Q3 2025 CareCloud Inc Earnings Call
Speaker #1: Greetings and welcome to the CareCloud, Inc. third quarter 2020 results conference call . At this time , all participants are in a listen only mode .
Speaker #1: A question and answer session will follow the formal presentation . If anyone requires operator assistance during the conference , please press Star Zero on your telephone keypad .
Speaker #1: As a reminder , this conference is being recorded . I would now like to turn the conference over to your host , Kristen Rossi .
Speaker #1: You may begin .
Speaker #2: Good morning everyone . Welcome to CareCloud, Inc. third quarter 2025 conference call . On today's call are Mahmud Haq , our founder and Executive Chairman .
Speaker #2: Co-Chief Executive Officer Stephen Schneider , and Hadi Chaudhry and Norman Roth , our interim chief Financial officer and corporate controller . Before we begin , I would like to remind you that certain statements made during this conference call are forward looking statements within the meaning of section 27 of the Securities Act of 1933 , as amended , and section 21 of the Securities Exchange Act of 1934 , as amended .
Speaker #2: 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 .
Speaker #2: Expected growth , business outlook and potential organic growth in acquisition . Forward looking statements may sometimes be identified with words such as will , may , expect , plan , anticipate , approximately , upcoming belief , estimate or similar terminology and the negative of these terms .
Speaker #2: 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 to differ materially from those contemplated in these forward looking statements .
Speaker #2: These statements reflect our opinions only as to the date of this presentation , and we undertake no obligation to revise these forward looking statements in light of new information or future events .
Speaker #2: 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 #2: For anyone who dialed into this call by telephone , you may want to download our third quarter 2020 earnings presentation . Please visit our Investor Relations site .
Speaker #2: I CareCloud, Inc. click on news and events . Then click IR calendar . Click on third quarter 2020 results . Conference call and download the earnings presentation .
Speaker #2: Finally , on today's call , we may refer to certain non-GAAP financial measures . Please refer to today's press release announcing our third quarter results .
Speaker #2: 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 Snyder Steven .
Speaker #3: Thank you . Kristen , and good morning , everyone . We appreciate you joining us . As we discuss our year to date performance and progress against our strategic objectives .
Speaker #3: Q3 was a truly transformational quarter for Carecloud . We delivered strong results and hit important AI milestones while simultaneously closing two strategic acquisitions that expanded our reach into the hospital market and deepened our analytics and benchmarking capabilities .
Speaker #3: I'm excited about what this means for our overall trajectory and for the value we can create for providers in today's market . Also , we are pleased to be raising full year revenue guidance to 117 to $119 million , up from the 111 to 114 million we set at the beginning of the year .
Speaker #3: And we are reaffirming adjusted EBITDA guidance of 26 to 28 million and GAAP EPs guidance of $0.10 to $0.13 , reflecting the momentum we are seeing and disciplined execution .
Speaker #3: Turning to the quarter , CareCloud, Inc. delivered another period of profitable growth with revenue of 31.1 million , an increase of 9% from the same period last year .
Speaker #3: Further growth is converting to earnings power . GAAP EPs improved by $0.08 year over year to $0.04 and adjusted EBITDA increased 13% to 7.7 million , demonstrating operating leverage in our model .
Speaker #3: I'll come back to guidance in a moment , but first , I want to go deeper on the two strategic acquisitions that are reshaping the company .
Speaker #3: Namely Medsphere and Map app . First , on August 22nd , we completed the acquisition of the assets of the Medsphere Systems Corporation .
Speaker #3: This transaction represents a significant expansion of Carecloud into the inpatient market . Historically , Carecloud has been known primarily for its ambulatory solutions revenue cycle and technology enabled services .
Speaker #3: Medsphere immediately broadens that profile . We can now serve community hospitals , regional systems , and critical access hospitals with a full stack that includes care , view and integrated inpatient EHR .
Speaker #3: Rxm cloud , which extends our revenue cycle capabilities into hospital billing and collections . While soft , a class recognized emergency department information system , Healthline for hospital supply chain management , chart logic our ambulatory EHR and practice management suite , which has a particular strength in the surgical subspecialties such as orthopedics market , where which provides physician relationship management and referral analytics to grow service lines and reduce referral leakage .
Speaker #3: And managed it services for implementation , interface management infrastructure support and a 24 over seven help desk . Put simply , we've evolved from an ambulatory first company to serving the entire care continuum .
Speaker #3: We can now support the full patient-clinician journey, from the doctor's office or outpatient clinic to the emergency department, into the inpatient bed, through the revenue cycle, and even into the supply chain.
Speaker #3: That is a fundamentally different and stronger posture for Carecloud . Scale matters here as well . Medsphere brings a national network of hospitals and gives us immediate hospital reach and credibility of buyers , who are often priced out of large enterprise suites , but still need AI enabled capabilities to operate .
Speaker #3: Consistent with our playbook , we were disciplined in how we financed it . We acquired Medsphere for $16.5 million , funding , roughly half with cash on hand , and the balance under our new credit facility .
Speaker #3: Since closing in late August , we've rapidly delivered and have already reduced the finance portion by nearly half . And today , the outstanding balance on the line of credit is under $5 million .
Speaker #3: In other words , approximately 70% of the purchase price has been funded from our internally generated cash . And we expect to pay off the remaining balance to zero over the upcoming months .
Speaker #3: Further , we executed this plan with no dilution to common shareholders . That is what we mean by disciplined capital allocation . We added an at scale hospital .
Speaker #3: IT platform and client base while strengthening the balance sheet and driving positive cash flow . Our near-term integration priorities are straightforward . First , cross-sell and upsell .
Speaker #3: We are beginning to introduce AI driven revenue cycle services , analytics and automation across the Medsphere hospital footprint to help facilities collect cash faster and at higher levels .
Speaker #3: Address staffing constraints , and gain access to integrated AI solutions that were previously out of their reach . Second , infrastructure leverage . We are aligning Medsphere support , implementation and managed services with care operating model to accelerate go lives and lower support costs per client .
Speaker #3: Supporting margin expansion over time . Medsphere is not just more revenue , it is strategic positioning placing us firmly inside the hospital . It stack with deployed assets and creating a national cross-sell channel for our AI and RCM automation .
Speaker #3: The second transaction since our last earnings call was our acquisition of Mapap from the Healthcare Financial Management Association , which closed on October 1st .
Speaker #3: Alongside a long term joint marketing agreement . Mapap is a hospital benchmarking and performance analytics platform used by leading hospitals and integrated delivery networks to measure and compare revenue cycle metrics such as cash collections , efficiency denial , performance and cost to collect exactly the levers CFOs and revenue cycle leaders are focused on right now .
Speaker #3: Hfma built this tool to show with clarity where an organization is underperforming and what best in class looks like . That matters for us .
Speaker #3: For multiple reasons . First , we move up the decision stack . We can now walk into a CFO conversation , leading with benchmarking insights and and tie gaps directly to our solutions .
Speaker #3: Second , we create an analytics led plan of action map that can identify the problems and care RCM capabilities and AI automation can then in turn , provide the solutions .
Speaker #3: Third , through our joint marketing agreement with Hfma , we further extend our reach and our credibility in the hospital finance leadership . From a near-term revenue standpoint , Mapap is about improving win rates and expansions into 2026 and beyond , particularly on top of the Medsphere base .
Speaker #3: And there is a tight product fit with our AI Center of Excellence . We intend to enrich map benchmarks with AI driven recommendations where a provider , for instance , is underperforming the expected dollar impact of closing that gap .
Speaker #3: And the automation to prioritize first . That is where the market is going , and we intend to lead it . Let me close with how we see the path forward .
Speaker #3: Again , we are increasing our full year 2025 revenue guidance to a range of 117 to 119 million , and reaffirming adjusted EBITDA guidance of 26 to 28 million , with 10 to $0.13 of GAAP EPs .
Speaker #3: More importantly , we believe the combination of Medsphere and Mapap positions carecloud very differently from a year ago . We now have a credible hospital presence covering inpatient EHR , EDI systems , RCM technology , analytics , supply chain and managed IT already deployed in facilities across the country .
Speaker #3: And we have a benchmarking engine that allows us to start commercial conversations with data , not just a pitch . And we have an AI Center of Excellence that sits on top of both driving targeted automation , measurable financial benefits , and operating leverage .
Speaker #3: We're doing all this while remaining profitable , generating cash and preserving flexibility , said simply . We are building an integrated , AI enabled ambulatory and hospital platform that's designed to meet and exceed the needs of providers in today's market .
Speaker #3: With that , I'll turn the floor over to Hardi to discuss how we are Productizing AI . Inside clinical and in strike that stop .
Speaker #3: With that , I'll turn the floor over to Hadi to discuss how we are productizing AI inside clinical and revenue cycle workflows , and then the norm for additional financial details .
Speaker #3: Howdy .
Speaker #4: Thank you . Steve , and good morning , everyone . I would like to start by echoing Steve's comments and thanking all of you for joining us today .
Speaker #4: Artificial intelligence remains at the center of CareCloud, Inc. transformation strategy , driving both operational efficiency and long term growth . Over the past year , we have made measurable progress , embedding AI across our platform , improving clinical documentation , accelerating revenue cycle performance and modernizing patient engagement through our AI Center of Excellence .
Speaker #4: We are rapidly converting innovation into results , enhancing client productivity , reducing costs , and positioning Carecloud as a scalable , differentiated player in the healthcare technology landscape .
Speaker #4: One of the most exciting developments from our AI Center of Excellence is our upcoming AI Front Desk solution , which is currently in advanced pilot testing and scheduled for formal launch in mid-December .
Speaker #4: This next generation multilingual , voice driven digital assistant autonomously managed patient calls , handling , appointment scheduling , rescheduling and cancellations . New patient registrations , prescription refills , lab results , inquiries , preventive care reminders , billing questions and referral requests .
Speaker #4: All through natural conversational interactions . Operating 24 over seven with no hold times , it can securely access , process and where needed , update real time clinical and financial data to deliver accurate , contextual responses .
Speaker #4: The system will fully integrated with CareCloud, Inc. EHR and practice management platforms , and can also interface with other leading systems across the industry to the best of my knowledge , none of our direct competitors are offering this level of proprietary AI capabilities for depth in our pilot deployments .
Speaker #4: AI front desk solution has already delivered strong results , successfully handling over 70% of incoming patient calls . End to end without human intervention , and achieving over 80% success in appointment scheduling and related tasks .
Speaker #4: The pilot included calls in multiple languages , roughly 90% English and 10% Spanish , demonstrating the system's ability to serve diverse patient populations .
Speaker #4: Lastly , by reducing administrative burden , eliminating wait times , improving patient access , and removing language barriers , this solution creates measurable efficiency gains and represents a major growth opportunity for carecloud .
Speaker #4: As we scale its deployment . Looking across both our client base and the broader market , the opportunity for this technology is significant as a fully integrated and highly scalable solution , the Agentic AI front desk is positioned to transform patient communication across both ambulatory and hospital settings .
Speaker #4: We see strong potential to deepen relationships with existing clients while expanding adoption among new healthcare organizations , unlocking meaningful , recurring revenue opportunities .
Speaker #4: As this solution scale . At the end of my remarks , we will play a brief recording of a real patient call that highlights the depth and capability of our AI solution .
Speaker #4: We have chosen a more complex interaction rather than a routine scheduling call to show the system sophistication and versatility . This recording was shared with patient consent and all protected health information has been removed in full compliance with HIPAA .
Speaker #4: Following our recent acquisition of Medsphere , we are making steady progress on the integration and modernization of their platform portfolio . Our roadmap is centered on merging Medsphere care view inpatient system with care Cloud's ONC certified platform , creating a unified next generation solution tailored for community and critical access hospitals .
Speaker #4: A major focus is on reestablishing Care View as an industry leading , mobile friendly platform designed to simplify workflows for physicians and nurses .
Speaker #4: While improving speed , usability and access across devices . In addition , chart Logic customers will gain access to care clouds proprietary EHR practice management and AI enabled capabilities , expanding the value of our combined portfolio .
Speaker #4: We are also working on plans to advance the recently acquired Hfma map app , a benchmarking tool that helps providers compare key operational and financial metrics .
Speaker #4: Our goal is to enhance it with AI driven analytics and predictive insights , transforming static benchmarks into actionable intelligence and further extending our AI footprint to help healthcare leaders optimize performance in real time .
Speaker #4: Together , these initiatives reflect how Carecloud is evolving into a unified , AI driven healthcare technology company . Now serving both the hospital and ambulatory segments .
Speaker #4: By connecting front office automation , clinical intelligence , and financial performance within a single platform . We are expanding our reach , strengthening our product portfolio and positioning Carecloud to deliver stronger growth , improved margins and sustained value creation .
Speaker #4: Heading into 2026 . Before I hand the call over to Norman Roth , our interim CFO and controller , let's listen to the patient call I mentioned earlier .
Speaker #4: Demonstrate the real world depth and capability of our Agentic AI front desk solution .
Speaker #5: Welcome to Doctor office . This is Sara . This call may be recorded for quality assurance and training purposes . How can I help you today ?
Speaker #6: I got Bill from LabCorp and they want the doctor to send them the code for the blood test .
Speaker #5: I understand you've received a bill from LabCorp and need assistance with getting the proper code sent from our doctors . Please wait one second .
Speaker #5: I need to verify your identity first . I see your phone number is seven three . Two . Is that correct ? Thank you for confirming to verify your identity .
Speaker #5: Could you please tell me your date of birth ?
Speaker #6: Six .
Speaker #5: Thank you . I can help you with your LabCorp bill issue . Let me check your lab results to see what's going on with the codes .
Speaker #5: I can see your lab results from LabCorp to help with your billing issue . Could you tell me which specific blood test date this bill is referring to ?
Speaker #5: I see you've had several tests done with LabCorp over time .
Speaker #6: Yeah , there was one titled . The other one is Vitamin B12 . And then there is one that's vitamin D3 . Level .
Speaker #5: Thank you for that information . I see you had lab work done on July 21st , 2025 that included TSH , thyroid test , vitamin B12 and vitamin D , 25 hydroxy total .
Speaker #5: Is this the lab work you're referring to ?
Speaker #6: Yes . There is more .
Speaker #5: I see that you're July 20th .
Speaker #6: Are the main .
Speaker #5: I understand for your July 24th and 2025 lab work with LabCorp . I can confirm that the test included TSH , thyroid , vitamin B12 and folate , and vitamin D 25 hydroxy total , along with several other tests .
Speaker #5: This lab report has been signed by the doctor , and there are comments from Doctor noting to check how much vitamin B12 you're taking and continue to monitor .
Speaker #5: I'll create a task for doc to send the proper billing code to LabCorp regarding these tests . This should help resolve your billing issue .
Speaker #5: I've created a high priority task for our staff to address this issue . This office will send the proper billing codes to LabCorp for your July 21st test .
Speaker #5: This should help resolve the billing issue . You're experiencing . Is there anything else you need help with ?
Speaker #6: No . That's it . Thank you . But please make it faster because LabCorp is bothering me .
Speaker #5: I completely understand your frustration with LabCorp bothering you about this. I've marked the task as high priority, and the doctor’s office will address this as soon as possible.
Speaker #5: They should contact LabCorp with the proper codes quickly to resolve this billing issue for you . Thank you for your patience . And please don't hesitate to call back if you need any further assistance .
Speaker #7: Thank you . Heidi . That was a very interesting demonstration of our AI capabilities . And thanks everyone for joining our call today .
Speaker #7: We delivered another strong quarter reflecting the strength of our business model and the disciplined execution of our strategic priorities . Positive earnings per share and strong cash flow .
Speaker #7: Underscore our continued operational efficiency and financial health . During the nine months ended September 30th , 2025 , we generated $19.9 billion of cash flow from operations compared to $15.4 million in the same period last year .
Speaker #7: In the third quarter , we reported revenue of $31.1 million , an increase of $2.5 million compared to the same period last year .
Speaker #7: CareCloud, Inc. generated approximately 900,000 in revenue for the quarter , and approximately $2.6 million for the first nine months of this year . There was approximately $3.4 million in revenue related to the Medsphere acquisition , which was completed toward the end of this past August .
Speaker #7: In the third quarter , we reported GAAP operating income of $3.2 million and GAAP net income of $3.1 million . This is consistent with the GAAP operating income of $3.3 million and GAAP net income of $3.1 million .
Speaker #7: During Q3 2020 . For . The GAAP net income per share for the quarter was $0.04 , based on the net income attributable to common shareholders , which takes into account the preferred stock dividends .
Speaker #7: There was a loss of $0.04 per share in the third quarter of 2020 for non-GAAP adjusted net income for the third quarter of 2025 was $4.4 million , or $0.10 per share , calculated using the end of period common shares outstanding .
Speaker #7: We reported adjusted EBITDA of $7.7 million in the third quarter, compared to $6.8 million in the same period last year. Revenue for the nine months of 2025 was $86.1 million, compared to $82.6 million for the same period in 2020.
Speaker #7: Four . For the first nine months of 2025 , the company's GAAP net income was $7.9 million compared to GAAP net income of $4.6 million for the first nine months of 2024 .
Speaker #7: This equates to income of $0.07 per share after subtracting the preferred stock dividends . This compares to a 28 cent loss for the same period last year .
Speaker #7: non-GAAP adjusted net income for the nine months was $10 million , or $0.24 . $0.24 per share , year to date . The adjusted EBITDA was $19.9 million , an increase of $3 million from $16.9 million in the same period last year .
Speaker #7: As of September 30, 2025, the company had approximately $4.3 million in cash, net of restricted cash of $815,000. Net working capital was approximately $6.1 million.
Speaker #7: We have a new $10 million line of credit with Provident Bank , and as of September 30th , 2025 , the line of credit balance was $6.5 million .
Speaker #7: Since then , we have made $1.6 million of additional payments on the line of credit , bringing the balance today to $4.9 million .
Speaker #7: Our intention is to fully pay the balance on the line of credit as soon as possible . We remain focused on profitability and cash flow and delivering long term shareholder value .
Speaker #7: We look forward to updating you at year end . With that , I'll now turn the call over to Mahmoud for his closing remarks .
Speaker #7: Mahmoud .
Speaker #8: Thank you , Noam . As we look ahead to 2026 , we remain focused on driving innovation , improving patient experience and creating lasting value for our shareholders .
Speaker #8: I want to thank our employees for their dedication , our clients for their continued trust , and our shareholders for their confidence and support .
Speaker #8: Thank you . Operator . You can open the call for questions . Thank you .
Speaker #1: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .
Speaker #1: A confirmation tone will indicate your line is in the question queue . You may press star two . If you'd like to remove your questions from the queue .
Speaker #1: For participants using speaker equipment , and may be necessary to pick up your handset before pressing the star keys . Thank you . Our first question comes from the line of Ellen Kelly with Maxim Group .
Speaker #1: Please go ahead .
Speaker #9: Hello . Good morning . Great quarter . Starting out with your push into the hospital space . Can you talk about your plan to try to win new customers and grow sales ?
Speaker #9: What's your go to market strategy on that ?
Speaker #10: Good morning . Allen . Certainly . So if we step back for a minute , we think about what has transpired since our last earnings call .
Speaker #10: We would really focus in on two primary things . One would be the acquisition of Medsphere . The second would be Mapap . If we think about Medsphere , Medsphere truly brings us from the position we are in .
Speaker #10: A year ago , roughly where we were an ambulatory centric provider to one that that will serve the full care continuum . And it with it immediate credibility and community hospitals , acute care facilities , critical access hospitals and the like .
Speaker #10: And then the second would be mapap . So Mapap brings with it the analytics engine and the credibility to be able to extend the the throughput of the overall medsphere operations and , and and cross-selling within that same hospital segment .
Speaker #10: So if we think about the more immediate opportunities our our near-term opportunities , candidly , will really be more so focused on cross-selling and upselling into that installed base .
Speaker #10: So we are now working with hundreds of hospitals throughout the country , and we have the opportunity to cross-sell our AI solutions to implement the AI solutions , to embed them more fully in existing platforms , to cross-sell and upsell our solutions into those existing relationships .
Speaker #10: That would be really the first order of priority or second order of priority will really be more focused on extending the same benefits that we're able to deliver to these existing customers , to the broader hospital community , with a focus initially on critical access hospitals .
Speaker #10: There are more than 1400 critical access hospitals throughout the country . They are underserved in terms of their technology opportunities . From a platform perspective and also in terms of the opportunity to avail themselves of RCM and and AI platforms .
Speaker #10: So we see a significant opportunity to be able to sell into these critical access facilities . But that will really come in an order of second priority in relationship to the significant upselling , cross-selling opportunities we have in the existing base .
Speaker #9: Thank you . My next question after that , I'll go back in the queue and ask more after other people . Is for AI .
Speaker #9: How are you thinking about the rollout of the new your new offerings ? Thank you .
Speaker #11: Thank you and thanks for . Thanks for your question . I think before even getting into the getting into the more specific to the products of this FDA genetic AI .
Speaker #4: Product , as an example , let's look at let's understand if we if we can take a note of how this whole AI landscape is changing and evolving , especially in the healthcare .
Speaker #4: And if you think about it , in the first six months of 2025 alone , nearly 6 billion of venture funds into digital health and about 60% of that was captured by AI startups .
Speaker #4: So that level of in investment is basically is transforming the AI landscape and especially into the clinical , financial and operational workflows . And before , if you think about our own opportunity of this FDA into the space of this voice based AI , as we all have heard about one of the prominent names Soundhound , they did really well .
Speaker #4: They have demonstrated how scalable conversational AI can be across industries . If you if you think about it , I think their 2022 revenue was approximately $46 million to now they have they expecting the 2025 revenue to be about 160 to $270 million .
Speaker #4: And with that , their market cap is around 7 billion today . So that's success , at least validates both the demand and the value creation potential for for high performing voice .
Speaker #4: Now , if you look at the healthcare , the biggest barrier is domain depth . And compliance . Healthcare , as we all know , isn't just about understanding the speech .
Speaker #4: It's about understanding clinical context . Pair rules . Fei privacy and Interoperability standards . And if you think about Carecloud , we have we have been we have spent years in building the infrastructure and certification to make this thing possible .
Speaker #4: So while voice AI companies are great at natural conversations , but we think that the Carecloud advantages in operational execution into the healthcare workflows .
Speaker #4: So another differentiator , if you think about this AI front desk solution , that it isn't just a bolt on voice tool , it's natively built into our EHR and practice management platforms , which gives us a secure , real time access into the high , highly regulated clinical and financial data .
Speaker #4: So while Soundhound and many other companies have proven the commercial scalability of conversational AI , but cloud is bringing the same sophistication into the into the healthcare .
Speaker #4: And if you think about this example of the call that we have played and we we purposefully picked up a more complicated call , more difficult call , difficult accent and difficult questions .
Speaker #4: And it still kept even the the empathy factor into while answering those questions to the patient . So this 70% success rate and this also includes even the calls where patients specifically ask to transfer the call to the human agent .
Speaker #4: If you remove that to success rate or the call handling rate even would be much higher . So now with the med , more clients added to our ambulatory clients on our existing platform to chart logic platform .
Speaker #4: So we'll see between all of them , they , they , they probably handle millions and millions of calls each year . So we see a tremendous where to be able to cross-sell and upsell into all these all this space .
Speaker #4: And so it was a long answer to your question . I just wanted to make sure that how we are positioning this conversational AI and AI applications .
Speaker #9: , that was great . Thank you .
Speaker #1: Our next question comes from the line of Michael Kim with Zacks small Cap Research . Please go ahead .
Speaker #12: Hi , everyone . Good morning and thanks for taking my questions . First , I guess just in terms of M&A , I know you recently closed a Medsphere and Mapap , but just wondering , maybe taking a step back what what you're seeing from a competitive standpoint , particularly as it relates to buyer and seller expectations around valuations .
Speaker #12: And then related to that , I know you plan to pay down the credit facility balance in the coming months , but just curious how you're thinking about capacity from a from a funding standpoint , going forward .
Speaker #12: Thanks .
Speaker #10: Thanks , Michael . AI is absolutely driving conversations in the M&A space , and AI is creating pressure both amongst r.c.m companies and also healthcare .
Speaker #10: IT companies like Medsphere and and and the Mapap product from an expectation perspective , companies who are looking to exit or owners who are looking to exit are seem to appreciate the fact that if they are not actively , rapidly deploying AI throughout their overall service offering or or platform , that they're anticipated expectation when it comes to valuation includes or bakes that that into the overall formula .
Speaker #10: So maybe said more simply , companies who are not leveraging AI understand that they have a limited window of time to to make an exit .
Speaker #10: And I think we're seeing that in terms of valuations . So think about the valuations of these two companies . Again , these are both technology .
Speaker #10: These are both technology suites . One was a technology company . The other one was a technology product created by a a nonprofit in our space .
Speaker #10: But both of them recognize the fact that they didn't have the capacity to be able to build AI into their platforms . And understood that , that their days were limited in terms of their ability to meet the the end users expectations .
Speaker #10: So from the perspective of valuations , I think that's the reality of what we're seeing . We're needed to be open to opportunities where we can move forward with an asset purchase , opportunities that we can close without any dilution to the common shareholders opportunities where we can continue to keep balance sheet flexibility and and arrive at attractive valuations .
Speaker #10: And if all of those initial criteria are met , then we analyze whether or not there's a good fit from the from a product perspective .
Speaker #10: And in terms of overall synergies . So if you think about where we started last year , we did not explicitly bake in any of the four acquisitions that we had into our overall expectations that we set .
Speaker #10: And forecast . But nevertheless , that that pressure that's building on the seller's side resulted in in these acquisitions this year .
Speaker #12: Got it . That's super helpful . Appreciate that . And and then maybe just to to follow up on your comments around specifically Medsphere and Mapap .
Speaker #12: Just curious how the structures of those transactions may , may have differed from prior prior deals in the past and how you think about kind of structuring going forward ?
Speaker #12: Thanks .
Speaker #10: Certainly . So , so at a high level , all four acquisitions that we closed this year really follow the same disciplined playbook for for our accretive , well priced acquisitions .
Speaker #10: So there were asset purchases . Again , as I mentioned before , there were Non-dilutive maintained balance sheet flexibility valuations of of of one times or less .
Speaker #10: If we think about Medsphere in particular , which closed in in late August , the was $16.5 million and we paid roughly half of that in cash at closing .
Speaker #10: And then we paid the balance of that through a credit facility. That credit facility was with a new bank, with no warrants, very practical covenants, and the like, and a lower effective interest rate.
Speaker #10: So notwithstanding all of that , we've taken that initial amount and we've reduced that by half . So from a practical perspective , we've paid from our internally generated cash .
Speaker #10: We've paid about 70 , 75% of that overall consideration from from cash at closing , I'm sorry , from from cash generated internally .
Speaker #10: And we expect to be able to fully satisfy the remaining balance within the next number of months , whether it be next quarter , or two quarters .
Speaker #10: We're not totally sure , but we're paying it off as quickly as we can . Mapap had a similar similar from from the perspective of the other two acquisitions that we closed .
Speaker #10: We paid all cash at closing and and again , a , a an accretive acquisition . Non-dilutive very attractive valuation .
Speaker #12: Great. I appreciate it. Thanks for taking my questions.
Speaker #10: Thank .
Speaker #1: As a reminder , if you would like to ask a please press star one on your telephone keypad . A confirmation tone will indicate your line is in the question queue .
Speaker #1: As a reminder , if you would like to ask a question ,
Speaker #1: You may press star remove your question from the queue . One moment while we pull for questions . Our next question comes from the line of Alan Kelly with Maxim Group .
Speaker #1: Please go ahead .
Speaker #9: potential to get to the type of margins that you're company has overall ?
Speaker #10: Certainly . So . So our basic playbook , Alan , with regard to the acquisitions is from from the perspective of looking out three months , I'm sorry , three quarters or so to be able to get them to a an operating cash flow margin of about 30% or greater , that's what we strive for .
Speaker #10: And with regard to the four acquisitions this year , we believe we're making good progress at getting to to those numbers . So , so , yes .
Speaker #10: And from a an upselling , cross-selling perspective , we can upsell cross-sell , for instance , R.c.m solutions , AI solutions and the like .
Speaker #10: And we can do that at at extremely attractive margins . So so the answer to that answer your question is yes .
Speaker #1: This now concludes our question and answer session . I would like to turn the floor back over to Norman Roth for closing comments .
Speaker #13: Thank you everyone for joining our call . Enjoy your day . So long .
Speaker #1: Ladies and gentlemen , thank you for your participation . This does conclude today's teleconference . You may disconnect your lines and have a wonderful day .