Q2 2026 CareCloud Inc Earnings Call

August 6, 2026

Operator 2: Greetings. Welcome to the CareCloud, Inc.'s Q2 2026 results conference 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 star 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Brendan Covello, Corporate Counsel. Thank you, Brendan. You may begin.

Operator: Greetings. Welcome to the CareCloud, Inc.'s Q2 2026 results conference 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 star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Brendan Covello, Corporate Counsel. Thank you, Brendan. You may begin.

Speaker #1: Inc. second quarter 2026 results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Speaker #1: Inc. second quarter 2026 results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. operator assistance during the conference, please press star zero on your telephone keypad. Greetings.

Speaker #1: keypad. Please note this conference is being recorded. I will now turn the conference over to Brendan Cavello, Corporate Counsel. Thank you, Brendan. You may begin.

Speaker #3: Good morning, everyone. Welcome to CareCloud's second quarter 2026 conference call. On today's call, I'm Mahmud Haq, our founder and executive chairman. Stephen Snyder, our chief executive officer.

Brendan Covello: Good morning, everyone. Welcome to CareCloud's Q2 2026 conference call. On today's call are Mahmud Haq, our Founder and Executive Chairman, Stephen Snyder, our Chief Executive Officer, A. Hadi Chaudhry, our Chief Strategy Officer, 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 call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than the statements of historical fact made during this call 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.

Speaker #3: A. Hadi Chaudhry, our chief strategy officer, 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 call are forward-looking statements within the meaning of Section 27A and the Securities Act of 1933.

Speaker #3: As amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact made during this call are forward-looking statements, including, without limitation, statements regarding our expectations and guidance for future financial and operational performance.

Brendan Covello: All statements other than the statements of historical fact made during this call 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.

Speaker #3: Expected growth, business outlook, and potential organic growth and acquisition. Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, approximately, upcoming, believe, estimate, or similar terminology, and a negative these terms.

Brendan Covello: Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, approximately, upcoming, believe, estimate, or similar terminology, and the negative of these terms. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. 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. Please refer to our press release and our reports filed with the Securities and Exchange Commission, where you will find a comprehensive discussion of our performances and factors that could cause actual results to differ materially from these forward-looking statements.

Speaker #3: 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 #3: These statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise these forward-looking statements in light of new information or future events.

Brendan Covello: 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. Please refer to our press release and our reports filed with the Securities and Exchange Commission, where you will find a comprehensive discussion of our performances and factors that could cause actual results to differ materially from these forward-looking statements.

Speaker #3: Please refer to our press release and our reports filed with the Securities and Exchange Commission where you will find a comprehensive discussion of our performances and factors that could cause actual results to differ materially from these forward-looking statements.

Speaker #3: For anyone who dialed into the call by telephone, you may want to download our second quarter 2026 earnings presentation. Please visit our investor relations site at ir.carecloud.com, click on News and Events, then click on Events. Under Second Quarter 2026 Results Conference Call, click on the earnings presentation to download.

Brendan Covello: For anyone who dialed into the call by telephone, you may want to download our Q2 2026 earnings presentation. Please visit our investor relations site, ir.carecloud.com, click on News & Events, then click on Events, and under Q2 2026 results conference call, click on the earnings presentation to download. Finally, on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our Q2 2026 results 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 CEO Stephen Snyder. Stephen?

Speaker #3: Finally, on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our second quarter 2026 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results.

Speaker #3: With that said, I'll now turn the call over to CEO Stephen Snyder. Stephen?

Speaker #4: Thank you, Brendan. And good morning, everyone. The second quarter reflected disciplined execution across our strategic priorities and another quarter of meaningful progress against our long-term plan.

Stephen Snyder: Thank you, Brendan, and good morning, everyone. The Q2 reflected disciplined execution across our strategic priorities and another quarter of meaningful progress against our long-term plan. We delivered 16% revenue growth year-over-year, our ninth consecutive quarter of positive GAAP net income, completed the full redemption of our Series B preferred stock, and entered an entirely new market, healthcare compliance and audit defense, through our acquisition of Empower Healthcare and Compliance Partners. This morning, I'll take you through the quarter's results, the redemption of our Series B preferred stock, our entry into the compliance market, where we are taking the company, and the path to our full-year guidance. Let me start with the numbers. For the Q2, revenue was $31.9 million, up 16% from $27.4 million in the Q2 of last year.

Speaker #4: We delivered 16% revenue growth year over year. Our ninth consecutive quarter of positive GAAP net income. Completed the full redemption of our Series B preferred stock and entered an entirely new market, healthcare compliance and audit defense, through our acquisition of Empower Healthcare and Compliance Partners.

Speaker #4: This morning, I'll take you through the quarter's results, the redemption of our Series B preferred stock, our entry into the compliance market, where we are taking the company, and the path to our full-year guidance.

Stephen Snyder: This morning, I'll take you through the quarter's results, the redemption of our Series B preferred stock, our entry into the compliance market, where we are taking the company, and the path to our full-year guidance. Let me start with the numbers. For the Q2, revenue was $31.9 million, up 16% from $27.4 million in the Q2 of last year.

Speaker #4: Let me start with the numbers. For the second quarter, revenue was 31.9 million dollars, up 16% from 27.4 million in the second quarter of last year.

Speaker #4: During the first half of 2026, revenue was $63.2 million, up 15% year over year. Just as important as our overall growth is the composition of that growth.

Stephen Snyder: During the H1 of 2026, revenue was $63.2 million, up 15% year-over-year. Just as important as our overall growth is the composition of that growth. Our recurring technology-enabled business solutions represented approximately 75% of revenue this quarter, up from 69% a year ago. That continuing shift towards recurring subscription-based revenue is foundational. On the bottom line, GAAP net income was $1.1 million, our ninth consecutive quarter of GAAP profitability, and adjusted EBITDA was $5.9 million. Both are lower than the prior year quarter for reasons that reflect investment strategy rather than margin erosion. Amortization and integration costs from the acquisitions are driving our growth. More than doubling of our R&D expense as we accelerate AI development, with more of that work now expensed rather than capitalized, and new interest expense on the facility that retired our high-cost preferred stock.

Speaker #4: Our recurring, technology-enabled business solutions represented approximately 75% of revenue this quarter, up from 69% a year ago. That continuing shift toward recurring, subscription-based revenue is foundational.

Speaker #4: On the bottom line, GAAP net income was 1.1 million dollars, our ninth consecutive quarter of GAAP profitability, and adjusted EBITDA was 5.9 million dollars.

Speaker #4: Both are lower than the prior year quarter, for reasons that reflect investment strategy rather than margin erosion. Amortization and integration costs from the acquisitions are driving our growth.

Speaker #4: A more than doubling of our R&D expense as we accelerate AI development, with more of that work now expense rather than capitalized, and new interest expense on the facility that retired our high-cost preferred stock.

Speaker #4: In each case, we traded near-term reported earnings for durable earnings power. And we expect that trade to begin paying off through the second half of the year.

Stephen Snyder: Each case, we traded near-term reported earnings for durable earnings power, and we expect that trade to begin paying off through the H2 of the year. Shifting our focus now to our capital structure. The recent retirement of our Series B preferred stock marked the most significant simplification of CareCloud's balance sheet since our IPO. On 15 May, we redeemed 100% of our outstanding Series B preferred stock, funded through a $50 million credit facility with Citizens Bank and Provident Bank, with zero dilution to common shareholders. That single step eliminates approximately $3.3 million of annual preferred dividends, and with it, the preferred overhang that shaped our capital structure for many years. Let me take a moment to explain what this means for our financial results and, more importantly, for our shareholders moving forward.

Speaker #4: Shifting our focus now to our capital structure, the recent retirement of our Series B preferred stock marked the most significant simplification of CareCloud's balance sheet since our IPO.

Speaker #4: On May 15th, we redeemed 100% of our outstanding Series B preferred stock, funded through a $50 million credit facility with Citizens Bank and Provident Bank, with zero dilution to common shareholders.

Speaker #4: That single step eliminates approximately 3.3 million dollars of annual preferred dividends and, with it, the preferred overhang that shaped our capital structure for many years.

Speaker #4: Let me take a moment to explain what this means for our financial results and, more importantly, for our shareholders going forward. Through the first six months of 2026, we paid approximately $6.4 million of preferred dividends.

Stephen Snyder: Through the H1 of 2026, we paid approximately $6.4 million of preferred dividends. With the Series B fully redeemed, the substantial majority of that preferred dividend obligation is now permanently behind us. Beginning in the Q3, far more of every dollar of net income we generate flows through to our common shareholders, reduced only by the cost of the debt that replaced the preferred, which is meaningfully less costly. That structural shift, combined with our operating plan, is an important part of the earnings per share outlook we are reaffirming today. That's the balance sheet. Let me now turn to the business we're building on top of it, starting with our most recent acquisition. May, we acquired Empower Healthcare and Compliance Partners, a full-service compliance and advisory firm founded by industry veteran Mitchell Brie, who joined us as President of Empower.

Speaker #4: With the Series B fully redeemed, the substantial majority of that preferred dividend obligation is now permanently behind us, beginning the third quarter, far more of every dollar of net income we generate flows through to our common shareholders, reduced only by the cost of the debt that replaced the preferred, which is meaningfully less costly.

Speaker #4: That structural shift, combined with our operating plan, is an important part of the earnings per share outlook we are reaffirming today. So that's the balance sheet.

Speaker #4: Let me now turn to the business we're building on top of it, starting with our most recent acquisition. In May, we acquired Empower Healthcare and Compliance Partners.

Speaker #4: A full-service compliance and advisory firm founded by industry veteran Mitchell Brie. Who joined us as president of Empower. The transaction was funded from operating cash flow, and follows the same disciplined tuck-in playbook we have now executed more than 20 times since our IPO.

Stephen Snyder: The transaction was funded from operating cash flow and follows the same disciplined tuck-in playbook we have now executed more than 20 times since our IPO. Empower takes CareCloud into an entirely new category: compliance, audit, defense, and regulatory readiness, at precisely the moment demand for those services is accelerating. The providers we serve are contending with rising payer scrutiny and audit activity, industry-wide denial rates, expanding privacy and security obligations, and a new layer of governance questions raised by the very AI adoption now sweeping through healthcare. Compliance has moved from back office checkbox to an operational priority. Empower gives our providers a trusted partner for all of it, delivered through the platform they already rely upon every day. We saw that value proposition in action within a few weeks of closing.

Speaker #4: Empower takes CareCloud into an entirely new category, compliance, audit defense, and regulatory readiness, at precisely the moment demand for those services is accelerating. The providers we serve are contending with rising payer scrutiny and audit activity, industry-wide denial rates.

Speaker #4: Expanding privacy and security obligations, and a new layer of governance questions raised by the very AI adoption now sweeping through healthcare. Compliance has moved from back-office checkbox to an operational priority.

Speaker #4: Empower gives our providers a trusted partner for all of it, delivered through the platform they already rely upon every day. We saw that value proposition in action within a few weeks of closing.

Speaker #4: In June, Empower's certified coding and compliance team helped a wound care provider reverse more than a million dollars in alleged overpayments, in a successful audit defense, before a hearing and appeals concrete, high-stakes outcome that builds durable client relationships.

Stephen Snyder: In June, Empower's certified coding and compliance team helped a wound care provider reverse more than $1 million in alleged overpayments in a successful audit defense before a hearing and appeals board. It is the kind of concrete, high-stakes outcome that builds durable client relationships, and it is a story we can now tell across our entire client base. Looking ahead, we plan to launch AI-enabled compliance software solutions during the fall of 2026, converting Empower's expertise into a scalable recurring revenue model. This will include a tiered subscription-based proactive compliance program driven by our AI-powered SaaS platform and supported by Empower's certified compliance professionals. It is the same motion we have run with every acquisition: acquire trusted capability, integrate that capability into our platform, and amplify it with AI.

Speaker #4: And it is a story we can now tell across our entire client base. Looking ahead, we plan to launch AI-enabled compliance software solutions during the fall of 2026, converting Empower's expertise into a scalable, recurring revenue model.

Speaker #4: This will include a tiered subscription-based proactive compliance program, driven by our AI-powered SaaS platform and supported by Empower's certified compliance professionals. It is the same motion we have run with every acquisition: acquire trusted capability, integrate that capability into our platform, and amplify it with AI.

Speaker #4: And that motion, acquire, integrate, amplify with AI, is a thread that runs through everything we're doing. Because our AI portfolio continues to scale. Patty will walk you through our AI progress in a moment, what I'll offer here is the market context, because the environment is moving decisively in our direction.

Stephen Snyder: That motion, acquire, integrate, amplify with AI, is a thread that runs through everything we're doing because our AI portfolio continues to scale. Patty will walk you through our AI progress in a moment. What I'll offer here is the market context because the environment is moving decisively in our direction. Industry surveys show that physician adoption of AI has more than doubled over the past three years, with administrative burden consistently ranked as the single largest opportunity for AI in medicine. At the same time, the pressures on provider economics, denial, staffing, documentation, regulatory complexity, are intensifying, not easing. Taken together, these secular trends reinforce our strategy and strengthen our confidence in the long-term opportunity for our solution. An integrated platform that pairs AI with clinical, financial, and now compliance workflows allows providers to rely upon our solution as the one that they trust.

Speaker #4: Industry surveys show that physician adoption of AI has more than doubled over the past three years, with administrative burden consistently ranked as the single largest opportunity for AI in medicine.

Speaker #4: At the same time, the pressures on provider economics, denials, staffing, documentation, regulatory complexity, are intensifying not easing. Taken together, these secular trends reinforce our strategy and strengthen our confidence in the long-term opportunity for our solution.

Speaker #4: In integrated platform that pairs AI with clinical, financial, and now compliance workflows, allows providers to rely upon our solution as the one that they trust.

Speaker #4: Separately, it was a true pleasure to have the opportunity to spend time with many of you in person last quarter. For those who are not able to attend, in May, we hosted our Analyst Day at the NASDAQ market site, and rang the NASDAQ closing bell.

Stephen Snyder: Separately, it was a true pleasure to have the opportunity to spend time with many of you in person last quarter. For those who were not able to attend, in May, we hosted our Analyst Day at the Nasdaq market site and rang the Nasdaq closing bell, where we laid out four themes that define CareCloud. An AI-first operating model. Second, a clean common stock story. Third, compounding free cash flow. Finally, a proven acquisition engine. In June, our shareholders overwhelmingly approved every proposal in our annual meeting. The Q2 was, in every respect, execution against these four themes. All that brings me to our outlook. We are reaffirming our full year 2026 guidance of revenue of $128 to $132 million, adjusted EBITDA of $29 to $31 million, and GAAP earnings per share of $0.20 to $0.23.

Speaker #4: Where we laid out four themes that define CareCloud. An AI-first operating model, second a clean, common stock story, third compounding free cash flow, and finally a proven acquisition engine.

Speaker #4: And in June, our shareholders overwhelmingly approved every proposal in our annual meeting. The second quarter was, in every respect, execution against these four themes.

Speaker #4: All that brings me to our outlook. We are reaffirming our full year 2026 guidance of revenue of 128 to 132 million dollars, adjusted EBITDA of 29 to 31 million dollars, and gap earnings per share of 20 to 23 cents.

Speaker #4: With $63.2 million in revenue and $11.3 million in adjusted EBITDA in the first half, our guidance implies a meaningfully stronger second half.

Stephen Snyder: With $63.2 million in revenue and $11.3 million in adjusted EBITDA in H1, our guidance implies a meaningfully stronger H2. The shape of our plan is H1 weighted towards investment and integration, and H2 that focuses on harvesting those investments. The building blocks of that ramp are specific, and they are underway. Continued growth in our recurring revenue base, the expansion of relationships with existing enterprise clients, expense management and integration initiatives designed to align our cost structure with our profitability objectives, and on earnings per share, specifically, the elimination of the Series B preferred dividend for the entire H2 of the year. As always, our expectations depend on the signing and continuation of certain client and vendor relationships, the anticipated timing and scope of client projects, and our timely execution of the integration and expense management initiatives that support these objectives.

Speaker #4: The shape of our plan is first half weighted towards investment and integration, and second half that focuses on harvesting those investments. The building blocks of that ramp are specific and they are underway.

Speaker #4: Continued growth in our recurring revenue base. The expansion of relationships with existing enterprise clients. Expense management and integration initiatives designed to align our cost structure with our profitability objectives.

Speaker #4: And an earnings per share specifically the elimination of the Series B preferred dividend for the entire second half of the year. As always, our expectations depend on the signing and continuation of certain client and vendor relationships, the anticipated timing and scope of client projects, and our timely execution of the integration and expense management initiatives that support these objectives.

Speaker #4: It is an important but demanding plan, and our team is working hard to deliver it. Before I hand it over to Patty, let me step back and leave you with where we stand.

Stephen Snyder: It is an important but demanding plan, and our team is working hard to deliver it. Before I hand it over to Hadi, let me step back and leave you with where we stand. Healthcare providers we serve are operating under enormous pressure: rising denials, workforce shortages, documentation burden, and a regulatory environment that grows more complex every year. Every one of these pressures increases the value of what CareCloud delivers. We enter H2 of 2026 with more than 40,000 providers on our platform, nine consecutive quarters of GAAP profitability, the cleanest capital structure our company has had in a decade, and a growing recurring revenue base. In addition to that, an AI portfolio that is in market and scaling, and with Empower, a foothold in one of the fastest-growing needs in healthcare operations.

Speaker #4: Healthcare providers we serve are operating under enormous pressure, rising denials, workforce shortages, documentation burden, and a regulatory environment that grows more complex every year.

Speaker #4: Every one of these pressures increases the value of what CareCloud delivers. We entered the second half of 2026 with more than 40,000 providers on our platform, nine consecutive quarters of gap profitability, the cleanest capital structure, our company has had in a decade, and a growing recurring revenue base.

Speaker #4: In addition to that, an AI portfolio that is in-market and scaling, and with Empower a foothold in one of the fastest growing needs in healthcare operations.

Speaker #4: The market opportunity in front of us is as large as it has ever been, and CareCloud is better positioned to capture it than at any point in time in our history.

Stephen Snyder: The market opportunity in front of us is as large as it has ever been, and CareCloud is better positioned to capture it than at any point in time in our history. With that, I'll turn the call over to Hadi Chaudhry, our Chief Strategy Officer, who will walk you through our AI strategy and product progress. Hadi?

Speaker #4: With that, I'll turn the call over to Patty Chaudhary, our Chief Strategy Officer, who will walk you through our AI strategy and product progress.

Speaker #4: Patty?

Speaker #2: Thank you, Steve. And good morning, everyone. Last quarter, I laid out our AI strategy across three tracks. Using AI internally to do our existing work faster and at lower cost, embedding AI into the products of our clients already use, and building new standalone AI products.

A. Hadi Chaudhry: Thank you, Steve, and good morning, everyone. Last quarter, I laid out our AI strategy across three tracks: using AI internally to do our existing work faster and at lower cost, embedding AI into the products our clients already use, and building new standalone AI products. I'm pleased to report that we have made significant progress on all three, and I want to give you the substance behind that this morning. Let me start with our new AI product. Our AI prior authorization and AI-assisted medical coding remain on track to bring to market this year. Both have continued to mature through the quarter. Prior authorization is moving through pilot deployments, and coding continues to run internally as we refine it to the accuracy levels our clients expect.

Speaker #2: I'm pleased to report that we have made significant progress in all three, and I want to give you the substance behind that this morning.

Speaker #2: Let me start with our new AI products. Our AI prior authorization and AI-assisted medical coding remain on track to bring to market this year.

Speaker #2: Both have continued to mature through the quarter, prior authorization is moving through pilot deployments, and coding continues to run internally as we refine it to the accuracy levels our clients expect.

Speaker #2: These are two of the most painful, most costly problems in healthcare administration, and we intend to meet the timeline we gave you. On Stratus AI front desk, our AI voice agent demand is strong, and we are continuing to sign new business.

A. Hadi Chaudhry: These are two of the most painful, most costly problems in healthcare administration. We intend to meet the timeline we gave you. On Stratus AI Front Desk, our AI voice agent, demand is strong. We are continuing to sign new business. With a new category like this, the work right now is in the implementation. We are prioritizing getting each deployment right over maximizing the count. The depth before breadth approach I described last quarter. Revenue is still in its early stages, but the product is performing in production. We are building the operational foundation that turns these deployments into durable recurring revenue. We will report that revenue as it scales. Now let me turn to our platform work, because last quarter I made you some specific dated commitments. I want to report against them directly.

Speaker #2: With the new category like this, the work right now is in the implementation. And we are prioritizing getting each deployment right over maximizing the count.

Speaker #2: The depth before breadth approach I described last quarter. Revenue still in its early stages, but the product is performing in production, and we are building the operational foundation that turns these deployments into durable recurring revenue.

Speaker #2: We will report that revenue as it scales. Now let me turn to our platform work, because last quarter, I made you some specific dated commitments, and I want to report against them directly.

Speaker #2: On our inpatient revenue cycle platform, we have completed the parity gaps between the legacy system and RCM Cloud. On CareView, the parity items we committed to for this quarter bringing legacy CareView onto this modern platform are complete.

A. Hadi Chaudhry: On our Inpatient Revenue Cycle platform, we have completed the parity gaps between the legacy system and RCM Cloud. On Care View, the parity items we committed to for this quarter, bringing legacy Care View onto this modern platform are complete. On Wellsoft, we completed two integrations this quarter. Our Breeze patient experience layer and Stratus AI Notes are both now live in the emergency department workflow. The Stratus AI integration follows next quarter. The modernization of Wellsoft into a full cloud-based SaaS platform is on track to complete later this year. The takeaway is simple. These were specific commitments. We delivered them. We saw the same execution in MarketWare, our physicians' relationship platform.

Speaker #2: And on WellSoft, we completed two integrations this quarter, our Breeze patient experience layer, and Citrus AI notes are both now live in the emergency department workflow.

Speaker #2: The Stratus AI integration follows next quarter, and the modernization of WellSoft into a full cloud-based SaaS platform is on track to complete later this year.

Speaker #2: The takeaway is simple. These were specific commitments, and we delivered them. We saw the same execution and market wear. Our physicians relationship platform. This quarter, we completed our flagship integration with practice match, added an integration with Dog Cafe, and launched a new candidate facing portal that lets physicians and hospital staff apply and submit their credentials, degrees, experience letters, licensure, directly to the hiring manager.

A. Hadi Chaudhry: This quarter, we completed our flagship integration with PracticeMatch, added an integration with DocCafe, and launched a new candidate-facing portal that lets physicians and hospital staff apply and submit their credentials, degrees, experience letters, licensure directly to the hiring manager. We also brought our AI candidate matching engine live, turning MarketWare from a relationship management tool into an AI-powered recruitment engine. That was part of more than 20 enhancements delivered this quarter, with another 20 plus, including Workday and DocuSign integrations underway for next quarter. I also want to flag something new that we are excited about. We are in active conversations with an existing private equity-based enterprise client about an AI-powered platform engagement. I will hold the details for now, but it's a strong validation of the capabilities we have built, and we will share the specifics as they materialize.

Speaker #2: We also brought our AI candidate matching engine live, turning market wear from a relationship management tool into an AI-powered recruitment engine. That was part of more than 20 enhancements delivered this quarter, with another 20 plus including Workday and DocuSign integrations underway for next quarter.

Speaker #2: I also want to flag something new that we are excited about. We are in active conversations with an existing private equity-based enterprise client about an AI-powered platform engagement.

Speaker #2: I will hold the details for now, but it's a strong validation of the capabilities we have built, and we will share the specifics as the materialize.

Speaker #2: Finally, a word on where all this thing is heading. Our growth through acquisitions has over time left us running a number of independent platforms, each with its own backend.

A. Hadi Chaudhry: Finally, a word on where all this thing is heading. Our growth through acquisitions has over time left us running a number of independent platforms, each with its own back end. We have begun the work of consolidating them, moving towards a single modular platform on a shared back end with a common data and AI foundation underneath. In that model, a client simply turns on the modules they need, ambulatory, inpatient, revenue cycle, compliance, and patient engagement, while everything runs on one foundation with one patient record and one place to bring our AI to bear. I'm not going to put a timeline on the full journey today. This is a multi-year vision. We will be disciplined about how we sequence it. The direction is deliberate. Fewer, stronger platforms built so that every new AI capability we create can be deployed everywhere at once.

Speaker #2: We have begun the work of consolidating them, moving towards a single modular platform on a shared backend, with a common data and AI foundation underneath.

Speaker #2: In that model, a client simply turns on the modules they need, ambulatory, inpatient, revenue cycle, compliance, patient engagement, while everything runs on one foundation.

Speaker #2: With one patient record and one place to bring our AI to bear. I'm not going to put a timeline on the full journey today.

Speaker #2: This is a multi-year vision, and we will be disciplined about how we sequence it. But the direction is deliberate. Pure, stronger platforms built so that every new AI capability we create can be deployed everywhere at once.

Speaker #2: So across all three tracks, internal efficiency, smarter products, and new AI offerings, this was the quarter of visible measurable progress. With that, I will turn the call over to our internal Chief Financial Officer and Corporate Controller, Norman Roth, to walk you through the quarter's financials in more details.

A. Hadi Chaudhry: Across all three tracks, internal efficiency, smarter products, and new AI offerings, this was the quarter of visible, measurable progress. With that, I will turn the call over to our Interim Chief Financial Officer and Corporate Controller, Norman Roth, to walk you through the quarter's financials in more details. Norm?

Speaker #2: Norm?

Speaker #3: Thanks, Heidi, and thanks, everyone, for joining our call today. I will provide some financial results for the second quarter and year to date. Our second quarter reflects continued execution of our long-term strategy.

Norman Roth: Thanks, Hadi, and thanks, everyone, for joining our call today. I will provide some financial results for Q2 and year-to-date. Our Q2 reflects continued execution of our long-term strategy. We returned to revenue growth following the Medsphere acquisition, generated strong free cash flow, remained GAAP profitable for the ninth consecutive quarter, and continued investing in the capabilities we believe will support long-term profitable growth. Revenue for Q2 2026 was $31.9 million, compared to $27.4 million for Q2 2025. Recurring technology-enabled business solution revenue was $24 million during Q2 2026, up approximately $5 million from Q2 2025, while the non-recurring project-based professional services revenue from medSR decreased approximately $1.3 million. Revenue increased 16% from Q2 2025, driven primarily by the Medsphere acquisition.

Speaker #3: We returned to revenue growth following the mid-sphere acquisition, generated strong free cash flow, remained gap profitable for the ninth consecutive quarter, and continued investing in the capabilities we believe will support long-term profitable growth.

Speaker #3: Revenue for the second quarter of 2026 was $31.9 million, compared to $27.4 million for the second quarter of 2025. Recurring technology-enabled business solution revenue was $24.0 million during the second quarter of 2026.

Speaker #3: Up approximately $5 million from the second quarter of 2025, while the non-recurring project-based professional services revenue from MedSR decreased approximately $1.3 million. Revenue increased 16% from the second quarter of 2025, driven primarily by the mid-sphere acquisition.

Speaker #3: Recurring revenue continues to represent the foundation of our business model and provides increased visibility into our future financial performance. Second quarter 2026 gap net income was $1.1 million, as compared to net income of $2.9 million in the same period last year.

Norman Roth: Recurring revenue continues to represent the foundation of our business model and provides increased visibility into our future financial performance. Q2 2026 GAAP net income was $1.1 million as compared to net income of $2.9 million in the same period last year. As expected, profitability this quarter reflects continued strategic investments in AI-enabled capabilities that we believe will enhance our platform, strengthen our competitive position, and drive long-term customer value. Higher interest expense due to the borrowings to redeem the Series B preferred stock and additional amortization expense due to the intangibles acquired in our recent acquisitions also impacted net income. Gross margins remain consistent between periods. Earnings per share for the three months ended 30 June 2026 was breakeven after deducting $941,000 of preferred stock dividends.

Speaker #3: As expected, profitability this quarter reflects continued strategic investments in AI-enabled capabilities that we believe will enhance our platform, strengthen our competitive position, and drive long-term customer value.

Speaker #3: Higher interest expense due to the borrowings to redeem the Series B preferred stock and additional amortization expense due to the intangibles acquired in our recent acquisitions also impacted net income.

Speaker #3: Gross margins remain consistent between periods. Earnings per share for the three months ended June 30, 2026, was break even after deducting $941,000 of preferred stock dividends.

Speaker #3: As part of our ongoing capital allocation strategy, we redeemed all outstanding Series B preferred stock during the quarter reducing our annual preferred dividend obligation by 3.3 million.

Norman Roth: As part of our ongoing capital allocation strategy, we redeemed all outstanding Series B preferred stock during the quarter, reducing our annual preferred dividend obligation by $3.3 million. Our dividend obligation going forward will be just for the remaining Series A preferred shareholders. Free cash flow generation, as defined for Q2 2026, was $5.7 million, as compared to $5.4 million in Q2 2025, reflecting the cash generative nature of our recurring revenue model and continued financial discipline. Adjusted EBITDA for Q2 was $5.9 million. Adjusted net income was $2.4 million, or $0.06 per share, compared to $3.3 million, or $0.07 per share in the same period last year, calculated using the end-of-period common shares outstanding. As of 30 June 2026, the company had approximately $13.4 million of cash and net working capital of $695,000.

Speaker #3: Our dividend obligation going forward will be just for the remaining Series A preferred shareholders. Free cash flow generation as defined for the second quarter of 2026 was 5.7 million, as compared to 5.4 million in the second quarter of 2025, reflecting the cash generative nature of our recurring revenue model and continued financial discipline.

Speaker #3: Adjusted EBITDA for the second quarter was 5.9 million. Adjusted net income was 2.4 million, or $0.06 per share, compared to 3.3 million or $0.07 per share in the same period last year, calculated using the end-of-period common shares outstanding.

Speaker #3: As of June 30, 2026, the company had approximately 13.4 million of cash and net working capital of $695,000. Our balance sheet remained well positioned to support our strategic priorities.

Norman Roth: Our balance sheet remains well-positioned to support our strategic priorities. During the quarter, we strengthened our capital structure through a new $50 million credit facility and established a $60 million at-the-market equity program, providing additional capital to support future growth opportunities when conditions warrant. Given our technology-enabled services model, we believe CareCloud remains relatively insulated from tariff-related risks affecting the physical goods industries. Additionally, healthcare demand has historically proven resilient through varying macroeconomic environments, supporting continuing demand for our solutions. Revenue for H1 2026 was $63.2 million, compared to $55 million in the prior period. For H1 2026, the company's GAAP net income was $2 million, compared to a GAAP net income of $4.9 million for the same period in 2025. This equates to a loss of $0.01 per share after subtracting the preferred stock dividends.

Speaker #3: During the quarter, we strengthened our capital structure through a new $50 million credit facility and established a $60 million at-the-market equity program, providing additional capital to support future growth opportunities when conditions warrant.

Speaker #3: Given our technology-enabled services model, we believe CareCloud remains relatively insulated from tariff-related risks affecting the physical goods industries. Additionally, healthcare demand has historically proven resilient, through varying macroeconomic environments supporting continuing demand for our solutions.

Speaker #3: Revenue for the first six months of 2026 was $63.2 million, compared to $55 million in the prior period. For the first six months of 2026, the company's gap net income was $2 million, compared to a gap net income of $4.9 million for the same period in 2025.

Speaker #3: This equates to a loss of $0.01 per share after subtracting the preferred stock dividends. Non-GAAP adjusted net income for the first half of 2026 was $4.5 million, or $0.11 per share. Year to date, adjusted EBITDA was $11.3 million, compared to $12.1 million in the same period last year.

Norman Roth: Non-GAAP adjusted net income for H1 2026 was $4.5 million, or $0.11 per share. Year-to-date, adjusted EBITDA was $11.3 million compared to $12.1 million in the same period last year. We generated $8.1 million of free cash flow as defined for H1 of the year, compared to $9.1 million in the same period last year. Near-term profitability reflects the investment phase we planned, and we are focusing on converting it in H2 of the year. Our long-term strategy remains unchanged. We continue to see meaningful opportunities in our core markets and believe the investments we have made in our platform, AI capabilities, and recent acquisitions position us well for long-term growth. With that, I will now turn the call over to our chairman, Mahmud, for his closing remarks. Mahmud?

Speaker #3: We generated $8.1 million of free cash flow, as defined, for the first six months of the year, compared to $9.1 million in the same period last year.

Speaker #3: Near-term profitability reflects the investment phase we planned and we are focusing on converting it in the second half of the year. Our long-term strategy remains unchanged.

Speaker #3: We continue to see meaningful opportunities in our core markets, and believe the investments we have made in our platform, AI capabilities, and recent acquisitions position us well for long-term growth.

Speaker #3: With that, I'll now turn the call over to our chairman, Mahmud, for his closing remarks. Mahmud?

Speaker #2: Thank you, Noam. This quarter marks an exciting milestone for CareCloud. We have simplified our capital structure, our delivering profitable growth, and our accelerating our AI-driven healthcare compliance strategy.

Mahmud Haq: Thank you, Norm. This quarter marks an exciting milestone for CareCloud. We have simplified our capital structure, are delivering profitable growth, and are accelerating our AI-driven healthcare compliance strategy. With strong momentum and a clear path forward, we believe the best is yet to come. I would like to thank our employees for their dedication, our clients for their continued trust, and our shareholders for their confidence and support. Operator, we are now ready to open the line for questions. Thank you.

Mahmud Haq: Thank you, Norman. This quarter marks an exciting milestone for CareCloud. We have simplified our capital structure, are delivering profitable growth, and are accelerating our AI-driven healthcare compliance strategy. With strong momentum and a clear path forward, we believe the best is yet to come. I would like to thank our employees for their dedication, our clients for their continued trust, and our shareholders for their confidence and support. Operator, we are now ready to open the line for questions. Thank you.

Speaker #2: With strong momentum and a clear path forward, we believe the best is yet to come. I would like to thank our employees for their dedication, our clients for their continued trust, and our shareholders for their confidence and support.

Speaker #2: Operator, we are now ready to open the line 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 1 on your telephone keypad.

Operator 2: 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. A confirmation tone will indicate your line is in the question queue. You may press star two if you would 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. One moment please while we pull for questions. Our first question is from Allen Klee with Maxim Group. Please proceed with your question.

Operator: 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. A confirmation tone will indicate your line is in the question queue. You may press star two if you would 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. One moment please while we pull for questions. Our first question is from Allen Klee with Maxim Group. Please proceed with your question.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #1: Our first question is from Alan Klee with Maxim Group. Please proceed with your question.

Speaker #4: Good morning. What would you say are the major factors that you expect to make second half 2026 different from first half? From a financial perspective.

Allen Klee: Good morning. What would you say are the major factors that you expect to make H2 2026 different from H1 from a financial perspective?

Speaker #5: Alan, and forgive us, would you mind just repeating that? We lost the volume for a minute.

Norman Roth: Allen, forgive us, would you mind just repeating that? We lost your volume for a minute.

Speaker #4: Oh, just what are the major factors that you expect to make second half 2026 financially different from first half 2026?

Allen Klee: What are the major factors that you expect to make H2 2026 financially different from H1 2026?

Speaker #5: Oh, okay. Very good. And I'll let Noam dig into that a little bit more, but 100%, as you said, the second half of the year, we expect to be much stronger than the first half of the year.

Stephen Snyder: Okay. Very good. I'll let Norm dig into that a little bit more. As you said, the H2 of the year we expect to be much stronger than the H1 of the year. Part of that is simply related to the natural seasonality that exists in our space. A component of that is seasonality. If we look at the revenue, only part of that is really seasonality. The other part of that relates to the fact that we will continue to layer growth on top of the existing business that we have, both through the expansion of the existing customer relationships, some of the enterprise relationships, and also through the Empower cross-selling that is well underway. Part of the story will be revenue.

Stephen Snyder: Okay. Very good. I'll let Norman dig into that a little bit more. As you said, the H2 of the year we expect to be much stronger than the H1 of the year. Part of that is simply related to the natural seasonality that exists in our space. A component of that is seasonality. If we look at the revenue, only part of that is really seasonality. The other part of that relates to the fact that we will continue to layer growth on top of the existing business that we have, both through the expansion of the existing customer relationships, some of the enterprise relationships, and also through the Empower cross-selling that is well underway. Part of the story will be revenue.

Speaker #5: Part of that is simply related to the natural seasonality that exists in our space. So a component of that is seasonality. But if we look at the revenue, only part of that is really seasonality; the other part of that relates to the fact that we will continue to layer growth on top of the existing business that we have.

Speaker #5: Both through the expansion of the existing customer relationships, some of the enterprise relationships, and also through the empower cross-selling that is well underway. So part of the story will be revenue.

Speaker #5: If you think about it, from a revenue perspective, we'll need to go from roughly $32 million in Q2 to $33 or $34 million per quarter in the balance of the year to achieve our guidance.

Norman Roth: If you think about from a revenue perspective, we'll need to go from roughly $32 million in Q2 to $33 million, $34 million per quarter in the balance of the year to achieve our guidance. We feel comfortable that that is very doable. The other part of it really relates more to the adjusted EBITDA and EPS component. If we think about some of the downward pressure from a profitability perspective, some of the downward pressure really relates to the fact that we've been spending significant energies integrating the Medsphere acquisition. From the perspective of the performance of the Medsphere acquisition, we've really been very pleased. As we talked about at the time when we acquired Medsphere, there's significant tech debt that we knew going into the acquisition really had to be remediated.

Stephen Snyder: If you think about from a revenue perspective, we'll need to go from roughly $32 million in Q2 to $33 million, $34 million per quarter in the balance of the year to achieve our guidance. We feel comfortable that that is very doable. The other part of it really relates more to the adjusted EBITDA and EPS component. If we think about some of the downward pressure from a profitability perspective, some of the downward pressure really relates to the fact that we've been spending significant energies integrating the Medsphere acquisition. From the perspective of the performance of the Medsphere acquisition, we've really been very pleased. As we talked about at the time when we acquired Medsphere, there's significant tech debt that we knew going into the acquisition really had to be remediated.

Speaker #5: And we feel comfortable that that is very doable. The other part of it really relates more to the adjusted EBITDA and the EPS component.

Speaker #5: So if we think about some of the downward pressure from a profitability perspective, some of the downward pressure really relates to the fact that we've been spending significant energies integrating the MedSphere acquisition.

Speaker #5: So from the perspective of the performance of the MedSphere acquisition, we've really been very pleased but as we talked about at the time when we acquired MedSphere, there's significant tech debt that we knew going into the acquisition really had to be remediated.

Speaker #5: So we've been working hard to deploy the research and development resources that are necessary to accomplish that, to really ensure that we have a solid foundation.

Norman Roth: We've been working hard to deploy the research and development resources that are necessary to accomplish that to really ensure that we have a solid foundation moving forward. Some of that development work relates to also making sure that the platform is really driven by AI, like the balance of our ambulatory platform. A lot of that energy and those resources have really been spent during H1 of the year. We believe we'll see the benefits of that in H2 of the year. Also, from an integration perspective and cost duplication, you see a significant amount of that integration efforts really being in our rearview mirror, having already been accomplished. There's still some more work to be done, but the lion's share of that was completed during Q1 and Q2 of the year.

Stephen Snyder: We've been working hard to deploy the research and development resources that are necessary to accomplish that to really ensure that we have a solid foundation moving forward. Some of that development work relates to also making sure that the platform is really driven by AI, like the balance of our ambulatory platform. A lot of that energy and those resources have really been spent during H1 of the year. We believe we'll see the benefits of that in H2 of the year. Also, from an integration perspective and cost duplication, you see a significant amount of that integration efforts really being in our rearview mirror, having already been accomplished. There's still some more work to be done, but the lion's share of that was completed during Q1 and Q2 of the year.

Speaker #5: Moving forward. Some of that development work relates to also making sure that the platform is really driven by AI, like the balance of our ambulatory platform.

Speaker #5: And a lot of that energy and those resources have really been spent during the first half of the year, but we believe we'll see the benefits of that in the second half of the year.

Speaker #5: Also, from an integration perspective and cost duplication, we see a significant amount of that integration efforts really being in our rearview mirror, having already been accomplished.

Speaker #5: There's still some more work to be done, but the lion's share of that was completed during the first and second quarters of the year.

Speaker #5: We'll see the benefits of that in the second half of the year. And then, Noam, are there other areas that would be helpful to talk about?

Norman Roth: We'll see the benefits of that in H2 of the year. Norm, are there other areas that would be helpful to talk about?

Stephen Snyder: We'll see the benefits of that in H2 of the year. Norm, are there other areas that would be helpful to talk about?

Speaker #3: Well, I think, Steve, those comments of our amortization will be decreasing, Alan. We use a little declining balance. It's an accelerated amortization that's related to the intangibles.

Norman Roth: Well, I think, Steve, those comments of our amortization will be decreasing, Allen. We use a declining balance. It's an accelerated amortization that's related to the intangibles that'll be decreasing over time.

Speaker #3: That'll be decreasing over time. And as Steve said, we've looked very carefully at our forecasted revenue and expenses. We feel comfortable with the sales pipeline and what opportunities will turn into recognized revenue.

Norman Roth: As Steve said, we look very carefully at our forecasted revenue and expenses. We feel comfortable with the sales pipeline and what opportunities will turn into recognized revenue, and also, how we're going to manage those expenses going forward.

Speaker #3: We also know how we're going to manage those expenses going forward.

Speaker #4: That was very comprehensive. Thank you. And then for the empower healthcare and compliance partners, acquisition, should we be thinking of this as minor on a financial impact, but then maybe becomes bigger from the cross-selling perspective, or how should we think about it?

Allen Klee: That was very comprehensive. Thank you. For the Empower Healthcare and Compliance Partners acquisition, should we be thinking of this as minor on a financial impact, but then maybe becomes bigger from the cross-selling perspective, or how should we think about it?

Speaker #5: Yeah, that's exactly how I think it makes sense to think about it. So again, the acquisition we closed in the middle of May, so from the perspective of Q2 results, it had minimal overall, it won't have a material impact on the financials either from the perspective of revenue contribution or overall EBITDA.

Stephen Snyder: Yes, that's exactly how I think it makes sense to think about it. Again, the acquisition we closed in the middle of May. From the perspective of Q2 results, it had minimal impact, and frankly, overall, it won't have a material impact on the financials, either from the perspective of revenue contribution or overall EBITDA. The benefit that we see really will be twofold. First of all, we're able now to be able to take the healthcare compliance and audit defense services that are really critical and becoming more and more important to the providers who we serve, and we're able to incorporate that expertise and that knowledge base now into our broader platform. We expect to be able to roll out a SaaS version of what has been, up to this point in time, delivered manually from the perspective of the professionals delivering these services.

Speaker #5: But the benefit that we see really will be twofold. First of all, we're able now to be able to take the healthcare compliance and audit defense services that are really critical and becoming more and more important to the providers who we serve.

Speaker #5: And we're able to incorporate that expertise and that knowledge base now into our broader platform. And we expect to be able to roll out a SaaS version of what has been up to this point in time, delivered manually from the perspective of the professionals delivering these services, will scale that and be able to bring that to the market in a SaaS platform that will be further supplemented and augmented by the professionals who we have on board through Empower.

Stephen Snyder: We'll scale that and be able to bring that to the market in a SaaS platform that will be further supplemented and augmented by the professionals who we have on board through Empower. Part of it will be taking our existing customer base and cross-selling that customer base into the SaaS platform. The other part will be being able to leverage cross-selling from the perspective of the existing Empower clients and cross-selling our revenue cycle management services and EHR solution into that base. The individual who now serves as the president of Empower, Mitch Brie, joined us through that acquisition. It was a company that he founded and grew. Just as a side note, we've known Mitch for some time, and Mitch has referred business to us that today represents about 10% of our overall revenue on an annualized basis.

Speaker #5: So part of it will be taking our existing customer base and cross-selling that customer base into the SaaS platform. The other part will be being able to leverage cross-selling from the perspective of the existing empower clients and cross-selling our revenue cycle management services and EHR solutions into that base.

Speaker #5: The individual who is now serves as the president of Empower, Mitch Bree, joined us through that acquisition. The company that he founded and grew and just as a side note, we've known Mitch for some time.

Speaker #5: And Mitch has referred business to us that today represents about 10% of our overall revenue on an annualized basis. So he's really been instrumental in terms of partnering with us and helping us grow our business from an organic perspective.

Stephen Snyder: He's really been instrumental in terms of partnering with us and helping us grow our business from an organic growth perspective. And we think that he can do far more by being a member of the team and by having an overall structure as part of the acquisition that heavily aligns Mitch and Empower with what we're trying to achieve in terms of growth. And in terms of the overall structure, I would just note that the overall structure of the acquisition really followed and tracked the same sort of structure you've seen in prior acquisitions with a minimal amount down. It was roughly 30% of the trailing 12 months revenue paid at closing, and then the balance of that will be paid from an earn-out that's really based upon the ability of Empower to help us grow and to be successful in leading cross-selling initiatives.

Speaker #5: And we think that he can do far more by being a member of the team and by having an overall structure as part of the acquisition that's heavily aligned, that heavily aligns Mitch and Empower with what we're trying to achieve in terms of growth.

Speaker #5: And in terms of the overall structure, I would just note that the overall structure of the acquisition really followed and tracked the same sort of structure you've seen in prior acquisitions, with a minimal amount down, roughly 30% of the trailing revenue, trailing 12 months revenue paid at closing, and then the balance of that will be paid from a earn-out that's really based upon the ability of Empower to help us grow and to be successful in leading cross-selling initiatives.

Speaker #4: Thank you. One slide 11 of the presentation I think it's stratus AI front desk. It might be referring to you have a section called demand, and you talk of new business selling through Q2, demand across basically, I was wondering if you could dig into a little bit of when you say new business sign through Q2 and demand from across the client base.

Allen Klee: Thank you. On slide 11 of the presentation, I think it's Stratus AI Front Desk it might be referring to, you have a section called demand, and you talk of new business signed through Q2, demand across. I was wondering if you could dig into a little bit of when you say new business signed through Q2 and demand from across the client base.

Speaker #5: Absolutely. So from an AI perspective, I'll let Hani talk a little bit more about the AI initiatives that we're seeing success on today. Both in terms of Stratus and also within our broader platform.

Stephen Snyder: Absolutely. From an AI perspective, I'll let Hani talk a little bit more about the AI initiatives that we're seeing success on today, both in terms of Stratus and also within our broader platform. And one other thing I'd mention too is that we're in conversations also, and some of these conversations are in the relatively early phases, but we're in active conversations with private equity groups about whether or not there may be an opportunity that relates to their portfolio companies. Private equity groups that are focused on healthcare companies, and we really see an opportunity to be able to partner with these private equity groups long term and to be able to assist them in accomplishing the ability to optimize their overall revenue structure and increase revenues, while at the same time being able to be effective in helping them reduce their costs.

Speaker #5: And one of the things I'd mention, too, is that we're in conversations also—and some of these conversations are in the relatively early phases—but we're in active conversation with private equity groups about whether or not there may be an opportunity that relates to their portfolio companies.

Speaker #5: So private equity groups that are focused on healthcare, companies and we really see an opportunity to be able to partner with these private equity groups long-term.

Speaker #5: And to be able to assist them in accomplishing the ability to optimize their overall revenue structure and increase revenues while at the same time being able to be effective and helping them reduce their costs.

Speaker #5: So really the same thing that we do as we acquire companies we think we can accomplish the same thing on their behalf. And a lot of those discussions really revolve around our ability to assist them in particular with regard to the AI needs that their portfolio companies have.

Stephen Snyder: Really the same thing that we do as we acquire companies, we think we can accomplish the same thing on their behalf. And a lot of those discussions really revolve around our ability to assist them, in particular with regard to the AI needs that their portfolio companies have. Again, no promise that any of these individual conversations will result in new business. We've had some promising conversations. In terms of the overall AI, Hani, if you don't mind just providing a little bit more color on that'd be great.

Speaker #5: Again, no promise that any of these individual conversations will result in new business, but we've had some promising conversations. But in terms of the overall AI, if you don't mind just providing a little bit more color on that, that'd be great.

Speaker #2: Thanks, Steve. So, as Steve mentioned, in terms of the StratusAI—to your question—we continue to see the demand. We continue to sign up more deals on StratusAI and other AI products.

A. Hadi Chaudhry: Thanks, Steve. As Steve mentioned, in terms of the Stratus AI to your question, we continue to see the demand. We continue to sign up more deals on Stratus AI and other AI products. We are extensively in the implementation phase, I think when we get to a point of where the AI specific revenue numbers are scalable enough that we should be able to start disclosing, we will separate it out from the technology-enabled services revenue. If you look at from the AI, it's the same three tracks we continue. One is using it internally to perform the work more efficiently, effectively, and cost efficiently. Then the front-end application that we are developing and selling to the customers.

Speaker #2: From we are in the extensively in the implementation phase, and I think when we get to a point of where the numbers, the AI-specific revenue numbers are scalable enough that we should be able to start disclosing, we will separate it out from the technology-enabled services revenue.

Speaker #2: But if you look at from the AI, it's the same three tracks. We continue one is our using it internally to perform the work more efficiently and effectively.

Speaker #2: And cost-efficiently. And then the front-end application that we are developing and selling to the customers.

Speaker #4: Okay. Thank you so much.

Stephen Snyder: Okay. Thank you so much.

Allen Klee: Okay. Thank you so much.

Speaker #5: Thank you.

Speaker #1: Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from Richard Hatkey with Zach's.

A. Hadi Chaudhry: Thank you.

A. Hadi Chaudhry: Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from Richard Handke with Zacks. Please proceed with your question.

Operator: Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from Richard Handke with Zacks. Please proceed with your question.

Speaker #1: Please proceed with your question.

Speaker #6: Hello everyone. Yeah, I'm feeling at least I had to jump off at 9:00. So as you know, I'm going to ask a couple of questions on her behalf.

Richard Handke: Hello, everyone. Yeah, I'm filling in. Lisa had to jump off at 9:00 AM, as you know, I'm going to ask a couple questions on her behalf. How you doing?

Richard Hantke: Hello, everyone. Yeah, I'm filling in. Lisa had to jump off at 9:00 AM, as you know, I'm going to ask a couple questions on her behalf. How you doing?

Speaker #6: How are you doing?

Speaker #5: I'm doing well, Richard. Thanks for calling in.

Speaker #6: All right. All right. Yeah, good. Now, her first set of questions related to AI and what's going on there. I think you guys have covered that quite extensively.

Stephen Snyder: Doing well, Richard. Thanks for calling in.

Richard Handke: All right. Yeah, good. Now, her first set of questions related to AI and what's going on there. I think you guys have covered that quite extensively, both in your remarks and in answer to the previous question. I think you've covered that. I think she got what she needs there. Let's talk about cross-selling a little bit. I know, Hani, you made a comment that you're in the early innings of cross-selling opportunity. Are you referring to Empower and MedSphere or just Empower? Let's just focus on MedSphere. Have you exhausted all the opportunities there?

Richard Hantke: All right. Yeah, good. Now, her first set of questions related to AI and what's going on there. I think you guys have covered that quite extensively, both in your remarks and in answer to the previous question. I think you've covered that. I think she got what she needs there. Let's talk about cross-selling a little bit. I know, Hani, you made a comment that you're in the early innings of cross-selling opportunity. Are you referring to Empower and MedSphere or just Empower? Let's just focus on MedSphere. Have you exhausted all the opportunities there?

Speaker #6: And both in your remarks and in answer to the previous question. So we're going to I think you've covered that. I think she got what she needs there.

Speaker #6: Let's talk about cross-selling a little bit. I know Honey, you made a comment that you're in the early innings of cross-selling opportunities. Are you referring to are you referring to Empower and Medspier or just Empower?

Speaker #6: Let's just focus on Medspier. Have you exhausted all the opportunities there?

Speaker #5: No, good question. And if we kind of break that up—so, from the perspective of Empower, we're focused heavily today on these cross-selling initiatives.

Stephen Snyder: No. Good question. If we kind of break that up, from the perspective of Empower, we're focused heavily today on these cross-selling initiatives. Cross-selling is already well underway with regard to Empower. We don't have any new signings yet in terms of from the perspective of the Empower cross-selling. Since it's only been a couple of months, I guess that would be understandable. From the MedSphere perspective, we still have significant opportunity to score additional wins from a MedSphere cross-selling perspective. We've already really seen some pretty significant traction in terms of the hospitals that we're working with from MedSphere acquisition perspective. We've been able to cross-sell and to expand the overall wallet share of those hospitals. Having said that, I still think we're just beginning in the whole scheme of cross-selling from a MedSphere perspective. Hani might have-

Speaker #5: So cross-selling is already well underway with regard to Empower. We don't have any new signings yet in terms of from the perspective of the Empower cross-selling.

Speaker #5: But since it's only been a couple of months, I guess that would be understandable. From the Medspier perspective, we still have significant opportunity to score additional wins from a Medspier cross-selling perspective.

Speaker #5: We've already really seen some pretty significant traction in terms of the hospitals that we're working with from Medspier acquisition perspective. We've been able to cross-sell and to expand the overall wallet share of those hospitals.

Speaker #5: Having said that, I still think we're just beginning in the whole scheme of cross-selling from a Medspier perspective. And Hani might have.

Speaker #2: Right. Right. So naturally, the one that you were referring to, Richard, that I was referring to, and I'm really careful here because that deal has not yet been signed.

A. Hadi Chaudhry: Right. Actually, the one that you were referring to, Richard, that I was referring to, I'm being careful here because that deal has not yet been signed. All that I can say that we are in active conversations with one existing PE-backed, a large enterprise client about an AI-powered platform engagement. We'll hold the specifics for now in terms of the names, the scope, and/or any number until it gets materialized. I would simply frame it as a strong validation of our capabilities in AI and over the decades that we have developed into our space. That's other than the Empower, the cross-sell opportunities that Steve was referring to.

Speaker #2: But all what I can say that we are in active conversation with one existing PE that a large enterprise client about an AI-powered platform engagement.

Speaker #2: So we'll hold this specifics for now in terms of the names, the scope, or any number until it gets materialized. I would simply frame it as a strong validation of our capabilities in AI and over the decades that we have developed into our space.

Speaker #2: So that's other than the Empower or the cross-sell opportunities, that Steve was referring to.

Speaker #6: Okay. Excellent. Thank you. Now, next question, I think, is related. Lisa was of the understanding that you have tripled your Salesforce. I'm not sure what over period of time that was.

Richard Handke: Okay. Excellent. Thank you. Next question I think is related. Lisa was under the understanding that you have tripled your sales force. I'm not sure what over a period of time that was. How does that change your expectations? Are they up to speed? Do you plan to expand any further? Could you talk a little bit about your sales force?

Richard Hantke: Okay. Excellent. Thank you. Next question I think is related. Lisa was under the understanding that you have tripled your sales force. I'm not sure what over a period of time that was. How does that change your expectations? Are they up to speed? Do you plan to expand any further? Could you talk a little bit about your sales force?

Speaker #6: How's that change your expectations? Are they up to speed? Are you going to you plan to expand any further? Could you talk a little bit about your Salesforce?

Speaker #5: That's right, Richard. We've really significantly expanded the overall Salesforce. And the Salesforce continues to be focused primarily on cross-selling, expanding the existing wallet share.

Stephen Snyder: That's right, Richard. We've really significantly expanded the overall sales force. The sales force continues to be focused primarily on cross-selling, expanding the existing wallet share. That's where we see the opportunity. That's where we're seeing the successes. From an expense structure perspective, in terms of the overall costs, it's less expensive to sell to our existing customers as opposed to pursuing more broadly net new wins. We continue to focus on that cross-selling. The team is fully up to speed in terms of our applications. Many of the individuals who are part of this expanded sales team joined us through the Medsphere acquisition, so they already understood their applications, understand the place in the market for those various applications and solutions, and also how to position those solutions from a cross-selling perspective.

Speaker #5: That's where we see the opportunity. That's where we're seeing the successes. And from an expense structure perspective, in terms of the overall cost, it's less expensive to sell to our existing customers as opposed to pursuing more broadly net new wins.

Speaker #5: So we continue to focus on that cross-selling. The team is fully up to speed in terms of our applications. Many of the individuals who are part of this expanded sales team joined us through the Medspire acquisition.

Speaker #5: So they already understood their applications, understand the place in the market for those various applications and solutions, and also how to position those solutions from a cross-selling perspective.

Speaker #6: Okay. Excellent. Thank you for that. Just one final question, different subject completely. You had that cyber breach back, I guess it was in Q1, March, something like that.

Richard Handke: Okay. Excellent. Thank you for that. Just one final question, different subject completely. You had that cyber breach back, I guess it was in Q1 March, something like that. Any update on that? Insurance is going to substantially cover all the costs, too early to tell? Any update there?

Richard Hantke: Okay. Excellent. Thank you for that. Just one final question, different subject completely. You had that cyber breach back, I guess it was in Q1 March, something like that. Any update on that? Insurance is going to substantially cover all the costs, too early to tell? Any update there?

Speaker #6: Any update on that, insurances, going to substantially cover all the costs too early to tell? Any update there?

Speaker #5: Certainly, based upon what we know today, we don't believe that this incident will have any material impact on our operations or financial conditions. So we still feel very strongly that that's the case.

Stephen Snyder: Certainly based upon what we know today, we don't believe that this incident will have any material impact on our operations or financial conditions. We still feel very strongly that that's the case. If we just back up for a minute and just talk more generally about the security incident, I think you're referring to the 16 March incident that we had. You'll recall, this was really an incident that affected a single environment within CareCloud Health, and we were really thankful that we had the ability to fully restore our system the same day that it was impacted. We restored it the same afternoon that it was impacted. Also, I'd say beyond that, from the perspective of customers, I think they can rest assured that we were able to expel the bad actor from our system on that same day, on 16 March.

Speaker #5: But if we just back up for a minute, we just talk more generally about the security incident. I think you're referring to the March 16th incident that we had.

Speaker #5: And you'll recall this was really an incident that affected a single environment within CareCloud Health. And we were really thankful that we had the ability to fully restore our system the same day that it was impacted.

Speaker #5: We restored it the same afternoon that it was impacted. And also, I'd say beyond that, from the perspective of a customer's I think they can rest assured that we were able to expel the bad actor from our system on that same day, on March 16th.

Speaker #5: And we've since had forensic analyses performed that validate our belief that we had cut off their access or essentially kicked them out of the system on March 16th.

Stephen Snyder: We've since had forensic analyses performed that validate our belief that we had cut off their access or essentially kicked them out of the system on 16 March. It was a limited universe of our overall platform and client base. It was restored quickly, and the threat no longer, to the best of our knowledge, exists within our platform as validated by our third-party forensic examiner. We're in the process right now of sending out notices to the patients who were impacted by that breach. That's well underway, and we continue, once again, to believe that the insurance coverage will provide everything that we need from a financial perspective to be able to both communicate to the patients, to perform the forensic analysis, which is already in our rearview mirror. Legal costs, litigation fees, and the like we believe will be within that coverage amount.

Speaker #5: So it was a limited. Universal of our overall platform and client base. It was restored quickly. And the threat no longer to the best of our knowledge exists within our platform as validated by our third-party forensic examiner.

Speaker #5: We're in the process right now of sending out notices to the patients who were impacted by that breach, so that's well underway. And we continue, once again, to believe that the insurance coverage will provide everything that we need from a financial perspective—to be able to both communicate to the patients, to perform the forensic analysis (which is already in our rearview mirror), legal costs, litigation fees, and the like.

Speaker #5: We believe we'll be within that premium—I'm sorry, within that coverage amount.

Speaker #6: Okay. Sounds like you have a very you had it very well contained. That's excellent. All right. Well, then I'll just leave it at I'll leave it leave you with this.

Richard Handke: Okay. Sounds like you had it very well contained. That's excellent. All right. Well, I'll just leave you with this. Looks to me like you met or slightly exceeded Lisa's expectations for you, top and bottom line for Q2, that's good. Anyway. Thank you, and thanks for taking my call.

Richard Hantke: Okay. Sounds like you had it very well contained. That's excellent. All right. Well, I'll just leave you with this. Looks to me like you met or slightly exceeded Lisa's expectations for you, top and bottom line for Q2, that's good. Anyway. Thank you, and thanks for taking my call.

Speaker #6: It looks to me like you met or slightly exceeded Lisa's expectations for you top and bottom line for Q2. So that's good. Anyway, anyway, thank you.

Speaker #6: And thanks for taking my call.

Speaker #5: Thank you, Richard.

Stephen Snyder: Thank you, Richard.

Speaker #1: Once again, if you would like to ask a question, please press star one on your telephone keypad. We have reached the end of the question-and-answer session.

Operator 2: Once again, if you would like to ask a question, please press star one on your telephone keypad. We have reached the end of the question and answer session. I would like to turn the floor back over to Norman Roth for closing comments.

Operator: Once again, if you would like to ask a question, please press star one on your telephone keypad. We have reached the end of the question and answer session. I would like to turn the floor back over to Norman Roth for closing comments.

Speaker #1: I would like to turn the floor back over to Norman Roth for closing comments.

Speaker #5: Thank you, everyone, for attending our call today. Have a great day.

Norman Roth: Thank you everyone for attending our call today. Have a great day.

Operator 2: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Q2 2026 CareCloud Inc Earnings Call

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