Greetings. Welcome to CareCloud, Inc. Fourth Quarter 2025 Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Brendan Covello, Corporate Counsel. Please begin.

Good morning, everyone. Welcome to CareCloud's Fourth Quarter and Full Year 2025 Conference Call. On today's call are Mahmud Haq, our Founder and Executive Chairman; Stephen Snyder, our Chief Executive Officer; A. Hadi Chaudhry, our Chief Strategy Officer; and Norman Roth, our Interim Chief Financial Officer and Corporate Controller. Before we begin, I would like to remind you that certain statements made during this call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21 of the Securities Exchange Act of 1934 as amended. All statements other than the statements of historical fact made during this 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, approximately, 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 other 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 those forward-looking statements. For anyone who dialed in the call by telephone, you may want to download our fourth quarter and full year 2025 earnings presentation. Please visit our Investor Relations site, ir.carecloud.com. Click on News and Events, then click IR Calendar, click on Fourth Quarter and Full Year 2025 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 and full year 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 CEO, Stephen Snyder. Stephen?

Thanks, Brendan, and good morning, everyone. I'm pleased to report that 2025 was a transformational year for CareCloud, marked by exceptional financial performance, strategic acquisitions that expanded our market reach and a successful launch of our flagship AI platform. We delivered results that underscore the strength of our business model and validate our vision for the company's future. In particular, I'm pleased to be able to talk today about our revenue growth, the remarkable acceleration of our profitability and free cash flow, the current status of our capital structure, the significance of our 2025 acquisitions, the evolution of our services offering and AI platform, our market position and growth drivers as we enter 2026 and our guidance for the year ahead. First, let me start with our top line numbers. For the full year 2025, we generated revenue of $120.5 million, representing nearly 9% year-over-year growth. In Q4 specifically, we achieved revenue of $34.4 million, up nearly 22% year-over-year, demonstrating accelerating momentum as we entered this year. Importantly, we raised our revenue guidance twice during 2025 and still exceeded the final target, a pattern that reflects the underlying health and predictability of our recurring revenue streams. Second, as to profitability, we reported GAAP net income of $10.8 million for 2025, a year-over-year increase of more than 37%. We achieved earnings per share of $0.10, marking our first full year of positive EPS since our 2014 IPO, a remarkable milestone that reflects our multiyear transformation to sustainable profitability. In Q4 alone, we posted GAAP earnings per share of $0.04. Adjusted EBITDA expanded to $27.5 million with a 23% margin, up more than 14% year-over-year. But perhaps most importantly, we generated $28.6 million in GAAP operating cash flow for the full year, a 38% increase year-over-year and $8.7 million in Q4 alone,…

Thank you, Steve. Good morning, everyone, and thank you for joining today. Steve has walked you through an outstanding financial year. That performance gives us the platform to do something really important, invest aggressively and deliberately in AI. My job today is to take you inside that effort, what we have built, what's working and where we are taking it in 2026. In April 2025, we launched CareCloud's AI Center of Excellence, a fully operational production-grade initiative with one mandate, build AI solutions that create measurable impact for health care providers. This is not a research lab or a pilot program. It is the engine behind everything in our AI portfolio. We built this capability in-house because AI and health care cannot be generic. It must be trained on the right data, integrated into real clinical and administrative workflows and designed around health care-specific compliance and accuracy. The AI Center of Excellence brings together engineering, data science, clinical informatics and product development to deliver exactly that. Let me walk you through what we have launched. Our flagship AI product of 2025 is stratusAI Front Desk Agent, which reached full commercial release in December. It is an agentic AI phone receptionist, fully autonomous, operating 24 hours a day, 7 days a week, ending patient calls with natural human-like conversation. The scope of what it manages is significant, appointment scheduling, rescheduling and cancellations, real-time insurance eligibility verification and demographic capture, prescription refill routing, lab results, inquiries, referral requests and automated confirmations and reminders. When a call requires human judgment, it escalates intelligently to a live staff member. The system is deeply integrated within our EHR and practice management platforms, which means there is no manual data reentry and no third-party middleware between the AI and the patient record. Our results speak for…

Thank you, Hadi, and thanks, everyone, for joining our call today. As you have just heard, we had another strong quarter and a strong finish to the year. We have accomplished and exceeded the goals we set for ourselves for 2025. In particular, we are now generating record levels of free cash flow and resumed paying dividends on our preferred shares, which started in February 2025, and we've also been catching up on the dividend arrearage for the Series B preferred stock. Further, we have fully repaid our Provident Bank line of credit at the end of the year, we had borrowed funds for the Medsphere acquisition and now have the full $10 million line of credit available. We generated $20.5 million of free cash flow in 2025, which we measure as cash from operations less purchases of property and equipment and capitalized software and other intangible assets. In 2025, we began seeking out acquisition opportunities and during the year, we completed 4 acquisitions. We continue to evaluate acquisition opportunities that will be accretive to the company. The key to growing our free cash flow continues to be reducing expenses and growing our GAAP net income. Fourth quarter 2025 GAAP net income was $2.9 million as compared to $3.3 million in the same period last year. This is our seventh consecutive quarter achieving positive GAAP net income. Revenue for the fourth quarter 2025 was $34.4 million compared to $28.2 million for the fourth quarter of 2024. There was approximately $7.2 million in revenue related to the Medsphere acquisition in the fourth quarter. Adjusted EBITDA for the fourth quarter 2025 was $7.7 million or 22% of revenue compared to $7.1 million in the same period last year. This was an increase of 8% year-over-year. For the full year, the story is…

Thank you, Norm. 2025 was a milestone year for CareCloud. We delivered strong profitability and free cash flow, expanded into the hospital market through strategic acquisitions and launched an AI platform that positions us well for the future. What is most exciting is that we are just getting started. We enter 2026 with strong momentum, a stronger balance sheet and significant opportunities to drive growth across our platform. I want to thank our employees, clients and shareholders for their continued trust and support. We remain focused on disciplined execution, innovation and creating long-term value for all of our stakeholders. Operator, please open the line for questions.

[Operator Instructions] Our first question is from Allen Klee with Maxim Group.

Great quarter. So when I'm listening to your talk, the 2 big themes I'm hearing among others, are your emphasis on AI and acquisitions and how you can combine them and get benefits. So could you expand a little more on how you're planning on kind of monetizing the AI in 2026? You've talked about, but I think it's important.

For sure. Thanks for the question, Allen. So if we step back for those who haven't followed our story so closely, and we'll just talk about M&A first and then we'll dig a little bit deeper into the AI question specifically that you asked. So first of all, from an M&A perspective, the environment today continues to be increasingly favorable. AI is a catalyst for smaller billing companies and for health care companies that focus on delivering software products to the inpatient, also the ambulatory space because they recognize the fact that without AI, their competitive position continues to weaken in the market. So that's driving more sellers into our pipeline than ever before. Our strategy continues to be one of patience and discipline like we've followed for years. So we wait for an opportunity where the recurring revenue associated with, first of all, it has to be recurring revenue relationships, a portfolio of recurring relationships, revenue relationships. And then secondly, from a valuation perspective, we really target valuations of between 0.6 and 1x revenue. That compares very favorably to the CAC in our space, which is typically about 1.5x or greater revenue. So we move forward with these acquisitions. And then with regard to that, those base companies that are part of that portfolio, we aim to bring them from a status of typically breakeven or operating at a loss to about 25% to 30% profitability margins typically within about 9 months. So that's the base strategy. You've asked about the AI overlay to that, and that's where I think the whole strategy gets even more interesting. So if we think about the -- just as an example, if we think about the Medsphere acquisition, we've purchased software products that lack that AI capability. And what our team has been doing is that it's been really focused in on taking the core AI products, taking the CirrusAI product, the stratusAI product, taking the AI Notes applications and the like and then weaving that and incorporating that fully into those platforms. And we expect to have that done within the next couple of quarters. So we're able to take those platforms and to make them increasingly more attractive and platforms that as opposed to being -- as opposed to lagging behind where the space is, will be increasingly leading in their particular markets. So we see some exciting potential there. The second thing would be if we think about this from the perspective of revenue cycle companies, we now are increasingly using AI and automation to handle a lot of the services that before were being handled by individuals here in the U.S. or members of our team globally. So AI and automation is increasingly assisting with the back-office processing enabling us to further drive margins. And Hadi might have something else to add to that from an AI perspective.

Sure. Thank you, Steve. Just to add on to what Steve has mentioned, our strategy from the AI perspective has been the same and threefolds. One, continue to focus on the improvement and implementation of AI in the back-end operations, whether it's the basic denial management, whether it's the automation of, as an example, the referrals and verification of the benefits and the like, and then there are many others. And the second is the AI enablement or AI integration into the existing -- the product suite that we have, whether it's our own EHR practice management platform or these other companies, as Steve mentioned that we are acquiring, the team continues to focus on building the AI layer to make it more attractive and more marketable. And then continue to focus on any other net new applications that we can bring to the market such as the stratusAI FDA.

That's very helpful. Then it was encouraging to see like contract wins with new customers. Could you talk a little about how you think -- what was behind the win and how you think that's an opportunity going forward?

Allen, if we think about our overall sales team and our marketing team, we've expanded that team by 2 or 3x. So we have an increased team that's focused -- increased science team that's focused on cross-selling and also these net new opportunities. Having said that, we continue to see the real opportunities this year being primarily in expanding the wallet share of those existing customers, many of whom we've acquired more recently through the Medsphere and the MAP App transactions. So through those transactions, we've acquired more than 100 new hospitals and health systems who we're working with. And we see significant opportunity to sell more deeply into these existing clients by providing additional services and solutions, AI products, RCM solutions with a real focus on stratusAI and CirrusAI that can add value, and we believe will resonate with this market. So yes, 100%, we've had some new wins. We talked about a new Wellsoft win. Wellsoft is our recently #1 Black Book ranked EHR that's focused on the emergency departments. So we had a win there. And we also had a win with regard to our supply chain product as well. So we have those new wins, but we really think that the real opportunity will be continuing to cross-sell and upsell the existing customers.

Okay. You also -- my last question, and then I'll jump back in. The front-end AI, you mentioned -- I think you said you launched that in December. How do you think about -- and you said it's a very large opportunity, in terms of how you're targeting that and early indications you get of interest? Any comments there?

For sure. Yes. Allen, you're talking about our stratusAI product. And again, the market opportunity is estimated to be $4 billion plus. And Hadi can provide a little bit more visibility with regard to the early response, but we've really been encouraged by how well that's resonated with regards to our existing base. Our sales efforts are almost exclusively focused on our existing base, and we're getting significant traction there. But over to Hadi.

Thank you. To your point, Steve, so we are seeing a very encouraging early adoption since the launch in -- the commercial launch in December. While we are not disclosing a specific client count at this stage, but our deployment pipeline is really robust across existing ambulatory client base. And we yet need to tap into aggressively into the Medsphere client base that our team has aggressively working towards integrating across the product suite there. So at the moment, we have seen an exceptional interest from our existing client base. So we expect to share more specific adoption metrics as we progress through 2026.

Our next question is from Michael Kim with Zacks Small-Cap Research.

So first, there continues to be a lot of uncertainty in the markets as it relates to AI and the potential impacts on SaaS companies. So just wondering how investors should think about CareCloud's exposure to AI disruption versus maybe being more of an AI beneficiary?

Thanks, Michael. And you're 100% right. The SaaS sell-off in the market has been significant and has not discriminated. It has not discriminated between companies where there really is a more significant risk than those where there isn't. We believe that the companies that are most at risk are the horizontal per seat tools for generic workflows, things like scheduling apps, basic CRM, things like -- companies like that where AI agents can replicate and fully replace that key functionality. That's really fundamentally though, not our business. And I would focus in particular in the health care space. So health care IT, in particular, has very deep industry moats that those horizontal SaaS players simply don't have. So our AI products, as an example, require rigorous testing, certification, approval by a government-approved entity with regard to -- prior to their initial launch and with regard to any fundamental changes we make to them. So the ability to -- for these new market entrances from AI companies is really very limited. And we also operate under HIPAA and a whole web of other health care-specific regulations that create substantial barriers to entry. We're also the system of record for our providers from a clinical, financial administrative perspective. And that data all lives within our existing platform. And if we think about more fundamentally, what our clients in the context of leveraging us accomplish really is in large part, shifting their risk to us. They rely upon us to securely host their data to ensure compliance, to most fundamentally produce revenue for the practice. So our SaaS offering isn't simply a stand-alone tool. It's really the technology backbone that drives our larger revenue cycle management services, which are fully integrated with it. And clients pay us based on the actual value we're…

Got it. Makes a lot of sense. And then second, clearly, earnings power and free cash flow continue to build. So just wondering what sort of assumptions you're building in as it relates to the 2026 guidance ranges and then how you think about sort of the trajectory of growth looking out beyond next year?

So to your point, Michael, for us, 2025 was a milestone year. It was our first positive -- our first year of producing positive EPS since we went public back in 2014. And we've had 7 straight quarters of GAAP profitability and free cash flow alone was up 55% as compared to 2024 up to $20.5 million in 2025. So if we think about just our EPS guidance this year of $0.20 to $0.23, that represents more than 100% growth, and we feel very confident about that guidance. Now what's driving that overall growth? It's really being driven in large part by the top line growth. And in addition to that, the integration savings with regard to the companies we've acquired and then really driven largely also by the AI efficiencies. And then add to that the fact that we've eliminated through the conversion in 2025, we've eliminated more than $7.5 million of preferred dividend obligations on an annualized basis. So the increased free cash flow really gives us flexibility to be able to fund M&A for operations. And if you just look at this most recent year, we were able to acquire all 4 companies purely from the cash flow generated during 2025 with 0 dilution to the common shareholders, also able to invest in our AI development and then fully resume payments relative to our Series A and Series B shareholders. And in addition to that, if you think about this year, in addition to all those things, we're also paying double dividends to clear up the arrearage relative to the Series B. So from a funding perspective, operations is really continuing to drive this flexibility and continues to open up new opportunities for us. And as we think even more broadly beyond 2026 and 2027, we believe that we'll continue to fundamentally expand the overall margin profile as we continue to scale.

Our next question is from Michael Galantino with Chaplin Davis.

Great year, great quarter. Way to finish the year strong. I've been involved with the company for a little over 9 years, and you guys have seen a lot -- we've all seen a lot of changes in the industry. I mean, nobody knew what AI was 9 years ago, and now it's the focus of the company. You guys have done a tremendous job navigating it specifically the last 2 or 3 years. I have a couple of questions. Steve, one to you on the AI front. Does the AI technology and the efforts of the company, does it save money in terms of operationally? And does it increase the margins? And I know you talked about the SaaS stocks that have been coming under -- or the software stocks that have come under significant pressure in the last 3 or 4 months, if you can address that? And the second question is, now that you have excess cash flow -- a lot of excess cash flow, which is a great problem to have, what are the focuses for the use of that money if there are no opportunities to make any more acquisitions this year?

Thanks, Mike. I appreciate your questions. So maybe I'll try to address the first one initially. And if you just -- if we think just -- if we kind of back up for a minute and think more fundamentally about the overall revenue of the company, and we go back to, let's say, the fourth quarter of 2024, and we think about our company on an annualized basis. On an annualized basis, we were at, let's say, $110 million roughly. We think about where we are today, probably $125 million. These are all very rough numbers. So we've increased the overall revenue base by about 14%, 15% roughly. And we've done all that while actually reducing the number of employees that we have today as compared to 2024. So I think that really more fundamentally, at least on a qualitative level, speaks to what we're able to do, and that's in large part driven by AI and automation. And as the year progresses, I believe you'll continue to see us being able to do far more with far less. So that -- those savings and that margin, we believe, will continue to increase as we move forward. And again, in the whole scheme of things, we're probably in the first inning. So this is really just beginning. We just launched our AI Center of Excellence less than a year ago. So these realities, the long-term realities are yet to be fully seen in the financials. But again, based upon the numbers as we see them today, we think there's significant opportunity for us to be able to reduce overall expenses associated with the revenue as we continue to grow it. The second thing is with regard to the use of that free cash flow. We continue to look for these opportunities to be able to put that capital to work with regard to these acquisitions. So acquisitions in our space, again, with a focus on being able to acquire companies from our internally generated cash flow ideally. So that would be one key focus. The second key focus would be continuing to -- as the opportunities present themselves and as our profit margins continue to grow to look for opportunities to be able to continue to enhance our overall capital structure as time progresses. That would be another opportunity that we look forward to pursuing and also continuing to invest in AI, continuing to look for opportunities to expand the existing capacity of our software products and to continue to handle an increasingly larger and larger share of the responsibilities that our clients are handling today.

Just a quick follow-up. When you guys are competing for this business, who is your competition? Who's out there bidding on the same business that CareCloud is right now? Are there much larger firms? Are they smaller start-ups? Or who is our direct competition for this business?

Good question, Mike. I think to answer that, we probably would have to break that into a couple of different areas. So from an EHR perspective, we're oftentimes competing against companies like eClinicalWorks, AdvancedMD and other similar players really focused on being on the ambulatory space. So those would be 2 of the main companies plus athenahealth would be a third company where there's a greater mix and more of a focus on the integrated solution that involves the delivery both of software and also of the revenue cycle management services. From an AI perspective, the playing field is wider, and it really then depends again on the products. So for instance, our CirrusAI product, that product that's more focused, for instance, on the -- using the audio and the ambient sound from the communications between the provider and the patient in the exam room to really populate the chart, many of our competitors in this space are offering very similar solutions. Some of those solutions are native. Other solutions are through a third-party application and integrate into their platform. From the perspective, though, of the product that Hadi was talking about before, many of our competitors actually aren't offering that solution. But kind of one company maybe to think about would be SoundHound. So SoundHound has a product that is actually very similar in many respects called Amelia, and Amelia has a lot of that same functionality. But SoundHound, unlike us, does not have a vertical -- does not have a vertical approach. They're an outside player selling horizontally into this space. So they don't have their own EHR, for instance, in which they can incorporate this product. But SoundHound is also interesting because if we look at their overall valuation, it's about 20x today, 20x the EV. So compare and contrast that with ours, and we think there's a lot of opportunity for investors once the market really understands that we have a proof of concept and we are able to demonstrate real success at rolling out our solution to our existing customer base.

Our final question is a follow-up from Allen Klee with Maxim Group.

Yes. Just on the financials quick thing. In terms of your outlook, any comments on thoughts of CapEx and capitalized software spending? And your guidance overall, does it include any unannounced acquisitions?

Great question. I'll let Norm handle the first part of that, but the answer to your second part of your question is no. It does not include any unannounced material acquisitions.

And I think, Allen, you're looking at CapEx and software, I think if you look at the levels from this year, I think they'd be the same or maybe a little less. So if you wanted to use that as your forecast.

Okay. Maybe just following up in terms of the run rate on operating expenses, to what extent -- I know you're increasing R&D, but do you still anticipate utilizing AI can get you some benefits on the expense side?

Absolutely. We do. We do. And candidly, as we sit here today as compared to a year ago, we believe we can accomplish everything that we're setting up to accomplish in terms of AI, and we can accomplish it with a smaller team than we had initially envisioned. There's been so much progress from an AI perspective in terms of the key models that we use to -- as the girding in our overall framework that we really believe that we can increasingly achieve what we're setting out to achieve from an AI perspective with a leaner team than we had initially envisioned. So I think there'll be less spending from the perspective of the AI Center of Excellence. And beyond that, the spend that -- the investments that we're making today will really continue to make us more efficient and continue to expand margins.

With no further questions, I would like to turn the conference back over to Norman for closing remarks.

Thank you, everyone, for attending our call today. Have a great day.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.