Executive Summary / Key Takeaways

• CareCloud, Inc. is undergoing a significant transformation, leveraging its deep healthcare IT expertise and a robust AI strategy to expand its market footprint beyond ambulatory care into the inpatient hospital segment.
• The company achieved record profitability in 2024, with its highest net income, Adjusted EBITDA, and free cash flow, setting the stage for anticipated positive GAAP EPS in 2025—a first since its 2014 IPO.
• Strategic acquisitions, including Medsphere Systems Corporation and MAP App, have been pivotal in establishing a credible hospital presence and enhancing benchmarking capabilities, while disciplined tuck-ins continue to fuel growth.
• CareCloud's AI Center of Excellence is rapidly developing and deploying proprietary AI solutions like Agentic AI Front Desk and cirrusAI Notes, which offer quantifiable benefits in operational efficiency, clinical documentation, and patient engagement.
• The company's strengthened capital structure, following the Series A preferred stock conversion, provides increased financial flexibility to fund ongoing AI innovation and strategic M&A, supporting its ambitious growth and profitability targets.

CareCloud's Evolving Healthcare IT Landscape

CareCloud, Inc., founded in 1999 as MTBC, Inc. before rebranding in March 2021, has established itself as a prominent provider of technology-enabled services and generative AI solutions within the complex and highly regulated U.S. healthcare industry. The company offers a comprehensive suite of proprietary cloud-based solutions, including revenue cycle management (RCM), practice management, and electronic health records (EHR), catering to a diverse client base from small medical practices to enterprise groups and health systems. Historically, CareCloud's growth has been significantly driven by strategic acquisitions, with approximately 80% of its existing clients initially joining through these means. To maintain competitive pricing and operational efficiency, CareCloud leverages a dual-shore model, operating corporate offices in New Jersey and offshore facilities in Pakistan, Azad Jammu and Kashmir, and Sri Lanka.

The healthcare IT industry is currently experiencing a profound shift, with substantial venture capital flowing into digital health, particularly AI startups. This trend underscores a growing demand for solutions that can enhance operational performance, streamline clinical workflows, and improve the patient experience. CareCloud's overarching strategy is to meet this demand by integrating advanced AI capabilities across its platform, expanding its market reach, and maintaining disciplined financial management. This approach positions CareCloud to capitalize on the industry's evolution, offering agile and cost-effective solutions that contrast with the often complex and expensive enterprise offerings from larger competitors.

In the competitive landscape, CareCloud faces formidable rivals such as Oracle (ORCL) (via Cerner), Allscripts Healthcare Solutions, and UnitedHealth Group (UNH) (through its Optum segment). While these larger players benefit from extensive resources, established networks, and broad data analytics capabilities, CareCloud differentiates itself through its focus on user-friendly, integrated solutions tailored for smaller to mid-sized providers and, increasingly, critical access hospitals. CareCloud's offshore operational model provides a notable cost advantage, allowing it to deliver competitively priced products and services. The company's deep domain expertise, built over two decades of processing millions of healthcare transactions annually, also provides a unique edge in developing AI solutions that are clinically relevant and compliant with stringent healthcare regulations.

Technological Differentiation: The AI-Driven Core

At the heart of CareCloud's strategic transformation is its commitment to artificial intelligence, embodied by its flagship CareCloud cirrusAI suite and the recently launched AI Center of Excellence. This initiative is not merely an incremental upgrade but a fundamental re-engineering of healthcare workflows, designed to deliver measurable improvements in efficiency and patient care. The AI Center of Excellence, which began with over 50 AI professionals and aims to scale to 500 by the end of 2025, is entirely self-funded through operating cash flow, underscoring its strategic importance and anticipated value generation.

CareCloud's AI strategy leverages its 25 years of proprietary clinical and financial data to train purpose-built models, complemented by the integration of market-available foundational models. This hybrid approach allows for rapid development while ensuring security, compliance, and clinical relevance. The tangible benefits of this technological differentiation are evident across several key products:

• cirrusAI Notes: This fully integrated documentation assistant streamlines clinical workflows by using ambient listening, smart summarization, and specialty-specific logic to integrate patient-provider conversations directly into the EHR. It also suggests medical codes and treatment options, bridging the gap between documentation and billing. Early adoption has shown a continuation rate of over 75% after trial periods, with users experiencing significant reductions in time spent on documentation.
• cirrusAI Voice: An AI-powered call center monitoring and auditing platform, cirrusAI Voice analyzes 100% of recorded calls, scores agent performance against key performance indicators (KPIs), and uses sentiment analysis to identify coaching opportunities. Deployed internally for over 80 agents and piloted with enterprise clients, this solution enhances compliance, efficiency, and cost savings.
• Agentic AI Front Desk Solution: Slated for a formal launch in mid-December 2025, this next-generation multilingual voice-driven digital assistant autonomously manages patient calls for tasks such as appointment scheduling, prescription refills, and lab result inquiries. Pilot deployments have demonstrated a success rate of over 70% in handling incoming patient calls end-to-end without human intervention, and over 80% success in appointment scheduling and related tasks, including calls in English and Spanish. This significantly reduces administrative burden and improves service responsiveness.
• AI-Driven Appeals: CareCloud cirrusAI Appeals generates customized appeal letters by analyzing patient claim details, the appeals reason, and the specific payor involved for healthcare workers to review, edit, and send. This functionality supports CareCloud's RCM teams in optimizing providers' RCM and securing proper reimbursement.

Beyond these specific products, CareCloud is developing an AI-enabled Personal Health Record (PHR) and enhancing its AI denial management capabilities with generative AI to automate appeals and classify root causes. The company is also advancing its specialty-based EHR strategy, with solutions for dermatology, podiatry, cardiology, gastroenterology, and general surgery approaching launch between the first and second quarters of 2025. These innovations are designed to intelligently connect clinical and financial workflows, providing better speed, accuracy, and outcomes.

The "so what" for investors is clear: CareCloud's technological leadership in AI creates a significant competitive moat. By offering solutions that directly address physician burnout, staffing shortages, and administrative inefficiencies, the company enhances its value proposition, leading to stronger client retention and attracting new business. These AI-driven efficiencies are expected to translate into higher operating cash flow margins, improved financial performance, and a strengthened market position, particularly as the company expands into underserved segments.

Strategic Expansion: Beyond Ambulatory Care

CareCloud's strategic narrative in 2025 is defined by a bold expansion beyond its traditional ambulatory focus, driven by key acquisitions and certifications that unlock new market opportunities. This strategic pivot is designed to broaden the company's addressable market and solidify its position as a comprehensive healthcare IT provider.

A transformational step was the acquisition of Medsphere Systems Corporation's assets on August 22, 2025. This move significantly expanded CareCloud into the inpatient market, enabling it to serve community hospitals, regional systems, and critical access hospitals with a full suite of solutions. The Medsphere portfolio includes Care View (an integrated inpatient EHR), RCM Cloud (hospital billing and collections), Wellsoft (an emergency department information system), HealthLine (hospital supply chain management), ChartLogic (ambulatory EHR and practice management), and Marketware (physician relationship management). This acquisition provides CareCloud with immediate hospital reach and credibility, creating a national cross-sell channel for its AI and RCM automation. Management aims to achieve an operating cash flow margin of 30% or greater from these acquisitions within approximately three quarters.

Further bolstering its hospital offerings, CareCloud acquired MAP App from the Healthcare Financial Management Association (HFMA) on October 1, 2025, alongside a long-term joint marketing agreement. MAP App is a hospital benchmarking and performance analytics platform that allows organizations to measure and compare revenue cycle metrics such as cash collections efficiency and denial performance. This acquisition enables CareCloud to "move up the decision stack" in commercial conversations by leading with data-driven insights and creating analytics-led action plans. The company plans to enrich MAP App benchmarks with AI-driven recommendations, including the expected dollar impact of closing performance gaps and prioritizing automation efforts.

Complementing these acquisitions, CareCloud achieved ONC Health IT Certification for its talkEHR platform, specifically tailored for Critical Access Hospitals (CAHs), effective August 1, 2025. This certification opens access to a $1.5 billion addressable market across more than 1,300 rural hospitals, many of which are seeking modern replacements for outdated systems. The CAH-certified platform is cloud-based, AI-enabled, and supports inpatient, outpatient, and swing bed workflows, extending CareCloud's operational efficiency and regulatory compliance to a critical, underserved segment of the healthcare system.

CareCloud also re-entered the M&A market in early 2025 with disciplined tuck-in acquisitions like MesaBilling (February) and RevNu Medical Management (April). RevNu Medical Management, which provides audiology and hearing aid billing/RCM IT solutions, expanded CareCloud's footprint into a new specialty. These acquisitions are structured to be accretive within 90 days, with consideration tied to revenue generated over time, ensuring financial discipline and alignment with long-term value creation. The success of this approach was validated when RevNu Med's largest customer expanded their 1-year contract to a 3-year agreement.

These strategic initiatives collectively position CareCloud to address a broader spectrum of the healthcare market, from small ambulatory practices to community hospitals. By offering affordable, AI-enabled solutions, CareCloud aims to capture market share from larger, more expensive enterprise vendors and smaller, less technologically advanced billing companies.

Financial Performance: A Return to Profitability and Growth

CareCloud's financial performance in 2024 marked a significant turnaround, laying a robust foundation for its 2025 growth strategy. The company achieved record-breaking profitability, reporting its highest net income of $7.9 million, Adjusted EBITDA of $24.1 million (a 56% increase year-over-year), and free cash flow of $13.2 million (a nearly 250% increase year-over-year), despite a modest decline in revenue for the full year 2024. This culminated in neutral earnings per share in the fourth quarter of 2024, signaling a strong pivot towards sustained profitability.

The momentum continued into 2025, with the company demonstrating consistent financial improvement. For the three months ended September 30, 2025, CareCloud reported net revenue of $31.1 million, a 9% increase from the same period last year. GAAP net income for the quarter was $3.1 million, and Adjusted EBITDA increased by 13% year-over-year to $7.7 million. Notably, GAAP EPS reached $0.04, marking the first time in the company's history it delivered positive GAAP earnings per share. For the nine months ended September 30, 2025, net revenue was $86.1 million, a 4% increase from the prior year, with GAAP net income of $7.9 million and Adjusted EBITDA of $19.9 million, an 18% increase year-over-year.

The Healthcare IT segment was a primary driver of revenue growth, with net revenue increasing by $2.5 million (9%) for the three months and $3.5 million (4%) for the nine months ended September 30, 2025. The Medsphere acquisition contributed approximately $3.4 million in revenue during the three and nine months ended September 30, 2025. While the Medical Practice Management segment's revenue remained relatively stable, its operating income declined for the nine-month period.

CareCloud's profitability margins reflect its operational efficiencies. The latest trailing twelve months (TTM) figures show a Gross Profit Margin of 30.55%, an Operating Profit Margin of 10.22%, a Net Profit Margin of 8.61%, and an EBITDA Margin of 21.53%. These figures demonstrate the impact of deliberate structural improvements, including a streamlined global workforce, reduced vendor reliance, and automation initiatives. Direct operating costs increased due to higher salary and outsourcing costs, while selling and marketing expenses decreased due to headcount reductions and lower spending. Research and development expenses increased significantly due to a shift in development activities, with fewer costs qualifying for capitalization.

Liquidity and capital resources have also seen substantial improvements. In March 2025, a mandatory conversion of approximately 3.54 million Series A preferred stock shares into common stock significantly strengthened the capital structure. This conversion reduced quarterly dividend obligations from approximately $3.9 million in Q1 2024 to $1.5 million in Q1 2025, resulting in over $10 million in annual cash savings on Series A preferred stock dividends and settling $11.4 million of accrued but unpaid dividends. This enhanced financial flexibility is crucial for funding ongoing AI innovation and strategic acquisitions. As of September 30, 2025, CareCloud had $5.1 million in cash and $6.1 million in net working capital. The company voluntarily terminated its line of credit with Silicon Valley Bank in August 2025 and subsequently secured a new two-year, $10 million revolving line of credit with Provident Bank (PFS) in September 2025. The company has been rapidly deleveraging, reducing the balance on this line of credit to $4.9 million as of the Q3 2025 earnings call, with an intention to fully pay it off in the coming months.

Cash provided by operations for the nine months ended September 30, 2025, was $19.9 million, demonstrating strong internal cash generation.

Outlook and Risks: Sustaining Momentum

CareCloud's management has provided an optimistic outlook for 2025, reflecting confidence in its strategic initiatives and operational discipline. The company has raised its full-year 2025 revenue guidance to a range of $117 million to $119 million, up from the initial range of $111 million to $114 million. This upward revision is attributed to the momentum observed and disciplined execution, particularly the contributions from recent acquisitions. Adjusted EBITDA guidance has been reaffirmed at $26 million to $28 million, and GAAP EPS guidance has also been reaffirmed at $0.10 to $0.13. This projected positive GAAP EPS would be a significant milestone, marking the first time since the company's IPO in 2014.

The underlying assumptions for this guidance include continued adoption of AI solutions, successful integration of the Medsphere and MAP App acquisitions, disciplined execution of its M&A strategy, and organic growth from existing and new clients. Management anticipates that the AI Center of Excellence will continue to drive operational efficiencies and product innovation, contributing to both revenue growth and margin expansion. The company expects to continue declaring monthly preferred dividends, with an annualized payment of approximately $5.5 million.

Despite the positive outlook, several risks and challenges warrant investor attention. CareCloud maintains cash balances at financial institutions that exceed FDIC insurance limits, and it holds cash in offshore subsidiaries in Pakistan and Sri Lanka where deposit insurance is not available. The financial markets have recently experienced volatility, particularly concerning small and regional banks, which could adversely impact CareCloud's bank relationships and financial condition. The successful integration of recent acquisitions, particularly Medsphere, is critical to realizing the anticipated synergies and achieving target operating cash flow margins. Furthermore, as CareCloud surpassed the accelerated filer threshold with a public float of $85.1 million as of June 30, 2025, it will be required to include an auditor attestation of its Internal Control over Financial Reporting (ICFR) for fiscal year 2025. This new compliance benchmark could lead to its current audit firm's resignation, necessitating a search for a new firm.

Conclusion

CareCloud, Inc. is in the midst of a transformative period, strategically pivoting from an ambulatory-centric provider to a comprehensive healthcare IT solution for the entire care continuum. The company's disciplined approach to AI innovation, exemplified by its self-funded AI Center of Excellence and a suite of advanced products like the Agentic AI Front Desk, is enhancing operational efficiency, streamlining clinical workflows, and improving patient engagement with quantifiable benefits. This technological leadership, coupled with a deep understanding of healthcare's complex regulatory and operational landscape, provides CareCloud with a distinct competitive advantage.

The strategic acquisitions of Medsphere and MAP App represent a significant expansion into the inpatient hospital market, offering new avenues for growth and cross-selling opportunities, particularly within underserved segments like critical access hospitals. Financially, CareCloud has demonstrated a remarkable turnaround, achieving record profitability in 2024 and projecting positive GAAP EPS for 2025, a testament to its rigorous cost management and strengthened capital structure. While risks associated with bank liquidity and integration challenges persist, CareCloud's clear strategic roadmap, robust financial health, and commitment to AI-driven innovation position it for sustained profitable growth and enhanced shareholder value in the evolving healthcare technology landscape.