 2024: 25.962M+ 28.090M+ 28.546M+ 28.239M) | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Positive EPS Turnaround Projection | Not mentioned in Q1, Q2, or Q3 (only hints of improving profitability and free cash flow were noted ) | Q4 2024 introduced a specific projection for positive EPS in 2025 for the first time, with expected EPS between $0.10 and $0.13 | Newly introduced as a major positive indicator, signaling a strong future outlook |
Revenue Growth Initiatives and Organic Growth Uncertainty | Consistently discussed in Q1 ( ), Q2 ( ) and Q3 ( ) with emphasis on upselling, AI integration and challenges of organic growth | **Q4 2024 details defined revenue targets (e.g. $111–$114 million for 2025) and highlights multiple growth drivers such as upselling RCM, specialty EHR launches, AI solutions, and acquisitions ** | Continues as a core focus with more specific targets and renewed optimism despite acknowledged organic growth challenges |
Acquisition Strategy and Market Reentry | Q2 discussed “quasi‐acquisitions” and efforts to reenter certain markets ( ); Q3 and Q1 largely omitted detailed commentary | **Q4 2024 explicitly announced a small acquisition marking the reentry into the acquisition market, reinforcing strategic intent to partner with smaller players ** | A renewed focus on acquisitions signals a positive reorientation towards inorganic growth, after a period of relative quiet |
AI Product Innovation, Adoption, and Monetization Challenges | Addressed in Q1 ( ), Q2 ( ), and Q3 ( , , ) with emphasis on early pilot phases, trial conversions, and modest revenues | **Q4 2024 continues to emphasize innovations like CirrusAI Notes and expanded features, while affirming that adoption remains in early stages and monetization is still emerging ** | A steady strategic focus with ongoing advancements yet cautious sentiment regarding full revenue realization |
Cost Reduction and Operational Efficiency | Repeated focus in Q1 ( , , ), Q2 ( , , ) and Q3 ( , , , ) with progressively improving free cash flow and expense reductions | Q4 2024 reports record profitability, significant free cash flow increases, full repayment of credit lines, and impressive cost-cutting measures ( , , ) | Clear improvement over time, with increasingly positive sentiment as operational efficiency and cost reductions strengthen the balance sheet |
Med SR Division Performance Challenges | Noted in Q1 ( , ), Q2 ( , ) and prominently in Q3 with Epic-related issues causing revenue declines ( , ) | **Q4 2024 mentions only a modest decline (approximately $400K), suggesting that while challenges persist, the focus has shifted away from major disruptions ** | A long‐standing concern that remains an area of vulnerability, albeit less dramatically emphasized in Q4 |
Capital Structure, Dividend Policy, and Share Dilution | Q1 discussions highlighted reviews by Citizens JMP and disparities between Series A and B ( , , ); Q2 and Q3 focused on credit line reductions, upcoming dividend resumptions, and measures to curb dilution ( , , , , ) | Q4 2024 details the conversion of Series A preferred shares into common stock, elimination of dividend obligations, and improved liquidity and cash savings ( , , ) | Progressively strengthened capital structure with clear steps reducing debt and improving shareholder value |
Partnership Expansion and Client Base Leverage | Q1 emphasized rolling out AI and digital health to the existing client base ( , , ); Q2 showcased 25 partner relationships and robust upsell opportunities ( , , , ); Q3 reinforced strategic reseller partnerships ( ) | Q4 2024 underlines the integrated platform approach and the opportunity to upsell digital health solutions like RPM/CCM across a diverse, nationwide client base ( ) | Consistently leveraged as a growth driver with refinements in strategy and continued focus on upselling to existing clients |
Remote Patient Monitoring (RPM) and Chronic Care Management Initiatives | Q1 mentioned digital health growth ( ); Q2 highlighted the Wellness program’s 154% revenue increase and enhanced patient engagement ( , ); Q3 introduced an in-house RPM solution with initial revenues noted ( ) | Q4 2024 reiterates the strategy to upsell RPM and CCM to its current customers as part of a broader digital health offering ( ) | Persistent and evolving focus with a transition from third-party reliance to in-house solutions, underscoring its importance in the digital strategy |
Competitive Landscape in AI Solutions | Q1 and Q2 participants discussed a highly competitive market space with differentiation through integration and performance ( , , ); Q3 emphasized differentiation through integrated clinical and back-end solutions ( , ) | Q4 2024 does not specifically address competitive dynamics in the AI space | Topic has receded from focus in Q4, possibly due to a shift from external competition concerns to internal product maturation and adoption |
Digital Health Revenue and Technology-Enabled Solutions | Q1 reported nearly 4x year-over-year growth ( , , ); Q2 emphasized strong revenue growth from the Wellness program and emerging AI products ( , , , , ); Q3 maintained relatively flat recurring revenue with strategic adjustments ( , ) | Q4 2024 shows recurring technology-enabled revenues remaining flat at around $24.8 million while stressing opportunities to upsell RPM/CCM, indicating a matured phase in digital health offerings ( , ) | A sustained focus but maturity is reflected in plateauing revenue figures, with strategic emphasis shifting towards integration and cross-selling within the client base |
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Preferred Stock Conversion
Q: Explain the preferred stock conversion and its impact?
A: The company converted 3.5 million Series A preferred shares into 26 million common shares at $25 per share, eliminating about $100 million in fixed obligations and annual dividends of $10 million. This simplifies the capital structure, improves liquidity, and aligns shareholder interests. The remaining 1 million preferred shares will continue receiving dividends and may be redeemed or converted in the future. -
Revenue Guidance and Growth Drivers
Q: How are you approaching revenue growth this year?
A: The company expects 2025 revenue between $111 million and $114 million, marking an increase after previous declines. Growth will come from upselling existing clients, acquiring new clients, expanding services like RCM and digital health, and potential small acquisitions. The focus is on returning to growth while managing costs responsibly. -
M&A Pipeline and Valuations
Q: What's the outlook for M&A activity and valuations?
A: The company has re-entered the acquisition market, targeting smaller and mid-sized medical billing companies. Valuations are returning to pre-COVID levels with more rational pricing from sellers. Acquisitions are expected to be a key driver of growth, especially in the second half of the year. -
2025 Guidance and M&A Impact
Q: Does guidance factor in M&A, and what's the customer outlook?
A: The 2025 revenue guidance does not include any material acquisitions, assuming organic growth and small tuck-in deals. Acquisitions are expected to play a key role later in the year, but immediate revenue impact is minimal in the guidance. Customer growth involves replacing natural attrition and adding new clients. -
Preferred Dividends Outlook
Q: What's the expected preferred dividend payment this quarter and beyond?
A: The company anticipates paying approximately $5.5 million annually in preferred dividends going forward. For March, payments are about $500,000 per month, decreasing to $450,000 monthly once accumulated dividends are addressed. Accumulated dividends on remaining preferred shares will be resolved over time, possibly upon redemption. -
User Base Expansion
Q: How is your user base expanding and evolving?
A: The user base is diversified across specialties, with about one-third in primary care and the rest in various specialties. Clients are spread across the U.S., with concentrations in New Jersey, New York, California, Florida, and the West. The company aims to upsell existing clients with solutions like digital health and AI, and convert EHR-only users to integrated systems.