CareCloud, Inc. (the “Company” or “CareCloud”) (Nasdaq: CCLD, CCLDP
and CCLDO), a leader in healthcare technology solutions for medical
practices and health systems nationwide, announced financial and
operational results for the year ended December 31, 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 for the year.
In the fourth quarter of 2023, management
developed and began executing a strategic plan aimed at enhancing
liquidity within its operations by streamlining payroll and
operating expenses. Once the reductions are fully implemented this
year, the Company anticipates an improvement of approximately $18
million in annualized free cash flow, of which approximately $13
million will be realized in 2024. Moreover, ongoing efforts to trim
costs will continue throughout the year, underscoring the Company’s
steadfast commitment to restoring profitability, generating
positive cash flow, and maintaining compliance with its debt
covenants.
A. Hadi Chaudhry, CEO and President of CareCloud
remarked “We are focused on cost alignment initiatives with the
goal of restoring profitability. Looking ahead to 2024, we
anticipate a transitional year marked by a company-wide commitment
to operational efficiency, profitability improvement and the
generation of free cash flow. Additionally, we are energized by the
prospects of leveraging generative AI, which strengthens the
foundation of our platform, empowering us to unlock even greater
operating efficiencies and bolster our competitive edge in the
market.”
The Board of Directors suspended the monthly
cash dividends for Series A and Series B Preferred Stock beginning
with the payment scheduled for December 15, 2023. During this
suspension, dividends will continue to accrue in arrears on the
Series A and Series B Preferred Stock. The Board of Directors will
regularly review profitability and cash flow and consider when the
Company is able to lift the suspension and resume paying
dividends.
Full Year 2023 Highlights
- Revenue of $117.1 million, as
compared to $138.8 million in 2022
- GAAP net loss of $48.7 million,
compared to net income of $5.4 million in 2022
- Adjusted net income of $4.8 million
or $0.30 per share, compared to $16.3 million or $1.07 per share in
2022
- Adjusted EBITDA
of $15.4 million, compared to $22.2 million in 2022
Fourth Quarter 2023
Highlights
- Revenue of
$28.4 million, as compared to $32.5 million in Q4 2022
- GAAP net loss
of $43.7 million, compared to net income of $499,000 in Q4
2022
- Adjusted net
income of $835,000, or $0.05 per share
- Adjusted EBITDA
of $4.1 million, as compared to $5.7 million in Q4 2022
Full Year 2023 Financial Results
Revenue for 2023 was $117.1 million, a 16%
decline compared to $138.8 million in 2022.
Norman Roth, CareCloud’s Interim Chief Financial
Officer and Corporate Controller remarked, “Revenue was negatively
impacted by approximately $9 million from two large clients which
were acquired years ago and migrated to their acquirers’ systems
during 2022. Our project-based professional services revenue was
also lower by $9.5 million.”
CareCloud’s GAAP net loss was $48.7 million in
2023, compared to net income of $5.4 million in 2022. Mr. Roth
noted that “as a result of the dividend suspension which caused a
triggering event in the fourth quarter, goodwill impairment charges
of $42 million were recorded. This is a non-cash charge and has no
effect on the cash flows of the Company.” GAAP net loss per share
was $4.11, based on the net loss attributable to common
shareholders.
Non-GAAP adjusted net income for 2023 was $4.8
million or $0.30 per share. Non-GAAP adjusted net income excludes
non-cash expenses such as impairment, depreciation and
amortization.
Adjusted EBITDA was $15.4 million, a decrease of
$6.8 million from $22.2 million last year.
Fourth Quarter 2023 Financial
Results
Revenue for the fourth quarter 2023 was $28.4
million, a decrease of 13% from the fourth quarter of 2022.
Fourth quarter 2023 GAAP net loss was $43.7
million, compared to net income of $499,000 in the same period last
year. GAAP net loss per share for the fourth quarter 2023 was
$3.00, based on the net income attributable to common
shareholders.
Non-GAAP adjusted net income for the fourth
quarter 2023 was $835,000, or $0.05 per share, and is calculated
using the end-of-period common shares outstanding.
Adjusted EBITDA for the fourth quarter 2023 was
$4.1 million, or 15% of revenue, compared to $5.7 million in the
same period last year.
Cash Balances and Capital
Structure
As of December 31, 2023, the Company had
approximately $3.3 million of cash. During the fourth quarter 2023
and for the full year 2023, cash flow from operations was
approximately $3.7 million and $15.5 million, respectively.
On December 31, 2023, the Company had 4,526,231
shares of non-convertible Series A Preferred Stock outstanding and
1,468,792 shares of non-convertible Series B Preferred Stock
outstanding. The Series A and B shares currently accrue dividends
at the rate of 11% and 8.75% per annum respectively, based on the
$25.00 per share liquidation preference (equivalent to $2.75 and
$2.1875, respectively, annually per share), and they are redeemable
at the Company’s option once the preferred stock dividends are
brought current.
2024 Guidance
CareCloud is providing the following
forward-looking guidance for the fiscal year ending December 31,
2024:
For the Fiscal Year Ending December 31, 2024Forward-Looking
Guidance |
Revenue |
$118 – $120 million |
Adjusted EBITDA |
$21 – $23 million |
The Company anticipates full year 2024 revenue
of approximately $118 to $120 million. Revenue guidance is based on
management’s expectations regarding revenues from existing clients,
including expansion of CareCloud Wellness which was introduced in
2022, as well as organic growth in new client additions.
Adjusted EBITDA is expected to be $21 to $23
million for full year 2024 and reflects the improvement from the
Company’s cost reduction efforts.
The Board of Directors will periodically review
profitability and cash flow and consider when the Company is in a
position to lift the suspension and resume paying dividends.
Conference Call Information
CareCloud management will host a conference call
today at 8:30 a.m. Eastern Time to discuss the full year 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 416-764-8658 and referencing
“CareCloud Fourth 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 10739699.
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.
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,” “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.
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:Norman RothInterim Chief
Financial Officer and Corporate ControllerCareCloud, Inc.
ir@carecloud.com
Investor Contact:Bill KornCareCloud, Inc.
ir@carecloud.com
CARECLOUD,
INC. |
CONSOLIDATED
BALANCE SHEETS |
AS OF
DECEMBER 31, 2023 AND 2022 |
($ in thousands, except share and per share amounts) |
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
3,331 |
|
|
$ |
12,299 |
|
Accounts receivable - net |
|
|
11,888 |
|
|
|
14,773 |
|
Contract asset |
|
|
5,094 |
|
|
|
4,399 |
|
Inventory |
|
|
465 |
|
|
|
381 |
|
Current assets - related party |
|
|
16 |
|
|
|
16 |
|
Prepaid expenses and other current assets |
|
|
2,449 |
|
|
|
2,785 |
|
Total current assets |
|
|
23,243 |
|
|
|
34,653 |
|
Property and equipment - net |
|
|
5,317 |
|
|
|
5,056 |
|
Operating lease right-of-use assets |
|
|
4,365 |
|
|
|
4,921 |
|
Intangible assets - net |
|
|
25,074 |
|
|
|
29,520 |
|
Goodwill |
|
|
19,186 |
|
|
|
61,186 |
|
Other assets |
|
|
641 |
|
|
|
838 |
|
TOTAL ASSETS |
|
$ |
77,826 |
|
|
$ |
136,174 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,798 |
|
|
$ |
5,681 |
|
Accrued compensation |
|
|
3,444 |
|
|
|
4,248 |
|
Accrued expenses |
|
|
5,065 |
|
|
|
4,432 |
|
Operating lease liability (current portion) |
|
|
1,888 |
|
|
|
2,273 |
|
Deferred revenue (current portion) |
|
|
1,380 |
|
|
|
1,386 |
|
Notes payable (current portion) |
|
|
292 |
|
|
|
319 |
|
Dividend payable |
|
|
5,433 |
|
|
|
4,059 |
|
Total current liabilities |
|
|
23,300 |
|
|
|
22,398 |
|
Notes payable |
|
|
37 |
|
|
|
13 |
|
Borrowings under line of credit |
|
|
10,000 |
|
|
|
8,000 |
|
Operating lease liability |
|
|
2,516 |
|
|
|
3,207 |
|
Deferred revenue |
|
|
256 |
|
|
|
342 |
|
Deferred tax liability |
|
|
- |
|
|
|
525 |
|
Total liabilities |
|
|
36,109 |
|
|
|
34,485 |
|
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
December 31, 2023 and December 31, 2022. Series B, issued and
outstanding 1,468,792 and 1,344,128 shares at December 31, 2023 and
December 31, 2022, respectively |
|
|
6 |
|
|
|
6 |
|
Common stock, $0.001 par value - authorized 35,000,000 shares.
Issued 16,620,891 and 15,970,204 shares at December 31, 2023 and
December 31, 2022, respectively. Outstanding 15,880,092 and
15,229,405 shares at December 31, 2023 and December 31, 2022,
respectively |
|
|
17 |
|
|
|
16 |
|
Additional paid-in capital |
|
|
120,706 |
|
|
|
130,987 |
|
Accumulated deficit |
|
|
(74,481 |
) |
|
|
(25,621 |
) |
Accumulated other comprehensive loss |
|
|
(3,869 |
) |
|
|
(3,037 |
) |
Less: 740,799 common shares held in treasury, at cost at
December 31, 2023 and December 31, 2022 |
|
|
(662 |
) |
|
|
(662 |
) |
Total shareholders' equity |
|
|
41,717 |
|
|
|
101,689 |
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
|
$ |
77,826 |
|
|
$ |
136,174 |
|
CARECLOUD, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2023 AND
2022 |
($ in thousands, except share and per share amounts) |
|
|
Three Months Ended |
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
NET REVENUE |
|
$ |
28,416 |
|
|
$ |
32,534 |
|
|
$ |
117,059 |
|
|
$ |
138,826 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct operating costs |
|
|
16,974 |
|
|
|
19,568 |
|
|
|
70,817 |
|
|
|
84,434 |
|
Selling and marketing |
|
|
2,121 |
|
|
|
2,474 |
|
|
|
9,650 |
|
|
|
9,788 |
|
General and administrative |
|
|
4,946 |
|
|
|
5,341 |
|
|
|
21,464 |
|
|
|
23,820 |
|
Research and development |
|
|
1,213 |
|
|
|
1,150 |
|
|
|
4,736 |
|
|
|
4,401 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(200 |
) |
|
|
- |
|
|
|
(3,090 |
) |
Depreciation and amortization |
|
|
4,120 |
|
|
|
3,039 |
|
|
|
14,402 |
|
|
|
11,725 |
|
Goodwill impairment charges |
|
|
42,000 |
|
|
|
- |
|
|
|
42,000 |
|
|
|
- |
|
Net loss on lease terminations, unoccupied lease charges and
restructuring costs |
|
|
675 |
|
|
|
210 |
|
|
|
1,105 |
|
|
|
1,138 |
|
Total operating expenses |
|
|
72,049 |
|
|
|
31,582 |
|
|
|
164,174 |
|
|
|
132,216 |
|
OPERATING (LOSS) INCOME |
|
|
(43,633 |
) |
|
|
952 |
|
|
|
(47,115 |
) |
|
|
6,610 |
|
OTHER: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
30 |
|
|
|
19 |
|
|
|
154 |
|
|
|
41 |
|
Interest expense |
|
|
(365 |
) |
|
|
(102 |
) |
|
|
(1,194 |
) |
|
|
(405 |
) |
Other expense - net |
|
|
(292 |
) |
|
|
(337 |
) |
|
|
(883 |
) |
|
|
(637 |
) |
(LOSS) INCOME BEFORE (BENEFIT)
PROVISION FOR INCOME TAXES |
|
|
(44,260 |
) |
|
|
532 |
|
|
|
(49,038 |
) |
|
|
5,609 |
|
Income tax (benefit)
provision |
|
|
(568 |
) |
|
|
33 |
|
|
|
(364 |
) |
|
|
177 |
|
NET (LOSS) INCOME |
|
$ |
(43,692 |
) |
|
$ |
499 |
|
|
$ |
(48,674 |
) |
|
$ |
5,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividend |
|
|
3,917 |
|
|
|
3,855 |
|
|
|
15,674 |
|
|
|
15,517 |
|
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS |
|
$ |
(47,609 |
) |
|
$ |
(3,356 |
) |
|
$ |
(64,348 |
) |
|
$ |
(10,085 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share:
basic and diluted |
|
$ |
(3.00 |
) |
|
$ |
(0.22 |
) |
|
$ |
(4.11 |
) |
|
$ |
(0.67 |
) |
Weighted-average common shares used to compute basic and diluted
loss per share |
|
|
15,874,550 |
|
|
|
15,224,347 |
|
|
|
15,669,472 |
|
|
|
15,109,587 |
|
CARECLOUD,
INC. |
CONSOLIDATED
STATEMENTS OF CASH FLOWS |
FOR THE
YEARS ENDED DECEMBER 31, 2023 AND 2022 |
($ in thousands) |
|
|
2023 |
|
|
2022 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(48,674 |
) |
|
$ |
5,432 |
|
Adjustments to reconcile net (loss) income to net cash provided
by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
14,889 |
|
|
|
12,318 |
|
Lease amortization |
|
|
2,152 |
|
|
|
3,286 |
|
Deferred revenue |
|
|
(92 |
) |
|
|
302 |
|
Provision for expected credit losses |
|
|
454 |
|
|
|
740 |
|
Deferred income taxes (benefit) provision |
|
|
(525 |
) |
|
|
76 |
|
Foreign exchange loss |
|
|
790 |
|
|
|
610 |
|
Interest accretion |
|
|
688 |
|
|
|
596 |
|
Goodwill impairment charges |
|
|
42,000 |
|
|
|
- |
|
Stock-based compensation expense |
|
|
4,886 |
|
|
|
4,914 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(3,090 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
2,246 |
|
|
|
1,493 |
|
Contract asset |
|
|
(695 |
) |
|
|
326 |
|
Inventory |
|
|
(84 |
) |
|
|
122 |
|
Other assets |
|
|
682 |
|
|
|
619 |
|
Accounts payable and other liabilities |
|
|
(3,256 |
) |
|
|
(6,593 |
) |
Net cash provided by operating activities |
|
|
15,461 |
|
|
|
21,151 |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(3,063 |
) |
|
|
(2,588 |
) |
Capitalized software and other intangible assets |
|
|
(8,550 |
) |
|
|
(9,179 |
) |
Net cash used in investing activities |
|
|
(11,613 |
) |
|
|
(11,767 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Preferred stock dividends paid |
|
|
(14,300 |
) |
|
|
(15,314 |
) |
Settlement of contingent obligation |
|
|
- |
|
|
|
(1,000 |
) |
Settlement of tax withholding obligations on stock issued to
employees |
|
|
(1,524 |
) |
|
|
(1,197 |
) |
Repayments of notes payable |
|
|
(888 |
) |
|
|
(1,003 |
) |
Stock issuance costs |
|
|
- |
|
|
|
(32 |
) |
Proceeds from issuance of Series B Preferred Stock, net of
expenses |
|
|
1,427 |
|
|
|
30,901 |
|
Redemption of Series A Preferred Stock |
|
|
- |
|
|
|
(20,005 |
) |
Proceeds from line of credit |
|
|
14,700 |
|
|
|
25,500 |
|
Repayment of line of credit |
|
|
(12,700 |
) |
|
|
(25,500 |
) |
Net cash used in financing activities |
|
|
(13,285 |
) |
|
|
(7,650 |
) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
|
|
469 |
|
|
|
225 |
|
NET (DECREASE) INCREASE IN CASH |
|
|
(8,968 |
) |
|
|
1,959 |
|
CASH - Beginning of the year |
|
|
12,299 |
|
|
|
10,340 |
|
CASH - End of the year |
|
$ |
3,331 |
|
|
$ |
12,299 |
|
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Dividends declared, not paid |
|
$ |
5,433 |
|
|
$ |
4,059 |
|
Purchase of prepaid insurance and motor vehicle with assumption of
notes |
|
$ |
656 |
|
|
$ |
695 |
|
SUPPLEMENTAL INFORMATION - Cash paid during the year for: |
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
144 |
|
|
$ |
153 |
|
Interest |
|
$ |
927 |
|
|
$ |
162 |
|
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 Net (Loss)
Income
Set forth below is a reconciliation of adjusted
EBITDA to our GAAP net (loss) income.
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
28,416 |
|
|
$ |
32,534 |
|
|
$ |
117,059 |
|
|
$ |
138,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss) income |
|
|
(43,692 |
) |
|
|
499 |
|
|
|
(48,674 |
) |
|
|
5,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Benefit) provision for income taxes |
|
|
(568 |
) |
|
|
33 |
|
|
|
(364 |
) |
|
|
177 |
|
Net interest expense |
|
|
335 |
|
|
|
83 |
|
|
|
1,040 |
|
|
|
364 |
|
Foreign exchange loss / other expense |
|
|
309 |
|
|
|
353 |
|
|
|
918 |
|
|
|
712 |
|
Stock-based compensation expense, net of restructuring costs |
|
|
933 |
|
|
|
1,515 |
|
|
|
4,716 |
|
|
|
4,914 |
|
Depreciation and amortization |
|
|
4,120 |
|
|
|
3,039 |
|
|
|
14,402 |
|
|
|
11,725 |
|
Transaction and integration costs |
|
|
16 |
|
|
|
152 |
|
|
|
286 |
|
|
|
876 |
|
Goodwill impairment charges |
|
|
42,000 |
|
|
|
- |
|
|
|
42,000 |
|
|
|
- |
|
Net loss on lease terminations, unoccupied lease charges and
restructuring costs |
|
|
675 |
|
|
|
210 |
|
|
|
1,105 |
|
|
|
1,138 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(200 |
) |
|
|
- |
|
|
|
(3,090 |
) |
Adjusted EBITDA |
|
$ |
4,128 |
|
|
$ |
5,684 |
|
|
$ |
15,429 |
|
|
$ |
22,248 |
|
Non-GAAP Adjusted Operating Income to
GAAP Operating (Loss) Income
Set forth below is a reconciliation of our
non-GAAP adjusted operating (loss) income and non-GAAP adjusted
operating margin to our GAAP operating (loss) income and GAAP
operating margin.
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
28,416 |
|
|
$ |
32,534 |
|
|
$ |
117,059 |
|
|
$ |
138,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss) income |
|
|
(43,692 |
) |
|
|
499 |
|
|
|
(48,674 |
) |
|
|
5,432 |
|
(Benefit) provision for income taxes |
|
|
(568 |
) |
|
|
33 |
|
|
|
(364 |
) |
|
|
177 |
|
Net interest expense |
|
|
335 |
|
|
|
83 |
|
|
|
1,040 |
|
|
|
364 |
|
Other expense - net |
|
|
292 |
|
|
|
337 |
|
|
|
883 |
|
|
|
637 |
|
GAAP operating (loss)
income |
|
|
(43,633 |
) |
|
|
952 |
|
|
|
(47,115 |
) |
|
|
6,610 |
|
GAAP operating margin |
|
|
(153.6 |
)% |
|
|
2.9 |
% |
|
|
(40.2 |
)% |
|
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense, net of restructuring costs |
|
|
933 |
|
|
|
1,515 |
|
|
|
4,716 |
|
|
|
4,914 |
|
Amortization of purchased intangible assets |
|
|
1,200 |
|
|
|
1,391 |
|
|
|
4,975 |
|
|
|
6,277 |
|
Transaction and integration costs |
|
|
16 |
|
|
|
152 |
|
|
|
286 |
|
|
|
876 |
|
Goodwill impairment charges |
|
|
42,000 |
|
|
|
- |
|
|
|
42,000 |
|
|
|
- |
|
Net loss on lease terminations, unoccupied lease charges and
restructuring costs |
|
|
675 |
|
|
|
210 |
|
|
|
1,105 |
|
|
|
1,138 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(200 |
) |
|
|
- |
|
|
|
(3,090 |
) |
Non-GAAP adjusted operating
income |
|
$ |
1,191 |
|
|
$ |
4,020 |
|
|
$ |
5,967 |
|
|
$ |
16,725 |
|
Non-GAAP adjusted operating margin |
|
|
4.2 |
% |
|
|
12.4 |
% |
|
|
5.1 |
% |
|
|
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 December 31, |
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
($ in thousands) |
|
GAAP net (loss) income |
|
$ |
(43,692 |
) |
|
$ |
499 |
|
|
$ |
(48,674 |
) |
|
$ |
5,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss / other
expense |
|
|
309 |
|
|
|
353 |
|
|
|
918 |
|
|
|
712 |
|
Stock-based compensation
expense, net of restructuring costs |
|
|
933 |
|
|
|
1,515 |
|
|
|
4,716 |
|
|
|
4,914 |
|
Amortization of purchased
intangible assets |
|
|
1,200 |
|
|
|
1,391 |
|
|
|
4,975 |
|
|
|
6,277 |
|
Transaction and integration
costs |
|
|
16 |
|
|
|
152 |
|
|
|
286 |
|
|
|
876 |
|
Goodwill impairment
charges |
|
|
42,000 |
|
|
|
- |
|
|
|
42,000 |
|
|
|
- |
|
Net loss on lease
terminations, unoccupied lease charges and restructuring costs |
|
|
675 |
|
|
|
210 |
|
|
|
1,105 |
|
|
|
1,138 |
|
Change in contingent
consideration |
|
|
- |
|
|
|
(200 |
) |
|
|
- |
|
|
|
(3,090 |
) |
Income tax (benefit) provision
related to goodwill |
|
|
(606 |
) |
|
|
14 |
|
|
|
(525 |
) |
|
|
75 |
|
Non-GAAP adjusted net
income |
|
$ |
835 |
|
|
$ |
3,934 |
|
|
$ |
4,801 |
|
|
$ |
16,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End-of-period shares |
|
|
15,880,092 |
|
|
|
15,229,405 |
|
|
|
15,880,092 |
|
|
|
15,229,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income
per share |
|
$ |
0.05 |
|
|
$ |
0.25 |
|
|
$ |
0.30 |
|
|
$ |
1.07 |
|
For purposes of determining non-GAAP adjusted
net income per share, we used the number of common shares
outstanding as of December 31, 2023 and 2022, respectively.
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
GAAP net loss attributable to
common shareholders, per share |
|
$ |
(3.00 |
) |
|
$ |
(0.22 |
) |
|
$ |
(4.11 |
) |
|
$ |
(0.67 |
) |
Impact of preferred stock dividend |
|
|
0.25 |
|
|
|
0.25 |
|
|
|
1.04 |
|
|
|
1.03 |
|
Net (loss) income per
end-of-period share |
|
|
(2.75 |
) |
|
|
0.03 |
|
|
|
(3.07 |
) |
|
|
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss / other expense |
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.06 |
|
|
|
0.05 |
|
Stock-based compensation expense |
|
|
0.06 |
|
|
|
0.10 |
|
|
|
0.30 |
|
|
|
0.32 |
|
Amortization of purchased intangible assets |
|
|
0.08 |
|
|
|
0.09 |
|
|
|
0.31 |
|
|
|
0.41 |
|
Transaction and integration costs |
|
|
0.00 |
|
|
|
0.01 |
|
|
|
0.02 |
|
|
|
0.06 |
|
Goodwill impairment charges |
|
|
2.65 |
|
|
|
- |
|
|
|
2.65 |
|
|
|
- |
|
Net loss on lease terminations, unoccupied lease charges and
restructuring costs |
|
|
0.03 |
|
|
|
0.01 |
|
|
|
0.07 |
|
|
|
0.07 |
|
Change in contingent consideration |
|
|
0.00 |
|
|
|
(0.01 |
) |
|
|
0.00 |
|
|
|
(0.20 |
) |
Income tax (benefit) provision related to goodwill |
|
|
(0.04 |
) |
|
|
0.00 |
|
|
|
(0.04 |
) |
|
|
0.00 |
|
Non-GAAP adjusted earnings per
share |
|
$ |
0.05 |
|
|
$ |
0.25 |
|
|
$ |
0.30 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End-of-period common
shares |
|
|
15,880,092 |
|
|
|
15,229,405 |
|
|
|
15,880,092 |
|
|
|
15,229,405 |
|
In-the-money warrants and
outstanding unvested RSUs |
|
|
733,908 |
|
|
|
598,245 |
|
|
|
733,908 |
|
|
|
598,245 |
|
Total fully diluted
shares |
|
|
16,614,000 |
|
|
|
15,827,650 |
|
|
|
16,614,000 |
|
|
|
15,827,650 |
|
Non-GAAP adjusted diluted
earnings per share |
|
$ |
0.05 |
|
|
$ |
0.25 |
|
|
$ |
0.29 |
|
|
$ |
1.03 |
|
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 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.
Goodwill Impairment Charges. Goodwill impairment
charges, which were related to the Healthcare IT reporting unit,
represent the impairment recorded as it was determined that the
fair value of the goodwill balance on the consolidated balance
sheet was less than the carrying value. 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. In addition, this is a non-recurring,
non-cash charge.
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 which
were incurred in 2023, 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.
Changes 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 of the acquired businesses.
Income tax (benefit) provision related to
goodwill. Income tax (benefit) provision resulting from the
amortization (impairment) 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.
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