CareCloud, Inc. (the “Company” or “CareCloud”) (Nasdaq: CCLD,
CCLDO, CCLDP), a leader in healthcare technology solutions for
medical practices and health systems nationwide, today announced
financial and operational results for the quarter ended September
30, 2023. The Company’s management will conduct a conference call
with related slides today at 8:30 a.m. Eastern Time to discuss
these results and management’s outlook.
“CareCloud is turning the corner in terms of
comparable revenue growth and has made significant progress
stabilizing the project-oriented professional business line and
accomplished major technology platform developments in the third
quarter,” said A. Hadi Chaudhry, President and Chief Executive
Officer of CareCloud. “We have taken steps to solidify our path
forward such as the decision to reduce our cost infrastructure and
align spending with our revenues targeted to improve free cash flow
by $10 million on an annualized basis. Furthermore, we remain
focused on servicing specialist provider markets, such as physical
therapy, and emerging international opportunities.
“Critical features of our CirrusAI platform have
been recently launched with the generative AI technology, marking
an important advancement for the overall healthcare industry and
establishing CareCloud as an industry-leader in the space,” added
Mr. Chaudhry. “CirrusAI is a state-of-the-art healthcare AI
platform poised to reshape how healthcare professionals deliver
patient care and manage their office workflows. The technology is
also designed to be compatible with other EHR systems and easy for
healthcare organizations to add CirrusAI to their workflows.”
Mr. Chaudhry concluded, “We are optimistic about
the opportunities ahead and remain committed to delivering top-tier
healthcare solutions to our customers while generating returns for
our shareholders. We believe that the strategic actions we have
taken recently will further strengthen our position as a leading
tech-enabled revenue cycle management provider and return the
company to sustainable growth.”
Third Quarter 2023
Highlights
- Revenue of
$29.3 million, 13% decline from Q3 2022
- GAAP net loss
of $2.7 million, compared to a net income of $1.1 million in Q3
2022
- Adjusted net
income of $203,000, or $0.01 per share
- Adjusted EBITDA
of $3.2 million, compared to $4.8 million in Q3 2022
Year-to-date 2023
Highlights
- Revenue of $88.6 million, a 17%
decrease from YTD 2022
- GAAP net loss of $5.0 million,
compared to net income of $4.9 million in the same period last
year
- Adjusted net income of $4.0
million, or $0.25 per share
- Adjusted EBITDA of $11.3 million,
compared to $16.6 million in the same period last year
“While we still face tough comparisons versus
the prior year due to the two health system mergers previously
mentioned, our third quarter revenues were level with the second
quarter and we expect a strong fourth quarter, with revenue growth
led primarily by professional services,” said Larry Steenvoorden,
Chief Financial Officer. “We are focused on executing our plan to
improve financial performance through actions including headcount
reductions, expected to be mostly completed in the final months of
this year. Such measures are planned to improve free cash flow and
will allow us to establish a sustainable foundation for higher
profitability in 2024 and beyond.”
Third Quarter 2023 Financial
Results
Revenue for the third quarter 2023 was $29.3
million, compared to $33.7 million in the third quarter of
2022.
Third quarter 2023 GAAP net loss was $2.7
million, as compared to net income of $1.1 million in the same
period last year. GAAP net loss was $0.42 per share, based on the
net loss attributable to common shareholders, which takes into
account the preferred stock dividends declared during the
quarter.
Non-GAAP adjusted net income for third quarter
2023 was $203,000 or $0.01 per share, calculated using the
end-of-period common shares outstanding.
Adjusted EBITDA for third quarter 2023 was $3.2
million, or 11% of revenue, compared to $4.8 million in the same
period last year.
Year-to-date 2023 Financial
Results
Revenue for the first nine months of 2023 was
$88.6 million, compared to $106.3 million in the first nine months
of 2022. Approximately 85% of revenue for the first nine months of
2023 involved the use of CareCloud’s technology, including 20% from
clients utilizing CareCloud’s professional
services. Approximately 11% of revenue is from clients where
we are managing their entire medical practice, and approximately 4%
of revenue comes from other services.
For the first nine months of 2023, the Company’s
GAAP net loss was $5.0 million, compared to GAAP net income of $4.9
million in the first nine months of 2022. This equates to a loss of
$1.07 per share after subtracting the preferred share dividends.
Non-GAAP adjusted net income for the first nine months of 2023 was
$4.0 million, or $0.25 per share.
During this period, adjusted EBITDA was $11.3
million, a decrease of $5.3 million from $16.6 million in the same
period last year.
Cash Balances and Capital
As of September 30, 2023, the Company had
approximately $6.4 million of cash and net working capital of $5.5
million. During the first nine months of 2023, cash flow from
operations was approximately $11.7 million.
2023 Full Year Guidance
CareCloud is reiterating its forward-looking
guidance for the fiscal year ending December 31, 2023:
For the Fiscal Year Ending December 31, 2023Forward-Looking
Guidance |
Revenue |
$120 – $122 million |
Adjusted EBITDA |
$15 – $17 million |
Conference Call Information
CareCloud management will host a conference call
today at 8:30 a.m. Eastern Time to discuss the third quarter 2023
results. The live webcast of the conference call and related
presentation slides can be accessed under Events &
Presentations at ir.carecloud.com/events/. An audio-only option is
available by dialing 631-891-4304 and referencing “CareCloud Third
Quarter 2023 Earnings Call.” Investors who opt for audio only will
need to download the related slides at
ir.carecloud.com/events/.
A replay of the conference call with slides will
be available approximately one hour after conclusion of the call at
the same link. An audio replay can also be accessed by dialing
412-317-6671 and providing access code 10022640.
About CareCloudCareCloud
(Nasdaq: CCLD, CCLDP, CCLDO) brings disciplined innovation to the
business of healthcare. Our suite of technology-enabled solutions
helps clients increase financial and operational performance,
streamline clinical workflows and improve the patient experience.
More than 40,000 providers count on CareCloud to help them improve
patient care while reducing administrative burdens and operating
costs. Learn more about our products and services, including
revenue cycle management (RCM), practice management (PM),
electronic health records (EHR), business intelligence, patient
experience management (PXM) and digital health, at
www.carecloud.com.
Follow CareCloud on LinkedIn, Twitter and Facebook.
For additional information, please visit our
website at www.carecloud.com. To view CareCloud’s latest investor
presentations, read recent press releases, and listen to interviews
with management, please visit ir.carecloud.com.
Use of Non-GAAP Financial Measures
In our earnings releases, prepared remarks,
conference calls, slide presentations, and webcasts, we use and
discuss non-GAAP financial measures, as defined by SEC Regulation
G. The GAAP financial measure most directly comparable to each
non-GAAP financial measure used or discussed, and a reconciliation
of the differences between each non-GAAP financial measure and the
comparable GAAP financial measure, are included in this press
release after the consolidated financial statements. Our earnings
press releases containing such non-GAAP reconciliations can be
found in the Investor Relations section of our web site at
ir.carecloud.com.
Forward-Looking Statements
This press release contains various
forward-looking statements within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995. These statements relate to anticipated future events, future
results of operations or future financial performance. In some
cases, you can identify forward-looking statements by terminology
such as “may,” “might,” “will,” “shall,” “should,” “could,”
“intends,” “expects,” “plans,” “goals,” “projects,” “anticipates,”
“believes,” “seek,” “estimates,” “forecast,” “predicts,”
“possible,” “potential,” “target,” or “continue” or the negative of
these terms or other comparable terminology.
Our operations involve risks and uncertainties,
many of which are outside our control, and any one of which, or a
combination of which, could materially affect our results of
operations and whether the forward-looking statements ultimately
prove to be correct. Forward-looking statements in this press
release include, without limitation, statements reflecting
management's expectations for future financial performance and
operating expenditures, expected growth, profitability and business
outlook, the impact of the Covid-19 pandemic on our financial
performance and business activities, and the expected results from
the integration of our acquisitions.
These forward-looking statements are neither
historical facts nor assurances of future performance. Instead,
they are only predictions, are uncertain and involve substantial
known and unknown risks, uncertainties and other factors which may
cause our (or our industry’s) actual results, levels of activity or
performance to be materially different from any future results,
levels of activity or performance expressed or implied by these
forward-looking statements. New risks and uncertainties emerge from
time to time, and it is not possible for us to predict all of the
risks and uncertainties that could have an impact on the
forward-looking statements, including without limitation, risks and
uncertainties relating to the Company’s ability to manage growth,
migrate newly acquired customers and retain new and existing
customers, maintain cost-effective global operations, increase
operational efficiency and reduce operating costs, predict and
properly adjust to changes in reimbursement and other industry
regulations and trends, retain the services of key personnel,
develop new technologies, upgrade and adapt legacy and acquired
technologies to work with evolving industry standards, compete with
other companies products and services competitive with ours, and
other important risks and uncertainties referenced and discussed
under the heading titled “Risk Factors” in the Company’s filings
with the Securities and Exchange Commission. In addition, there is
uncertainty about the spread of the Covid-19 virus and the impact
it may have on the Company’s operations, the demand for the
Company’s services, and economic activity in general.
The statements in this press release are made as
of the date of this press release, even if subsequently made
available by the Company on its website or otherwise. The Company
does not assume any obligations to update the forward-looking
statements provided to reflect events that occur or circumstances
that exist after the date on which they were made.
SOURCE CareCloud
Company Contact:Larry SteenvoordenChief
Financial OfficerCareCloud, Inc. IR@carecloud.com
Investor Contact:Asher DewhurstICR
WestwickeCareCloudIR@westwicke.com
CARECLOUD, INC. |
CONSOLIDATED BALANCE SHEETS |
($ in thousands, except share and per share amounts) |
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
6,406 |
|
|
$ |
12,299 |
|
Accounts receivable - net |
|
|
12,310 |
|
|
|
14,773 |
|
Contract asset |
|
|
4,948 |
|
|
|
4,399 |
|
Inventory |
|
|
478 |
|
|
|
381 |
|
Current assets - related party |
|
|
50 |
|
|
|
16 |
|
Prepaid expenses and other current assets |
|
|
3,299 |
|
|
|
2,785 |
|
Total current assets |
|
|
27,491 |
|
|
|
34,653 |
|
Property and equipment - net |
|
|
5,319 |
|
|
|
5,056 |
|
Operating lease right-of-use assets |
|
|
4,491 |
|
|
|
4,921 |
|
Intangible assets - net |
|
|
26,689 |
|
|
|
29,520 |
|
Goodwill |
|
|
61,186 |
|
|
|
61,186 |
|
Other assets |
|
|
745 |
|
|
|
838 |
|
TOTAL ASSETS |
|
$ |
125,921 |
|
|
$ |
136,174 |
|
LIABILITIES AND SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
6,243 |
|
|
$ |
5,681 |
|
Accrued compensation |
|
|
3,118 |
|
|
|
4,248 |
|
Accrued expenses |
|
|
4,629 |
|
|
|
4,432 |
|
Operating lease liability (current portion) |
|
|
1,810 |
|
|
|
2,273 |
|
Deferred revenue (current portion) |
|
|
1,527 |
|
|
|
1,386 |
|
Notes payable (current portion) |
|
|
490 |
|
|
|
319 |
|
Dividend payable |
|
|
4,125 |
|
|
|
4,059 |
|
Total current liabilities |
|
|
21,942 |
|
|
|
22,398 |
|
Notes payable |
|
|
10 |
|
|
|
13 |
|
Borrowings under line of credit |
|
|
12,000 |
|
|
|
8,000 |
|
Operating lease liability |
|
|
2,789 |
|
|
|
3,207 |
|
Deferred revenue |
|
|
422 |
|
|
|
342 |
|
Deferred tax liability |
|
|
606 |
|
|
|
525 |
|
Total liabilities |
|
|
37,769 |
|
|
|
34,485 |
|
COMMITMENTS AND CONTINGENCIES
(NOTE 7) |
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par
value - authorized 7,000,000 shares. Series A, issued and
outstanding 4,526,231 shares at September 30, 2023 and December 31,
2022. Series B, issued and outstanding 1,463,392 and 1,344,128
shares at September 30, 2023 and December 31, 2022,
respectively |
|
|
6 |
|
|
|
6 |
|
Common stock, $0.001 par value
- authorized 35,000,000 shares. Issued 16,598,449 and 15,970,204
shares at September 30, 2023 and December 31, 2022, respectively.
Outstanding 15,857,650 and 15,229,405 shares at September 30, 2023
and December 31, 2022, respectively |
|
|
17 |
|
|
|
16 |
|
Additional paid-in
capital |
|
|
123,872 |
|
|
|
130,987 |
|
Accumulated deficit |
|
|
(30,789 |
) |
|
|
(25,621 |
) |
Accumulated other
comprehensive loss |
|
|
(4,292 |
) |
|
|
(3,037 |
) |
Less: 740,799 common shares
held in treasury, at cost at September 30, 2023 and December 31,
2022 |
|
|
(662 |
) |
|
|
(662 |
) |
Total shareholders’
equity |
|
|
88,152 |
|
|
|
101,689 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
125,921 |
|
|
$ |
136,174 |
|
CARECLOUD,
INC. |
CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED) |
($ in thousands, except share and per share amounts) |
|
|
Three Months
Ended |
|
|
Nine Months
Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
NET REVENUE |
|
$ |
29,280 |
|
|
$ |
33,723 |
|
|
$ |
88,643 |
|
|
$ |
106,292 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct operating costs |
|
|
18,260 |
|
|
|
20,406 |
|
|
|
53,843 |
|
|
|
64,866 |
|
Selling and marketing |
|
|
2,337 |
|
|
|
2,504 |
|
|
|
7,529 |
|
|
|
7,314 |
|
General and administrative |
|
|
5,482 |
|
|
|
6,500 |
|
|
|
16,518 |
|
|
|
18,479 |
|
Research and development |
|
|
1,260 |
|
|
|
1,168 |
|
|
|
3,523 |
|
|
|
3,251 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(1,660 |
) |
|
|
- |
|
|
|
(2,890 |
) |
Depreciation and amortization |
|
|
3,903 |
|
|
|
2,810 |
|
|
|
10,282 |
|
|
|
8,686 |
|
Net loss on lease terminations and unoccupied lease charges |
|
|
8 |
|
|
|
307 |
|
|
|
430 |
|
|
|
928 |
|
Total operating expenses |
|
|
31,250 |
|
|
|
32,035 |
|
|
|
92,125 |
|
|
|
100,634 |
|
OPERATING (LOSS) INCOME |
|
|
(1,970 |
) |
|
|
1,688 |
|
|
|
(3,482 |
) |
|
|
5,658 |
|
OTHER: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
52 |
|
|
|
14 |
|
|
|
124 |
|
|
|
22 |
|
Interest expense |
|
|
(352 |
) |
|
|
(96 |
) |
|
|
(829 |
) |
|
|
(303 |
) |
Other expense - net |
|
|
(422 |
) |
|
|
(495 |
) |
|
|
(591 |
) |
|
|
(300 |
) |
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES |
|
|
(2,692 |
) |
|
|
1,111 |
|
|
|
(4,778 |
) |
|
|
5,077 |
|
Income tax provision |
|
|
57 |
|
|
|
55 |
|
|
|
204 |
|
|
|
144 |
|
NET (LOSS) INCOME |
|
$ |
(2,749 |
) |
|
$ |
1,056 |
|
|
$ |
(4,982 |
) |
|
$ |
4,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividend |
|
|
3,916 |
|
|
|
3,849 |
|
|
|
11,757 |
|
|
|
11,662 |
|
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS |
|
$ |
(6,665 |
) |
|
$ |
(2,793 |
) |
|
$ |
(16,739 |
) |
|
$ |
(6,729 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share: basic and diluted |
|
$ |
(0.42 |
) |
|
$ |
(0.18 |
) |
|
$ |
(1.07 |
) |
|
$ |
(0.45 |
) |
Weighted-average common shares used to compute basic and diluted
loss per share |
|
|
15,760,499 |
|
|
|
15,148,721 |
|
|
|
15,600,361 |
|
|
|
15,070,913 |
|
CARECLOUD, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND
2022 |
($ in thousands) |
|
|
|
2023 |
|
|
2022 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net (loss)
income |
|
$ |
(4,982 |
) |
|
$ |
4,933 |
|
Adjustments to reconcile net
(loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
10,672 |
|
|
|
9,120 |
|
Lease amortization |
|
|
1,618 |
|
|
|
2,474 |
|
Deferred revenue |
|
|
221 |
|
|
|
381 |
|
Provision for doubtful accounts |
|
|
389 |
|
|
|
715 |
|
Provision for deferred income taxes |
|
|
81 |
|
|
|
62 |
|
Foreign exchange loss |
|
|
596 |
|
|
|
238 |
|
Interest accretion |
|
|
493 |
|
|
|
460 |
|
Stock-based compensation expense |
|
|
3,783 |
|
|
|
3,399 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(2,890 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,889 |
|
|
|
10 |
|
Contract asset |
|
|
(549 |
) |
|
|
318 |
|
Inventory |
|
|
(97 |
) |
|
|
85 |
|
Other assets |
|
|
(117 |
) |
|
|
62 |
|
Accounts payable and other liabilities |
|
|
(2,276 |
) |
|
|
(4,264 |
) |
Net cash provided by operating activities |
|
|
11,721 |
|
|
|
15,103 |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(2,687 |
) |
|
|
(2,156 |
) |
Capitalized software |
|
|
(6,635 |
) |
|
|
(6,967 |
) |
Net cash used in investing activities |
|
|
(9,322 |
) |
|
|
(9,123 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Preferred stock dividends paid |
|
|
(11,691 |
) |
|
|
(11,478 |
) |
Settlement of tax withholding obligations on stock issued to
employees |
|
|
(1,425 |
) |
|
|
(1,140 |
) |
Repayments of notes payable |
|
|
(717 |
) |
|
|
(769 |
) |
Stock issuance costs |
|
|
- |
|
|
|
(32 |
) |
Proceeds from issuance of Series B Preferred Stock, net of
expenses |
|
|
1,427 |
|
|
|
30,280 |
|
Redemption of Series A Preferred Stock |
|
|
- |
|
|
|
(20,005 |
) |
Proceeds from line of credit |
|
|
14,700 |
|
|
|
17,500 |
|
Repayment of line of credit |
|
|
(10,700 |
) |
|
|
(25,500 |
) |
Net cash used in financing activities |
|
|
(8,406 |
) |
|
|
(11,144 |
) |
EFFECT OF EXCHANGE RATE
CHANGES ON CASH |
|
|
114 |
|
|
|
(309 |
) |
NET DECREASE IN CASH AND
RESTRICTED CASH |
|
|
(5,893 |
) |
|
|
(5,473 |
) |
CASH AND RESTRICTED CASH -
Beginning of the period |
|
|
12,299 |
|
|
|
10,340 |
|
CASH AND RESTRICTED CASH - End
of the period |
|
$ |
6,406 |
|
|
$ |
4,867 |
|
SUPPLEMENTAL NONCASH INVESTING
AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Dividends declared, not paid |
|
$ |
4,125 |
|
|
$ |
4,040 |
|
Purchase of prepaid insurance with assumption of note |
|
$ |
620 |
|
|
$ |
695 |
|
SUPPLEMENTAL INFORMATION -
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
131 |
|
|
$ |
128 |
|
Interest |
|
$ |
630 |
|
|
$ |
125 |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP MEASURES (UNAUDITED)
The following is a reconciliation of the
non-GAAP financial measures used by us to describe our financial
results determined in accordance with accounting principles
generally accepted in the United States of America (“GAAP”). An
explanation of these measures is also included below under the
heading “Explanation of Non-GAAP Financial Measures.”
While management believes that these non-GAAP
financial measures provide useful supplemental information to
investors regarding the underlying performance of our business
operations, investors are reminded to consider these non-GAAP
measures in addition to, and not as a substitute for, financial
performance measures prepared in accordance with GAAP. In addition,
it should be noted that these non-GAAP financial measures may be
different from non-GAAP measures used by other companies, and
management may utilize other measures to illustrate performance in
the future. Non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with our results of
operations as determined in accordance with GAAP.
Adjusted EBITDA to GAAP (Loss)
Income
Set forth below is a reconciliation of our
“adjusted EBITDA” to our GAAP net (loss) income.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
($ in
thousands) |
|
Net revenue |
|
$ |
29,280 |
|
|
$ |
33,723 |
|
|
$ |
88,643 |
|
|
$ |
106,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss) income |
|
|
(2,749 |
) |
|
|
1,056 |
|
|
|
(4,982 |
) |
|
|
4,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
57 |
|
|
|
55 |
|
|
|
204 |
|
|
|
144 |
|
Net interest expense |
|
|
300 |
|
|
|
82 |
|
|
|
705 |
|
|
|
281 |
|
Foreign exchange loss / other expense |
|
|
426 |
|
|
|
523 |
|
|
|
609 |
|
|
|
359 |
|
Stock-based compensation expense |
|
|
1,209 |
|
|
|
1,328 |
|
|
|
3,783 |
|
|
|
3,399 |
|
Depreciation and amortization |
|
|
3,903 |
|
|
|
2,810 |
|
|
|
10,282 |
|
|
|
8,686 |
|
Transaction and integration costs |
|
|
91 |
|
|
|
316 |
|
|
|
270 |
|
|
|
724 |
|
Net loss on lease terminations and unoccupied lease charges |
|
|
8 |
|
|
|
307 |
|
|
|
430 |
|
|
|
928 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(1,660 |
) |
|
|
- |
|
|
|
(2,890 |
) |
Adjusted EBITDA |
|
$ |
3,245 |
|
|
$ |
4,817 |
|
|
$ |
11,301 |
|
|
$ |
16,564 |
|
Non-GAAP Adjusted Operating Income to
GAAP Operating (Loss) Income
Set forth below is a reconciliation of our
non-GAAP “adjusted operating income” and non-GAAP “adjusted
operating margin” to our GAAP operating (loss) income and GAAP
operating margin.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
($ in
thousands) |
|
Net revenue |
|
$ |
29,280 |
|
|
$ |
33,723 |
|
|
$ |
88,643 |
|
|
$ |
106,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss) income |
|
|
(2,749 |
) |
|
|
1,056 |
|
|
|
(4,982 |
) |
|
|
4,933 |
|
Provision for income taxes |
|
|
57 |
|
|
|
55 |
|
|
|
204 |
|
|
|
144 |
|
Net interest expense |
|
|
300 |
|
|
|
82 |
|
|
|
705 |
|
|
|
281 |
|
Other expense - net |
|
|
422 |
|
|
|
495 |
|
|
|
591 |
|
|
|
300 |
|
GAAP operating (loss) income |
|
|
(1,970 |
) |
|
|
1,688 |
|
|
|
(3,482 |
) |
|
|
5,658 |
|
GAAP operating margin |
|
|
(6.7 |
%) |
|
|
5.0 |
% |
|
|
(3.9 |
%) |
|
|
5.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
1,209 |
|
|
|
1,328 |
|
|
|
3,783 |
|
|
|
3,399 |
|
Amortization of purchased intangible assets |
|
|
1,201 |
|
|
|
1,428 |
|
|
|
3,775 |
|
|
|
4,884 |
|
Transaction and integration costs |
|
|
91 |
|
|
|
316 |
|
|
|
270 |
|
|
|
724 |
|
Net loss on lease terminations and unoccupied lease charges |
|
|
8 |
|
|
|
307 |
|
|
|
430 |
|
|
|
928 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(1,660 |
) |
|
|
- |
|
|
|
(2,890 |
) |
Non-GAAP adjusted operating income |
|
$ |
539 |
|
|
$ |
3,407 |
|
|
$ |
4,776 |
|
|
$ |
12,703 |
|
Non-GAAP adjusted operating margin |
|
|
1.8 |
% |
|
|
10.1 |
% |
|
|
5.4 |
% |
|
|
12.0 |
% |
Non-GAAP Adjusted Net Income to GAAP Net
(Loss) Income
Set forth below is a reconciliation of our
non-GAAP “adjusted net income” and non-GAAP “adjusted net income
per share” to our GAAP net (loss) income and GAAP net loss per
share.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
($ in
thousands) |
|
GAAP net (loss) income |
|
$ |
(2,749 |
) |
|
$ |
1,056 |
|
|
$ |
(4,982 |
) |
|
$ |
4,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss / other expense |
|
|
426 |
|
|
|
523 |
|
|
|
609 |
|
|
|
359 |
|
Stock-based compensation expense |
|
|
1,209 |
|
|
|
1,328 |
|
|
|
3,783 |
|
|
|
3,399 |
|
Amortization of purchased intangible assets |
|
|
1,201 |
|
|
|
1,428 |
|
|
|
3,775 |
|
|
|
4,884 |
|
Transaction and integration costs |
|
|
91 |
|
|
|
316 |
|
|
|
270 |
|
|
|
724 |
|
Net loss on lease terminations and unoccupied lease
charges |
|
|
8 |
|
|
|
307 |
|
|
|
430 |
|
|
|
928 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(1,660 |
) |
|
|
- |
|
|
|
(2,890 |
) |
Income tax expense related to goodwill |
|
|
17 |
|
|
|
35 |
|
|
|
81 |
|
|
|
61 |
|
Non-GAAP adjusted net income |
|
$ |
203 |
|
|
$ |
3,333 |
|
|
$ |
3,966 |
|
|
$ |
12,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End-of-period Common shares |
|
|
15,857,650 |
|
|
|
15,211,136 |
|
|
|
15,857,650 |
|
|
|
15,211,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income per share |
|
$ |
0.01 |
|
|
$ |
0.21 |
|
|
$ |
0.25 |
|
|
$ |
0.81 |
|
For purposes of determining non-GAAP adjusted
net income per share, we used the number of common shares
outstanding as of September 30, 2023 and 2022.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
GAAP net loss attributable to common
shareholders, per share |
|
$ |
(0.42 |
) |
|
$ |
(0.18 |
) |
|
$ |
(1.07 |
) |
|
$ |
(0.45 |
) |
Impact of preferred stock dividend |
|
|
0.25 |
|
|
|
0.25 |
|
|
|
0.76 |
|
|
|
0.78 |
|
Net (loss) income per end-of-period share |
|
|
(0.17 |
) |
|
|
0.07 |
|
|
|
(0.31 |
) |
|
|
0.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss / other expense |
|
|
0.02 |
|
|
|
0.03 |
|
|
|
0.04 |
|
|
|
0.02 |
|
Stock-based compensation expense |
|
|
0.08 |
|
|
|
0.09 |
|
|
|
0.24 |
|
|
|
0.23 |
|
Amortization of purchased intangible assets |
|
|
0.07 |
|
|
|
0.09 |
|
|
|
0.23 |
|
|
|
0.31 |
|
Transaction and integration costs |
|
|
0.01 |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.05 |
|
Net loss on lease terminations and unoccupied lease charges |
|
|
0.00 |
|
|
|
0.02 |
|
|
|
0.03 |
|
|
|
0.06 |
|
Change in contingent consideration |
|
|
0.00 |
|
|
|
(0.11 |
) |
|
|
0.00 |
|
|
|
(0.19 |
) |
Income tax expense related to goodwill |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Non-GAAP adjusted earnings per share |
|
$ |
0.01 |
|
|
$ |
0.21 |
|
|
$ |
0.25 |
|
|
$ |
0.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End-of-period common shares |
|
|
15,857,650 |
|
|
|
15,211,136 |
|
|
|
15,857,650 |
|
|
|
15,211,136 |
|
In-the-money warrants and outstanding unvested RSUs |
|
|
758,160 |
|
|
|
605,526 |
|
|
|
758,160 |
|
|
|
605,526 |
|
Total fully diluted shares |
|
|
16,615,810 |
|
|
|
15,816,662 |
|
|
|
16,615,810 |
|
|
|
15,816,662 |
|
Non-GAAP adjusted diluted earnings per share |
|
$ |
0.01 |
|
|
$ |
0.21 |
|
|
$ |
0.24 |
|
|
$ |
0.78 |
|
Explanation of Non-GAAP Financial
Measures
We report our financial results in accordance
with accounting principles generally accepted in the United States
of America, or GAAP. However, management believes that, in order to
properly understand our short-term and long-term financial and
operational trends, investors may wish to consider the impact of
certain non-cash or non-recurring items, when used as a supplement
to financial performance measures in accordance with GAAP. These
items result from facts and circumstances that vary in frequency
and impact on continuing operations. Management also uses results
of operations before such items to evaluate the operating
performance of CareCloud and compare it against past periods, make
operating decisions, and serve as a basis for strategic planning.
These non-GAAP financial measures provide management with
additional means to understand and evaluate the operating results
and trends in our ongoing business by eliminating certain non-cash
expenses and other items that management believes might otherwise
make comparisons of our ongoing business with prior periods more
difficult, obscure trends in ongoing operations, or reduce
management’s ability to make useful forecasts. Management believes
that these non-GAAP financial measures provide additional means of
evaluating period-over-period operating performance. In addition,
management understands that some investors and financial analysts
find this information helpful in analyzing our financial and
operational performance and comparing this performance to our peers
and competitors.
Management uses adjusted EBITDA, adjusted
operating income, adjusted operating margin, and non-GAAP adjusted
net income to provide an understanding of aspects of operating
results before the impact of investing and financing charges and
income taxes. Adjusted EBITDA may be useful to an investor in
evaluating our operating performance and liquidity because this
measure excludes non-cash expenses as well as expenses pertaining
to investing or financing transactions. Management defines
“adjusted EBITDA” as the sum of GAAP net income (loss) before
provision for (benefit from) income taxes, net interest expense,
other (income) expense, stock-based compensation expense,
depreciation and amortization, integration costs, transaction
costs, impairment charges and changes in contingent
consideration.
Management defines “non-GAAP adjusted operating
income” as the sum of GAAP operating income (loss) before
stock-based compensation expense, amortization of purchased
intangible assets, integration costs, transaction costs, impairment
charges and changes in contingent consideration, and “non-GAAP
adjusted operating margin” as non-GAAP adjusted operating income
divided by net revenue.
Management defines “non-GAAP adjusted net
income” as the sum of GAAP net income (loss) before stock-based
compensation expense, amortization of purchased intangible assets,
other (income) expense, integration costs, transaction costs,
impairment charges, changes in contingent consideration, any tax
impact related to these preceding items and income tax expense
related to goodwill, and “non-GAAP adjusted net income per share”
as non-GAAP adjusted net income divided by common shares
outstanding at the end of the period, including the shares which
were issued but are subject to forfeiture and considered contingent
consideration.
Management considers all of these non-GAAP
financial measures to be important indicators of our operational
strength and performance of our business and a good measure of our
historical operating trends, in particular the extent to which
ongoing operations impact our overall financial performance.
In addition to items routinely excluded from
non-GAAP EBITDA, management excludes or adjusts each of the items
identified below from the applicable non-GAAP financial measure
referenced above for the reasons set forth with respect to that
excluded item:
Foreign exchange / other expense. Other expense
is excluded because foreign currency gains and losses and other
non-operating expenses are expenditures that management does not
consider part of ongoing operating results when assessing the
performance of our business, and also because the total amount of
the expense is partially outside of our control. Foreign currency
gains and losses are based on global market factors which are
unrelated to our performance during the period in which the gains
and losses are recorded.
Stock-based compensation expense. Stock-based
compensation expense is excluded because this is primarily a
non-cash expenditure that management does not consider part of
ongoing operating results when assessing the performance of our
business, and also because the total amount of the expenditure is
partially outside of our control because it is based on factors
such as stock price, volatility, and interest rates, which may be
unrelated to our performance during the period in which the
expenses are incurred. Stock-based compensation expense includes
cash-settled awards based on changes in the stock price.
Amortization of purchased intangible assets.
Purchased intangible assets are amortized over their estimated
useful lives and generally cannot be changed or influenced by
management after the acquisition. Accordingly, this item is not
considered by management in making operating decisions. Management
does not believe such charges accurately reflect the performance of
our ongoing operations for the period in which such charges are
recorded.
Transaction costs. Transaction costs are upfront
costs related to acquisitions and related transactions, such as
brokerage fees, pre-acquisition accounting costs and legal fees,
and other upfront costs related to specific transactions.
Management believes that such expenses do not have a direct
correlation to future business operations, and therefore, these
costs are not considered by management in making operating
decisions. Management does not believe such charges accurately
reflect the performance of our ongoing operations for the period in
which such charges are incurred.
Integration costs. Integration costs are
severance payments for certain employees relating to our
acquisitions and exit costs related to terminating leases and other
contractual agreements. Accordingly, management believes that such
expenses do not have a direct correlation to future business
operations, and therefore, these costs are not considered by
management in making operating decisions. Management does not
believe such charges accurately reflect the performance of our
ongoing operations for the period in which such charges are
incurred.
Net loss on lease terminations and unoccupied
lease charges. Net loss on lease termination represents the
write-off of leasehold improvements and gains or losses as a result
of an early lease termination. Unoccupied lease charges represent
the portion of lease and related costs for vacant space not being
utilized by the Company. Accordingly, management believes that such
expenses do not have a direct correlation to future business
operations, and therefore, these costs are not considered by
management in making operating decisions. Management does not
believe such charges accurately reflect the performance of our
ongoing operations for the period in which such charges are
incurred.
Change in contingent consideration. Contingent
consideration represents the amount payable to the sellers of
certain acquired businesses based on the achievement of defined
performance measures contained in the purchase agreements.
Contingent consideration is adjusted to fair value at the end of
each reporting period, and changes arise from changes in the
forecasted revenues and profitability of the acquired
businesses.
Income tax expense related to goodwill. Income
tax expense resulting from the amortization of goodwill related to
our acquisitions represents a charge (benefit) to record the tax
effect resulting from amortizing goodwill over 15 years for tax
purposes. Goodwill is not amortized for GAAP reporting. This
expense is not anticipated to result in a cash payment.
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