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 quarter ended March 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 rest of the year.
“At CareCloud, we are undergoing a significant
transformation by transitioning from a growth strategy that relied
solely on acquisitions at the time of our IPO to a self-sustaining
company that thrives on organic growth,” said A. Hadi Chaudhry,
CareCloud’s chief executive officer and president. “We continue to
see momentum in our bookings growth, signing up new practices and
selling new services to existing customers, and remain open to
acquisition opportunities that align with our vision. Our priority,
however, is to convert our record bookings into realized revenue,
while continuing to deliver innovative technology and new solutions
that drive our mission to revolutionize healthcare management.”
First Quarter 2023
Highlights
|
● |
Revenue of $30.0 million |
|
● |
GAAP net loss of $401,000, or $0.28 per share |
|
● |
Adjusted net income of $2.4 million, or $0.15 per share |
|
● |
Adjusted EBITDA of $4.2 million |
First Quarter 2023 Financial
Results
Revenue for the first quarter 2023 was $30.0
million, a decrease of 15% from the first quarter of 2022,
primarily due to the decrease in revenue from the two large clients
discussed below and a decrease in non-recurring revenue.
Bill Korn, CareCloud’s chief financial officer
remarked, “there were three principal drivers of the $5.3 million
decline in revenue compared with first quarter 2022. First, when we
acquired Meridian Medical Management, their two largest clients
were in the process of migrating away. Both clients finished the
majority of their migrations in mid-2022. Approximately $2.6
million of the revenue decrease was due to these clients. In
addition, our first quarter professional services revenue was down
$1.2 million from first quarter 2022. The revenue from these
projects fluctuates, but our professional services business
continues to be strong. Finally, the first quarter of 2022 included
approximately $1.2 million of revenue from revenue cycle management
for services which were Covid-related. This was not present during
the first quarter of 2023.”
“There will be a similar effect on revenue
during second quarter 2023, which will also show a year-over-year
decline due to the two large clients who migrated away in mid-2022,
with professional services revenue being comparable to first
quarter,” remarked Bill Korn. “We have a number of major projects
in our pipeline for the second half of 2023, but they will not
generate significant revenue over the next three months.
Approximately 87% of our 2023 revenue came from technology-enabled
business solutions and professional services.”
First quarter 2023 GAAP net loss was
approximately $401,000, compared to $1.1 million net income for the
same period last year. GAAP net loss per share for first quarter
2023 was $0.28, based on the net income attributable to common
shareholders, which takes into account the preferred stock
dividends declared during the quarter.
Non-GAAP adjusted net income for first quarter
2023 was $2.4 million, or $0.15 per share, and is calculated using
the end-of-period common shares outstanding. Non-GAAP adjusted net
income excludes non-cash expenses such as depreciation and
amortization.
Adjusted EBITDA for first quarter 2023 was $4.2
million, or 14% of revenue, compared to $4.7 million for the same
period last year. This reflects the loss of revenue from the two
large clients which were acquired and who were previously very
profitable.
Cash Balances and Capital
Structure
As of March 31, 2023, the Company had
approximately $8.2 million of cash. Our net working capital on
March 31, 2023 was approximately $12.3 million. As of March 27,
2023, Silicon Valley Bank became a division of First-Citizens Bank
& Trust Company. Our loan agreement with SVB remains in place –
the only difference is that it is now with Silicon Valley Bank, a
division of First-Citizens Bank & Trust Company. We continue to
have access to our line of credit on the same terms as before, and
we had $10 million drawn on our line as of March 31, 2023.
2023 Guidance
CareCloud is reiterating the following
forward-looking guidance for the fiscal year ending December 31,
2023:
For the Fiscal Year Ending December 31, 2023Forward-Looking
Guidance |
Revenue |
|
$142 – $146 million |
Adjusted EBITDA |
|
$24 – $27 million |
The Company anticipates full year 2023 revenue
of approximately $142 to $146 million. Revenue guidance is based on
management’s expectations regarding revenues from existing clients,
including adoption of CareCloud Wellness which was introduced in
2022, as well as new clients acquired through organic growth. We
have excluded the effects of any future acquisitions or tuck-ins,
and made assumptions about the timing for new customers going live
and the adoption rates of new services. This implies 12% net
organic growth from 2022 to 2023, excluding the revenue from the
two large clients who were previously acquired and migrated off our
services in mid-2022.
Adjusted EBITDA is expected to be $24 to $27
million for full year 2023, which implies growth of approximately
15% from 2022 to 2023, without the effects of any future
acquisitions or tuck-ins.
Conference Call Information
CareCloud management will host a conference call
today at 8:30 a.m. Eastern Time to discuss the first 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 416-764-8658 and referencing
“CareCloud First 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 36525137.
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, 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:Bill KornChief Financial
OfficerCareCloud, Inc.bkorn@carecloud.com
Investor Contact:Asher DewhurstICR
WestwickeCareCloudIR@westwicke.com
CARECLOUD,
INC.CONSOLIDATED BALANCE SHEETS($ in
thousands, except share and per share amounts)
|
|
March 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
8,161 |
|
|
$ |
12,299 |
|
Accounts receivable - net |
|
|
14,646 |
|
|
|
14,773 |
|
Contract asset |
|
|
5,018 |
|
|
|
4,399 |
|
Inventory |
|
|
265 |
|
|
|
381 |
|
Current assets - related party |
|
|
16 |
|
|
|
16 |
|
Prepaid expenses and other current assets |
|
|
3,371 |
|
|
|
2,785 |
|
Total current assets |
|
|
31,477 |
|
|
|
34,653 |
|
Property and equipment - net |
|
|
4,520 |
|
|
|
5,056 |
|
Operating lease right-of-use assets |
|
|
4,465 |
|
|
|
4,921 |
|
Intangible assets - net |
|
|
28,535 |
|
|
|
29,520 |
|
Goodwill |
|
|
61,186 |
|
|
|
61,186 |
|
Other assets |
|
|
838 |
|
|
|
838 |
|
TOTAL ASSETS |
|
$ |
131,021 |
|
|
$ |
136,174 |
|
LIABILITIES AND SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,191 |
|
|
$ |
5,681 |
|
Accrued compensation |
|
|
2,597 |
|
|
|
4,248 |
|
Accrued expenses |
|
|
3,728 |
|
|
|
4,432 |
|
Operating lease liability (current portion) |
|
|
2,095 |
|
|
|
2,273 |
|
Deferred revenue (current portion) |
|
|
1,394 |
|
|
|
1,386 |
|
Notes payable (current portion) |
|
|
84 |
|
|
|
319 |
|
Dividend payable |
|
|
4,115 |
|
|
|
4,059 |
|
Total current liabilities |
|
|
19,204 |
|
|
|
22,398 |
|
Notes payable |
|
|
12 |
|
|
|
13 |
|
Borrowings under line of credit |
|
|
10,000 |
|
|
|
8,000 |
|
Operating lease liability |
|
|
2,822 |
|
|
|
3,207 |
|
Deferred revenue |
|
|
350 |
|
|
|
342 |
|
Deferred tax liability |
|
|
551 |
|
|
|
525 |
|
Total liabilities |
|
|
32,939 |
|
|
|
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 March 31, 2023 and December 31,
2022. Series B, issued and outstanding 1,445,392 and 1,344,128
shares at March 31, 2023 and December 31, 2022, respectively |
|
|
6 |
|
|
|
6 |
|
Common stock, $0.001 par value
- authorized 35,000,000 shares. Issued 16,333,407 and 15,970,204
shares at March 31, 2023 and December 31, 2022, respectively.
Outstanding 15,592,608 and 15,229,405 shares at March 31, 2023 and
December 31, 2022, respectively |
|
|
16 |
|
|
|
16 |
|
Additional paid-in
capital |
|
|
129,678 |
|
|
|
130,987 |
|
Accumulated deficit |
|
|
(26,208 |
) |
|
|
(25,621 |
) |
Accumulated other
comprehensive loss |
|
|
(4,748 |
) |
|
|
(3,037 |
) |
Less: 740,799 common shares
held in treasury, at cost at March 31, 2023 and December 31,
2022 |
|
|
(662 |
) |
|
|
(662 |
) |
Total shareholders’
equity |
|
|
98,082 |
|
|
|
101,689 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
131,021 |
|
|
$ |
136,174 |
|
CARECLOUD,
INC.CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)FOR THE THREE MONTHS ENDED MARCH
31, 2023 AND 2022($ in
thousands, except share and per share amounts)
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
NET REVENUE |
|
$ |
30,001 |
|
|
$ |
35,341 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
Direct operating costs |
|
|
18,107 |
|
|
|
22,673 |
|
Selling and marketing |
|
|
2,612 |
|
|
|
2,384 |
|
General and administrative |
|
|
5,120 |
|
|
|
5,585 |
|
Research and development |
|
|
1,078 |
|
|
|
985 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(600 |
) |
Depreciation and amortization |
|
|
3,038 |
|
|
|
2,940 |
|
Net loss on lease termination and unoccupied lease charges |
|
|
269 |
|
|
|
158 |
|
Total operating expenses |
|
|
30,224 |
|
|
|
34,125 |
|
OPERATING (LOSS) INCOME |
|
|
(223 |
) |
|
|
1,216 |
|
OTHER: |
|
|
|
|
|
|
|
|
Interest income |
|
|
20 |
|
|
|
5 |
|
Interest expense |
|
|
(150 |
) |
|
|
(100 |
) |
Other income - net |
|
|
17 |
|
|
|
83 |
|
(LOSS) INCOME BEFORE PROVISION
FOR INCOME TAXES |
|
|
(336 |
) |
|
|
1,204 |
|
Income tax provision |
|
|
65 |
|
|
|
64 |
|
NET (LOSS) INCOME |
|
$ |
(401 |
) |
|
$ |
1,140 |
|
|
|
|
|
|
|
|
|
|
Preferred stock dividend |
|
|
3,931 |
|
|
|
4,037 |
|
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS |
|
$ |
(4,332 |
) |
|
$ |
(2,897 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common share:
basic and diluted |
|
$ |
(0.28 |
) |
|
$ |
(0.19 |
) |
Weighted-average common shares used to compute basic and diluted
loss per share |
|
|
15,421,096 |
|
|
|
14,992,147 |
|
CARECLOUD,
INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)FOR THE THREE MONTHS ENDED MARCH
31, 2023 AND 2022($ in
thousands)
|
|
2023 |
|
|
2022 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(401 |
) |
|
$ |
1,140 |
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,205 |
|
|
|
3,080 |
|
Lease amortization |
|
|
683 |
|
|
|
832 |
|
Deferred revenue |
|
|
16 |
|
|
|
104 |
|
Provision for doubtful accounts |
|
|
97 |
|
|
|
131 |
|
Provision for deferred income taxes |
|
|
26 |
|
|
|
36 |
|
Foreign exchange gain |
|
|
(11 |
) |
|
|
(52 |
) |
Interest accretion |
|
|
166 |
|
|
|
168 |
|
Gain on sale of assets |
|
|
- |
|
|
|
(6 |
) |
Stock-based compensation expense |
|
|
1,072 |
|
|
|
887 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(600 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(156 |
) |
|
|
(1,618 |
) |
Contract asset |
|
|
(619 |
) |
|
|
80 |
|
Inventory |
|
|
116 |
|
|
|
86 |
|
Other assets |
|
|
(615 |
) |
|
|
(97 |
) |
Accounts payable and other liabilities |
|
|
(2,556 |
) |
|
|
(1,084 |
) |
Net cash provided by operating activities |
|
|
1,023 |
|
|
|
3,087 |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(835 |
) |
|
|
(544 |
) |
Capitalized software |
|
|
(2,204 |
) |
|
|
(2,253 |
) |
Net cash used in investing activities |
|
|
(3,039 |
) |
|
|
(2,797 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Preferred stock dividends paid |
|
|
(3,875 |
) |
|
|
(3,943 |
) |
Settlement of tax withholding obligations on stock issued to
employees |
|
|
(1,113 |
) |
|
|
(775 |
) |
Repayments of notes payable |
|
|
(236 |
) |
|
|
(251 |
) |
Stock issuance costs |
|
|
- |
|
|
|
(11 |
) |
Proceeds from issuance of Series B Preferred Stock, net of
expenses |
|
|
1,437 |
|
|
|
26,638 |
|
Redemption of Series A Preferred Stock |
|
|
- |
|
|
|
(20,000 |
) |
Proceeds from line of credit |
|
|
12,700 |
|
|
|
8,500 |
|
Repayment of line of credit |
|
|
(10,700 |
) |
|
|
(10,500 |
) |
Net cash used in financing activities |
|
|
(1,787 |
) |
|
|
(342 |
) |
EFFECT OF EXCHANGE RATE
CHANGES ON CASH |
|
|
(335 |
) |
|
|
(152 |
) |
NET DECREASE IN CASH AND
RESTRICTED CASH |
|
|
(4,138 |
) |
|
|
(204 |
) |
CASH AND RESTRICTED CASH -
Beginning of the period |
|
|
12,299 |
|
|
|
10,340 |
|
CASH AND RESTRICTED CASH - End
of the period |
|
$ |
8,161 |
|
|
$ |
10,136 |
|
SUPPLEMENTAL NONCASH INVESTING
AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Dividends declared, not paid |
|
$ |
4,115 |
|
|
$ |
3,950 |
|
SUPPLEMENTAL INFORMATION -
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
2 |
|
|
$ |
- |
|
Interest |
|
$ |
75 |
|
|
$ |
40 |
|
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
Income
Set forth below is a reconciliation of adjusted
EBITDA to our GAAP net income.
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
30,001 |
|
|
$ |
35,341 |
|
|
|
|
|
|
|
|
|
|
GAAP net (loss) income |
|
|
(401 |
) |
|
|
1,140 |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
65 |
|
|
|
64 |
|
Net interest expense |
|
|
130 |
|
|
|
95 |
|
Foreign exchange gain |
|
|
(8 |
) |
|
|
(56 |
) |
Stock-based compensation expense |
|
|
1,072 |
|
|
|
887 |
|
Depreciation and amortization |
|
|
3,038 |
|
|
|
2,940 |
|
Transaction and integration costs |
|
|
72 |
|
|
|
102 |
|
Net loss on lease termination and unoccupied lease charges |
|
|
269 |
|
|
|
158 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(600 |
) |
Adjusted EBITDA |
|
$ |
4,237 |
|
|
$ |
4,730 |
|
Non-GAAP Adjusted Operating Income to GAAP
Operating Income
Set forth below is a reconciliation of our
non-GAAP adjusted operating income and non-GAAP adjusted operating
margin to our GAAP operating income and GAAP operating margin.
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
($ in thousands) |
|
Net revenue |
|
$ |
30,001 |
|
|
$ |
35,341 |
|
|
|
|
|
|
|
|
|
|
GAAP net (loss) income |
|
|
(401 |
) |
|
|
1,140 |
|
Provision for income taxes |
|
|
65 |
|
|
|
64 |
|
Net interest expense |
|
|
130 |
|
|
|
95 |
|
Other income - net |
|
|
(17 |
) |
|
|
(83 |
) |
GAAP operating (loss)
income |
|
|
(223 |
) |
|
|
1,216 |
|
GAAP operating margin |
|
|
(0.7 |
%) |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
1,072 |
|
|
|
887 |
|
Amortization of purchased intangible assets |
|
|
1,323 |
|
|
|
1,805 |
|
Transaction and integration costs |
|
|
72 |
|
|
|
102 |
|
Net loss on lease termination and unoccupied lease charges |
|
|
269 |
|
|
|
158 |
|
Change in contingent consideration |
|
|
- |
|
|
|
(600 |
) |
Non-GAAP adjusted operating
income |
|
$ |
2,513 |
|
|
$ |
3,568 |
|
Non-GAAP adjusted operating margin |
|
|
8.4 |
% |
|
|
10.1 |
% |
Non-GAAP Adjusted Net Income to GAAP Net
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 income and GAAP net loss per share.
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
($ in thousands, except for per share amounts) |
|
GAAP net (loss) income |
|
$ |
(401 |
) |
|
$ |
1,140 |
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain |
|
|
(8 |
) |
|
|
(56 |
) |
Stock-based compensation
expense |
|
|
1,072 |
|
|
|
887 |
|
Amortization of purchased
intangible assets |
|
|
1,323 |
|
|
|
1,805 |
|
Transaction and integration
costs |
|
|
72 |
|
|
|
102 |
|
Net loss on lease termination
and unoccupied lease charges |
|
|
269 |
|
|
|
158 |
|
Change in contingent
consideration |
|
|
- |
|
|
|
(600 |
) |
Income tax expense related to
goodwill |
|
|
26 |
|
|
|
36 |
|
Non-GAAP adjusted net
income |
|
$ |
2,353 |
|
|
$ |
3,472 |
|
|
|
|
|
|
|
|
|
|
End-of-period shares |
|
|
15,592,608 |
|
|
|
15,062,651 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income
per share |
|
$ |
0.15 |
|
|
$ |
0.23 |
|
For purposes of determining non-GAAP adjusted
net income per share, we used the number of common shares
outstanding as of March 31, 2023 and 2022, respectively.
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
GAAP net loss attributable to
common shareholders, per share |
|
$ |
(0.28 |
) |
|
$ |
(0.19 |
) |
Impact of preferred stock dividend |
|
|
0.25 |
|
|
|
0.27 |
|
Net (loss) income per
end-of-period share |
|
|
(0.03 |
) |
|
|
0.08 |
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain |
|
|
0.00 |
|
|
|
0.00 |
|
Stock-based compensation expense |
|
|
0.07 |
|
|
|
0.06 |
|
Amortization of purchased intangible assets |
|
|
0.09 |
|
|
|
0.11 |
|
Transaction and integration costs |
|
|
0.00 |
|
|
|
0.01 |
|
Net loss on lease termination and unoccupied lease charges |
|
|
0.02 |
|
|
|
0.01 |
|
Change in contingent consideration |
|
|
0.00 |
|
|
|
(0.04 |
) |
Income tax expense related to goodwill |
|
|
0.00 |
|
|
|
0.00 |
|
Non-GAAP adjusted earnings per
share |
|
$ |
0.15 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
End-of-period common
shares |
|
|
15,592,608 |
|
|
|
15,062,651 |
|
In-the-money warrants and
outstanding unvested RSUs |
|
|
630,094 |
|
|
|
790,926 |
|
Total fully diluted
shares |
|
|
16,222,702 |
|
|
|
15,853,577 |
|
Non-GAAP adjusted diluted
earnings per share |
|
$ |
0.15 |
|
|
$ |
0.22 |
|
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, lease termination and unoccupied lease 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, lease
termination and unoccupied lease 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, lease
termination and unoccupied lease 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. 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. 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.
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 termination 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.
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 expense related to goodwill. Income
tax expense resulting from the amortization of goodwill related to
our acquisitions represents a charge 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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