Welcome to the CareCloud, Inc. Fourth Quarter and Full-Year 2022 Post Results Conference Call. At this time, all participants will be 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 Blanche, CareCloud's General Counsel. Ms. Blanche, you may begin.

Good morning, everyone, and welcome to the CareCloud's fourth quarter and full-year 2022 conference call. On today's call are Mahmud Haq, our Founder and Executive Chairman; Hadi Chaudhry, our Chief Executive Officer, President and 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 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 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. For anyone who dialed into the call by telephone, you may want to download our fourth quarter 2022 earnings presentation. Please visit our Investor Relations site, ir.carecloud.com, click on News and Events, then click IR calendar, click on Fourth Quarter 2022 Results Conference Call 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 2022 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results. And with that said, I'll now turn the call over to our CEO, Hadi Chaudhry. Hadi?

Thank you, Kim, and thanks to all of you for joining us for our fourth quarter and full-year earnings call. 2022 was a big year for our company on several fronts, including record bookings, redefining the tech-enabled revenue cycle solutions. Our Wellness brand, which includes our chronic care management and remote patient monitoring is rapidly gaining traction in our user base. Our Wellness offering and another record booking quarter in the fourth quarter, ending the year with approximately $8 million of bookings. As a reminder, revenue recognized may differ from our bookings due to timing of go-lives, patient adoption ramps or other factors. 2022 was also the first full-year of operating medSR under the CareCloud's umbrella, and it delivered strong performance from both a revenue and margin contribution perspective. As a reminder, one of the key considerations of the acquisition was leveraging their 200-plus hospital relationships into cross-sell RCM-related services. We acquired them in 2021 and during that year, they generated an annualized revenue of $27 million. Last year, they recorded $30 million, a 9% increase, but that's not the full story. Over the last year, we reestablished and strengthened our relationships with several leading health system software vendors and confirmed our cross-selling thesis by increasing medSR RCM-related revenue by approximately 300%. We will continue to leverage our relationships for recurring revenue tech-enabled RCM deals, which will help overall growth. Shareholders will appreciate the improvement in its contribution margin increasing from 3% in 2021, the ERP bought them to 14% for all of 2022 and ending 2022 with a 24% run rate directly as a result of cross-selling and realizing the anticipated cost synergies. I also want to highlight our tech-enabled revenue cycle management solution, which is truly differentiated in the market as it sits on top of our industry-leading…

Thanks, Hadi, and thank you all for joining today's call. In the fourth quarter, we reported revenue of $32.5 million, GAAP net income of $499,000 and adjusted EBITDA of $5.7 million. For the full-year, we reported revenue of $139 million, GAAP net income of $5.4 million and adjusted EBITDA of $22 million. These results were in line with expectations. Approximately 88% of our 2022 revenue came from technology-enabled business solutions. Clients using our technology-enabled revenue cycle management services represented approximately 52% of our annual revenue, with over 90% of that revenue coming from clients who also utilized our EHR or practice management software as well as our services. Let's look at the full-year on a same-store basis, which is highlighted in our earnings presentation deck. You'll see we stripped out the contribution of two large customers to highlight our annual revenue performance on a consistent basis. These were each unique instances and it's important to dig into the details here. These two health systems had been acquired in 2016 and 2018 before we started servicing them after our 2020 acquisition of Meridian Medical Management. And in 2022, they finally completed the migration onto their acquirer's software platforms winding down our services. We knew this was a likely outcome when we bought Meridian and adjusted our purchase price accordingly. While the timing was later than what we were originally led to expect, this meant that we earned some extra revenue and profit margin for two years. But the end of the extra revenue for these two large customers means that reported results overall look less favorable. Normalizing to remove the impact of these two customers, our revenue increased $8.6 million or 7% from 2021 to 2022, driven by a combination of our medSR acquisition in mid-2021 and organic growth. 2023, we…

Thank you, Bill. 2022 gave us our strongest year of organic sales activity, both new customers and new services for existing customers. We are proud of this accomplishment and look forward to seeing this new business turn into revenue during 2023. I would like to thank our customers, shareholders and all our associates for their trust, loyalty, support of CareCloud's mission. Let's open the call to questions. Operator?

Thank you. We will now be conducting our question-and-answer session. [Operator Instructions]. We take our first question from the line of Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.

Hello Hadi, Bill, and Mahmud. How are you?

Good morning, Jeff.

So just to clarify, Bill, the two customers contribution to 2022 revenue was that $8.6 million I heard you call out?

Jeff, I think we said that $8.6 million was the revenue growth that we would have had if you exclude those customers. Their contribution was actually in total, a little closer to $10 million.

Okay. Got it. Perfect. And could you talk about bookings and trends on that front or perhaps any backlog related to your funnel? Do you anticipate that the growth you'll see in '23 is going to come from new customers, new accounts, new territories? Or will that be amped up by increased offerings on EHR practice management and Wellness?

Great question, Jeff. And I think if you just look at the overall booking, as we mentioned, that for 2022, we grew our booking numbers by about roughly 94%. One-third of those approximately are about -- we mentioned $8 million we closed under the Wellness offering during 2022. We absolutely seeing the similar trend going forward. We probably -- should be closing somewhere close to the same one-third at least for the foreseeable future quarters in terms of the Wellness. But overall, the growth -- the bookings should be coming from all of these places, whether it's the different EHR offering, our tech-enabled RCM services sitting on top of our technology suite, our force offering and by leveraging through over medSR relationships and selling into that space, the recurring revenue RCM deals. It's consecutively in the last three quarters were -- the consecutive quarters was better than the previous month. And we foresee, yes, it has to stabilize. It had to just stay at a certain average. It cannot just be that every other quarter can be better than the next one. But overall, if you look at it, our goals are for this year, even higher than the 2022 overall booking numbers.

Got it. That's helpful Hadi. And then I guess, lastly, we hear you on cadence and on seasonality. Could you talk about -- are you taking any price out there? And could you also talk about inflationary pressures that you're seeing anywhere or any effect, particularly on your labor costs? Thank you.

Great. And I can start the answer, and Bill, please feel free to jump in. I think you probably would be referring to some of the conversion, the rupee to dollar conversion or the foreign currency conversion costs and the inflation factors there. I think it's because all the revenue for us being generated so far on the U.S. side. So even there is a devaluation of the foreign currency that goes in the short-term to our favor, long-term, because as inflation start kicking in, it still goes back to a normalized at the same level. So we do not see anything in the long run. Short-term, there could be some additional benefit to us because of that change. But in the long-term, it should again goes back to our overall thesis of our overall model of the leveraging the offshore team. Bill, anything you would like to add?

Yes. I mean we are -- I think we are fortunate that we're operating in labor markets where there's still lots of people who want to work. So when we look for new employees, fortunately, as we look overseas, we get plenty of really qualified applicants. Again, I don't have scientific data, but I'd say anecdotally, I hear from people who are using India for offshore that they're under a lot of pressure. And I'd say we're doing fine. We're treating our employees well. We're helping them keep pace with inflation. But we're not seeing overall dollar-denominated costs going up, and we're not seeing positions going unfilled. So we're fortunate that we're open for business. And if we get new contracts, and we're easily able to staff up to do the work.

Okay. Got it. That's helpful. Thanks for taking the questions.

Thank you, Jeff.

Thanks, Jeff.

Thank you. We take the next question from the line of Allen Klee with Maxim Group. Please go ahead.

Sounds good morning. You talked about one of your goals for this year is translating your bookings into revenues. Can you give some -- I think, specifically on the remote patient monitoring and chronic care programs of what you're planning to do to execute on that? Thank you.

Yes, good morning Allen. And thank you for your question. And so first talking about the non-Wellness offering bookings, that's continued to be, as we have mentioned before, to at six months average because large clients could be between six to eight or 10 months, smaller could be within three months. At an average, it's about six months go lifetime for non-wellness bookings. For Wellness bookings, whether it's the chronic care management or remote patient monitoring that adds another layer of complication, which is the adoption by the patients. And I think what we are looking at right now will we close about $8 million bookings in 2022 for under the Wellness. We anticipate in the first half of this year -- actually, I'm just -- let me step back. The roughly 70% of that already have been moved in production. But when I say moved in production, it's not that we have started to generate the revenue. Some of that could be that we are reviewing the eligibility of the patients. We may have been establishing the connections with the patient to bring them on board that can -- they be interested in participating in chronic care and remote patient monitoring. In terms of the revenue recognition, we anticipate that roughly 25% of the 70% that we have moved in production will be realized or we will be able to realize in the first half of this year. The rest will be towards or most of it will be towards the second half of the year and some percent probably could even be pushed into 2024. This adoption absolutely will improve as there will be more and more awareness on the patient side as the more and more value-based care models will pushed in. I think that awareness will improve the patient adoption rates. But this is how we are forecasting. This is how we are looking at it right now.

Thank you. And my last question is you talked about expanding internationally. Could you just educate us a little bit on what the regulatory environment or what the other incentives are in those countries to adopt what you're offering? Thank you.

Thanks, Allen. Just talking a bit about the high level. First of all, this is for us a work in progress. We are still in discussion and talking to even where possible, the government officials as well in that area. So it will take us a couple of more months to be able to exactly understand all the different incentives. But in terms of an opportunity, as I mentioned during the opening remarks, that similar to how the EMR adoption was conducted at the beginning of -- in the first -- around the 2,000 time after the Obama carrier and the meaningful use and those implementations started to take place. In this UAE market and more specifically, initially talking about the Dubai market, the UAE government is similarly pushing the implementation of adoption of the electronic health record systems. So we see our -- the opportunities in three areas. One is leveraging our medSR division and providing an opportunity for implementation, activation of these health systems in that space, UAE initially, and then we anticipate expanding to the other -- the GCC region could be Qatar, could be Saudi Arabia in that area. The second opportunity is our own ambulatory EHR, which we need to get it certified first, but then we can start offering it in that area. And the third thing is the revenue cycle. And we understand the revenue cycle of that area is different than the definition of RCM is different than that of the U.S. because everything -- there's one standard platform, the practices we'll have to log on to the same platform to create the claims, the insurances, and the government authorities have to log on to the same portal to pull the claim for processing. But our U.S.-based medSR trained staff and positioning and our workforce, the global workforce, primarily based out of Pakistan, these two combinations together, we believe, set us in a very unique position there, and that set us up for success in that area. There are a lot of initiatives from government. There's -- we are initially reviewing. And again, once we get it finalized, we will communicate, there's a health city there. We probably may end up opening an office in the health city because that gets us connected with all the different players in the industry in the market there.

That's very helpful. Thank you so much.

Thanks Allen.

Thank you. We take the next question from the line of Michael Donovan with H.C. Wainwright. Please go ahead.

Thank you Bill, Hadi, and Mahmud. I'm calling on behalf of Kevin Dede as he's on the road. Hadi, you mentioned leveraging relationships to drive recurring revenue. Can you talk more to recurring revenue and how customers expand services with CareCloud once they're onboarded?

Thank you, Michael. Good morning. There are a couple of different ways we can look at it. One, I specifically made that comment from the medSR division's perspective. One of the reasons for the acquisition of the medSR business was because of their 200-plus relationships into the health system space, into the hospitals, their connections, whether it's with the right decision-makers, whether it's the CFO or the Head of the Revenue Cycle or the CIOs there. So with their help, we are able to now leverage those relationships and started to offer RCM recurring revenue deals in that space. As we explained earlier and build it too, that this is a one-time project-based revenue, most of the revenue of the medSR. But because of disconnection now, we are able to leverage those relationships and start selling our tech-enabled RCM solution. And the proof has already started to come in. Because this year in 2022, the RCM-related revenue of medSR division has grown by over 300%. So that's already have set us up for success in that area. So that's what we anticipate even growing further in 2024. And actually, I have Dwight with me who Heads our medSR division. Dwight, would you like to give some more color?

Sure. I'd be more than happy to. And to kind of highlight Hadi's point, we saw several of our clients this year start out with something as simple as a technology system selection process. And then that ramps right into staffing an interim CIO right into taking over a lot of the RCM components to now management and doing things around where we really get true recurring -- our senior recurring revenue. And we've seen that in several of our clients this year.

Okay, great. Appreciate it. And to get better understanding on international expansion. So UAE's trying to position itself to also be a medical tourism hub. Is this something you take into consideration when looking for new markets?

You hit the nail on the head, Michael. Absolutely. That's one of our reasons on the digital health space, because based on the different studies, we looked at in different places is one consistent number that market is expected to grow by 25% CAGR in the digital health space over the next few years. And we -- once we started a small project or initiative. I think probably two years back for the telehealth under creating a platform or providing a platform on which we can connect on one side, the doctors and the other side the patients. So with this introduction of it stepping into this, the Middle East side, we are planning on or thinking about trying to get that So with coming back to your point, yes, that is one of the reasons the medical tourism there.

Okay. Thank you. I appreciate all the colors.

Thank you.

Thank you. [Operator Instructions] Thank you ladies and gentlemen, we have reached the end of the question-and-answer session. And I'd now like to turn the call back over to Kim Blanche for closing remarks. Over to you.

We'd like to thank everyone who's joined us today. We appreciate your interest in us as a company and your participation on today's call. We look forward to speaking with you again next quarter. Thank you all, and have a great day.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.