Q4 2024 CareCloud Inc Earnings Call
Thank you for watching Please subscribe to my channel
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. If anyone should require operator assistance during the conference, please press stars 0 on your telephone keypad.
As a reminder, this conference has been recorded. I would now like to turn the conference over to your host, Kristen Rothey, Corporate Council for CareCloud. Thank you. You may begin.
Good morning everyone. Welcome to CareCloud's fourth quarter of 2024 conference call. On today's call, or Mahmud Haq?
Kristen Rothey: Our Founder and Executive Chairman, Adi Chaudhary, 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.
Kristen Rothey: 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.
Kristen Rothey: and Section 21E of the Securities Exchange Act of 1934 as amended.
Kristen Rothey: 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.
Kristen Rothey: That plan anticipates, approximately upcoming believe estimate or similar terminology and the negative but 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 could differ materially from those contemplated in these forward looking statements. These.
Kristen Rothey: These statements reflect our opinions only actually the date of this presentation and we undertake no obligation to revise these forward looking statements in light of new information or future events.
Kristen Rothey: 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.
Kristen Rothey: Our dog care cloud Dot com click on news and events and quick IR calendar.
Quarter 2024 results conference call and download the earnings presentation.
Kristen Rothey: 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 Schneider Steven.
Thank you Christian and thanks, everyone for joining us today on the fourth quarter 2024 earnings call.
Kristen Rothey: Over the past year. Our team has remained focused on executing our strategic initiatives.
Kristen Rothey: <unk> operational efficiencies and delivering strong financial performance.
Kristen Rothey: As a result, we have achieved record breaking profitability and taken meaningful steps to position. The company for continued success in 2025 and beyond.
Kristen Rothey: Today I'll walk you through our key accomplishments our strategic outlook.
Kristen Rothey: Provide some information regarding our recent series a preferred stock conversion.
Kristen Rothey: And talking about the opportunities ahead, as we continue to scale, our business and drive long term value for our shareholders.
Kristen Rothey: First in 'twenty 'twenty four we successfully executed on our core priorities, leading to the strongest year of profitability in our company's history.
Kristen Rothey: Free cash flow reached record levels, demonstrating our disciplined approach to efficiency and operational excellence.
Kristen Rothey: 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.
Spite of modest decline in revenue.
Kristen Rothey: Additionally, we generated $13 $2 million and free cash flow a year over year increase of nearly 250% reinforcing our ability to drive sustained profitability.
Kristen Rothey: Notably we achieved neutral earnings per share in Q4, 'twenty 'twenty, four and pivotal milestone that signals our progress towards sustained profitability.
Kristen Rothey: Looking ahead to 2025, we anticipate positive earnings per share for the first time since we went public in 2014.
Kristen Rothey: Milestone that reflects the strength of our business transformation and operational discipline.
Kristen Rothey: These results reflect a focused effort on streamlining operations.
Kristen Rothey: Cost cutting and leveraging our proprietary AI technology.
Kristen Rothey: By reducing reliance on third party contractors and optimizing our global workforce, we have strengthened our margins while maintaining scalability.
Kristen Rothey: Financial discipline, we've maintained has put us in an excellent position as we move into 2025.
Kristen Rothey: Building on this momentum it's important to recognize the strategic milestones that has helped reinforce our financial strength and position us for continued growth.
Kristen Rothey: One of the most significant strategic moves this quarter was the conversion of our series a preferred shares into common stock.
Kristen Rothey: Prior to this conversion insiders own 38% of the common stock with our executive chairman being a net acquirer of our common stock and owning more shares today than he owned when we went public in 2014.
Kristen Rothey: In reflecting upon our long term strategy and Gulf, creating value for all shareholders. We strongly believe that this was the right decision for our series a series B and common stock investors.
Kristen Rothey: Importantly, this conversion was structured to provide meaningful benefits the series a preferred shareholders.
Kristen Rothey: The shares converted at a redemption price, which represented a premium to the market price and included the payment of all cumulated dividends, which totaled about $11 million.
Kristen Rothey: These were paid in common stock at the time of conversion.
This structure ensured that preferred shareholders not only received pulls out the full value of their investment.
Kristen Rothey: But it also better aligns their interests with common shareholders, ensuring all stakeholders participate in care clouds future growth.
Kristen Rothey: By consolidating our capital structure, we have created a more attractive financial model for investors, while simultaneously providing improved liquidity.
Kristen Rothey: Louisville, a dividend obligations tied to the preferred shares frees up additional resources that can now be reinvested in the key growth areas.
Kristen Rothey: As we continue to scale. This conversion enables us to maintain a structure that better supports both near term execution and long term value creation.
Kristen Rothey: As we move forward into 2020 five.
Kristen Rothey: Our focus remains on leveraging these strategic enhancements to drive growth and innovation.
Kristen Rothey: Looking ahead, we remain laser focused on strategic growth efficiency and expansion we.
Kristen Rothey: We anticipate revenue growth in the range of.
Kristen Rothey: $111 million to $114 million in terms of guidance supported by market demand for our integrated AI driven solutions.
Kristen Rothey: Adjusted EBITDA is projected to be between 26, and 28 million, reflecting our continued commitment to maintaining profitability while investing in innovation.
Kristen Rothey: Earnings per share is expected to range between 10 cents and 13th sense reinforcing our ability to generate shareholder value. This projection is especially significant as we expect positive EPS for the first time since our IPO in 2014.
Kristen Rothey: Testament to our long term strategy disciplined financial management and execution.
Speaker Change: Innovation continues to be a key growth driver, which hottie will elaborate on shortly.
Speaker Change: We are continuously enhancing our AI driven solutions to improve provider efficiency reduce administrative burdens and optimize patient outcomes.
Speaker Change: This focus on automation and analytics will enable us to expand our offerings, while maintaining industry leading results.
Speaker Change: Finally, a key component of our long term growth strategy has been and remains acquiring client relationships from traditional medical billing companies and an attractive customer acquisition costs over the years, we have successfully closed more than twice such business acquisitions foundational element to building Coeur.
Speaker Change: Cloud into the company. It is today, our experience and expertise in acquiring well priced businesses and then integrating them with our global team proprietary technology and now AI has allowed us to extract significant efficiencies and realize meaningful synergies.
Speaker Change: The planned approach has been instrumental to our growth.
Speaker Change: It's important to highlight that while acquisitions have historically been a critical driver of our expansion we have not completed an acquisition in almost four years.
Speaker Change: Over our most recent acquisition earlier this month, so quite small marks our reentry into the acquisition market.
Speaker Change: With our improved financial position operational efficiency and AI driven capabilities, we are well equipped to strategically pursue high value acquisitions that align with our long term vision. We see this as an important step forward signaling a readiness to pursue larger accretive opportunities that align with this.
Speaker Change: Vision the.
To summarize 'twenty 'twenty four was a transformative year for care cloud, we achieved record breaking financial performance execute upon strategic initiatives that strengthen our foundation and we set the stage for an even stronger 2025, the conversion of our series a preferred shares into common stock underscores our commitment to opt.
Speaker Change: <unk>, our capital structure and enhancing shareholder value. We believe this move positions us for sustainable growth, while creating a more transparent and efficient investment opportunity for all stakeholders.
Speaker Change: As we enter 2025.
Speaker Change: It is stronger than ever.
Speaker Change: With the foundation of financial discipline, cutting edge AI innovations and strategic growth initiatives. We are confident in our ability to drive long term value for our shareholders and customers alike, and we thank our investors clients and her team for their continued trust and support.
Hardy: That said I'll turn the call over to Hardy are so CEO Ali thank.
Speaker Change: Thank you, Steve and good morning, everyone I'm.
Speaker Change: I'm excited to speak with you today about the technological advancements that are shaping care clouds future.
Speaker Change: Clearly in AI driven automation.
Tony: Tony Tony for whatever 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.
Tony: Today, I will walk you through how will the innovation and AI automation and new products, including specialty based EHR solutions are driving efficiency enhancing provider workflows and positioning care cloud for sustained innovation and growth in 2025 and beyond.
Tony: So a lot of 'twenty 'twenty four we advanced cloud suite of AI, our flagship AI powered solution that streamlines administrative tasks and clinical documentation, enabling providers to focus on patient care a.
Tony: A key component did I say I noticed try skype structures and integrates patient provider conversations directly into the EHR, reducing mangled charting while enhancing documentation accuracy.
Tony: Unlike third party solutions here, let's see I noticed fully embedded within the care cloud EHR, ensuring a seamless workflow with no need for toggling between systems.
Tony: This quarter, we expanded citrusy I nodes to support multiple specialties, including Obgyn General practice emergency medicine family practice, and pain management, ensuring that a wide range of providers benefit from other AI powered charting tools.
Tony: Additionally, we strengthened sales and marketing efforts, let's say, let's say I ignored positioning it as a key driver of innovation and growth.
Tony: The first phase of rollout has already demonstrated commercial viability.
Tony: Early adopters seeing its value.
Tony: While we are in the early stages of adoption, we remain optimistic that seriously I noticed will play a pivotal role in AI powered efficiency and clinical workflows reinforcing care clouds commitment to advancing health care technology.
Tony: As we noted in our last earnings call. So, let's see I continues to enhance EHR practice management and RCM systems through AI, driven automation significantly improving efficiencies across clinical and financial workflows.
Tony: Advancements include AI powered summarization, which has helped providers have you patient histories faster and more thoroughly than do you think time spent and documentation.
Tony: North Summarization, which has streamlined revenue cycle processes saving users over 70% of time.
Tony: Care to conventional methods.
Tony: Management automation, which is reduce manual claim processing by over 75%, improving accuracy and accelerating Resubmission and appeals.
Tony: These AI driven efficiencies and are benefiting over 600 providers with select AI solutions available as standalone subscriptions reinforcing our commitment to scalable AI innovation.
Tony: This quarter, we introduced an AI powered call center auditing and monitoring solution now deployed internally for over 80 agents it processes called recordings and generates automated scorecards evaluating key performance metrics, such as greetings patient identity validation.
Tony: Subject matter knowledge sentiment analysis and professionalism.
Tony: The solution also features intuitive dashboards, helping organizations track performance identify weak areas and highlight top and bottom performers.
Tony: Auditing, 100% of calls we enhanced compliance efficiency and cost savings we remain on track for a market launch next quarter.
Tony: A major focus for 2025 is a specialty based EHR solutions addressing the distinct needs of various medical specialties.
Speaker Change: Their initial focus includes rheumatology gastroenterology, podiatry cardiology and orthopedics. He had actively working on expanding into additional specialty areas. Many of these specialty year charge is set to launch and entered the market between now and the end of second quarter.
Speaker Change: The specialty EHR market represents a multibillion dollar opportunity driven by the need for tailored solution.
Speaker Change: That enhance clinical efficiency regulatory compliance and patient care.
Speaker Change: Degrading AI driven automation, our specialty EHR optimize documentation streamline workflows and improve provider decision, making further strengthening care clouds position in this expanding market.
Speaker Change: As we enter 2025 of our focus is on accelerating growth and innovation, while driving cost efficiencies through AI and automation.
Speaker Change: Extending over a specialty based EHR solutions, and launching new AI driven products, such as our AI based call center auditing and monitoring solution.
Speaker Change: During 2024, we laid the foundation for sustained growth of our broader strategy is centered on AI, driven automation revenue cycle innovations and workflow optimization as we continue expanding our offerings, we remain committed to empowering health care providers with technology, they need to succeed in an in.
Speaker Change: Pleasingly digital health care landscape.
Speaker Change: With that I will turn the call over to our interim CFO Norman wrought with a deeper dive into our financial performance.
Speaker Change: No.
Speaker Change: Thanks, Heidi and thanks to everyone for joining our call today.
Speaker Change: You've 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 resumed paying dividends on our preferred shares which started this past February ahead of what we previously announced.
Speaker Change: We will realize more than $10 million annual cash savings.
Speaker Change: Series, a preferred stock dividends as compared to our dividend obligations as they existed prior to the September 11th proxy.
Speaker Change: Additionally, we satisfied $11.4 million of accrued but unpaid dividends as a result of the recent conversion.
Speaker Change: Further as we previously announced we have fully repaid our Silicon Valley Bank line of credit at the end of the third quarter 2024.
Speaker Change: With internally generated profits and cash flows and are now.
Speaker Change: Debt free.
We generated $13.2 million of free cash flow 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.
Speaker Change: The key to growing our free cash flow has been reducing expenses and growing our GAAP net income.
Speaker Change: Fourth quarter 2024, GAAP net income was $3 $3 million.
Speaker Change: As compared to a net loss of $43 $7 million in the same period last year.
Speaker Change: Of which $42 million was due to the goodwill impairment.
Speaker Change: This is our third consecutive quarter returning to positive GAAP net income and our largest quarterly net income since Q4 2021.
Speaker Change: Revenue for the fourth quarter, 2024 was $28 $2 million compared to $28 $4 million for the fourth quarter of 2023.
Speaker Change: Recurring technology enabled business solution revenues during fourth quarter, 2024, with $24 $8 million essentially flat with fourth quarter 2023.
Speaker Change: Nonrecurring professional services revenues for Medisoft kind approximately $400000.
Speaker Change: Adjusted EBITDA for the fourth quarter, 2024, with seven $1 million or 25% of revenue compared to $4 $1 million in the same period last year.
Speaker Change: This was an increase of 73% year over year and was the highest quarterly adjusted EBITDA, we have ever reported.
Speaker Change: On a year to date basis. The story is similar.
With our emphasis on improving profitability revenue for the year 2024 was $110 $8 million compared to $117 $1 million in 2023.
Speaker Change: But our GAAP operating income was $9 $1 million compared to an operating loss of $47.1 million in the same period last year and our GAAP net income was $7 $9 million.
Speaker Change: Pair to a GAAP net loss of $48 $7 million for 2023.
Speaker Change: This was the highest GAAP net income for the company since inception.
Speaker Change: Adjusted net income was $5 million or 65 cents per share calculated using the end of period common shares outstanding.
Speaker Change: For the year 2024, adjusted EBITDA was $24 $1 million, an increase of 56% or $8 $7 million from $15.4 million last year.
Speaker Change: Our adjusted EBITDA for full year 2024 was also the highest amount average achieved by the company.
Speaker Change: During the year 2024, we generated $26 million of cash from operations and $13 $2 million of free cash flow.
Speaker Change: The free cash flow amount of $13.2 million increased by 244% compared to $3 $8 million in the same period last year.
Speaker Change: As of December 31, 2024 company had approximately $5 million of cash.
Speaker Change: Networking capital was $5 $2 million.
Speaker Change: Compared to a working capital deficit in the prior year of $57000.
Speaker Change: Now that we have repaid our bank debt free cash flow during 2025 will allow us to increase our cash balance and build additional cushion in our networking capital.
Speaker Change: Our financial position has improved tremendously during the year 2024.
Speaker Change: We are happy to have returned to profitability fully repaid our bank debt I resumed our preferred stock dividends.
Speaker Change: Achieved cost savings from the preferred stock conversion.
Speaker Change: Forward to reporting strong results for the first quarter of 2025.
Speaker Change: Our team has really worked well together to achieve this turnaround.
Speaker Change: With that I will now turn the call over to Tim I moved for his closing remarks.
The mood.
Tim: Thank you no I want to extend my sincere gratitude to our employees clients and shareholders for their trust dedication and support.
Tim: Their collective efforts have been instrumental in driving our success and positioning <unk>.
Tim: For long term growth.
Tim: 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.
Tim: By leveraging advanced automation and intelligent technology, we are shaping the future of health care and ensuring that we continue to create value for our clients shareholders and investors.
Tim: Operator, please open the floor for questions.
Speaker Change: Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Tim: In order to allow for as many questions as possible we ask that you.
Speaker Change: We need to keep to one question and one follow up thank you.
Speaker Change: Our first question comes from the line of Michael Kim with Zacks small cap research. Please proceed with your question.
Michael Kim: Hey, everyone. Good morning, and thanks for taking my questions.
Michael Kim: Just first I appreciate the the revenue and EBITDA guidance for this year.
Michael Kim: But focusing on on the top line.
Michael Kim: The midpoint suggests modest modest revenue growth year over year. So just curious as to how you're thinking about sort of the mix of <unk>.
Michael Kim: Growth drivers looking forward.
Michael Kim: Cross engaging new clients, introducing new services and door.
Michael Kim: Tapping into into new markets.
Michael Kim: Okay.
Michael Kim: Great. Thanks for the question Michael.
Michael Kim: To your point for 2024, we were very pleased to be able to report the highest income highest adjusted EBITDA highest cash flow in our history and as we look at this year.
Michael Kim: We believe that we're really poised to be able to continue to advance along all of those metrics.
Michael Kim: And in particular, maybe we will start actually with EPS. So for this year, we expect EPS to be between 10 and 13 cents.
Which is particularly significant because it represents the first anticipated positive EPS for the companies since we went public in 2014.
Michael Kim: So as we think about it.
This really reflects the strength of our business transformation that we've been talking about during 2024.
Speaker Change: Also that the benefits of the AI automation that honey has been talking about together with the benefits associated with the recent series E.
Speaker Change: Deferred stock conversion, which has further strengthened our capital structure and eliminated dividend obligations.
Speaker Change: If we move for a minute Michael then to adjusted EBITDA again.
Speaker Change: We're projecting this year $26 million to $28 million and adjusted EBITDA.
Reflecting this disciplined approach that we've been taking to cost management.
Speaker Change: And also the investment that we're making to innovation.
Speaker Change: And then finally, if we're thinking about revenue, we anticipate revenue in the range of about $111 million to $114 million.
Speaker Change: Which represents.
Speaker Change: While of course Q1, Youll recall represents a typically seasonally low level of revenue due to the reset of deductibles on the for the full year, we anticipate this year.
Speaker Change: Actually having a revenue increase.
Speaker Change: After a few years of revenue declines. So we believe those declines are behind us and we're excited about that.
Speaker Change: About being able to be in a position, where we're actually increasing revenue this year.
Speaker Change: I think there is as we look at the opportunity sets that we have before us.
Speaker Change: 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.
Speaker Change: Including those that leverage the specialty specific EHR products that hot he was talking about a moment ago.
Speaker Change: And other solutions along the lines of RCM.
Speaker Change: Life Sciences will represent some additional ads.
Speaker Change: RCM with AI solutions are being sold by the <unk> in particular and the small hospitals represent.
Speaker Change: Some additional and then finally, some tuck ins.
Speaker Change: Associated with them with a focus on RCM client bases that we acquire.
Speaker Change: And that acquisition of RCM client basis is really.
Speaker Change: Very consistent with our historical patterns in the past or be able to grow from a very attractive cost of customer acquisition through those acquisitions.
Speaker Change: Again, if we think overall in terms of 2025 guidance.
Speaker Change: It really reflects the strategic shift back into growth, while continuing to approach.
Speaker Change: The overall spend responsibly.
Speaker Change: And represents also the stronger capital structure.
Speaker Change: Okay.
Speaker Change: Got it that's very helpful. And then maybe just to follow up on your comments.
Speaker Change: On the M&A side sounds.
Speaker Change: It's great to see the 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.
Speaker Change: Any insights into what you might be seeing in terms of.
Speaker Change: Buyer and seller expectations as it relates to valuations.
Speaker Change: Thanks.
Speaker Change: Sure certainly good question.
Speaker Change: You will recall, we announced in early March.
Speaker Change: Acquisition, albeit a very small acquisition, but we're really.
Speaker Change: Signaling to the market that we believe that we're back in the.
Speaker Change: Acquisition business as it were.
Speaker Change: We've reenter the acquisition market and.
Speaker Change: 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.
Speaker Change: So there are many smaller and mid sized medical billing companies, particularly those that have struggled to scale and to adapt to automation.
Speaker Change: Companies continue to be looking for partners like care cloud.
Speaker Change: Have a care cloud has of course, a more sophisticated technology and operational infrastructure. So theres a real opportunity for these businesses to partner with or to be acquired by a company like <unk> cloud and to be able to realize the benefits associated with our technology and our and our global model.
Speaker Change: If we think about our existing client base, Michael over 8% of our existing clients joined us initially through acquisitions.
Speaker Change: And we've completed about 2020 or 25 acquisitions, so far in our company's history. So acquisitions have really been a key part of our DNA.
Speaker Change: 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 costs. So.
Speaker Change: We believe the opportunity is is a phenomenal one and we continue to pursue that this year.
Speaker Change: As 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 our accretive and align with our long term objectives.
Speaker Change: But to your question from a valuation expectation perspective.
Speaker Change: What we've seen in the market is really a gradual return towards the lower multiples that we saw in the pre Covid era.
Speaker Change: Some sellers of course continue to have inflated expectations as you would imagine.
Speaker Change: 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 recognized this need to partner with a larger platform like care cloud in order to stay competitive.
Speaker Change: So as a buyer our focus really remains upon these value driven acquisitions. So we're not chasing deals with aggressive multiples, but were instead target businesses, where we where we know we can offer.
Speaker Change: Significant upside to the clients.
Speaker Change: And it can also provide AI and technology automation and operational efficiencies that enhance the overall client experience. So so we think that from an acquisitions perspective. This year will especially the second half of the year will be that'll be a key driver of our overall growth.
Speaker Change: This year.
That's great very helpful. Thanks for taking my questions.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Jeffrey Cohen: Hey, good morning, Thank you for taking our questions. So I wondered if you could talk a little bit about <unk>.
Jeffrey Cohen: Your user base and talk a little bit about expanding the user base, coupled with our expanding the offerings and the types of customers that you had or what.
You're seeing with the current customer base as far as where it's headed.
Jeffrey Cohen: For sure yes. Thank you for the question, Jeff So in terms of the user base.
Jeffrey Cohen: The 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.
Jeffrey Cohen: So where we do business of course in all 50 states with the heaviest concentrations of clients.
Jeffrey Cohen: New Jersey, New York, California, Florida, and also the west.
Jeffrey Cohen: Just on a high level, that's a little bit of an overview in terms of our overall customer base.
Jeffrey Cohen: From the perspective of of the services that our customers use the majority of our customers are are leveraging.
Jeffrey Cohen: Sure.
Jeffrey Cohen: Integrated platform, so the EHR and the and the RCM and that P. M. In our integrated model. We of course have clients that are leveraging.
Jeffrey Cohen: Other solutions on a standalone basis, but the majority of our using our overall integrated solution. So for us a real upside in the opportunities in that existing base.
Jeffrey Cohen: <unk>, primarily to being able to.
Jeffrey Cohen: Sell the a variety of different solutions, including digital health, that's RPM and CCN into this existing base and also being able to take.
Jeffrey Cohen: HR, only users and being able to upsell them.
Jeffrey Cohen: So that they're all leveraging our revenue cycle management solutions, and then finally being able to roll out AI across the entirety of that base.
Jeffrey Cohen: So I don't know if that addresses your question exactly.
Jeffrey Cohen: If not I'd be happy to zero in on a different area.
Jeffrey Cohen: No that's super helpful and then I would say.
Jeffrey Cohen: A follow up can we talk about the 2020 guide so I'm sure that as it stands now.
You're not far through any M&A and then maybe could you talk about.
Jeffrey Cohen: How that may look as far as.
Jeffrey Cohen: Customers number of customers.
Jeffrey Cohen: In fact in some of the.
Jeffrey Cohen: Tricia versus edition.
Jeffrey Cohen: For sure for sure maybe I'll get started on that since then and then Nora.
Jeffrey Cohen: Norm or how he can jump in.
Jeffrey Cohen: So so with regard.
Jeffrey Cohen: We kind of just step back for a moment.
Jeffrey Cohen: Here from an acquisition perspective, we really do see acquisitions, playing a key role in terms of the overall growth.
Jeffrey Cohen: So, especially as the year progresses.
Jeffrey Cohen: But.
Jeffrey Cohen: 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 is a material acquisition. During the year, you really contemplates that material acquisition happening relatively late in the year, where where the revenue being added by <unk>.
That acquisition would be pretty minimal instead really contemplates traditional organic growth combined with some relatively small tuck in opportunities.
Jeffrey Cohen: In terms of the overall client base again.
Jeffrey Cohen: For sure because of whether it be consolidation or practices.
Jeffrey Cohen: Providers retiring the lake there's always a natural.
Jeffrey Cohen: Attrition related to that base with regard to our base and any other.
Jeffrey Cohen: 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 shred it business.
Jeffrey Cohen: Okay.
Jeffrey Cohen: Perfect. Thanks for taking our questions.
Thanks, Jeff.
Speaker Change: Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad. Our next question comes from the line of Allen Klee with Maxim Group. Please proceed with your question.
Yes, hi.
Speaker Change: <unk> on the preferred.
Speaker Change: <unk> stocks.
Speaker Change: And.
Speaker Change: The series a forced conversion tell tell me if I understand this right. If you can explain it it looks like you force conversion on three and a half million or so.
Speaker Change: The preferred as but I believe there was around $4 5 million outstanding so of the remaining close to a million shares does.
Speaker Change: What happens with that does that still is that still outstanding and still pay an eight and three quarters.
Speaker Change:
Speaker Change: Dividend or and can that be redeemed and then kind of.
Speaker Change: Going forward like.
Speaker Change: On the series B.
Speaker Change: Hugh.
Speaker Change: On the series B your will.
Speaker Change: Will you be paying at a higher rate than that.
Speaker Change: Which you lowered it to.
Speaker Change: To try to catch up on the <unk>.
Speaker Change: The amount that was not paid in the prior year end.
Speaker Change: If so how long how much is that and how long you have to pay it at the higher rate to get that.
Speaker Change:
Speaker Change: To fully catch up on that and maybe just if you could then to say what the preferred the total preferred dividends that you expect to pay in in the March quarter, and then and then what you expect to see for the quarters going forward after that thank you.
Speaker Change: Of course, so thanks, Alex for the question.
Speaker Change: So.
Speaker Change: I think your question is about both the as the BS.
Speaker Change: So maybe just for a moment if it's okay with you if you 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 four and a half and $3 5 million and then the $1 million, that's that's leftover and redemption and the like.
Speaker Change: So again, if we step back for US it was really very important to ensure that.
Speaker Change: Our shareholders the preferred a we're talking about this context now.
Speaker Change: We're treated fairly and had the opportunity to participate equally in the company's long term growth and this is why if you. 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 protection. So the.
Speaker Change: <unk> could not be acquired and left in <unk>.
Speaker Change: Outstanding.
Speaker Change: Together with conversion and that conversion. Unlike other many other companies that have been our position that conversion wasn't simply <unk>.
Speaker Change: Multiple of the much lower market price, but it was really a conversion that would make the preferred shareholders whole by having the conversion.
Speaker Change: Occur at the full redemption price of $25. So if.
Speaker Change: If we kind of think about the what the when and the Y first in terms of the one point it was a mandatory conversion it was approved of buying.
Speaker Change: By an overwhelming majority of the of the series a preferred shareholders back in September of 2024 and <unk>.
Speaker Change: Theres been a little bit of confusion, let me just talk about the mechanics of that of the overall conversion involve the series a preferred shares being again valued at the redemption price of $25, which.
Speaker Change: Which represented a premium over the price at the time the market price is about $19 that represented a premium to that market price, but it was the right thing to do to be able to provide full value to the to the series E plus.
Plus it.
We added.
All accumulated and unpaid dividends.
Speaker Change: So then we took the some of those numbers and divide it by the 20 Davy Wap of the common shares and then issue the shares which is how we got to.
Speaker Change: The conversion of one preferred being converted to 7374 shares of common stock.
Speaker Change: So to your point Alan in total there were three 5 million shares of preferred that were converted and they were converted into.
Speaker Change: 26 million 26 million shares rather of of common which left out 1 million shares a little shy of 1 million shares in total.
Speaker Change: And I'll come back to that just in a minute that of course happened on September I'm, sorry on March six.
Speaker Change: And in terms of if we think about the why do we convert against the conversion.
Speaker Change: It was really part of our overall strategy to simplify the capital structure.
Speaker Change: And to enhance overall shareholder value by converting that roughly $100 million fixed obligations.
Speaker Change: $100 million I'm talking really about the shares that could bleed over together with the accumulated dividends together with the perpetual $10 million obligation to take that the entirety of that of that 100 million.
Speaker Change: Obligated to pay an additional $10 million on per year to convert that into common.
Speaker Change: And to allow the shareholders again to benefit from the long term growth of the company on equal footing with with the common shareholders. So it really provided immediate benefits to the preferred shareholders by converting again at a premium to the market price and ensuring that our opportunity to.
The long term growth and from a common shareholder perspective.
It had the benefit of eliminating the monthly dividend obligation, which if we compare that to what it was before September of last year was about $10 million a year.
Speaker Change: Savings.
Speaker Change: <unk> improved the liquidity and the public float and.
Speaker Change: On balance overall really makes our financial model more attractive to investors and positions everyone that benefit from that same long term value creation and one last thing that I'll then I'll.
Alan: Haven't forgotten Alan I will get back to your question and one more and one just one second.
Alan: But one thing I think is probably worthwhile for investors to think about is the fact that there.
Alan: There really is full alignment with regard to the insiders that board and the management team and the shareholders because youll recall that pre conversion almost 40% of the shares.
Alan: Of common stock were held by insiders.
Alan: And of course, the largest of which is our executive chairman and founder who has been a net buyer of the common.
Alan: Purchased about a half a million shares roughly in back in 2023 and <unk> more shares today than when we went public in 2000 back in 2014. So he believes we all believe frankly.
Alan: Very strongly that the conversion truly supports the long term value creation and is in the best interest of all shareholders common shareholders preferred a preferred b and like becoming more specifically to your question Alan.
Alan: In that conversion almost 1 million shares did not convert over.
Alan: What we did in the terms of that proxy is we gave the we proposed giving the material shareholders those with 100000 shares or more the opportunity to opt out again appreciating the fact that.
Alan: If those much larger shareholders also were converted over and if they decided to.
To exit the common stock.
Alan: Be highly it could have a negative impact on the overall shares including the shares were just converted over relative to the.
Alan: Relative to the A's so.
There's 1 million shares of stock out there.
And we will continue to pay dividends on those 1 billion shares can they be redeemed yesterday, we redeemed frankly, we believe they could also be converted over again, if we if we move forward with another mandatory conversion down the road that can would continue to have the option to opt out but but.
Alan: That's always a possibility.
Alan: With regard to the BS the BS will again continue to be paid 83 quarter percent just like the remaining days, but from the perspective of the catch up what we're intending to continue to do.
Alan: Is to continue to one monthly payment.
Alan: Each each month as we've always done.
Alan: So that will continue to be.
Alan: Payments.
Alan: And those accumulated payments at some point in time, we will have to be called out whether it would be at a redemption because we have the ability to redeem the b's at $25 50 today and that will become 25, 25% and 25.
Alan: Even in a couple of years. So we have the ability to redeem that beast, but in a redemption scenario. We'd also have to make make them whole in terms of any accumulated dividend. So those accumulative as remain out there.
Alan: And our intention to get us.
Alan: With regard to the A's and B's just to continue to make monthly payments for the time being and then and then at some point in time.
Alan: We may do better than that in terms of a larger catch up but then again it may not happen and so redemption.
Alan: Did I address every gallon sure.
Just.
Speaker Change: Just what will be the preferred dividend total payment and in the March quarter, and then what do you expect it to be in the quarters thereafter.
Alan: Okay Fair.
Speaker Change: Fair enough.
Speaker Change: On an annualized basis going forward it'll be about $5 $5 million roughly.
Speaker Change: And I'm sorry, you asked another question not to annualized dividend you asked for what period.
Speaker Change: So in the first quarter, it's two thirds of that because it's two months and then in the following quarters.
Speaker Change: Annualized.
Speaker Change: It's a quarter five five.
Speaker Change: Yeah.
Speaker Change: Yes on a monthly basis it'll be about.
Speaker Change: 450000, roughly on a monthly basis and Thats, both the A's and B's.
So if we think about the fact that.
Speaker Change: Conversion happened here in the midst of the quarter that will be norm roughly.
Speaker Change: So the payment for March would be.
Speaker Change: 500, and that would go forward if you remember the Asia getting 11% up until the time, we catch up to September 11th Entertainment adjusted $4 50, a month after that but if you remember in February made a larger payment because we had all the A's and B's outstanding at that time.
Alan: And Alan again.
The perspective of the conversion.
Alan: Relative to all the ease of course, who are converted over we cost them all up in terms of the dividends right up until March 5th or sixth when we actually converted so there won't be any cash payments relative to those particular investors because we've already painted paid them in kind at the time of the conversion.
Okay. Thank you.
Alan: Thank you.
Roth: Thank you, ladies and gentlemen that concludes our time allowed for questions I'll turn the floor back to Mr. Roth for any final comments.
Speaker Change: Thank you everyone for joining us today have a great day.
Roth: Thank you.
Roth: Thank you conclude today's conference call you may disconnect. Your lines at this time. Thank you for your participation.