Q1 2025 CareCloud Inc Earnings Call
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Speaker Change: Ladies and gentlemen, greetings and welcome to the CareCloud Inc. 4th quarter 2025 earnings conference call.
Speaker Change: At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad.
as a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host, Kristen Rothey, corporate counsel. Please go ahead.
Speaker Change: Good morning everyone, welcome to CareCloud's first quarter of 2025 conference call.
Speaker Change: Umpidates Call, or Mahmud Haq, are founder and executive chairman, co-chief executive officers Stephen Snyder and Hardy Chargery, and Norman Roth are interim chief financial officer
Speaker Change: Before we begin, I would like to remind you that certain statements made during this conference call before booking statements within the meeting of Section 27A of the Security Act of 1933 as amended in Section 21E of the Security Exchange Act of 1934 as amended.
Speaker Change: All statements, others and statements of historical facts may during this conference are forward between statements, including without limitations, 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 with these statements, they sometimes be identified with words such as will, names, expects, plans, anticipates, approximately upcoming police estimates for similar terminology and the negative of these terms.
Speaker Change: Both of these statements are not promises or guarantees of future performance in our subject to a variety of risks and uncertainties, many of which are the other control, which could cause actual results to differ materially from those compensated in these four of the key statements.
Speaker Change: These statements reflect our opinions only as to the date of this presentation, and we undertake no obligation to revise these forward looking statements in light of new recreations or future events.
Speaker Change: Please refer to our press release and our reports file with the Securities and Exchange Commission, where you will find a more comprehensive discussion of our performance impactors that could cause actual results to different material from those former looking statements.
Speaker Change: For anyone who dialed into the call by telephone, you may want to download our first quarter of 2025 earnings presentation.
Speaker Change: Please visit our investor relations site, ir.carecloud.com. Click on news and events, and click on our calendar, click on first quarter, 2025 Results Conference call, and download the earnings presentation.
Speaker Change: Finally, on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our first quarter of results and for a reconciliation of these non-GAAP performance measures, work out financial results.
Speaker Change: Get that said, I'll now turn the call over to our co-CEE of Stephen Snyder.
Stephen Snyder: Thank you, Kristen. Good morning, everyone. Thank you again, everyone, for joining us today for CareCloud's first quarter 2025 earnings call.
Stephen Snyder: We are very pleased to report continued strength and momentum into one, building on the record-setting year we had in 2024.
Stephen Snyder: Our continued focus on operational discipline, innovation through AI, and strategic execution is yielding tangible results.
Stephen Snyder: Today I'll walk you through our first quarter highlights, growth outlook, and the early returns we're seeing from our strategic initiatives, including our return to M&A.
Stephen Snyder: Let's begin with a look at our financial performance for the quarter.
Stephen Snyder: Revenue for the first quarter was $27.6 million, an increase from $26 million during the same period last year.
Stephen Snyder: This growth reflects ongoing demand for our integrated AI-enabled R-C-M solutions, and we believe it sets us on the path for achieving our full-year guidance.
Stephen Snyder: We are also reporting gap net income of $1.9 million in meaningful turnaround from the net loss of $241,000 in Q1, 2024 and adjusted EBITDA rose to $5.6 million, up 52% year over year.
Stephen Snyder: These results underscore the impact of our cost management initiatives and operational streamlining together with our ability to scale properly while continuing to invest in innovation.
Stephen Snyder: This profitability is the result of deliberate structural improvements we've made across the business.
Stephen Snyder: We continue to benefit from a streamlined global workforce and reduce vendor reliance. Further, our automation initiatives have helped expand our historical margins and improve efficiency
Stephen Snyder: This refreshed cost structure forms a strong foundation we can build on as we expand, enabling long-term profitable growth.
Stephen Snyder: Turning to our capital structure, in March 2025, we executed a mandatory conversion of a significant portion of our series A preferred stock, in the common stock.
Stephen Snyder: This conversion reduced our outstanding Series A shares from $4.5 million to less than $1 million shares materially strengthening our capital structure and providing greater financial flexibility by reducing our dividend obligations.
Stephen Snyder: To illustrate this increased financial flexibility, consider the contrast between our dividend obligations and free cash flow over the last year.
Stephen Snyder: For instance, in Q1 2024, our quarterly dividend obligation stood at approximately $3.9 million while free cash flow totaled just $2.2 million.
Stephen Snyder: Meaning, we were obligated to pay out more and prefer dividends than we were generating a free cash flow.
Stephen Snyder: In Q-1 2025, that picture has changed dramatically. Following the series A conversion, our dividend obligation has decreased from $3.9 million to approximately $1.5 million per
Stephen Snyder: Waller-free cash flow, for example, increased $3.6 million during the same quarter.
Stephen Snyder: Disreversal, not only highlights the financial benefit of the conversion, but it also underscores our increased ability to reinvest in the business and fuel future growth.
Stephen Snyder: Even with a portion of the series A remaining, the reduction in dividend obligations has already begun to create financial headroom for the investment in strategic initiatives.
Stephen Snyder: As we look at the path ahead, we are particularly excited about our AI initiative. Last month, we officially launched our AI Center of Excellence, beginning with over 50 AI professionals and targeting a team of 500 by the end of the year.
Stephen Snyder: This dual-shore initiative is fully self-funded to operating cash flow, and it focuses on
Polymating, coding, claims, and documentation.
Producing the Niles and Revenue Risk .
Stephen Snyder: Enhancing Patient and Provider Engagement, and finally embedding AI across our EHR and R.C.M. platforms.
Stephen Snyder: As Holly will describe shortly, we believe this initiative positions CareCloud at the forefront of intelligent healthcare automation and NAI.
Stephen Snyder: Producing administrative burdens on providers while enabling scalable, real-world performance improvements across the care continuum.
Stephen Snyder: Let's now turn to another court element of our growth strategy, acquisitions.
Stephen Snyder: In early 2025, we completed two strategic acquisitions, Mesa Billing in February and Revenue Medical Management in April . These transactions mark our return to M&A after nearly four years.
Stephen Snyder: and Signal, a renewed focus on discipline, a creative growth through acquisitions.
Stephen Snyder: Since going public in 2014, we have completed approximately 20 acquisitions, and in many ways we have built CareCloud through pursuing and executing on this strategy. These types of transactions have allowed us to cost effectively acquire customers, particularly at a lower cost than direct sales.
Stephen Snyder: while realizing synergies through integration into our global team and the proprietary technology.
Stephen Snyder: Revenue Medical Management expands our footprint into the audiology and hearing health market, a large and growing specialty care segment with limited health source or CM adoption.
Stephen Snyder: Mesa Billing, while also small, further validates the opportunities that exist in the acquisition market.
Stephen Snyder: Both deals are expected to be accreted within 90 days. Importantly, consideration is tied to retained revenue and paid quarterly, ensuring financial discipline and strong alignment with long-term value creation.
Stephen Snyder: With our enhanced financial position, operational readiness and AI-driven platform, we'll continue actively evaluate targets that are well priced and aligned with our strategic priorities.
Stephen Snyder: We delivered strong financial results, executed a significant step forward in the Re-struction or capital of base, re-entered the M&A market with our discipline approach and launched a bold new AI initiative that will shape the next chapter of our growth.
Stephen Snyder: With this strong start to the year at Conviction regarding our Strategic Initiatives, we remain confident in our ability to drive sustainable value for our shareholders and clients alike. I'll now turn the floor over to Hadi.
Hadi: Thank you, Steve, and thank you everyone for joining our call today.
Hadi: As Steve mentioned, Q1 marks the beginning of a pivotal year for CareCloud. We entered 2025 with strong financial discipline, healthy cash flows and an operational water is designed to scale.
Hadi: Our performance reflects that foundation and more importantly, it sets the stage for accelerated innovation, especially in AI.
Hadi: We are focused on transforming every aspect of the care journey through intelligent automation from clinical workflows and revenue cycle operations to patient engagement and analytics.
Hadi: The groundwork we have laid over the past two decades now enables us to move faster, execute with confidence and deliver AI solutions that create my arable impact across the healthcare ecosystem.
Hadi: Earlier this quarter, we officially launched the CareCloud AI Center of Excellence, a strategic initiative that establishes the foundation for the future of intelligent healthcare technology.
Hadi: While still early in development, we believe it is set to become the world's largest dedicated healthcare AI center as we scale to 500 AI professionals by the end of this year.
Hadi: Importantly, this initiative is fully self-funded, powered entirely by the company's internally generated cash flows, without reliance on outside capital.
Hadi: This reflects the strength of our underlying business model and our ability to invest in innovation while maintaining financial discipline.
Hadi: The center is the innovative engine behind our AI roadmap, driving advancements across clinical intelligence, revenue cycle automation, patient engagement, and real-time analytics.
Hadi: The sets of approach apart is a combination of proven infrastructure and deep strategic advantage, including.
Hadi: First of all, our deep healthcare DNA. For the over 20 years of experience, we understand how healthcare truly works, not in theory, but in practice.
Hadi: We process over 100 million clinical, financial, and administrative transactions each year, giving us one of the most diverse and representative real-world healthcare experience and data sets
Hadi: Our team includes thousands of professionals who have worked inside Revenue Cycle and Clinical Operations for decades solving complex problems at scale.
Hadi: We have developed thousands of live integrations with pairs, labs, pharmacies, and other third-party platforms putting us at the center of the healthcare data ecosystem.
Hadi: This isn't about how systems should work in textbooks. It's about how they actually work in practice.
Hadi: That insight enables us to build AI products that are bounded, effective and ready for immediate use across documentation, intelligent assistance, analytics, and denial management.
Hadi: It also empowers us to train proprietary domain-specific large-language models that reflect the complexity of real-world care, giving us a powerful edge over generic AI approaches.
Hadi: Unlike many startups building AI tools without real-world experience of meaningful data, CareCloud has both. That's why we can build AI that doesn't just look promising, it actually works.
Hadi: Second, Dual-Show Engineering at Scale, our hybrid US offshore delivery model ensures 24-7 development velocity and unmatched cost efficiency.
Hadi: Third, cost-talented vantage. We access highly skilled AI and engineering talent at globally competitive rates, enabling rapid scale without compromising quality.
Hadi: and Ford, Compliance Readiness, all development occurs within a HIPAA-compliance framework making over AI products secure, audit ready, and enterprise deployable from day one.
Hadi: This is an experimentation, a strategic execution, and it will drive over next generation of innovation across the CareCloud platform.
Hadi: Our long-term vision is to deliver a fully AI-enabled experience that spans the entire care continuum, from patient engagement to practice management, clinical documentation, Revenue Cycle Optimization, and Annalytics.
Hadi: This means intelligent patient interaction at the front end AI-powered support for providers within the EHR, automation and forecasting throughout the revenue cycle, and analytic tools that help administrators make smarter, faster decisions.
Hadi: This is not siloed AI, it's intelligent infrastructure natively embedded across our platform and services.
Hadi: While the AI Center sets the foundation for future innovation, I would like to take a moment to highlight the real progress we are already making with the AI solutions currently in
Hadi: Sir C.I. Nord's continues to gain traction with increasing recognition for its ability
Speaker Change: The RSA notes continues to gain traction with increasing recognition of its ability to streamline documentation, improve accuracy, and enhance clinical workflows, while adoption is still scaling early feedback shows strong alignment with provider needs.
Speaker Change: Ordin just an ambient documentation tool, Syracia I note suggests medical codes and treatment options helping close the loop between documentation and billing.
Speaker Change: We continue to enhance the solution with features like multi-lingual support, customizable templates and intelligent prompts while expanding specialty coverage.
Speaker Change: because it is fully embedded within the CareCloud EHRs. There is no toggling a disruption to workflow making it intuitive, efficient, and core pillar of our AI driven strategy.
Speaker Change: We are also seeing strong progress with Cirrus AI Voice, our AI Powered Call Center auditing and Quality Monitoring platform.
Speaker Change: This quarter, in addition to using it internally, we deployed CRSAI Voice with two high-volume healthcare organizations.
Speaker Change: on an evaluation basis. The system audits 100% of recorded calls, generates automated scorecards and delivers real-time insights into agent performance, sentiment, compliance and communication quality.
Speaker Change: initial feedback has been positive, particularly in the areas like compliance visibility, agent coaching, and operational efficiency pending successful outcomes we plan to move ahead with a formal commercial launch later this year.
Speaker Change: On the clinical side, CRSAI Assist is now embedded into the EHR, helping providers retrieve information, generate summaries, and answer clinical questions through natural language commands.
Speaker Change: We have also rolled out AI-driven chart summarization which helps providers distill complex nodes quickly, improving coding accuracy and reducing documentation time.
Speaker Change: On the RCM side, we continue to strengthen our denial prevention and management models, reducing rework and accelerating the PL cycles. We are also building forecasting and analytic tools to give practice managers real-time visibility into financial and operational performance.
Speaker Change: Each of these initiatives are designed not just to automate tasks [inaudible]
Speaker Change: to intelligently connect clinical and financial workflows for better speed, accuracy and outcomes.
Speaker Change: We're also advancing our specialty-based EHR strategy, which we introduced last quarter. These purpose-built solutions are designed for high-value specialties including dermatology, poditry, cardiology, gastroenterology, and journal surgery.
Speaker Change: Several of these systems are approaching launch and we believe their deep configurability and embedded AI tools will set CareCloud apart as a differentiated leader in the specialty EHR space.
Speaker Change: We are proud of what we have launched and even more excited about what's ahead.
Speaker Change: The CareCloud AI Center of Excellence is now operational and scaling fast.
Speaker Change: The work being done there is not theoretical. It's grounded in real workflows backed by real data and built for real providers.
Speaker Change: Beginning this quarter, we will provide regular updates on the progress of a recall center, including new product rollouts, adoption matrix, and real-world impact on quarterly basis.
Speaker Change: CareCloud is entering the new chapter, one that combines financial strength with bold innovation. We are confident in our direction and deeply grateful to our clients, employees and shareholders for joining us on this journey.
Stephen Snyder: With that, I will turn the call over to the interim CFO , Norman Roth, for a deeper dive into
Norman Roth: Thanks Heidi and thanks everyone for joining our call today. As you have just heard we had another strong quarter and are moving forward with our plans for this year. In particular, we are now generating strong amounts of free cash flow and resume paying dividends on our preferred shares which started in February .
Norman Roth: We will realize more than $10 million of annual cash savings on the Series A preferred stock
Norman Roth: as compared to our dividend obligations as they existed prior to the September 2024 proxy when the dividend rate was reduced to be consistent with Series B.
Norman Roth: and before we converted over 75% of our series A cheers into common stock. Additionally, we satisfied $11.4 million of accrued but unpaid dividends as a result of the conversion.
Norman Roth: Revenue for the first quarter of 2025 was $27.6 million, compared to $26 million for the first quarter of 2024.
Norman Roth: Recurring Technology Enabled Business Solution Revenue with 17.7 million users during the first quarter of 2025.
Norman Roth: Up approximately $400,000 from the first quarter of 2024, while non-recurring professional services revenue for medias are increased approximately $1.5 million.
Norman Roth: We generated $3.6 million of free cash flow for the first quarter and have our entire $10 million line of credit facility available to us.
Norman Roth: The key to growing our free cash flow has been reducing expenses and growing our gap net income.
Norman Roth: First quarter, 2025 gap net income was $1.9 million, as compared to a net loss of $241,000 in the same period last year. This is our fourth consecutive quarter returning to positive gap net income.
Norman Roth: Adjusted EBITDA for the first quarter 2025 was $5.6 million for a 20% of revenue compared to $3.7 million in the same period last year.
Norman Roth: This was an increase of 52% year-over-year. Adjusted net income was $2.3 million or $5 cents per share calculated using the end-of-period common shares outstanding compared to $220,000 per one-cent per share last year.
Norman Roth: As of March 31, 2025, the company had approximately $6.8 million of cash and networking capital of $11.7 million.
Norman Roth: Now that we have repaid our bank debt and reduced our dividend commitments, pre-cash flow during 2025 will allow us to invest for growth while we increase our cash balance and build additional working capital.
Norman Roth: We are fortunate that we have not been affected by any of the recent tariffs that were instituted or contemplated.
Norman Roth: since starting to apply to physical goods, not services, even better, the revenue of our doctors practices, our customers, should not be significantly affected by the tariffs, or the uncertainty of potential recessions or inflation, so we don't anticipate the pressure of reduced demand for our services.
Norman Roth: Based on this, I am pleased to report that unlike many other public companies, CareCloud is reaffirming our guidance for 2025. We anticipate full year 2025 revenue of approximately $111 to $114 million dollars.
Norman Roth: Primarily from existing clients with small organic growth in new client additions and a few small tuck-in acquisitions that shows the two we have closed in the last few months.
Norman Roth: Adjusted EBITDA is expected to be between $26.28 million for 2025 and reflects improvements from the company's cost reduction efforts even after our investment in the new NIE Center of Excellence.
Norman Roth: We expect Gap earnings for sure to be 10 cents to 13 cents, which is the first positive Gap EPS after dividends since we went public in 2014.
Norman Roth: We also filed the form S3 Shell Registration Statement which is now effective, allowing us to sell various securities to the public.
Norman Roth: So we have the flexibility to sell shares if we meet capital and prices are favorable.
Speaker Change: Our financial position has improved tremendously during the past 12 months. It is great to have returned to profitability and to hear Heidi and Steve talk about our investments to return the company to growth.
Speaker Change: We look forward to reporting strong results for the remainder of 25. With that, I'll turn the call over to our Chairman Mahmud for his closing remarks. Mahmud?
Mahmoud: I want to sincerely thank our employees, clients and shareholders for their continued trust and support.
Mahmoud: As we look ahead, we remain committed to discipline execution, sustainable growth, and creating long-term value for all our stakeholders. Operator, please open the line for questions.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your questions from the queue.
Mahmoud: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock keys.
Mahmoud: David and Chairman, we will wait for a moment while we poll for questions.
Speaker Change: The first question comes from the line of Allen Klee from Maxim Group. Please go ahead.
Alan Klee: Yes, good morning. Congratulations. I believe this was your first quarter of year-over-year revenue growth in over two years.
Speaker Change: and better than what I was projecting. And then I just heard Norman mention that Mayda Saur was up year over year, which I can't remember the last time that happened. So, could you go into a little detail of what?
Speaker Change: What were the key factors for how revenue grew and how you think the quarter did versus your expectations going into it? Thank you.
Speaker Change: Sure, Allen, we would be happy to. Maybe I'll get to start it and then Norma Haddie can jump in. So, if you think about the year still, our guidance is 114.
Speaker Change: So after a year in 2024, where we were really laser focused on...
Speaker Change: Refreshing the overall capital structure. I think you're beginning to see some evidence that we're having some early success in terms of being able to pivot back into growth.
Speaker Change: and I think you're right, certainly from a menace r perspective. That in particular is an outlier. For menace r, however there was a large project during the first quarter of this year.
Speaker Change: So, as we move forward, I wouldn't expect there to be from a medisart perspective, a continuing year-over-year increase that's certainly, instead, we're really modeling revenue being essentially flat for medisart.
Speaker Change: In terms of the larger organization, kind of where we're focused, we're focused on really selling our existing client base together with some of these net new opportunities that had had spoken about that would be really facilitated by these.
Specialty Specific EHRs,
Speaker Change: and then the final part of the overall growth strategy really involves the source of tuck-ins that over years have really been a key driver in terms of our overall growth.
Speaker Change: These are the tuck-ins that are similar to the Revenue Med and Mesa tuck-ins that we've completed so far this year where we're able in a very cost-efficient way to be able to acquire those customer relationships.
http://TheBusinessProfessor.com
Norman Roth: So, I don't know if you have any other color to add from your side to Norm.
Speaker Change: No, I think that was very good, Steve. As you said, we had the Special Medis arc project, our CCM and RPM services, we're up a little bit of quarter over quarter. So yes, I agree on this for the first time we've been up and thank you for the comment.
Thank you.
and then...
Speaker Change: I have a lot of minutia questions but I'll hold back on them. I get us maybe just on as you think about what you're doing in AI, which is
a lot. How do you think of that?
Ideally, the
Speaker Change: when you'll see for the people that are getting hired, when you might see some products as a result of that. If you can, I don't know if you can.
Speaker Change: The projects that we have been able to deliver and the progress we have made are their adoptions and
Speaker Change: The certain performance matrix, the matrices, and that's why we'll keep a regular cadence of the communication for the things that we have completed. Of course, every quarter there will be projects that will be completed. We already have started to gain traction on some of the back-end processes or the back-end projects to improve the overall efficiency of RCM on the front-end from the EHR and practice management platform perspective.
Speaker Change: and some of these other initiatives, such as the Versace I know, and the Call Center solution, and there are many others in the queue, but every quarter you will see the results and we will be communicating those.
Speaker Change: Thank you. I'll just ask one more question. Then I'll go back in the queue to give other people time right now. But how do you think about the seasonality of your business for the remaining quarters of the year?
Thank you.
Speaker Change: Good question, Allen. So from a seasonality perspective, of course, typically our first quarter is lower due to deductibles. And that would be the case this year, but for an outlier that we had from a medissar perspective. So as we think about the overall year, I think we think maybe less so with regard to seasonality and more so thinking about what's the overall number that we think has achieved.
All right.
Speaker Change: But to your point, still modest growth after a few years of declining revenue so so we're excited about that and we think that the the first quarter is
Speaker Change: Provided some additional evidence that were on track when it comes to being able to not only reduce cost last year, but then leverage that lower cost.
Speaker Change: Thank you so much. I'll hop that back in the queue. Thank you.
Thank you.
Speaker Change: Thank you. The next question comes from the line of Michael Kim from Zach Small Cap Research. Please go ahead.
Michael Kim: Everyone, good morning, and thanks for taking my questions. First, just given the strengthening balance sheet and building free cash flow.
Michael Kim: particularly in light of the lower dividend payments related to the Series A conversion that you referenced, just wondering if you could update us on...
Michael Kim: sort of capital allocation priorities as you think through continuing to reinvest for growth versus increasingly capitalizing on M&A opportunities. Thanks.
Michael Kim: Sure, no, thanks for your question, Michael, and to your point.
Michael Kim: We believe that we're in a great position to be increasingly strategic, as you say with regard to the Capitol allocation.
Speaker Change: In terms of priorities, our first priority really would remain reinvesting in the business. As Hadi said, with a particular focus on reinvesting in particular in AI,
Speaker Change: We're continuing the scale. It's Heidi described the AI Center of Excellence.
which is really the pump best.
Speaker Change: towards driving this generative AI automation, improving client outcomes, and then long-term expanding margins. And we see AI as a really core engine for both operational efficiency and also for long-term product innovation and long-term growth.
Speaker Change: Having said that, of course, at the same time, we're actively pursuing tuck-in acquisitions.
Speaker Change: and in particular, tuck-in acquisitions that align closely with what we believe to be our existing capabilities and our existing client-based insuring that there are synergies, so...
Speaker Change: are a very fruitful avenue for allocating capital because they allow us to bring customers into this ecosystem at a significantly lower cost per customer acquisition as compared to traditional sales and marketing.
and then, of course, as you know, once they're integrated,
Speaker Change: to answer your question. It's really a balanced approach. We're investing in this next generation of technology while at the same time deploying capital in it.
Speaker Change: in a disciplined M&A effort with an effort into the long term to grow efficiently and also to be strategic in the way in which we're expanding.
Thank you. Thank you. Thank you.
Speaker Change: Scott, that's helpful. And then on the expense side, just to follow up on some of your comments, but just curious if you could discuss maybe some targeted areas for further efficiencies as you increasingly leverage AI and technology more broadly. Thanks.
Speaker Change: Certainly. No thanks for your question again. So of course last year we endeavored and we accomplished
being able to cut about $25 million worth of
Speaker Change: So we'll continue to do that. This year I think one of the key areas that I would really be focusing in on as an investor is what we're able to do from the AI Center of Excellence.
So for this year,
Speaker Change: We of course are going from 50 to 500 team members at AI Center of Excellence. Again, as Hadi mentioned, it's completely self-funded. It's really not a cost center, or I wouldn't view it as a cost center, I'd really view it as essentially a value generator. And the value, I think, well of course.
Speaker Change: In part come from better positioning us as a leader in the AI space within healthcare, but also in ways that are not as perceptible to those from a front end perspective on the back end.
Speaker Change: We're already making early and meaningful progress at the Plan AI to in an intelligent way.
Speaker Change: to automate the Revenue Cycle, the core functions of the Revenue Cycle.
So this includes things like...
Corp aspects of our overall eligibility verification.
Speaker Change: being mindful in terms of denials, being able to prevent those denials and manage those denials. Things like payment forecasting is increasingly done by AI internally. And this from an operational perspective also includes things like
Speaker Change: Something close to the entire entirety of that overall appeals process from the initial denial all the way through the re-adjudication and also up to payment.
So, I'm like, I think that from a cost savings perspective,
Michael Kim: and from an efficiency perspective, I think really AI will play a key part of that.
of that story as we move forward. [inaudible]
using AI again to streamline these internal workflows.
Michael Kim: and to evaluate overall internally what's happening within our own company and to really drive the next steps of what we think has to occur within the company. So I think from a cost perspective that AI will essentially create additional...
Speaker Change: Headroom in which we can operate as we continue to move forward. I think one of the things too that Hathi, if you think about the AI just for a moment, I think one of the things that Hathi mentioned that I think is really key, which is kind of...
Speaker Change: Our scale and the experience that we have processing millions of transactions monthly, William allows us to, in a unique way, to deploy and to iterate these kind of models.
Speaker Change: quickly in live environments to make changes to the environment, to what we're deploying, gives us immediate real-time feedback and it gives us that kind of on a wholesale basis in mass. It creates a bit of a flywheel effect if you think about it. It allows us to
Speaker Change: kind of develop learning more quickly to achieve better outcomes and to accelerate this path forward from an operational perspective. So, I think again to...
Speaker Change: Our overall size, the fact that we're working with millions and millions of transactions each month really uniquely positions us to be effective we believe when it comes to AI as contrasted with many other players in the industry who are really more approaching this.
Speaker Change: from a textbook perspective as Heidi mentioned. They may be correct in terms of from a textbook perspective what the next steps, but if they lack the ability to actually in real-time [inaudible]
Test.
They're overall, you know,
Textbook, Answer against the real world dynamics.
Speaker Change: They lack the ability to innovate and iterate as quickly as we can. So from an expense standpoint, again, I think I would focus this year more on what can we achieve as we deploy and leverage AI.
Very helpful. Appreciate the color. Thanks
Thank you.
Speaker Change: Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one.
Speaker Change: We take the next question from the line of Allen Klee from Maxim Group. Please go ahead.
Alan Klee: Yes, hi. I know it's not a large part of your revenue, but I think it's pretty interesting and has a lot of potential. Could you comment on remote patient monitoring and chronic care management of where you see that and the opportunity?
Alan Klee: Sure, we'd be happy to. So if you look at the revenue from the first quarter, you'll see your growth of 25, 30% roughly in terms of RPM and CCM and agreed. We're very excited about RPM and CCM. It's a natural fit from an upselling perspective as we're able to also acquire new business.
Alan Klee: It's a natural go-to in terms of being able to add value and expand the overall, the overall opportunity to generate increased revenue on a same-store basis.
Alan Klee: An engine within the company that allows us not only to better meet the needs of our clients,
and their patients, but also to increase revenue.
Speaker Change: Still on balance as you said, Michael, as you said, Allen, it still represents a relatively small portion of our overall revenue and really will continue to be...
Speaker Change: will continue to be a relatively small portion of revenue. I think right now it represents it's less than 5% 4% give or take.
Speaker Change: So during the year, as we continue to grow that, it may grow by a percentage or something along those lines, but in terms of the overall company it will still represent an exciting but still a relatively small portion of the revenue.
Thank you.
[inaudible]
Speaker Change: Okay, great. In my last, well, I'm going to lump three questions. But they're kind of minutia on financial stuff. Figured.
Speaker Change: Cost of good revenues is also good sold as a percentage of revenue declined to 56% in the quarter compared to 58% of our half percent in Q1 25. My question is
Speaker Change: and you've talked about some efficiencies. Do we believe that type of...
Speaker Change: Change is somewhat sustainable, and then during the quarter, if we look at year-to-year,
Speaker Change: Dale's in marketing looks like you've been lower on that than you've been growing R&D and I guess we should kind of think out of those trends continuing and then finally
Speaker Change: How should we, your actual tax rate you've been paying is pretty low, is it reasonable to assume that space is at around that rate? Thank you very much.
Speaker Change: So, yeah, good question, I don't thank you. So, yeah, I think the, when you look at the cost of revenue, I believe it's sustainable, and, you know, we're looking for additional improvements, of course you probably had a little bit of growth in the first quarter, because, you know, the metastar wages, most of the people are contractors, so they're hired for a specific project.
Speaker Change: So, you know, those people don't continue once the project is over. I just didn't follow your question on sales and marketing and R&D if you could maybe just reiterate that please.
Speaker Change: You were able to reduce your sales and marketing expenses a percent of revenue? Is that something you think is sustainable at a lower rate of revenue?
Speaker Change: Good question, Allen. And I think if we step back for a moment and think about the historic growth today, roughly 80% of our clients joined us through acquisitions. So as we move forward, I think that
Speaker Change: and there will be a similar percentage of new relationships that join us through acquisitions. I can't say specifically to be 80%, maybe it'll be something more or something less, but...
But a quesit of growth will continue to be...
Speaker Change: a core part of our overall growth strategy as we move forward. So you may not see that impact necessarily in the sales and marketing expense line. So, you know, the overall growth won't really be directly related in the strict sense to what you can discern from a sales and marketing perspective.
Speaker Change: But I'm not sure if that answers your question or not.
Yes, thank you. And then, Cuxerite.
Thank you. Thank you.
Speaker Change: The tax rate? Is that the final question? The other question? Yeah, it's reasonable to think it stays at a relatively low rate.
Speaker Change: Yes, yes, I would think so, Allen, because as you read in our footnotes, you know, we have sufficient NOLs, so we're not paying federal tax, so our taxes are basically...
State Minimum Tax.
You know what this is?
Speaker Change: You know, not a large number, so yeah, I would think.
Speaker Change: That tax rate would stay consistent, you know, and it's going forward for her.
Percival Future.
That's great. Thank you so much.
Thank you. Thank you.
Speaker Change: Ladies and gentlemen, after I know for the questions, I will now hand the conference over to Norman Roth for his closing comments. Norman?
Norman Roth: Thank you everyone for attending our call today. I have a great day. So long.
Thank you. Thank you. Thank you.
Speaker Change: Ladies and gentlemen, the Conference of CareCloud Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.
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