Q3 2024 CareCloud Inc Earnings Call
Greetings and welcome to the Coeur Com, Inc. Third quarter 'twenty 'twenty four results conference call.
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Speaker Change: It is now my pleasure to introduce your host Andrea Aloha travel ticket. Thank.
Speaker Change: Thank you you may begin.
Speaker Change: Good morning, everyone welcome to Coeur called third quarter 'twenty 'twenty four conference call on today's call are Mahmud Haq, our founder and executive Chairman Hearty Shout drew <unk>, our Chief Executive Officer, and a director.
Speaker Change: Snyder, our president Crystal Williams, our Chief operating officer, and Norman Raw, our interim Chief Financial Officer, and corporate controller.
Speaker Change: 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 27, a of the Securities Act of 1933 as amended and section 21 E of.
Speaker Change: Of the Securities Exchange Act of 1934 as amended.
Speaker Change: All statements other than statements of historical fact made during this conference are forward looking statements.
Speaker Change: Loading without limitation statements regarding our expectations and guidance for future financial and operational performance expected growth business outlook and potential organic growth and acquisition.
Speaker Change: Forward looking statements may sometimes be identified with words, such as will may.
Speaker Change: He expects 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.
Speaker Change: Many of which are beyond our control.
Speaker Change: Which could cause actual results to differ materially from those contemplated in these forward looking statements. These statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise these forward looking statements in light of new information or future events.
Speaker Change: Please refer to our press release and our 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 these forward looking statements.
Speaker Change: For anyone who dialed into the call by telephone you may want to download our third quarter 'twenty 'twenty four earnings presentation. Please.
Speaker Change: Visit our Investor Relations site.
Speaker Change: I R Dot care cloud dotcom.
On news and events.
Quick I, our calendar click on third quarter 'twenty 'twenty poor result conference call and download the earnings presentation.
Speaker Change: Finally on today's call, we may refer to certain non-GAAP financial measures.
Speaker Change: Please refer to today's press release announcing our third quarter 'twenty 'twenty poor results for a reconciliation of these non-GAAP performance measures to our GAAP financial results.
Speaker Change: With that said I'll now turn the call over to our C O hearty shout very Hardy.
Speaker Change: Thank you Andrew and good morning, everyone. Thank.
Speaker Change: Thank you for joining us today for care cloud third quarter 2024 earnings call.
I'm pleased to start with two key updates.
Speaker Change: We have fully paid down over $10 million decline, demonstrating noble's commitment to strong financial management and a solid balance sheet.
Speaker Change: Second we are on track to resume monthly dividend payments on a a series a and series B preferred shares starting in March 2025, demonstrating their confidence in carrier cloud profitability and I would commit to generating strong free cash flow to deliver value to our shareholders.
Speaker Change: In terms of over our Q2 financials.
Speaker Change: We generated $6 $8 million and adjusted EBITDA of 111% increase over last year and achieved $10.3 million and year to date free cash flow of 328% improvement over 2023.
Speaker Change: Revenue for Q3 was $28 $5 million slightly down from $29 $3 million in Q3 2023 due to fluctuations in nonrecurring revenue from mobile Native Heart Division.
Speaker Change: But these accomplishment in 2024, we have met our key financial goals setting a strong foundation for 2025.
Speaker Change: This quarter, we remain laser focused on advancing care cloud service.
Speaker Change: Our flagship solution that streamlines administrative tasks and clinical documentation, enabling providers to prioritize patient care.
Speaker Change: Tennessee is integrated technology reduces non clinical workload, allowing doctors to spend more time with patients and see more of 10 pardon me.
Speaker Change: We have enhanced Chinas E. I noticed two generate fully structured patient charts that integrate directly into the EHR, capturing natural patient provider conversations to improved documentation quality and reduce administrative burdens.
Speaker Change: Now the solution also provides diagnostic and procedural support automating documentation, while suggesting they live in diagnosis and procedures.
Speaker Change: Adaptable to radius health care settings, and supporting multiple languages J cloud service.
Speaker Change: A powerful tool for boosting clinical efficiency and enhancing patient outcomes.
Speaker Change: A key differentiator of tiered cloud Sheerness AI is it seamless integration with the number of EHR systems.
Speaker Change: <unk> users to work within a single platform without the need to toggle between different systems or manually input data.
Speaker Change: Deep integration streamlined workflows and enhances user efficiency.
Speaker Change: Additionally, citizens can function as an overly making it compatible with Vegas health care in Wyoming and systems with other vendors, allowing for flexible implementation across diverse settings.
Sue Kerr: Sue Kerr cloud citizens.
Sue Kerr: Hedging over the entire product suite, including EHR practice management and billing systems with advanced AI functionality.
Sue Kerr: Recently, we launched an AI module that summarizes clinical documentation, helping providers, we view patient histories quickly and totally.
Sue Kerr: <unk> also introduced a clean notes summarization feature that streamlines workflows are RCM staff significantly reducing the time spent on lengthy claim details.
Speaker Change: Oh the logs show. These two features save approximately 70% of use this time compared to conventional methods.
Speaker Change: These tools that now are neighbors for over 100 off over providers.
Speaker Change: Our billing teams benefit from AI powered denial management tools that significantly enhanced accuracy and efficiency identifying denied claims and automating resubmission assist.
Speaker Change: Our system not only flags denied claims but also provide specific reasons for each denial guiding users on targeted areas to review it.
Speaker Change: We recommend solutions such as verifying the use of specific modifiers and weird applicable automatically resubmission of the claim.
Speaker Change: For example, if a claim is denied two missing documentation the AI era.
Speaker Change: Trees and upload the necessary filings to the appropriate portal.
Speaker Change: This advanced automation minimizes manual effort accelerates resolution times and ensures greater accuracy and denial management similar.
Speaker Change: Similarly, although AI generated appeals are saving over 75% of mangled appeal generation time.
Speaker Change: Our AI solutions use a hybrid pricing model based on value we deliver for.
Speaker Change: The features that improve efficiency and accuracy directly boosting client revenue, we do not charge separately as many of them in the freezer contingency based aligning over successful clients.
Speaker Change: Our standalone products like K cloud Chelsea I note, we apply specific charges.
Speaker Change: Revenue from this product is still modest it shows promising growth potential for the future.
Speaker Change: Although unique ability to connect clinical and financial data sets us apart in the industry over the past two decades, we have built a robust data asset.
Speaker Change: Integrates comprehensive insurance claims data, but the rich clinical information.
Speaker Change: Labeling us to deliver highly accurate AI driven solutions that support better decision, making for providers and also life Sciences partners valuable insights into diverse patient populations.
Speaker Change: This reflects our commitment to using technology for better health outcomes accessibility and sustainable value.
Speaker Change: These are just a few examples of other AI products and the value they bring to care club, we have many more AI driven solutions in active development with chevron already in various stages of rollout.
Speaker Change: Looking ahead.
Speaker Change: Our main goal for next year is to generate enough free cash flow to cover dividends, while continuing to grow profitably. We believe our success should be measured by ever ability to operate profitably and remain cash flow positive.
Speaker Change: End to end solutions skilled global workforce and strong record of innovation, including generative AI, we are well positioned for sustainable growth delivering value to our clients and shareholders as we advanced care clouds mission into 2025 and beyond.
Speaker Change: I will now turn the call over to our President Steve Snyder Steve.
Steve Snyder: Good morning, everyone. Thank you for joining us today on <unk> third quarter 2024 earnings call.
Steve Snyder: Today, I'll be covering three key topics, including our successful focus on free cash flow during 2024, yeah.
Steve Snyder: The outcomes and significance of our recent series a preferred shareholder proposal and finally the task that lies ahead for growth.
Steve Snyder: Let's turn first to free cash flow.
Steve Snyder: Line with the objectives, we discussed during the last quarterly earnings call expense reduction and the generation of free cash flow remain our primary goals for 2024.
Steve Snyder: Our strategy remains clear.
Steve Snyder: By enhancing efficiency and maintaining financial discipline, we are positioning care club for long term value creation.
Steve Snyder: And enabling us to resume dividends on our shares of preferred stock on March 15th 2025.
Speaker Change: Truly exciting milestone.
Speaker Change: As we discussed in our last earnings call. We are achieving these increased efficiencies in three primary ways, which are each having a direct positive impact on our generation of free cash flow.
Speaker Change: First we have been using our proprietary technology, including our AI, which has empowered us to reduce costs, while accomplishing day to day tasks in a more systematic efficient and reliable manner.
Speaker Change: Second we have continued to reduce our reliance on third party contractors, leveraging our lower cost in house team of subject matter experts instead.
Speaker Change: This approach increases our operational control and reduces the risk that comes with relying upon third parties to handle critical business functions.
Speaker Change: And third we continue to embrace the core strength of our global business model, leveraging our most effective and cost efficient resource for each discrete process, thereby enabling us to both increase our overall bandwidth.
Simultaneously, reducing the associated costs.
Speaker Change: During 2024, we have made meaningful progress, increasing our free cash flow and expanding our margins.
Speaker Change: This progress has enabled us to fully pay off the $10 million balance on our credit facility and further strengthen our balance sheet, while building cash reserves through.
Speaker Change: Through the end of Q3, we generated a remarkable $10.3 million in free cash flow representing growth of almost 330% compared to the same period in 2023.
Speaker Change: This level of free cash flow generation represents an all time high for our company.
Our refreshed expense structure will enable us to continue to produce cash and further expand margins as we scale.
Speaker Change: This gives us great confidence that we are in a solid position to resume dividend payments accomplishing our key objectives for 2024.
Now, let's turn to the recent series a preferred shareholder proposal.
Speaker Change: This proposal was designed to provide protection to series a preferred shareholders.
Speaker Change: Why is the dividend rate and incorporate more flexibility with an exchange feature.
Speaker Change: Our special proxy vote was held on September 11, 2024, and I'm pleased to report that 89% of the shares that were affirmatively vote at all.
Speaker Change: The proposal cast their votes in favor of the changes.
Speaker Change: The proposal has passed with extremely strong support which reflects the widespread investor confidence and the soundness of these changes.
Speaker Change: These approved changes are pivotal for a few reasons.
Speaker Change: First they protect series a shareholders and a change of control event, giving them the right to have their shares liquidated at $25 per share India event of a change of control.
Speaker Change: This avoids the possibility that a future require to purchase care cloud and Nevertheless, we have shares of series a preferred stock outstanding.
Speaker Change: In essence this change creates parity between the rights of series, a and series B shareholders in the event of a change of control.
Speaker Change: Second these changes equalize the dividend treatment between series, a and series B shareholders $8, 75%.
Speaker Change: This change translates to an annual reduction of approximately $2 5 million in our annual dividend obligation, thereby strengthening our cash flow and freeing up capital for reinvestment.
Speaker Change: Third the new exchange feature is a strategic win for the company and for all classes of shareholders under.
Speaker Change: Under the exchange feature the company may at an appropriate point in time.
Speaker Change: <unk> shares of series a preferred stock for common stock.
Speaker Change: The 25 dollar redemption price for each share of preferred stock.
Speaker Change: This exchange feature empowers the company and by extension all of our shareholders.
Speaker Change: To avoid traditional offering expenses and discounts associated with the secondary issuance of common stock, which often times averaged 30% or more of the capital raised.
Speaker Change: Turning to growth in the past the head as we previously emphasized refreshing our operational cost structure and substantially growing our free cash flow has been and continues to be our core focus in 2024.
However, as we progress through 2025, our focus will expand to include strengthening our recurring revenue base and ultimately pivoting to annualized net growth as.
Speaker Change: As we do this we will pursue a disciplined approach and ensure that new growth opportunities allow us to grow our free cash flow.
Speaker Change: This growth will come from a variety of sources.
Speaker Change: First we'll continue to heavily lean into AI in 2025.
Speaker Change: The transformational part of our larger growth strategy.
Speaker Change: In particular, Curt called Cirrus, a high it makes our integrated solutions from the EHR to the practice management system and related tools or more attractive and powerful.
Speaker Change: And it provides a significant differentiator in the market, giving us a clear competitive advantage in our space.
Speaker Change: Second we see significant opportunity around the wrap up of our new in house remote patient monitoring solution.
Speaker Change: <unk> Leverages, our core technology strengths to generate high margin revenue.
Speaker Change: This focus on RPM is part of our larger wallet share expansion initiatives and includes Upsells to other care cloud solutions, including our full RCM and CCM solutions.
Speaker Change: Third we will focus on strategic partnerships and reseller relationships with revenue cycle management companies and other complementary vendors.
Speaker Change: Finally, we will explore further expanding our force offering in which we provide our customers with specialized human capital and related AI powered tools to support their operations.
Speaker Change: To sum it up.
Speaker Change: We are achieving strong progress on the financial and operational goals outlined at the beginning of this year.
Speaker Change: Free cash flow improvements to shareholder protections in strategic growth initiatives, we are firmly positioned for a transformative 2025.
With that said, let me introduce you to our new Chief operating Officer Crystal Williams Crystal.
Crystal Williams: Thank you, Steve and good morning, everyone as Chief operating Officer. My primary focus is on maximizing client satisfaction.
Crystal Williams: Our objective is clear we do not want to lose a single client due to performance issues or dissatisfaction.
Crystal Williams: While our metrics are already best in class, we know that maintaining our competitive edge require continuous improvement.
Crystal Williams: In today's fast evolving landscape, achieving nickel is impossible without leveraging advanced technology.
Crystal Williams: And AI is central to our approach.
Speaker Change: As Harley mentioned, we have developed and deployed a range of AI powered tools to support these objectives.
Speaker Change: I'm focused on ensuring that our AI driven solution such as denial management and appeal generation are effectively implemented and fully utilized to maximize their impact.
Speaker Change: These AI tools are critical for enhancing performance across the board.
Speaker Change: For example, our AI driven quality monitoring system in the contact center.
Speaker Change: Laos us to perform QA and customer and patient support calls.
Speaker Change: This technology provides detailed scoring and sentiment analysis for every interaction.
Speaker Change: Enabling us to take proactive measure and deliver a more personalized and responsive support experience.
Speaker Change: Achieving result, much faster and more effectively than would be possible.
Speaker Change: With AI at the core of our operation, we're committed to driving unmatched efficiency and setting a new standard for client satisfaction.
Speaker Change: Now I will turn the call over to our CFO normal norm.
Crystal Williams: Thanks Crystal.
Norm: Thanks to everyone for joining our call today.
Norm: You just heard we had a great quarter and are proceeding nicely with accomplishing the goals, we laid out for ourselves this year.
Norm: In particular, we are now generating record levels of free cash flow and will resume paying dividends on our preferred shares on March 15th 2025.
Further we have fully paid off our Silicon Valley Bank line of credit with internally generated profits and cash flows we generated $10 $3 million of free cash flow during the last nine months and used $10 million to repay our line of credit.
Norm: Since we are not relying on our line of credit and we do not plan on using the line in the near future. We have negotiated with S. P. B to reduce the total capacity on the line to $10 million.
Norm: Thereby lowering our cost and alleviating the need to spend management time satisfying bank covenants.
Norm: While still providing us with some rainy day money.
Norm: The key to growing our free cash flow has been reducing expenses and growing our GAAP net income.
Norm: Third quarter 2024, GAAP net income was $3 $1 million as compared to a net loss of $2.7 million in the same period last year.
Norm: GAAP net loss was four cents per share.
Norm: Just on the net loss attributable to common shareholders, which takes into account the preferred stock dividends earned whether or not they were declared or paid during the quarter.
Norm: This is our second consecutive quarter returning to positive GAAP net income and our largest quarterly net income since Q4 2021.
Norm: Revenue for the third quarter, 2024 was $28 $5 million compared to $29 $3 million for the third quarter of 2023.
<unk> technology enabled business solution revenues during third quarter, 2024, with $24 $2 million essentially flat with third quarter 2023, and up approximately $200000 from second quarter 2024, well nonrecurring professional services revenues for Medisoft decline.
From $5 million to $4 3 million.
Norm: Adjusted EBITDA for the third quarter 2024, it was $6 $8 million or 24% of revenue compared to $3.2 million in the same period last year.
Norm: This was an increase of 111% year over year. It was the highest quarterly adjusted EBITDA, we reported in two years.
On a year to date basis. The story is similar with our emphasis on improving profitability revenue for the first nine months of 2024 was $82.6 million.
Norm: Appeared to $88 $6 million in the first nine months of 2023.
But our GAAP operating income was $5 $7 million compared to an operating loss of $3 $5 million in the same period last year.
Norm: Our GAAP net income was $4 $6 million compared to a GAAP net loss of $5 million in the first nine months of 2023.
Norm: Adjusted net income was $6 $6 million or 41 cents per share calculated using the end of period common shares outstanding.
Norm: Year to date, adjusted EBITDA was $16 $9 million, an increase of 50% or $5 $6 million from $11 $3 million in the same period last year.
Norm: During the nine months ended September 32024, we generated $15.4 million of cash from operations.
Norm: $10 $3 million of free cash flow.
Norm: Free cash flow amount of $10 $3 million increased by 328 per cent.
Norm: Compared to $2.4 million in the same period last year.
Norm: As of September 32024, the company had approximately $2 $8 million of cash.
Norm: Net working capital was $732000.
Norm: Now that we've repaid our bank debt free cash flow during the fourth quarter.
Norm: To increase our cash balance and build some cushion in our net working capital.
Norm: I'm pleased to update our forward looking guidance for the full year, we are updating our adjusted EBITDA guidance to $23 million to $25 million for full year 'twenty 'twenty, four which is an increase from the guidance. We originally provided at the start of this year, reflecting our emphasis on improving profitability and cash flow.
Norm: Throughout the year.
We are reaffirming analyst expectations for our revenue guidance of $109 million to $111 million.
Norm: Revenue guidance is based on our expectations of revenues from existing clients.
Norm: Our financial position has improved tremendously during the first nine months of 2024.
Norm: We are happy to have returned to profitability fully repaid our bank debt, we will resume our dividends in March.
Norm: Forward to reporting strong results for the full year in a few months. Our team has really worked well together to achieve this turnaround and with that I'll now turn the call over to Mahmud for his closing remarks Mahmood.
Mahmud Haq: Thank you know.
Mahmud Haq: Third quarter accomplishments, including substantial improvement in profitability the full repayment of our credit line and setting us up to resume dividends by March 25.
Mahmud Haq: Demonstrating the strength of our strategy and resilience of our team.
Mahmud Haq: I want to extend a heartfelt thank you to our employees shareholders investors and clients for their continued trust and support.
Mahmud Haq: As we look to the future we remain committed to sustainable growth continuous innovation.
Mahmud Haq: Setting new standards in health care technology.
Mahmud Haq: Thank you for being part of this journey with us.
Mahmud Haq: Peter Please open the floor for questions.
Thank you we will now be conducting a question and answer session.
Mahmud Haq: If you would like to ask a question. Please press Star then one on your telephone keypad.
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Speaker Change: The first question, we have is from Jeff Cohen of Ladenburg Thalmann. Please go ahead.
Speaker Change: Good morning. This is destiny on for Jeff. Thank you for taking our questions in your prepared remarks, I heard you mention life science partnerships and I'm not sure that I had heard that before in any of the other conference calls. So I'm wondering if you can give any more color or insight on.
What types of companies.
Speaker Change: And whatever else, you're able to give us at the moment.
Speaker Change: Hi, Good morning, Destiny and thank you for your question.
Speaker Change: We did a recent thread leads delivered partnership at an initial partnership as an example, with Docker right and so it's a medic medicine adherence we'd look at any patient specific the existing medications.
Speaker Change: The different demographic information and the previous symptoms and based on that it could be recommended suggest to those to those companies the different two dockery and they push a specific add to the to that specific provider to these would be the different medicines that can be provided then at the same time.
Speaker Change: The message gets pushed to do it.
The telephone observation that there are any applicable as an example, any coupons available for those specific medicine and then also confirmation when it's ready to be picked up and then the medicine.
Speaker Change: But that's just the 1101 of those relationships that you have entered into.
Speaker Change: But the whole idea behind this is.
Speaker Change: If you look at over the entirety of the data as it all for 20 plus years, whether it's clinical visit it's medicine related financial related a lot of this information can be used and it can be very effectively use it to help with these life Sciences partners that relates to.
Speaker Change: Giving them to specific guidance in terms of the different medicines available or for them to do the risk assessment and the research on their site so Bob.
Speaker Change: Even though right now the revenue has not been separately identified other than the top line item.
Speaker Change: But we anticipate we expect that this that we need to start contributing towards our revenue goals for the next year.
Speaker Change: Okay. So this is your current.
Speaker Change: Partnership.
Speaker Change: Is putting different kinds of medicines in front of patients through an AD. If I understood correctly. Now you also said it could be used for life science companies to kind of Derisk us.
Speaker Change: That that nature or things of that nature are you also able to or interested in kind of helping these companies determine what patient groups are best for trials or are you going to stay a little a little further down the hall clinical and regulatory area. That's when these companies.
Speaker Change: And just think this is going to be any and all of these possibilities of redeem is working with all variety of at the moment the different possible opportunities.
Speaker Change: We will keep everyone up to date as we move forward, but I think that the real value from where this whole thing gets stemming from whether it's for AI or whether it's for the life Science supporting the life Sciences company is that we are trying to monetize their trying to use the value of the data that we have for the last 20 plus years it started with financial discipline.
Speaker Change: Then there is an extensive.
Speaker Change: The data from the clinical perspective, a whole different demographic and almost every single state of the U S. It's a large data set that can be utilized and help these companies.
Speaker Change: Yeah.
Speaker Change: The next question we have is from Allen Klee of Maxim Group. Please go ahead.
Speaker Change: Good morning.
Speaker Change: You've spoken in the past that your strategy of Rolling out your AI search services with start giving wedding youre.
Speaker Change: Your clients trial them and then <unk>.
Speaker Change: Move to charging.
Speaker Change: Where are you on that today.
Speaker Change: What are you thinking about the early indications thanks.
Speaker Change: Good morning Ann.
Speaker Change: Right and we still continues.
Speaker Change: Let me step back for us the way, we think that we have positioned ourselves little differently.
Speaker Change: Competitors there is a front end into the back end. So we simultaneously have started to work on both fronts. So if you can talk about it from the front end, which is the doctor. The initial the application was to this AI knows which had been significantly enhanced N V. B basically MRSA patients together, which is the <unk> guide.
Speaker Change: That would be initially launched and then disappear.
Speaker Change: So best of the both wars in this enhanced what isn't working is launched now this one application can listen to the fact as provider conversation and not only converted into a salt north instead now been worst state into a structure chart and at the same time suggest and recommend that if the diagnosis of procedure based.
Speaker Change: That's better than the prior history.
Speaker Change: Yes. This this.
We initially launched as a 30 day trial, which we extended to 60 days trial NBS started to convert those providers into it.
Speaker Change: Our paint line, so revenue generating plants at the same time some of these additional features.
Speaker Change: We were able to launch during this quarter, which is charged somebody let's think about it if you go and look at the one of the patient chart. It could be 50 different prior visits over the last three years. So you expect the doctor the Doctor I expect to go through each one of those to understand okay. This is I need to remember all of this before I think connection or decided about the next quarter.
Speaker Change: Affection for the patients now with the help of the AI everything get summarize over the last 10 15 different visit and it helps with the Doctor on one side not to Miss any critical information and also saving them significant time. So all of this together for some of those we have added it as part of their rate.
Speaker Change: It is slow because there is no point of charging separately, because it's going to bring on bringing the overall value.
Speaker Change: <unk> four of a horror charging USB restarted reach or there is a revenue as I mentioned is a more distant revenue.
Overall client base, who are using fronting the different feature.
Speaker Change: Teachers has gone over our 50000, plus I'm, sorry, the 100 plus users.
Speaker Change: But not all of them are paying their subset of those which are paying another subset subset, which is still in trial and the other Mitch.
Speaker Change: It will not be paying.
Speaker Change: Yeah.
Speaker Change: Great. Thank you.
Moving on to meta SAR I think you mentioned it was around $4 3 million of revenue during the quarter.
Speaker Change: It's.
Speaker Change: It's kind of hard to forecast this the nature of the business but.
Speaker Change: Is there anything from what you're hearing from your pipeline and stuff that gives you a sense that this might be bottoming or.
Speaker Change: Or has.
It has a potential for growth in the future.
Speaker Change: Okay.
Speaker Change: Let me just take this opportunity to zoom out and just to remind everyone that.
Speaker Change: How did we get to this point in terms of the overall revenue and from Tomatoes are standpoint, so when we acquired Medisoft in second quarter of 2021, it was doing about $32 million and professional services revenue.
And we bought the Medisoft at about 30% to 35% at multiples of revenues are great right in terms of in terms of buying this company. The narrative behind US was one is the revenue and just thinking how we can leverage these relationships and try to upsell into the into the hospital space.
Speaker Change: About 60%, 55% to 60% was FX related professional services revenue and billings was from different consulting services from other EHR.
Speaker Change: Smaller portion a portion of the market and if we think about it that this epic challenge, which is if it's English isn't going like 800 pound gorilla in the hospital space at over 55% to 60%.
Speaker Change: <unk> is off to a hospital bags are roughly in that in that number are the market share post acquisition, but they became increasingly paranoid that we may be tried to compete with them and begin erecting roadblocks for us and then delete prohibited us altogether from supporting their clients.
Speaker Change: So we cannot from that point onward service any of the any of the epic nine with respect their decision it's their business decision when did it.
Speaker Change: And in retrospect for us.
Speaker Change: [noise] stake was to veto it took too long for us to respond and we did not cut to realign our expenses because there were still some some lighter hopes that we may be able to convince them on the point that we are not competing with them.
Speaker Change: Or there was some activation probability, but none of them really got got materially. So if you think about the take the a big down that I'd hate us about somewhere between $18 million to $20 million. So if you think about over top revenue from 130 $738 million you take out the $20 million just because of that.
Speaker Change: Direct epic impact coming from Mega Solar and then there were a number of others. If you take that dissimilar.
Speaker Change: The other some of the large clients that we lost a part of that challenge. The issue was again the epic related that we cannot service those clients at all.
Speaker Change: And I apologize for the long answer to your question, but I just I was just trying to put the put things in perspective.
Speaker Change: I think if you if you look at some of them are it will continue to be a challenge for us in terms of exactly predicting how much revenue each quarter, we will be driving only one point I can tell you. We're entering into we hope to enter in 2025, almost with the same booked in backlog business.
Speaker Change: As would be entered into the last year, but it does not that does not mean that it will we will hit the same number in the next year and we'll keep everyone up to date as we get closer to the end of the year end and give the guidance for the next year.
Speaker Change: Okay.
Speaker Change: Ladies and gentlemen, just a final reminder, if you would like to ask a question you May Press Star then one.
Speaker Change: We will pause a moment and see if any further questions.
Speaker Change: We have a follow up question from Allen Klee of Maxim Group. Please go ahead.
Allen Klee: Yeah, Hi, I have a couple more questions I got cut off.
Allen Klee: In the past you.
Allen Klee: You've provided that you've identified 26 million of.
Allen Klee: Central expense cuts of which 20 million you hope to.
Allen Klee: Good.
Allen Klee: Make happen in 2024, and the rest in 'twenty six.
Speaker Change: I'm not sure if I saw that on this call, but did you do you still feel comfortable with that or is there any reason why it might be more or less.
Speaker Change: Good morning, Alan Great question, we still feel very comfortable with that $26.
Speaker Change: Number and overall cost rational rationalization.
Speaker Change: It's still the right number to be thinking about.
Speaker Change: And that really that number of course relates to all the expenses that we've been able to cut since the beginning of this exercise through the end of the year. So we have another.
Speaker Change: Another month and a half two months still to go and we believe that we will.
Speaker Change: Hit that $26 million number by the end of this year and of course, you won't see all of the positive impact in our financials for this year. What you will see you will see that the entirety of that impact as we progress into into next year.
Okay.
Speaker Change: Okay.
Speaker Change: Is there a way to think of how much we see this year of the 26.
Speaker Change: Yes.
Speaker Change: And I think if you think about probably the 'twenty number is probably the right number to think about so that theres still some additional benefit we'll see in the upcoming year and again, if we kind of step back for a moment how did we get here how do we accomplish those cuts we've really accomplished those cuts through.
Speaker Change: Expense reductions through three main avenues.
Speaker Change: One was what has been utilizing our proprietary technology, our AI in order to perform the same tasks that were performing before on a manual basis.
Speaker Change: With the use of technology kind of in a second key component of of those overall reductions relates to taking work that was being handled by outside third parties and bringing that work in house and then I'm not only has the benefit of reducing the expenses, but also has it been.
Speaker Change: Of giving us more control.
Speaker Change: From an end to end perspective with regard to that overall responsibility in discharging his responsibilities and a third key basis or way that we were able to accomplish this really comes through.
Speaker Change: Kind of recognizing the fact that we have this powerful global business model, and then fully utilized and that global business model to further reduce costs.
Speaker Change: And but the overall numbers right that you say, which is 26.
Speaker Change: Yes.
Speaker Change: Thank you that's helpful.
You guys commented on remote patient monitoring is an opportunity.
Speaker Change: Could you give some color on.
Speaker Change: We're we're kind of how it performed this quarter and where how you think about.
Speaker Change: The outlook or pipeline for that.
Speaker Change: With this in the future.
Speaker Change: Sure we'd be happy to for sure.
Speaker Change: And from an RPM perspective, one of the things to think about Alan is we've actually launched our own RPM solution in house.
Speaker Change: We were partnering before with a third party, who is helping us with RPM. So we've launched our own in house solution.
Speaker Change: We're really excited by that because of the margins the margins will be significantly different and we think will be far more capable of being able to meet our clients' needs and two to deliver the results that they'd like to be able to deliver through RPM. So so.
Speaker Change: If you think about the overall number maybe maybe hardy or norm can jump in in terms of the full year number for this year.
Speaker Change: From RPM CCM perspective, the digital health.
Speaker Change: Sure.
Speaker Change: Just if you wanted to break it up between chronic care management.
And RPM so for the nine months in 2024, we did $2 2 million just a chronic.
Speaker Change: Kind of care management and 194.
Speaker Change: And then 544000 in remote patient monitoring.
Speaker Change: So that's about 2728 so.
Speaker Change: Uh huh.
Speaker Change: And I Wonder if you think about it again.
Speaker Change: As we've been saying since the very beginning of the year.
Certainly during 2024, our North Star has been generating free cash flow. That's the that's the reason of course, we were able to fully satisfy the Silicon Valley bank obligation and have that is zero today as we as we stand here in the fourth quarter. That's the reason why we feel.
Very confident to be able to say that we're going to be resuming dividends in the first quarter of next year, because we believe that from an expense perspective, we have an expense model that is that that lays the foundation for continued growth as we go into this next year, so whether it be RPM or.
Speaker Change: CCM or or four store leveraging AI across our entire platform. We're excited about that.
Speaker Change: Thank you just a follow up you've mentioned.
That you brought the RPM solution in house.
Speaker Change: Assume you mean RPM in CCM.
It does.
When did that happen.
Speaker Change: So it's actually just RPM at this point in time.
Speaker Change: Because all of RPM.
Our RPM really.
Speaker Change: Gives us the ability to utilize our core technology strengths.
Speaker Change: Coupled with with the support that's provided together with that core technology strength and to leverage that core technology. The strength of the benefit of our clients and that we just launched that within the last 30 days.
So where we have we have a team that we've built in house, we're managing that out of our Miami office and we expect great things ahead in the year ahead.
Speaker Change: Thank you my last two questions are a little bit new issue related to models and if.
Do you want to take it offline thats fine, but what they were it was.
Speaker Change: How to think about it is capitalized software or an area where.
Speaker Change: Going forward that might be at a lower run rate and then.
Just wanted to understand what you are paying off.
Speaker Change: Your line and reducing it to $10 million.
Speaker Change: Does that imply but you have to pay like.
Speaker Change: I don't know what the word is maintenance needs.
Speaker Change: We're having at even if you don't go out.
Speaker Change: What would be the.
Speaker Change: The expense related to that.
Speaker Change: Yeah.
Speaker Change: Ellen I think.
Speaker Change: We can find the specific answer right now, but we can get into the more details offline on a recall if that's if that makes sense.
Speaker Change: Okay, great well, thank you so much and congrats on.
Speaker Change: Everything you've accomplished.
Speaker Change: I was told by people that when companies.
Speaker Change: Paying their dividends like.
Speaker Change: Almost never presume [laughter].
Speaker Change: On the preferreds are you guys really stand out on everything that you accomplished a very very impressive discipline So group brands.
Speaker Change: Well, we really appreciate that and we really appreciate.
Speaker Change: The support your support and supportive of all of our analysts who continue to recommend recommend tier cloud and we've heard the same thing I don't know, whether whether it's necessarily true but at the point in time, when we stopped the dividends we were told by bankers because there's a a 1% share.
Speaker Change: <unk> that youll ever resume dividends, they kind of wrote us off so.
Speaker Change: Much like the much like our IPO, which you know which was given the about a zero percent chance of being successful where we're excited to be able to to.
Speaker Change: To defy the odds and really thankful for for all the support and to your point Alan If you think more broadly just for a moment about the dividends and maybe that brings into maybe clear focus that preferred the preferred the series a preferred changes.
Speaker Change: Maybe if we kind of think about that if you don't mind I'll, just take a minute and what kind of work through those changes, obviously, you're very familiar with them, Alan but I'm not sure that our investors more broadly we have the same familiar familiarity with those so maybe we'll just kind of walk through those changes what were the changes and why.
Speaker Change: The changes in there why do they benefit or the benefit to shareholders.
Speaker Change: Those three changes were first of all changing the the change of control provision so what.
Speaker Change: What that really means is that we provided protection for the series a shareholders, giving them the right to have their shares liquidated at $25 per share in the event of a change of control. So the benefits certainly to the series a shareholders are pretty clear it really ensures that the.
Speaker Change: At the A's can't be left outstanding against their will suddenly just control. It gives them is essentially the same protection that there has been afforded to the series B shareholders. It puts them on an equal playing field with the with the BS.
Speaker Change: The first that's the first change the second change was.
Speaker Change: It was really equalizing, the dividends and equalized dividends at 875% going forward, 875%.
Speaker Change: And and if we kind of just think about that.
Essentially equates to about a $2 5 million dollar savings for the company.
Speaker Change: Which from a from a series a and series B perspective.
Speaker Change: Is that.
Speaker Change: Well to put in perspective, that's about the amount of the of the overall dividends for the series B and more broadly to put in perspective.
Speaker Change: It enables us to do and has enabled us to do is to is to more quickly be able to resume dividends because the overall dividend burden has been has been somewhat reduced.
And if you are a common shareholder as a common shareholder and again almost 40% of the shares of common or owned by insiders. So you can feel very comfortable as a common shareholder that where we're at.
Speaker Change: Acting in full alignment with your best interests, but as a common shareholder it preserves additional capital to reinvest in the business.
Speaker Change: And finally, there is the third thing is there is an exchange feature that the shareholders approved all these changes in terms of the affirmative vote were approved by almost 90% of those who vote. So I think there's a real clear.
Speaker Change: Understanding amongst the shareholders that these changes are overwhelmingly favorable to the company.
Speaker Change: Exchange feature really enables the company at.
Speaker Change: At the appropriate point in time to exchange shares of series a preferred stock for common stock at a $20 $25 redemption price and if you think about the overall preferred shares.
Speaker Change: From a from an eight perspective, it's a real number probably to think about it is it's probably a 27 $50 I'm sorry, $27 50 type type share because there is a there are accrued dividends that are associated with with that share. So again the benefits with regards to the exchange.
Speaker Change: Our cros all the shareholders.
Speaker Change: It's like having children and they don't like to pick your favorite and for US we really tried to keep that in mind. When we were when we were fashioning the proposed changes.
Speaker Change: So why does that matter why is that beneficial to shareholders well for all shareholders and for the company. The cost. If we were to move ahead of you are too.
Speaker Change: To raise capital.
Speaker Change: And do a secondary offering for instance, with regard to.
Speaker Change: In order to be able to redeem the shares the cost of capital together with the discounts associated with it would generally be about 30% and if you think about the $115 million roughly and preferred a that's outstanding that would be $35 million so by having.
Speaker Change: Exchange feature in place we have the ability just in terms of the preferred a two well save all shareholders about $35 million that would be our estimate.
Speaker Change: And again I think one thing to keep in mind with regard to the exchange with regard to all these changes is the significant ownership inside ownership interest that there is in terms of the carbon.
Speaker Change: Again, we want to thank everyone. We want to thank all the preferred the series a.
Speaker Change: Preferred shareholders for for undertaking the time to understand the changes and also for their.
Speaker Change: Overwhelming support for those changes.
Speaker Change: How much is it.
Speaker Change: No that was a little bit.
Speaker Change: Beyond what you were.
Speaker Change: Asked about but do you have any other questions.
Speaker Change: I mean, I don't have a public opinion on the preferreds I cover your your common stock I have a personal opinion.
Speaker Change: It's one of the most compelling investments of anything in the market right. Now you may I don't know if you're interested.
Speaker Change: Walked through to investors like.
Speaker Change: What they get from a potential return of things invest in them.
Speaker Change: That's the focus of this call but.
Speaker Change: Right right.
Speaker Change: I appreciate the comments.
Speaker Change: Whether it be the a or the b or the common 100% agree that.
The the thesis for investing in any of them. We think is a pretty compelling thesis. So so we appreciate that we appreciate your comments for sure.
Speaker Change: So.
Speaker Change: Thank you well very good.
Speaker Change: Over to norm.
Speaker Change: Yeah.
Speaker Change: Okay I think.
Speaker Change: That will conclude our call today. So thank you everyone for attending and have a great day. Thanks.
Speaker Change: Thanks, everyone.
Speaker Change: Yeah.
Speaker Change: Ladies and gentlemen that concludes today's conference. Thank you for joining US you may now disconnect your lines.
Speaker Change: Okay.
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