Good day, and welcome to the MTBC Fourth Quarter 2019 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.I would now like to turn the conference over to Kim Grant, General Counsel. Please go ahead.

Thank you. Good morning, everyone. And welcome to the MTBC 2019 fourth quarter conference call. On today's call are Mahmud Haq, our Founder and Executive Chairman; Stephen Snyder, our Chief Executive Officer and the Director; A. Hadi Chaudhry, our President and the Director; and Bill Korn, our Chief Financial Officer.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.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, expected growth, business outlook and potential organic growth and acquisitions.Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, upcoming, believe, estimate or similar terminology and the negative of these terms. 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 of 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 our 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.Any assessment of offerings by our competitors is an opinion based on management’s objective, beliefs and assumptions and on information currently available to our management which we believe to be reliable but in no way is warranted by us as the accuracy or completeness.We caution investors not to rely unduly on this assessment and urge investors to perform their own research, consult with their own advisors and make their own assessment before making any investment decisions. We assume no obligation and disclaim any duty to update or revise such assessment in the event it later turns out to be inaccurate whether as a result of new information, future events or otherwise.For anyone who dialed into the call by telephone, you may want to download our fourth quarter 2019 earnings presentation. Please visit our Investor Relations site ir.mtbc.com. Click on events, and download the earnings presentation.Finally on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our fourth quarter 2019 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results.With that said, I'll now turn the call over to our Chief Executive Officer of MTBC, Stephen Snyder. Steve?

Thank you, Kim. And thank you everyone for joining us on our fourth quarter 2019 earnings call. As Kim mentioned, I'm joined on today's call by Mahmud Haq, Bill Korn, Hadi Chaudhry and Kim Grant.I'm also pleased to introduce you to some additional team members including Shruti Patel, the President of our new Telehealth Division, Al Nardi, our Senior Vice President of Strategic Initiatives and Juan Molina, the President of our new CareCloud Division.Shruti, Al and Juan are a few of the many rising stars in our leadership team, and will be available for questions during the second half of today's call.Today, I'm thrilled to report record revenue for the full year 2019 of $64.4 million. Together with record adjusted EBITDA of $8.1 million. This represents year-over-year increases of 27% and 9% and 69% respectively.For the fourth quarter, we're pleased to report revenue of $15.8 million together with record fourth quarter adjusted EBITDA of $2.8 million, which represents year-over-year adjusted EBITDA growth for the quarter of 98%.We expect 2020 to be another record year as we reaffirm our revenue and adjusted EBITDA guidance. During 2020, we expect to grow our revenue by 55% to 58% with guidance of $100 million to $102 million. We expect to generate between $12 million and $13 million of adjusted EBITDA, which will represent growth of 48% to 60% year-over-year.We expect this growth to come across several growth vectors. This growth will be driven by our recent CareCloud acquisition, our newly scaled organic growth engine, partnerships and new business line opportunities. While our exceptional rate of revenue growth is a strong differentiator in this market, we believe that the combination of this growth, coupled with consistent and accelerating adjusted EBITDA makes us one of the diamonds in the rough among companies of our size.We believe…

Thank you, Steve. And thank everyone for joining us on our fourth quarter 2019 call. As Steve mentioned, we are making great strides in the integration. The integration efforts are on track, and this has been facilitated by our repeatable integration capabilities, coupled with the talented team at CareCloud. We have already begun seeing the benefits of this integration by among other things, reducing the costs and reliance on third parties, some of which include CareCloud's current offshore revenues cycle BPO, and both near shore and offshore product and engineering contractors.As the integration progresses, our combined teams will enable us to enhance the quality outcomes of our revenue cycle management customers, and accelerate development capabilities and timelines.We would like to take a few moments to discuss our existing new telehealth initiative. As many of you know the telehealth industry is taking off and predicted to be the total addressable market of 35 billion according to statistics [ph] analytics. We believe this is the perfect time to expand our portfolio and be part of this exciting movement.As you may recall, in quarter four of 2019, we announced the release of our integrated telehealth solution. This solution focused on integrating our telehealth software to our Poppy [ph] EHR product allowing providers and patients to conduct virtual patient encounters from the comfort of their own home or virtually anywhere.Following the initial success of our pilot, we had focused on taking telehealth to the next level. To accomplish this, last week, we announced the creation of a separate division focused solely on telehealth, led by an experienced team of to drive growth. We are thrilled to have a dynamic leader, focused on this latest opportunity for us. Shruti Patel has been a valuable member of the MTBC team for more than five years, and has worked on some of our most strategic initiatives.She recently served as MTBC’s General Counsel and has now been promoted to Division, President of telehealth business division. In the quarters ahead, we intend to expand our telehealth offering from a SaaS only offering, to one that includes the provision of virtual care to a management services agreement with the physician owned partner entity.We are bullish about our newest phase in our telehealth solution, and the go-to-market opportunities that exist with the software offering, especially as we begin to work to enable these capabilities across our more than 15,000 providers within our base and other partners, we plan on bringing onboard.We expect general availability of this new telehealth offering within the next 90 days. We look forward to continue providing updates in our journey as we progress to 2020.I will now turn the floor over to our Chief Financial Officer Bill Korn. Bill?

Thank you, Hadi. As Steven and Hadi said, 2019 was a great year. Our revenue for the full year was a $64.4 million; an increase of 27% compared to $50.5 million in 2018, and was in the upper end of our guidance range of $63 million to $65 million.2019 was one of our best years ever for organic sales, with 9% revenue growth from a combination of new organic customers and growth in revenue from existing customers. Our revenue has grown at a compound annual rate of 35% per year since MTBC’s IPO at a $10 million revenue run rate in July 2014.Our GAAP operating income was $67,000, an improvement of $2.6 million compared to 2018. This is the first full year that MTBC reported positive GAAP operating income since going public.Non-GAAP adjusted operating income was $6.8 million or 11% of revenue which represents an improvement of $3.1 million from 2018, and a new record. For the full year 2019, our GAAP net loss was $872,000 to $0.60 per share, which included $3.2 million in stock-based compensation expense, and $3 million in non-cash depreciation, and amortization expense.This reflects an improvement of $1.3 million compared to 2018. Non-GAAP adjusted net income for 2019 was $6.7 million or $0.55 per share, an improvement of $3.2 million compared to last year, and a new record.Adjusted EBITDA for the full year of 2019 increased 69% to a record $8.1 million as compared to $4.8 million in 2018. Adjusted EBITDA was within our $8 million to $10 million guidance range.During 2019, MTBC generated a record $7.6 million in cash from operations. As we continue to scale our business through both organic and strategic means such as the CareCloud acquisition, we were able to spread our fixed expenses over a larger revenue base and generate larger…

Thank you, Bill. 2020 will be another year of record breaking growth and increasing profitability. We thank our investors, customers, employees for their support. We will now open the call to questions. Operator?

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Gene Mannheimer of Dougherty & Company. Please go ahead.

Good morning, thanks for taking the question and congrats on a strong finish to the year. Guys, as with most acquisitions MTB has done, there's often some disruption with the customer based post deal. Is there any early read from your family of customers on CareCloud and so far as their retention expectations there? Thank you.

Hey Gene, how are you? This is Juan Molina. And for those of you that don't know me, President of CareCloud. So Gene, great question. We're not seeing any impacts whatsoever from the recent acquisition and we're not expecting to see any turn associated with that. In fact, what we've been able to do is because of the expanded value proposition, opportunities that we have with MTBC including different, our product lines and service offerings, we’ve been able to very quickly start injecting that into our customer base, and the customer base is actually very excited to see those new opportunities available to them.

That's terrific. Thanks and welcome Juan.

Thanks.

And maybe one for you, Bill. What -- can you just share with us what are the primary factors that led you to hit the low end of your EBITDA range for 2019 versus the upper band? And if you could also talk in for 2020 about how the cadence of expenses may look with the CareCloud business folded in? Thank you.

Sure. Thanks, Gene. So as we were starting fourth quarter of 2019, we had CareCloud on the on the radar screen. And so we thought about what we wanted to do end the year really strong to be able to integrate CareCloud quickly. So we started ramping up resources in our team overseas knowing that that once we, once we closed the acquisition we wanted people on the ground that were ready to pick up the work. So I think we did this proactively knowing that it was a good bet to make. And as I think about 2020, what you'll see is somewhat consistent with other acquisitions.So I think during first quarter of 2020, you've got CareCloud, which was spending a lot more than its revenue in the past. Even as we're reducing expenses, you'll see that it being a little bit of a drag on our on our Q1 EBITDA. And that's okay. We factored that into our plan. By Q2, we expect that that CareCloud will be essentially neutral on EBITDA. So we will have brought the CareCloud specific expenses down to the level of CareClouds revenue, which you know frankly is something that I think they tried for many many years. And with our resources, with our team, with our technology where resources compare integrated with theirs we're able to do.In Q3 and Q4, you'll see CareCloud actually contributing to our overall EBITDA. So as you think about the $12 million to $13 million of EBITDA, that will be back end loaded. And again, you'll see us by the end of the year running at a significantly higher annual run rate of EBITDA and cash flow.

Very helpful. Thank you, Bill. Congrats again.

Thanks Gene.

The next question comes from Marc Wiesenberger of B. Riley FBR. Please go ahead.

Yes, thank you. Do you anticipate, I know you talked about the kind of the overall magnitude of new deals, but specifically like individual deal sizes, do you anticipate those going up after the CareCloud deal? And if so, does that potentially impact the timing and cadence of signing on these new deals?

That's a great question. Thanks for the question, Marc. As we look at the trend in terms of the overall signings relative to the size of the practices over the last few years, the overall practice size has consistently grown over time, and we would envision that same trend continuing as we move forward with CareCloud. The CareCloud offering allows us to extend the reach of our overall solution set across a broader variety of practice sizes, and even though we work with many large groups today from a clinical perspective, the CareCloud platform really helps to strengthen our overall offering from a clinical perspective to really meet the needs of those larger practices in particular.

That's great. Thanks. And maybe just kind of similar point, can you talk about the interoperability of the legacy and CBC platform, and the CareCloud experience, and how kind of practice will build and navigate between them?

For sure, we'd be very happy to do that. And one thing I'd say at the outset is, with the transaction just having recently been closed, from the perspective of the overall integration when it comes to things like the information technology, our team is still working on finalizing the roadmap relative to that. But at least at the onset, what we can say for sure is that as we think about CareCloud's ecosystem of applications and solutions, from a technology perspective that EHR, the PM, the patient focused applications and the like, in many respects it's similar to what we provide to our existing base. The main differentiators relate to the broader solution set, the full service revenue cycle management, credentialing, the coding and a whole variety of these other value added services, which we'll be working overtime in terms of being able to deploy them and being able to incorporate those same solutions into the CareCloud solutions set.So I think that'll be atleast initially one of the key things that we do. Overtime, we continue to at least at this point in time, I believe that will maintain two different applications. The MTBC application being a lighter application that in particular is a phenomenal solution from a clinical perspective for the smaller practices, there are 1 to 5 doctor groups, and the CareCloud solution from a clinical perspective being particularly well equipped to meet the needs of those medium and larger groups. And I think from an interoperability perspective, if there's anything Hadi or Juan, you'd like to add?

Yes, so this is Juan, and that's a great point, Steve. And it's a great question as well. So we've already begun. As Steve mentioned, we're still rationalizing what the overall product strategy is and specifically, I think Steve is right on that we're looking at having these two separate products and continuing to serve our customers with the respective products. However, good example of how some of this interoperability is actually working. CareCloud has been able to over the last several years externalize some of our internal Web services and open up our API sort of the broader market, and to developers across the country.And one of the things that we've been able to do very quickly with MTBC is allow them to leverage our open API infrastructure. And we've been plugging in their automated appointment confirmation and calling tools. So that's just one example. There are many examples that we're working through as we rationalize all of these different integration points.You know as you've heard today, there's also some existing, some exciting opportunities on the telemedicine side. So as we think about our brief solution, telemedicine is a natural product synergy that could exist. So there's a lot more to come on this and we're excited to see what the next several quarters hold as we launch new products into the market or new integrations into the market.

Great. Thank you very much.

The next question today comes from Matthew Galinko of National Securities. Please go ahead.

Hey, thanks for taking my question. I guess firstly in -- Steve, you touched on I think an aspirational goal to drive 100 million if I heard that right in revenue growth tied to additional M&A over the next year or two. Can you touch on just briefly, A, what the pipeline looks like to get you there. And B, how think about funding it particularly with respect to the Series B preferred that's I think an optional redemptions later this year? Thanks.

Sure. I'll be very happy to it. Great question. So there are two aspects to your question that will do our best job to address. First is, in terms of our overall vision with regard to this aspiration of some very large -- either one large target company that we require or a group of target companies we acquire that are in roughly the $100 revenue range over the next year or so to your point. The second part of that is funding. And I think from a funding perspective, I think I would put that in the category of -- we would -- we can speak a little bit to that. We can -- but I think more so we cross that bridge as we get there at that point in time based upon the overall equity valuations. Is based upon options with regard to a death and the like. We would continue to ensure that in the most cost-efficient way for the cost of capital perspective we're moving forward in a way that gives us both the flexibility operationally to be able to acquire companies that need work, but that can be purchased at a very attractive valuations, but also at a reasonable cost of capital. And I'll Bill jump in just a moment on that if he is anything else to add.I think in terms of the overall aspiration that we have in terms of these larger acquisitions there are more limited number of companies that are in the -- strictly speaking, the RCM alone space, companies that are solely focus of RCM that rise that level. There's a relatively small universe of those companies. So, to the extent that we were able to accomplish this objective with only RCM companies more likely if they not, it…

Sure. You mentioned the Series A preferred stock where we have the right if you wanted to starting in November to redeem the shares. But again, it's only if we want to and we have the cash to do so without impacting other priorities. And definitely, we'll wait till that time to make a decision. From one perspective, our monthly cash flow from operations is typically greater than our dividend. For example, last year the cash flow was 1.25 times our dividend. We expect it to be similar this year. And what we've found is that with no penalties, no covenants, a lot of flexibility, the ability to raise money easily. For us stock has been a great financing instrument for us in a way that doesn't dilute our shareholders.And as long as we could use proceeds wisely as we have for accretive acquisitions, for example, like CareCloud, like Orion. We feel confident we could generate incremental returns that are far in excess of the dividend rate. So we'll see down the road as we see the next opportunities. What's the what's the right way to finance it. It's great to be a $100 million company with many different options and the flexibility that whichever way the markets go we know we can raise capital and do so on good terms.

Great. Thanks. I'll jump back in the queue.

The next question today comes from Kevin Dede of H.C. Wainwright. Please go ahead.

Good morning, gentlemen. Thanks for taking my questions. Steve, you touched on this for a bit already with regard to the $100 million that you mentioned in pipeline that you'd like to address. I scratch my head a little bit. I'm wondering if you could dive in a little on valuations per say. Historically you've paid a fraction of sales. And that change with regard to CareCloud. I'm just wondering how you're going to look at that going forward? And what we should expect as you pull the trigger on other deals going forward?

Thanks Kevin. Great question. So, to your point, Kevin, historically when we look at RCM companies struggling distressed RCM companies where we're only buying the customer relationships and where there's a high historical rate of churn. When we look at those companies we've oftentimes been able to buy them opportunistically somewhere in the range of 0.3 or 0.5 or 0.6 times annualized revenues. I think when we look at other transactions that occur in the space oftentimes for RCM companies that are healthier from a balance sheet perspective and in terms of retention, oftentimes those companies when they're -- in our experience when they're $10 million plus in revenue are nevertheless trading at or selling at one times or so revenues.But for the distressed companies, I agreed, we've really been very fortunate to be able to identify and to acquire companies that have been a creative and have helped us grow at very attractive valuations. When we look at CareCloud, there are a couple additional elements that us really made CareCloud and exciting opportunity for us. CareCloud has a customer base that standing alone is generating $30 million plus in annualized revenues. But in addition to that unlike the other companies we've purchased CareCloud also has significant brand equity around the CareCloud name and the company they've been able to build, have a phenomenal team that's drawn from some of the leading companies in our space from mall scripts and from Athenahealth and from many of the other leaders in our space.We have individuals who have significant industry and domain knowledge who -- we believe will really be critical to us as we continue to execute against our business plan and focus in on growth. And then in addition to that, from a technology perspective, they've leveraged and they've utilized…

Okay. Thanks for the deep dive, Steve. I really appreciate it. Another question that's looming I think is the sort of the brand and marketing strategy. And I know that both you and Juan touched on this a little bit. And clearly there are two elements that of MTBC now that you can market, right? One for a sort of a high end Prime larger practice and one for a smaller. I'm wondering how you intend to rationalize -- or at least help us rationalize your desire to grow organic sales, build a sales force and somehow manage two platforms. If you could just sort of dive in a little bit on how you'd like us to think about your brand and equity charter going forward, I think it would be really helpful?

Absolutely. Be very happy to. And I think in terms of being able to provide the best answer what we'll do is, we have Al Nardi, so Al is our Senior Vice President of Strategic Initiatives has played a key role over the last number of years from a sales and overall business development perspective. So Al, if you can help us first of all maybe kind of talk some about the opportunities that you see in terms of the combined company from a sales and marketing perspective. And then Kevin, right after that then we'll address the question that you have that other part of the question that you had with regard to the overall IT platform.

Thank you Steve. Yes. As far as organic growth I can outline a little bit of the strategy for you and what we're doing and what we see the opportunity to be. We see an opportunity to upselling cross-sell into a much larger combined client base now. That's in addition to the expanding GPO. The GPO has grown to approximately 10% in the last 90 days and 20% over the last 18 months. We also with this combined team of -- a larger team of 20 are coordinating on marketing through more multiple campaigns for sales and organic growth. There's also a large opportunity to re-engage lost opportunities with expanded services from a combined pipeline.So for example, for clients who may not have closed on the CareCloud platform, but were looking for services. We've already reached out to 10 lost opportunities and had four respond that are in discussion with us on services. And I think that's something that helps us also define why the opportunity is so great. Though I can't quantify in the market how all competitors operate. What we've found is that most of them require you to be on their software in order to provide revenue cycle services. Whereas MTBC has the ability and does build on multiple platforms in addition to our own. So we've been able to seize new opportunities from the CareCloud base and opportunities that were lost because they weren't choosing that specific platform.We also have an additional avenue for sales that we're currently working with partnerships to other billing companies and EHRs and other software for back office support on an FTE model. This effort is being led by our SVP of Partnerships and helps these partners expand while reducing costs. We have two of these partnerships already in contract and another two that are in negotiations out of a large pipeline of potential partners.

Perfect. Thanks Al. And Hadi, maybe you can jump in and just kind of help us in through and talk a little about the two platforms.

Right. Thank you, Steve. And thanks Kevin for the question. So as Steve mentioned and as Juan has also mentioned. So there are two separate independent key platforms. We are still continues to primarily focus on one to five provided groups of practices. And when it comes to them much larger client base we will continue to try to use the CareCloud platform. But in addition to that as Juan mentioned previously. There is a lot of different APIs that are available and we already have started to work on. First of all identifying to the right mix where the two integrations can happen, such as there's call service for example. There's an integration from the Greece perspective we have started looking on.And in the same way, let's say, our say a rule based system, our proprietary rule based and the scrubbing system that we have -- we are working on, integrating that into the cloud platform. So I think as we will continue to work on the roadmap. But from the focusing perspective in addition to the integration, how the two systems will be operating together, we will continue to sell and reach out to the different sites of the client base for MTBC and/or CareCloud platform.

And Kevin, just to use as just one example. We think about the CareCloud base virtually 100% of the CareCloud base is leveraging their practice management. A smaller subset are leveraging the EHR. And then the smallest subset of that client base of roughly 4500 providers is leveraging revenue cycle management, which represents roughly 30% of their base in terms a number of providers is leveraging revenue cycle management. So we think we have a significant opportunity that we can leverage to up-sell the remainder of that base. The other 70% on the possibility of leveraging revenue cycle management. And if you think about this in terms of the kind of it's a marketer's dream or a salesman's -- salesperson dream in some respects, because they're leveraging the platform.We have complete visibility in terms of the key performance indicators regarding their existing operations from a revenue cycle manager perspective. What's working well. What's not working well. Where we can add value. So, we have really the ability in a very informed way to be able to provide additional visibility with regard to their existing workflows and their existing KPI. So we can add value in that context even if they don't leverage RCM. But we can also specifically tailor our RCM offering on a client level in a way that specifically addresses the needs that they have in their day to day practices. So that data allows us in a very targeted way to be able to make sure that we're providing the best and most compelling offering to those CareCloud customers.

Okay. Just a follow up. So I have it sort of sorted out in my little head, Steve. Does that mean that you'll continue to market two brands? I guess I was kind of wondering if you've made progress on or decided at all to consolidate the entire marketing effort under one brand or perhaps continue to push two?

Absolutely. Good question. For the time being we'll continue to promote two brands. We'll continue to really strengthen the overall CareCloud offering with our back office solutions and by integrating our technology and the like. So we'll continue to do manage two branch for the time being. But that's one of the discussion -- that's one of the items that's under discussion and we're analyzing with regard to the overall integration roadmap. So perhaps certainly more to come on that. And your idea for sure is a good idea in terms of what the possibilities could be in terms of being able to leverage our brand equity more broadly across the whole organization. But that's still something that we're internally analyzing.

Very good. Thank you so much for indulging me, Steve. I hop back in the queue.

Thank you, Kevin.

The next question today comes from Michael Galantino of Chapin Davis. Please go ahead.

Thank you. Congratulations guys. Great quarter. You guys have under promised it over delivered as usual. So terrific acquisition of CareCloud. I have a two-part question if I may. First for Hadi. Could you talk a little bit about the synergies and expense savings you have implemented in the few months since the acquisition of CareCloud. And also I have a quick question for Shruti in terms of the telehealth division. How do you plan on differentiating your service -- the telemedicine service -- Telehealth service out of MTBC from the likes of the Teledocs of the world?

Thank you, Michael and thanks for the question. So from the integration perspective in terms of the numbers, we are already on track to reduce the expenses when it comes to the BPO and the development contractors by roughly about 85% sometime in the mid of the second quarter. And as Bill has mentioned that the way this whole transition is happening right now, we expect the second quarter to be EBITDA neutral for the CareCloud. There is -- in terms of what -- how much we have accomplished so far? I think we're probably at around half way through in terms of to that 85% reduction in those expenses. And that's as you understand that's the initial transition from the third-party vendors and the contractors to MTBC's own onshore employees. So that process is taking place.

Thank you.

Perfect. And thanks for the question. I'm so here.

Okay. Go ahead.

So to address your question. So how do we see ourselves different from competitors. So in terms of competitors we see two major categories of competitors of the market. The first is we see standalone telehealth companies such as Teledoc, MDLive and Doctors on Demand, just to name a few. But then we also see a category of competitors that are offering more of a standalone application that only offer software and not a full suite of telehealth services. So for example like a Kyron. So what we're trying to do is we are now focusing on our efforts to go to market approach by combining both. We are looking to do a standalone business unit that will provide not only software but will also provide services as well. And another advantage and differentiation from the competitors is that we have a vast -- we have a group of existing providers of over 50,000 providers at our GPO members that we could even leverage and use as our go-to-market approach.

Okay. It is the [Indiscernible] part of the story now. Great story. Thank you.

Thanks, Mike.

That concludes our question and answer session. I would like to turn the conference back over to Kim Grant for any closing remarks.

Thank you. And we would like to thank everyone for joining today and for all of your continued support. We look forward to speaking to you again in the near future. Thank you all and have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.