CareCloud Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 3, 2023

There are 8 speakers on the call.

Operator

Welcome to the CareCloud, Inc. 2nd Quarter 2023 Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. I will now turn the call over to your host, Kim Blanch, CareCloud's General Counsel, Ms.

Operator

Blanche, you may begin.

Speaker 1

Good morning, everyone. Welcome to the CareCloud Q2 2023 Conference Call. On today's call are Mahmood Haq, our Founder and Executive Chairman Adi Chaudhry, our Chief Executive Officer, President and Director and Larry Steenborden, our Chief Financial Officer. In addition, Bill Korn, our Chief Strategy Officer, will be available for the Q and A portion of the call. Before we begin, I would like to remind you that certain statements made during this conference call are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended.

Speaker 1

All statements other than statements of historical facts made during this conference call are forward looking statements, including without limitation statements regarding our expectations and guidance for future financial and operational performance, Forward looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, Forward looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward looking statements. These statements reflect our opinions only as to the date of this presentation, and we undertake no obligation to revise these forward looking statements in light of new information or future events. Please refer to our press release and reports filed with the Securities and Exchange Commission, where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward looking statements. For anyone who dialed into the call by telephone, you may want to download our Q2 2023 earnings presentation. Please visit our Investor Relations site, ir.carecloud.com, click on News and Events, then click IR Calendar, Click on Q2 2023 results conference call and download the earnings presentation.

Speaker 1

Finally, on today's call, We may refer to certain non GAAP financial measures. Please refer to today's press release announcing our Q2 2023 results for a reconciliation of these non GAAP performance measures to our GAAP financial results. And with that said, I'll now turn call over to our CEO, Hadi Chaudhry. Hadi?

Speaker 2

Thank you, Kim. And thanks to all of you for joining our Q2 2023 earnings call. Before I jump in, I would like to take a minute to introduce Larry Stein Warden, who joined us in July as our new Chief Financial Officer. Larry brings with him extensive experience he has spent time as CFO in several different areas of the healthcare space. Our team is looking forward to working with him as Bill transitions into his new role as Chief The Q2 revenue came in at $29,400,000 and adjusted EBITDA came in at $3,800,000 This compares to revenues of $37,200,000 and adjusted EBITDA of $7,000,000 in Q2 last year.

Speaker 2

Taking a step back and looking at the quarter as a whole, there were a few main areas that contributed to these numbers coming in lower than the prior year period, Which includes softness in Medisar Professional Services, a slower conversion ramp for wellness revenue And the loss of revenue from 2 large customers due to health system mergers as previously announced. Larry will go into further details on these developments And meeting the evolving needs of our providers. We believe that we have taken the necessary actions to address the near term issues we are facing And over the long term, focus on several emerging avenues of growth that include our generative AI Offering powered by our relationship with Google, our wellness solution, which is gaining more attention in the market and what could be a meaningful Turning now to the launch of our new generative AI product. I want to provide more detail on our recently announced partnership with Google Cloud with the goal of making it easier for doctors And clinicians to access essential information. We are actively working on integrating Google Cloud's advanced generative AI And enterprise search technology into CareCloud solutions.

Speaker 2

Once launched, our AI model will assist the physicians with data informed Personalized treatment decisions. One of the major advantages of this collaboration in the nearly 20 years of CareCloud's de identified clinical data and financial information, which will be used in a HIPAA compliant to train Google's generative AI models within CareCloud solutions. This valuable data includes insights From small and medium sized medical practices that haven't previously been used for generative AI. Current healthcare AI models have been Trained primarily with health system data, our partnership allows us to fill an important gap in the industry and create more comprehensive AI generated The first CareCloud solution using generative AI will focus on clinical and is set to launch in the coming months. We will start by training Google's generative AI models with our clinical data.

Speaker 2

This will enable our solutions to use a patient's current and past clinical data to create personalized care plans for that specific patient, enabling the physician to make more informed decisions for that patient. These plans will be tailored to each patient's medical history and current symptoms, including medication recommendations, lab orders, diagnosis and procedures. Eventually, the offering will also enable the system to give patients personalized estimates of their insurance coverage and out of pocket expenses, helping them make informed decisions about their health Here. We plan to charge a reasonable license fee for this Smart Assistant Edition and are exploring different licensing models or user fees, Similar to Microsoft recent launch of CoPilot. The overarching goal of this partnership with Google Cloud is to I now want to provide you an update on our UAE opportunity.

Speaker 2

As we discussed last quarter, We are continuing to explore opportunities for expansion in the Middle East. We previously mentioned that we were close to completing the establishment of an entity In the UAE to capitalize on the opportunities in this market. I am pleased to report that we have successfully established a branch office in Dubai and receive our license to conduct business in UAE. In May, we attended the Precision Med Conference at Dubai World Trade Center And then the MENA Hospital Project Conference in June to start building relationships with our partners. We are now in the process of recruiting the best local talent for our business development team with the primary goal of developing new business relationships Within the Gulf Cooperation Council, which is comprised of 6 countries, KCloud is uniquely aligned to take advantage of the opportunities in this market.

Speaker 2

I also want to highlight that on the marketing front, we recently revamped our entire corporate website. We updated the site to not only include all of our brands, solutions and services, but also optimize it by end market and category To make it easier for our customers and partners to navigate, we believe this will make for a more enhanced user experience. Next, I would like to provide an update on the progress we have made on bookings conversions and new customer go lives. For our core tech enabled RCM, we have gone live with 95% of the potential revenue we booked last year Compared to 88% last quarter, on an annualized run rate, we have recognized 94% of those potential revenue from the live clients. In our wellness solution, we have gone live with 93% of the potential revenue, also in line with last quarter, While the percentage of annualized run rate revenue increased from 7% to 23%.

Speaker 2

We still believe this is a meaningful opportunity for us, The ramp is taking significantly longer than we initially anticipated. Our wellness offering represented a paradigm shift How people treat chronic illnesses, getting them into a monthly virtual checkup routine in order to proactively manage their illness. Lastly, in force, which is our staffing augmentation solution, we have gone live with 96% of the potential revenue, same as last quarter, but the percentage of annualized run rate revenue has increased from 4% to 65% at the end of the Q2. The increase was driven by one of the contracts we noted last quarter going live, a new client starting to ramp. Overall, out of the total recurring bookings we signed in 2022, 95% of the potential revenue has gone live with us In some form or fashion, up from 92% last quarter.

Speaker 2

In the Q2, on an annualized basis, We recognized 62% of the potential revenue opportunity from those clients that have gone live compared to 44% last quarter. Turning to 2023 bookings, we are experiencing further bookings growth with a meaningful increase in first half twenty twenty 3 bookings compared to the first half of last year. Notably, we are signing that new business more efficiently as we have seen a year over year decline in our customer acquisition cost. In summary, During the quarter, our core tech enabled RCM business is performing well, but we did experience some softness in 2 of our Newer innovative business lines, wellness and MedAssert Professional Services. As we look to the second half of the year, We face some continued headwinds in those businesses and have adjusted our 2023 guidance accordingly.

Speaker 2

We believe that we have passed the low point and I believe that we have taken the right steps to stabilize those business lines in the second half. Now I will turn the call over to Larry for a deeper look into our Q2 results and annual guidance.

Speaker 3

Larry? Thank you, Hadi, and hello, everyone. I appreciate the kind words from those of you that have already reached out, And I'm excited about getting started in the new seat. CareCloud strategy is focused on being front runners in the market and it's exciting time to join the company And a very motivated and passionate team. With that, let me turn to the financials.

Speaker 3

Revenue in the quarter was $29,400,000 compared to 37,200,000 Hours in Q2 2022. The year over year decline is primarily a result of the factors that Hadi mentioned, Softness in Med SR and a slower conversion ramp for wellness revenue as well as the loss of revenue from 2 large customers due to health system mergers. Regarding Med SR, after the acquisition, a large EHR vendor stopped allowing their clients to contract with us We saw the impact of this play out in the last quarter. In light of this, our team started to establish Stronger Meditech relationships and leverage more RCM cross selling opportunities. The expectation was that through these relationships and with organic sales, the gap could be bridged to deliver growth as originally projected.

Speaker 3

However, this did not materialize. We still believe this is the right approach to get us back on track. And in light, We anticipate mid SR's Meditech related revenue and RCM revenue will increase for the full year, but it will not be enough to offset the decline in professional services this year. The second area identified was in wellness. The real life ramp did not pan out as steep as the initial forecast predicted.

Speaker 3

Now that we have a year of experience and more data is available, it is becoming clear that it will take longer to migrate into revenue. Going forward, we are now able to use this real life data in our forecasting and are confident about this patient population opportunity, but the ramp will take longer. Adjusted EBITDA of $3,800,000 reflects a 13% margin for the quarter. This compares to $7,000,000 19 percent in Q2 2022. The decline in quarterly EBITDA was a combination lower revenue and related margins as we continue to invest in sales and marketing and R and D to drive future growth.

Speaker 3

We ended the quarter with $7,700,000 in cash and net working capital of $8,200,000 Cash provided by operations was $6,400,000 offset by cash used in investing And financing activities of $7,100,000 In addition, we ended the 2nd quarter the same as the first quarter With $10,000,000 drawn on our $25,000,000 line of credit. Now turning to guidance. As mentioned earlier, there are a few areas in which results differed from expectations. For Med SR, we expect the impact will be approximately $12,000,000 deviation from our projected plans on an annualized basis. As I discussed earlier in more detail, for wellness, we anticipate it will be approximately $4,000,000 short of our original We now have real life data to help us project these contributions in a more conservative and accurate way.

Speaker 3

And lastly, it was planned to backfill approximately $8,000,000 of revenue from the previously mentioned customer health system mergers Organically, but this is not materializing at the expected rate. Additionally, I'd like to provide an update on Force, our staffing augmentation service, which was discussed last quarter. The large contract that we signed late last year with a well known publicly traded healthcare technology company was delayed in the preproduction phase Due to the customer focusing on other priorities. While this led to a slower than expected timeline, we are pleased to say that we went live On August 1. Taking into account all of these variables, we will be adjusting our annual guidance accordingly.

Speaker 3

We now expect full year revenue of $120,000,000 to $122,000,000 and adjusted EBITDA of 15 $17,000,000 While the fundamentals of the business are solid, we have undertaken a deep dive into expenses And capital spend to scale the business accordingly and improve profitability for the second half and into 2024. We still see plenty of opportunity for our solutions moving forward and we'll use our steady core RCM business As well as developing projects such as physical therapy, our AI solution, the opportunity in the Middle East And the wellness ramp is a strong foundation from which to grow. That concludes my prepared remarks. In closing, I want to reiterate that like the entire team, I'm very motivated to be in this role and see the vision the company has in sight. I'll now turn the call over to Mahmud for his closing remarks.

Speaker 3

Mahmud?

Speaker 2

Thank you, Larry. As Hadi expressed earlier, we feel that our solutions are well positioned in the market. We are executing on I would like to thank our employees, customers and shareholders for all they do to support the CareCloud mission. Thank you. Operator?

Operator

Thank you. Ladies and gentlemen, we will now begin the Our first question comes from Jeffrey Cohen of Landenberg Thalmann. Please go ahead.

Speaker 4

Hey, good morning. Hi, Hadi, Larry and Bill. How are you?

Speaker 2

Good morning, Jeff, Gabriel. Very well. Thank you. How are you?

Speaker 4

It's fine. So I know that Larry went through a few of the shortfalls in some of the contracts on Congrats on carrying up the force contract. But Larry, I guess the question is, any macro themes that you're seeing Over the past quarter as far as position or organization spending patterns that you can talk about?

Speaker 2

Can you have us a little elaborate it further, Jeff, please?

Speaker 4

Just from a macro standpoint, are you seeing any themes out there as far as your space with utilization Or orders that are out there in North America the past quarter?

Speaker 2

Not exactly, but we do see from the MedAssR perspective like any other consultancy businesses, Like any other consultancy businesses, some impact, but I think for us, it's not primarily driven by The overall, the advisory and the consistency business impact, it's for us at least it's that large vendor driven Because you all, as you understand, there are a couple of vendors, just 3 which covers about 80% of the market share in that space. So if the largest one thinks that they should not be working with us, that have a significant impact. But other than that, no, we have not.

Speaker 4

Okay. And anything to speak of as far as utilization recently or Any geographical strength or weakness to call out as far as specific specialties or specific geographies So you could talk about?

Speaker 2

No. Again, Jeff, we have not seen any such patterns, But I think we do see a lot of at least these discussions more towards this the next the upcoming technologies. I would say Between the confusion of the people and waiting for the next and the right technology to be used and more referring to These AI based upcoming technological tools and the movement towards the value based, how the two pieces are going to Get together and from the preventative medicine as well, but not anything specific that we have seen at least yet.

Speaker 4

Okay, great. And then lastly for us, any commentary on the regenerative partnership with Google Cloud as far as Roll out and talk about which specific offerings of yours that it's being embedded in and how you would

Speaker 2

And if we just zoom out just to give you, first of all, the perspective of how this partnership has come together. So this was I was able to meet earlier this year in a meeting with the CEO of the Google Cloud. The idea was or the thought was and if you think about CareCloud or previously known as MTBC when started in 1999, Our focus was or how we started was how to focus the small to medium practices primarily Such as EHR and then all of those. Fast forward for these last 20 years now, we have the data, The clinical and financial because of our proprietary software and the technology, we started investing Pradeep, let's say, we're from the last over 5 years, by establishing our own AI or the data science department to see how we can what we can perspective and think about it and let's talk about Google. They launched their Vertex AI, which is their AI trained AI model and the engine.

Speaker 2

And then they started focusing on the health sector, and they are calling it the MedPAR model, which is a AI trained model for the health care industry. But when we talk about it, that model is trained only on the health system side space, The larger practices, because for the smaller ones, whether it's Google or someone else, they have 1, it's a very highly regulated industry. So

Speaker 4

So in order to have an outreach or

Speaker 2

reach out to so many of thousands and thousands of those small practices and take their data and then train their AI model, it's just not simply not So this partnership is basically Google coming with their technological, their people, their expertise and technology on the generative AI. We are coming in with over the last 20 years of data and our people and the experts and together we are trying to produce the product. So that's the bigger picture. What we are trying to accomplish for us in the short term, as I mentioned as part of the script, the we will be providing a sort of a Smart Assistant in our EHR and the practice management product, which will work as a if you use the analogy of the Microsoft launch of their co pilot. First of all, the co pilot is a co pilot.

Speaker 2

It's not a pilot. It won't be flying the plane, but it will be assisting. So our product is also going to assist and suggest the doctor leaving the responsibility with the doctor. The decision maker would still be with the doctor and making sure HIPAA compliant and regulatory requirements and patients have safety in mind. So that assistant will be able to because we have their test specific patients and the industries from the Same specialty, gender insurance mix.

Speaker 2

So we will be able to suggest a treatment plan, A full comprehensive care plan with the help of that generative AI to the doctor, which can help In the rare disease cases, which can help in preventive medicine, there could be certain tests that should be conducted at that In perspective, that one license or one user will be charging from the license fee perspective. And then in the bigger picture, there improvement of the overall profitability and then the patient outcomes for that practice. So this is going to be the one, the revenue generation line for us This is how the revenue will be generated. In addition to that, the bigger picture is once this proof of concept gets done, our model gets trained For the small to medium sized practices data, with the help of the Google, we plan to there is though and we will communicate with anything gets finalized with Google. We plan to go back and how we can provide this with the help of working with Google access to this trained AI model to other vendors in this space.

Speaker 2

So there will be another in the future that at least our goal is what we are opportunistic about. That's what we think is about to go. But anyway, I hope I answered the question in terms of the revenue for us this year. We plan to process this. We are going through and making sure just because of Dealing with the patient health information, it should provide a reasonable accurate projections.

Speaker 2

So we are in the process of refining the results. And by the end of the Q3, early Q4, we plan to launch this product. Let's see how the what is the attention and We get from our existing client base first as everyone is going through that adaptability and understanding the generative AI and then we believe this is going to help us in the bigger picture into the 2024.

Speaker 4

Okay, perfect. Thanks for taking our questions.

Speaker 2

Thank you. Thanks, Jeff.

Operator

Thank you. The next question comes from Neil Chatterjee of B. Riley. Please go ahead.

Speaker 5

Hi. Thank you. This is Anderson on for Neil. You called out the weaknesses in wellness and professional services in Q2. How do you see those recovering going forward in the second half and in 2024?

Speaker 2

I can talk about from the business perspective and Larry if you want to add any other color to it. Just let's talk about the professional services first. So for Professional Services, if you think about it and just to the largest vendor that I've been talking about and just to put the things in perspective, if we talk about Activation services. 1 activation project for that largest health system could potentially have, let's say, dollars 1,000,000 at could only be, let's say, a $200,000 project. So for us to bridge that gap, It's taking us time to get there.

Speaker 2

The other the second major line of business from where we anticipate we should be able to recover or should be able to do a good With this professional services, it's leveraging those relationships into health system space to sell over RCM services. As you may recall, last When we presented the numbers for the Professional Services division, we were able to increase the revenue of RCM by roughly 300 compared to prior to acquisition. So both of these 2 LVC may not be the similar 300%, but there is Decent increase on the RCM revenue compared to the last year as well. So our RCM business line under MedAssar is growing. Our Meditech business line is also growing and that's opening even further door for us into a more partnered possible Relationship on the RCM with Meditech and also our Middle East opportunity.

Speaker 2

So we believe between the 2, we will keep on growing. Our goal would be and again, we will share the numbers at the end of this year when we close the year. Our goal would be that at least with these two possible lines and the opportunities that exist for us in Middle East, we should be able to get Back to where we should be by the end of next year. Again, that's our goal. We yet need to see how the things plays out until the end of this year.

Speaker 2

But we do see a lot of these opportunities and the path for us to get back to where we should be. And the path for us to get back to where we should be.

Speaker 5

Great. Thank you. And then on your Middle East expansion, Congrats on the UAE trade license. When do you anticipate recognizing revenues there?

Speaker 2

And I'll answer it and then just to mention that Dwight who is heading over MedAssar as well as the Middle East division, he also joined And Carl from the Force division, the Head of the Force, he also had joined us during the Q and A session. So let me answer that and then I'll hand it over to Dwight to give you a little more color. We in the current We are going through the process of finding the right boots on the ground resources who have the knowledge who can go and help us sell into that space and there are a number of other activities We are projecting. We our internal goal is to at least have been able to sign our deal, a Few deals before the end of this year, which should have a revenue recognition for us into the next year. Because no matter what you do by the time We signed the deal, get the resources aligned, get the project initiated, the revenue recognition will take at least 6 months From the point of signing the deal.

Speaker 2

So this is a bigger picture. But, Dwight, would you like to give just a little more color like how we are doing on the Middle East Hi for Neil and the other people listening.

Speaker 6

Sure, absolutely. And good morning and thank you for taking some time. So yes, in UAE, we're excited about the opportunities there. And not only UAE, but also the GCC. So we're seeing those 6 Gulf countries really Bringing together quite a few exciting opportunities for us.

Speaker 6

Like Hadi said earlier, I attended a few conferences this year and so did Carl. We're seeing a lot of excitement in what we're bringing to the table, both from a professional services and a solutions point of view. Looking this quarter, really, we're hiring our business development team and getting them up and running. And then with our goal really as We move through Q3 and Q4 of using the Arab Health Summit, which is in January of 2024 is really our time that we can come forward and show all of our It's a huge conference, almost 65,000 attendees. So that really becomes where we're pointing toward as we move through Q3 and Q4 And building that excitement and those opportunities to come.

Speaker 5

Great. Thank you so much for taking my questions.

Speaker 2

Thank you. Thanks, Ian.

Operator

Thank you. The next question comes from Derek Greenberg of Maxim Group. Please go ahead.

Speaker 7

Hi, good morning. I wanted to touch on wellness a little bit more and possibly just some things you're learning as that Process continues to roll on and some actions you may be taking to improve onboarding for the product.

Speaker 2

Thank you, Eric, and thanks for your question. I think I'll just hit it in a way, 1st of all, even other than for our clients or the doctors The providers and for us, the doctors also trying to adapt to this new preventive care and accept and adopt to the preventive care technologies or the options and the opportunities. And then also for the patients, it's a paradigm shift from every time when you feel, say, going to the doctor's office and seeing them in person from that shift to The telehealth appointments, now this is another the paradigm shift where you are not sick, you're not feeling sick, but there are Still certain things in the case of the chronic conditions that can proactively be managed. So that paradigm It's taking this time to convince the patient that this is something good for you in the long term. Those Let's say one time in a month, 20 minutes or 45 minutes and in case of the diabetes or blood pressure taking those readings every day, how that's going to change your overall Health in the long term.

Speaker 2

Yes, we are continuing to adapt other ways. As an example, What are the right times to call the patients? If the patient is more available during the lunch hours versus in the evening hours, How can we leverage our automated text messages? How we can keep sending them a text message to remind them from the call before they have to get on the call? Because there are leakages in all of these places.

Speaker 2

Number 1, convincing the patient. Number 2nd, they may not be available for the call even though the call was scheduled. So all of these pieces, we do have the technology that we have developed over the last 20 years. For us, it's just a matter of Keep plugging in those technologies at the right time in the right places and making sure how we can ramp up or improve the patient adaptability. Long term, Sure.

Speaker 2

The bigger picture, I think this industry is also going to drive that paradigm shift or the adaptability Because as more and more insurances have started to cover, their deductibles will be impacted. The doctor will have more incentives To get so there will be a better push even coming from the doctor when they are trying to convince the patient. So for this year, for the last 1 year, Based on their data, we had to readjust this guidance. We are trying to be more conservative now and then try to actually surpass those expectations as we keep on improving with the help of the different technology. So I think if you want to talk And we can plan to by the end of this year dive into little more details in terms of the various KPIs in this space.

Speaker 2

But at the moment, I think we are not ready to dive into those specifics. But there's an overall and high level, I would say the picture. Unless, Larry, if you would like to give any other color on the numbers specific, I think that's No,

Speaker 3

I think that really from the Revolve business strategy and then how we're thinking about this and moving into really a 2024 catalyst and not a significant revenue driver

Speaker 2

And Derek, the good thing for us is the business is signed. We have already the acknowledgment for the doctors. So we have a good number to focus on and we continue to see the attraction from even our existing client base in addition to the new logos. And now when we are selling our end to end solution, sometime this becomes a hook for us. If they sign up for chronic care and remote patient monitoring, It comes for us as an entire end to end deal instead of just the remote patient monitoring and chronic care Management.

Speaker 2

And let's see, we do not have any insight from the CMS in terms of the next year's reimbursement rates. But we Hope. And again, it's just a hope. Let's based on all the moving parts of this industry that there Could potentially be some improvement or some to give more attraction to the chronic care management because in the bigger picture this is going to Improve the expenditures of the government at large.

Speaker 7

Okay, great. Thanks for the color. And then my other questions are just if what the bookings in the quarter were And how that compares to last year? And then maybe if you could just touch on the therapy offering trial, how that's progressing?

Speaker 2

Sure. Derek, can I miss the last part please of your question? Can you repeat that please, the last piece of your question? The color on?

Speaker 7

Yes. My apologies. The question was bookings in the quarter and then the second part was Just the therapy offering trial you guys are working on how that's tracking?

Speaker 2

Got it. Okay. Sure. So for in order From the booking standpoint, if you compare the first half of twenty twenty two compared to the first half of twenty twenty 3, we have done better compared to the last year. We shared the number of the last quarter booking to be, I think, around there was $7,000,000 what We booked for the Q2 of 2022.

Speaker 2

So the 2 quarters together, 1st and the second of last year, because this quarter, that's the only reason we kept Sharing the by quarter booking number just to make sure that how we are ramping up our sales engine and the Engine and this year, we plan not to give the quarterly booking numbers. But just to give you color, we have done better compared to the last the first management and the remote patient monitoring, so that makes this change. Last year, it was, let's say, 40% to Steve, so this year, it's more probably between 70% 30%, 70% on the digital health and 30% on our Our tech enabled core RCM and the SaaS rep bookings. So but that translate basically then and give the reason I'm giving that color, Even though the bookings are higher, there is a different go lifetime. The revenue recognition is going to be a little different.

Speaker 2

Tech enabled average 6 months, We can start recognizing the revenue. And in the case of chronic care and remote patient, it looks like with the full ramp, gradual ramp, it's going to be somewhere over a year. And now to the second part of your question, Derek, for the therapy, what we have some early adapters, as I mentioned last year last one, the last quarter, we are continuing to work with those early adapters and keep on improving our product to make sure Any of the concerns are optimized is addressed and the product keeps on getting optimized. As you know, we have our Largest client or among our top clients of our therapy practice, we are closely working with them as well. But as you know, The other large players who have been in this therapy business for the last multiple decades, as an example, Raintree or WebPT and some of these others.

Speaker 2

And most of the time, these contracts are number of years contract. So even if someone likes the product today, they're going to have to wait for probably a year or 2 unless whenever their next renewal is due There is a huge transition plan that we have to work through. So we are getting traction and We have a pipeline to work on and we will keep everyone up to date when we are able to sign the business there. For the new logos, we are extensively working on the marketing campaign. So we hope to get some results over the next two quarters from this therapy in terms of the new logos.

Speaker 2

Our product is very we received many good reviews and the feedbacks even from the very large multi site multi clinician practices compared to what exist today in the industry. It's a multiple it's a significant step forward in terms of technological advancements. If I use this analogy, if you think about, as an example, an Epic system, it's been there in the industry Let's say from 60s or 70s, it's the easiest decision for a hospital today to choose EPYC if they And everyone believes there are other products that exist in the market, which is far more superior and technologically advanced. But it It takes them some time to take the decision that if any other product is justifiable for them. And that's the kind of where we are Fighting and struggling right now.

Speaker 2

We are making good progress. We are still excited about it. And we hope that should we believe and confident that So add value for us in the years to come.

Speaker 7

Okay, great. Thanks for answering my question.

Speaker 2

Thank you.

Operator

Thank you. There are no further questions. I will turn the call back to Kim Blanch for closing remarks.

Speaker 1

On behalf of the company, I'd like to thank everyone who has joined us on today's call. We appreciate your

Operator

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect

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Key Takeaways

  • CareCloud reported Q2 revenue of $29.4M (down from $37.2M y-o-y) and adjusted EBITDA of $3.8M (versus $7M), attributing the decline to softness in Medisar Professional Services, a slower wellness ramp, and lost revenue from health system mergers, and lowered full-year revenue guidance to $120M–$122M with EBITDA guidance of $15M–$17M.
  • Announced a generative AI partnership with Google Cloud to integrate 20 years of de-identified clinical and financial data into HIPAA-compliant AI models and launch a Smart Assistant for personalized treatment plans and patient cost estimates under a license fee model similar to Microsoft CoPilot in coming months.
  • Successfully established a branch office in Dubai and received a UAE business license, and is recruiting a local business development team to pursue new opportunities across the Gulf Cooperation Council following participation in Precision Med and MENA Hospital conferences.
  • Operationally, CareCloud achieved go-lives on 95% of core RCM bookings (up from 88%), recognized 94% of annualized run-rate revenue, and improved go-lives on staffing augmentation (“Force”) to 96% with a 65% run-rate revenue, while wellness solution run-rate increased to 23%.
  • CareCloud faced continued headwinds from a large EHR vendor’s exclusivity cutting Medisar revenues and a lengthier-than-expected wellness ramp, prompting management to assert the low point has passed but acknowledged slower recoveries in professional services and wellness segments.
AI Generated. May Contain Errors.
Earnings Conference Call
CareCloud Q2 2023
00:00 / 00:00