CareCloud, Inc. (the "Company" or "CareCloud") (Nasdaq: CCLD, CCLDP
and CCLDO), a leader in healthcare technology solutions for medical
practices and health systems nationwide, today announced financial
and operational results for the three months ended March 31, 2024.
First Quarter 2024 Financial
Highlights
|
● |
Revenue of $26.0 million, as compared to $30.0 million in Q1
2023 |
|
● |
GAAP operating income of $129,000, as compared to operating loss of
($223,000) in Q1 2023 |
|
● |
GAAP net loss of ($241,000) or $(0.02) per share, as compared to
net loss of ($401,000) or $(0.28) per share in Q1 2023 |
|
● |
Adjusted EBITDA of $3.7 million, as compared to $4.2 million in Q1
2023 |
|
● |
Cash provided from operations of $4.1 million, as compared to $1.0
million in Q1 2023 |
|
● |
Free cash flow of $2.2 million, as compared to ($2.0 million) in Q1
2023 |
Recent Operational
Highlights
|
● |
Identified approximately $22 million in annualized expense
reductions since the initiative began in October 2023, of which $15
million in cost savings will be realized this year |
|
● |
Repaid $2.0 million of the outstanding balance on the Company’s
credit facility during 2024, half in March and half in April
2024 |
|
● |
Retained JMP Securities to assist the Company in providing
recommendations to optimize its capital structure |
"I'm very pleased to announce that we are
turning the corner in our pivot towards improved profitability, as
our free cash flow, cash from operations and related metrics are
all moving strongly in the right direction even with a lower level
of revenue, enabling us to pay down $2.0 million on our credit
facility so far this year," said A. Hadi Chaudhry, CEO of
CareCloud. "Additionally, we have continued to actively expand our
use of generative AI, which further drives operating efficiencies
as we simultaneously strengthen the foundation of our
platform."
"Our entire team remains hard at work, with the
shared goal of aligning costs and driving profitability," said
Stephen Snyder, President of CareCloud. “Our first quarter revenue
is always seasonally low, due to the effect of insurance
deductibles, and we continued to have softness in medSR’s
nonrecurring project-based revenue; however, the effects of our
cost reduction efforts are starting to materialize. During the
quarter, we were encouraged to realize improved year-over-year free
cash flow, and positive GAAP operating income for the first time
since 2022, and a large increase in cash provided from
operations.”
CareCloud is reiterating its forward-looking
guidance for the fiscal year ending December 31, 2024:
Forward-Looking Guidance |
Revenue |
|
|
$118 – $120 million |
|
Adjusted EBITDA |
|
|
$21 – $23 million |
|
Conference Call Information
CareCloud management will host a conference call
today at 8:30 a.m. Eastern Time to discuss the first quarter 2024
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 416-764-8658 and referencing
“CareCloud First Quarter 2024 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 16789915.
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 condensed 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," "seeks," "estimates," "forecasts," "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 pandemics 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,
manage and keep our information systems secure 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.
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.
About CareCloud
CareCloud (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 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, please visit
ir.carecloud.com.
SOURCE CareCloud
Company Contact:
Norman RothInterim Chief Financial Officer and Corporate
ControllerCareCloud, Inc.ir@carecloud.com
Investor Contact:
Bill KornCareCloud, Inc.ir@carecloud.com
CARECLOUD, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS($ in thousands, except share
and per share amounts)
|
|
March 31, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
4,138 |
|
|
$ |
3,331 |
|
Accounts receivable - net |
|
|
11,962 |
|
|
|
11,888 |
|
Contract asset |
|
|
5,455 |
|
|
|
5,094 |
|
Inventory |
|
|
480 |
|
|
|
465 |
|
Current assets - related party |
|
|
16 |
|
|
|
16 |
|
Prepaid expenses and other current assets |
|
|
2,225 |
|
|
|
2,449 |
|
Total current assets |
|
|
24,276 |
|
|
|
23,243 |
|
Property and equipment -
net |
|
|
5,438 |
|
|
|
5,317 |
|
Operating lease right-of-use
assets |
|
|
4,107 |
|
|
|
4,365 |
|
Intangible assets - net |
|
|
23,237 |
|
|
|
25,074 |
|
Goodwill |
|
|
19,186 |
|
|
|
19,186 |
|
Other assets |
|
|
641 |
|
|
|
641 |
|
TOTAL ASSETS |
|
$ |
76,885 |
|
|
$ |
77,826 |
|
LIABILITIES AND SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,921 |
|
|
$ |
5,798 |
|
Accrued compensation |
|
|
2,765 |
|
|
|
3,444 |
|
Accrued expenses |
|
|
6,350 |
|
|
|
5,065 |
|
Operating lease liability (current portion) |
|
|
1,775 |
|
|
|
1,888 |
|
Deferred revenue (current portion) |
|
|
1,386 |
|
|
|
1,380 |
|
Notes payable (current portion) |
|
|
167 |
|
|
|
292 |
|
Dividend payable |
|
|
5,438 |
|
|
|
5,433 |
|
Total current liabilities |
|
|
23,802 |
|
|
|
23,300 |
|
Notes payable |
|
|
35 |
|
|
|
37 |
|
Borrowings under line of
credit |
|
|
9,000 |
|
|
|
10,000 |
|
Operating lease liability |
|
|
2,320 |
|
|
|
2,516 |
|
Deferred revenue |
|
|
308 |
|
|
|
256 |
|
Total liabilities |
|
|
35,465 |
|
|
|
36,109 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par
value - authorized 7,000,000 shares. Series A, issued and
outstanding 4,526,231 shares at March 31, 2024 and December 31,
2023. Series B, issued and outstanding 1,482,792 and 1,468,792
shares at March 31, 2024 and December 31, 2023, respectively |
|
|
6 |
|
|
|
6 |
|
Common stock, $0.001 par value
- authorized 35,000,000 shares. Issued 16,859,291 and 16,620,891
shares at March 31, 2024 and December 31, 2023, respectively.
Outstanding 16,118,492 and 15,880,092 shares at March 31, 2024 and
December 31, 2023, respectively |
|
|
17 |
|
|
|
17 |
|
Additional paid-in
capital |
|
|
120,622 |
|
|
|
120,706 |
|
Accumulated deficit |
|
|
(74,722 |
) |
|
|
(74,481 |
) |
Accumulated other
comprehensive loss |
|
|
(3,841 |
) |
|
|
(3,869 |
) |
Less: 740,799 common shares
held in treasury, at cost at March 31, 2024 and December 31,
2023 |
|
|
(662 |
) |
|
|
(662 |
) |
Total shareholders’
equity |
|
|
41,420 |
|
|
|
41,717 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
76,885 |
|
|
$ |
77,826 |
|
CARECLOUD, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)FOR THE THREE MONTHS ENDED MARCH 31,
2024 AND 2023($ in thousands, except share and per share
amounts)
|
|
March 31, |
|
|
|
2024 |
|
|
2023 |
|
NET REVENUE |
|
$ |
25,962 |
|
|
$ |
30,001 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
Direct operating costs |
|
|
15,177 |
|
|
|
18,107 |
|
Selling and marketing |
|
|
1,770 |
|
|
|
2,612 |
|
General and administrative |
|
|
3,721 |
|
|
|
5,120 |
|
Research and development |
|
|
913 |
|
|
|
1,078 |
|
Depreciation and amortization |
|
|
3,930 |
|
|
|
3,038 |
|
Net loss on lease terminations, unoccupied lease charges and
restructuring costs |
|
|
322 |
|
|
|
269 |
|
Total operating expenses |
|
|
25,833 |
|
|
|
30,224 |
|
OPERATING INCOME (LOSS) |
|
|
129 |
|
|
|
(223 |
) |
OTHER: |
|
|
|
|
|
|
|
|
Interest income |
|
|
27 |
|
|
|
20 |
|
Interest expense |
|
|
(365 |
) |
|
|
(150 |
) |
Other income - net |
|
|
7 |
|
|
|
17 |
|
LOSS BEFORE PROVISION FOR
INCOME TAXES |
|
|
(202 |
) |
|
|
(336 |
) |
Income tax provision |
|
|
39 |
|
|
|
65 |
|
NET LOSS |
|
$ |
(241 |
) |
|
$ |
(401 |
) |
|
|
|
|
|
|
|
|
|
Preferred stock dividend |
|
|
5 |
|
|
|
3,931 |
|
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS |
|
$ |
(246 |
) |
|
$ |
(4,332 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common share:
basic and diluted |
|
$ |
(0.02 |
) |
|
$ |
(0.28 |
) |
Weighted-average common shares used to compute basic and diluted
loss per share |
|
|
16,014,309 |
|
|
|
15,421,096 |
|
CARECLOUD, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)FOR THE THREE MONTHS ENDED MARCH 31,
2024 AND 2023($ in thousands)
|
|
2024 |
|
|
2023 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(241 |
) |
|
$ |
(401 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,020 |
|
|
|
3,205 |
|
Lease amortization |
|
|
509 |
|
|
|
683 |
|
Deferred revenue |
|
|
58 |
|
|
|
16 |
|
Provision for expected credit losses |
|
|
37 |
|
|
|
97 |
|
Provision for deferred income taxes |
|
|
- |
|
|
|
26 |
|
Foreign exchange gain |
|
|
(11 |
) |
|
|
(11 |
) |
Interest accretion |
|
|
168 |
|
|
|
166 |
|
Stock-based compensation (benefit) expense |
|
|
(708 |
) |
|
|
1,072 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(111 |
) |
|
|
(156 |
) |
Contract asset |
|
|
(361 |
) |
|
|
(619 |
) |
Inventory |
|
|
(15 |
) |
|
|
116 |
|
Other assets |
|
|
- |
|
|
|
(615 |
) |
Accounts payable and other liabilities |
|
|
721 |
|
|
|
(2,556 |
) |
Net cash provided by operating activities |
|
|
4,066 |
|
|
|
1,023 |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(298 |
) |
|
|
(835 |
) |
Capitalized software and other intangible assets |
|
|
(1,570 |
) |
|
|
(2,204 |
) |
Net cash used in investing activities |
|
|
(1,868 |
) |
|
|
(3,039 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Preferred stock dividends paid |
|
|
- |
|
|
|
(3,875 |
) |
Settlement of tax withholding obligations on stock issued to
employees |
|
|
(151 |
) |
|
|
(1,113 |
) |
Repayments of notes payable |
|
|
(223 |
) |
|
|
(236 |
) |
Proceeds from issuance of Series B Preferred Stock, net of
expenses |
|
|
- |
|
|
|
1,437 |
|
Proceeds from line of credit |
|
|
- |
|
|
|
12,700 |
|
Repayment of line of credit |
|
|
(1,000 |
) |
|
|
(10,700 |
) |
Net cash used in financing activities |
|
|
(1,374 |
) |
|
|
(1,787 |
) |
EFFECT OF EXCHANGE RATE
CHANGES ON CASH |
|
|
(17 |
) |
|
|
(335 |
) |
NET INCREASE (DECREASE) IN
CASH |
|
|
807 |
|
|
|
(4,138 |
) |
CASH - Beginning of the
period |
|
|
3,331 |
|
|
|
12,299 |
|
CASH - End of the period |
|
$ |
4,138 |
|
|
$ |
8,161 |
|
SUPPLEMENTAL NONCASH INVESTING
AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Dividends declared, not paid |
|
$ |
5 |
|
|
$ |
3,931 |
|
Purchase of prepaid insurance with assumption of note |
|
$ |
96 |
|
|
$ |
- |
|
Reclass of deposits for property and equipment placed in
service |
|
$ |
296 |
|
|
$ |
- |
|
SUPPLEMENTAL INFORMATION -
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
6 |
|
|
$ |
2 |
|
Interest |
|
$ |
295 |
|
|
$ |
75 |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURESTO
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 Net
Loss
Set forth below is a reconciliation of adjusted
EBITDA to our GAAP net loss.
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
25,962 |
|
|
$ |
30,001 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
|
|
(241 |
) |
|
|
(401 |
) |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
39 |
|
|
|
65 |
|
Net interest expense |
|
|
338 |
|
|
|
130 |
|
Foreign exchange gain |
|
|
(5 |
) |
|
|
(8 |
) |
Stock-based compensation (benefit) expense, net of restructuring
costs |
|
|
(708 |
) |
|
|
1,072 |
|
Depreciation and amortization |
|
|
3,930 |
|
|
|
3,038 |
|
Transaction and integration costs |
|
|
12 |
|
|
|
72 |
|
Net loss on lease terminations, unoccupied lease charges and
restructuring costs |
|
|
322 |
|
|
|
269 |
|
Adjusted EBITDA |
|
$ |
3,687 |
|
|
$ |
4,237 |
|
Non-GAAP Adjusted Operating Income to
GAAP Operating Income (Loss)
Set forth below is a reconciliation of our
non-GAAP adjusted operating income and non-GAAP adjusted operating
margin to our GAAP operating income (loss) and GAAP operating
margin.
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
25,962 |
|
|
$ |
30,001 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss |
|
|
(241 |
) |
|
|
(401 |
) |
Provision for income taxes |
|
|
39 |
|
|
|
65 |
|
Net interest expense |
|
|
338 |
|
|
|
130 |
|
Other income - net |
|
|
(7 |
) |
|
|
(17 |
) |
GAAP operating income
(loss) |
|
|
129 |
|
|
|
(223 |
) |
GAAP operating margin |
|
|
0.5 |
% |
|
|
(0.7 |
%) |
|
|
|
|
|
|
|
|
|
Stock-based compensation (benefit) expense, net of restructuring
costs |
|
|
(708 |
) |
|
|
1,072 |
|
Amortization of purchased intangible assets |
|
|
840 |
|
|
|
1,323 |
|
Transaction and integration costs |
|
|
12 |
|
|
|
72 |
|
Net loss on lease terminations, unoccupied lease charges and
restructuring costs |
|
|
322 |
|
|
|
269 |
|
Non-GAAP adjusted operating
income |
|
$ |
595 |
|
|
$ |
2,513 |
|
Non-GAAP adjusted operating margin |
|
|
2.3 |
% |
|
|
8.4 |
% |
Non-GAAP Adjusted Net Income to GAAP Net
Loss
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 and GAAP net loss per share.
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
($ in thousands, except for per share amounts) |
|
GAAP net loss |
|
$ |
(241 |
) |
|
$ |
(401 |
) |
|
|
|
|
|
|
|
|
|
Foreign exchange gain |
|
|
(5 |
) |
|
|
(8 |
) |
Stock-based compensation
(benefit) expense, net of restructuring costs |
|
|
(708 |
) |
|
|
1,072 |
|
Amortization of purchased
intangible assets |
|
|
840 |
|
|
|
1,323 |
|
Transaction and integration
costs |
|
|
12 |
|
|
|
72 |
|
Net loss on lease
terminations, unoccupied lease charges and restructuring costs |
|
|
322 |
|
|
|
269 |
|
Income tax provision related
to goodwill |
|
|
- |
|
|
|
26 |
|
Non-GAAP adjusted net
income |
|
$ |
220 |
|
|
$ |
2,353 |
|
|
|
|
|
|
|
|
|
|
End-of-period shares |
|
|
16,118,492 |
|
|
|
15,592,608 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income
per share |
|
$ |
0.01 |
|
|
$ |
0.15 |
|
For purposes of determining non-GAAP adjusted
net income per share, we used the number of common shares
outstanding as of March 31, 2024 and 2023, respectively.
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
GAAP net loss attributable to
common shareholders, per share |
|
$ |
(0.02 |
) |
|
$ |
(0.28 |
) |
Impact of preferred stock dividend |
|
|
0.00 |
|
|
|
0.25 |
|
Net loss per end-of-period
share |
|
|
(0.02 |
) |
|
|
(0.03 |
) |
|
|
|
|
|
|
|
|
|
Foreign exchange gain |
|
|
0.00 |
|
|
|
0.00 |
|
Stock-based compensation (benefit) expense |
|
|
(0.04 |
) |
|
|
0.07 |
|
Amortization of purchased intangible assets |
|
|
0.05 |
|
|
|
0.09 |
|
Transaction and integration costs |
|
|
0.00 |
|
|
|
0.00 |
|
Net loss on lease terminations, unoccupied lease charges and
restructuring costs |
|
|
0.02 |
|
|
|
0.02 |
|
Income tax provision related to goodwill |
|
|
0.00 |
|
|
|
0.00 |
|
Non-GAAP adjusted earnings per
share |
|
$ |
0.01 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
End-of-period common
shares |
|
|
16,118,492 |
|
|
|
15,592,608 |
|
In-the-money warrants and
outstanding unvested RSUs |
|
|
192,125 |
|
|
|
630,094 |
|
Total fully diluted
shares |
|
|
16,310,617 |
|
|
|
16,222,702 |
|
Non-GAAP adjusted diluted
earnings per share |
|
$ |
0.01 |
|
|
$ |
0.15 |
|
Set forth below is a reconciliation of our non-GAAP free cash
flow to net cash provided by operating activities.
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
($ in thousands) |
|
Net cash provided by operating
activities |
|
$ |
4,066 |
|
|
$ |
1,023 |
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(298 |
) |
|
|
(835 |
) |
Capitalized software and other intangible assets |
|
|
(1,570 |
) |
|
|
(2,204 |
) |
Free cash flow |
|
$ |
2,198 |
|
|
$ |
(2,016 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities1 |
|
$ |
(1,868 |
) |
|
$ |
(3,039 |
) |
Net cash used in financing
activities |
|
$ |
(1,374 |
) |
|
$ |
(1,787 |
) |
1 Net cash used in investing activities
includes purchases of property and equipment and capitalized
software and other intangible assets, which are also included in
our computation of free cash flow.
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, non-GAAP adjusted net
income and free cash flow to provide an understanding of aspects of
operating results and cash flows before the impact of investing and
financing transactions 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.
Management defines "free cash flow" as net cash
provided by operating activities less purchases of property and
equipment and capitalized software and other intangible assets.
Management considers all of these non-GAAP
financial measures to be important indicators of our operational
strength, cash flows 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 loss / 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, unoccupied lease
charges and restructuring costs. Net loss on lease terminations
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. Restructuring costs
primarily consist of severance and separation costs associated with
the optimization of the Company’s operations and profitability
improvements. 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.
Income tax provision related to goodwill. Income
tax provision 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. Any income
tax expense is not anticipated to result in a cash payment.
Free cash flow. Management believes that free
cash flow, which measures our ability to generate additional cash
from our business operations, is an important financial measure for
use in evaluating the Company’s financial performance. Free cash
flow should be considered in addition to, rather than as a
substitute for, consolidated net operating results as a measure of
our performance and net cash provided by operating activities as a
measure of our liquidity. Additionally, the Company’s definition of
free cash flow is limited, in that it does not represent residual
cash flows available for discretionary expenditures, due to the
fact that the measure does not deduct the payments required for
debt service and other contractual obligations or payments made for
business acquisitions. Therefore, we believe it is important to
view free cash flow as a measure that provides supplemental
information to our condensed consolidated statements of cash
flows.
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