CareCloud, Inc.

CareCloud, Inc. is a technology-enabled services provider and generative AI solutions developer focused on redefining healthcare revenue cycle management (RCM) ¹. The company offers a full suite of proprietary cloud-based solutions to healthcare providers, ranging from small practices to enterprise medical groups, hospitals, and health systems across the United States and other locations ¹. Its business model is heavily reliant on its offshore operations, primarily in Pakistan and Sri Lanka, where approximately 3,300 of its 3,650 global employees are located, providing a significant cost advantage with labor costs estimated at 15% to 17% of comparable U.S. employees ¹. The U.S. Healthcare IT industry market was approximately $322.59 billion in 2024 and is projected to reach $792.05 billion by 2034, growing at a 9.39% compound annual growth rate (CAGR) from 2025 to 2034 ¹. The RCM sub-segment alone was nearly $172.2 billion in 2024 and is projected to grow at a 10.1% CAGR through 2030 ¹. The U.S. EHR market was valued at $12.9 billion in 2024 and is expected to grow at a CAGR of 2.55% from 2025 to 2030 ¹. The Telehealth market is estimated at approximately $42.61 billion in 2024 and is expected to grow to $358.96 billion by 2034 with a CAGR of 23.84% ¹.

CareCloud's core business model involves generating revenue primarily from technology-enabled business solutions, often bundled with its cloud-based software and related business services ¹. The company's RCM services are typically billed as a percentage of payments collected by customers, with basic SaaS services included at no additional charge when RCM services are utilized ¹. Revenue is also generated from professional services, printing and mailing services, group purchasing services, and medical practice management services ¹. The company serves approximately 45,000 providers across 2,900 independent medical practices and hospitals in 80 specialties and subspecialties in 50 states as of December 31, 2025 ¹.

The company's technology-enabled business solutions include RCM services (end-to-end medical billing, eligibility, analytics, medical coding, credentialing, and healthcare claims clearinghouse), cloud-based software (EHR, Practice Management, RCM Cloud, HealthLine, Marketware, Wellsoft, CareVue, and AI tools like CareCloud cirrusAI and Stratus AI Desk Agent), digital health (Chronic Care Management, Remote Patient Monitoring, and Telemedicine solutions), and Healthcare IT professional services & staffing (consulting, strategic advisory, workforce augmentation, and managed services) ¹. Additionally, the MAP App is an industry-leading tool for benchmarking RCM performance ¹. Medical practice management services are provided to medical practices, including facilities, equipment, supplies, support services, nurses, administrative staff, and management, bill-paying, and financial advisory services ¹.

For the fiscal year ended December 31, 2025, CareCloud reported net revenue of $120.499 million ⁴, an increase of 9% from $110.837 million in 2024 ⁴. Direct operating costs were $64.456 million ⁴, selling and marketing expenses were $4.818 million ⁴, general and administrative expenses were $18.386 million ⁴, and research and development expenses totaled $6.382 million ⁴. Depreciation and amortization expense was $14.960 million ⁴. Operating income for 2025 was $11.343 million ⁴, representing an operating margin of 9.4% ⁴. Net income was $10.798 million ⁴, with diluted EPS of $0.10 ⁴. Cash and restricted cash stood at $3.617 million ⁵, and working capital was $1.315 million ⁵. Total liabilities were $28.092 million ⁵.

Comparing 2025 to 2024, net revenue increased by $9.662 million ⁴, or 9% ⁴. This growth was driven by a $3.235 million increase in technology-enabled business solutions revenue to $76.907 million ⁴, a $7.161 million increase in professional services revenue to $25.363 million ⁴, and a $10.5 million contribution from the Medsphere acquisition ⁴. Medical practice management services revenue decreased by $0.499 million to $13.933 million ⁴. Direct operating costs increased by $3.614 million, or 6% ⁴, primarily due to a $1.0 million increase in salary costs from the Medsphere acquisition, a $2.4 million increase in outsourcing and other customer processing costs, and a $270,000 increase in consultancy expenses ⁴. Selling and marketing expense decreased by $1.414 million, or 23% ⁴, due to lower spending and headcount reduction ⁴. General and administrative expense increased by $2.263 million, or 14% ⁴, driven by a $2.5 million increase in salary costs due to headcount ⁴. Research and development expense increased by $2.601 million, or 69% ⁴, due to an increase in offshore headcount ⁴. Lease termination and restructuring costs decreased by $0.442 million, or 74% ⁴, to $154,000 ⁴. Net income increased from $7.851 million in 2024 to $10.798 million in 2025 ⁴.

During 2025, CareCloud completed several significant operational developments, including the acquisition of MAP App effective October 1, 2025, for a closing payment of $467,817 plus potential earnouts ¹. MAP App is an industry-leading tool for benchmarking RCM performance ¹. On August 22, 2025, the company acquired certain assets and assumed liabilities of Medsphere Systems Corporation for an aggregate purchase price of $16.5 million ¹. Medsphere provides healthcare IT software and related services to the inpatient and ambulatory market ¹. On April 1, 2025, CareCloud acquired certain assets of RevNu Medical Management, which provides audiology and hearing aid billing/RCM IT solutions, for contingent consideration of approximately $565,000 ¹. The company also invested approximately $1.6 million in upgrading related party leased facilities, primarily for the expansion of its AI center ¹.

CareCloud is focused on reducing costs, maintaining profitability, and generating positive free cash flow to continue paying Preferred Stock dividends, including those in arrears ¹. The company plans to continue enhancing its solutions with new functionality and features through internal teams, partnerships, and acquisitions, dedicating resources to research and development to bolster existing applications and drive new innovation ¹.

A key growth area for CareCloud is expanding into new categories, specialties, and markets by reassessing the market landscape and seeking new opportunities to meet client needs ¹. This includes developing new technologies, launching new services, entering new specialties that can leverage its solutions, and expanding into adjacent markets ¹. The company is also relentlessly driving organic growth by investing in sales and marketing activities, partners, and products to expand its client footprint ¹. It aims to extend relationships with existing clients through its CareCloud Wellness offerings, generating additional recurring revenue by increasing SaaS subscription licenses and services purchased by current clients, and converting SaaS clients into higher revenue per client offerings such as RCM and other business services ¹.

Operationally, CareCloud plans to leverage the significant cost advantages provided by its technology and global workforce, particularly its cost-effective offshore team located in Pakistan and Sri Lanka ¹. This operating model is expected to provide significant cost advantages compared to other RCM companies and allow for substantial cost reductions in acquired businesses ¹. The company anticipates further reducing its employee count during 2026 ¹.

Planned capital allocation includes continued investment in research and development to enhance and expand service offerings and ensure regulatory compliance ¹. The company capitalized approximately $3.2 million in development costs for internal-use software in 2025 ⁴. Purchases of property and equipment were $4.8 million in 2025 ⁴. The company resumed paying monthly dividends on Preferred Stock in February 2025, paying one month of arrearage each month for the rest of the year ¹. Starting with the February 2026 dividend payment, it will begin paying double dividends monthly on the Series B Preferred Stock to reduce dividends in arrears ¹. As of December 31, 2025, there was approximately $6.8 million of dividends in arrears ¹. The company does not intend to pay cash dividends on its common stock ¹.

Management explicitly flagged several structural headwinds and execution risks. The continued success of the business model is heavily dependent on offshore operations, and any disruption could adversely affect the company's ability to offer competitively priced products and services ¹. The company operates in a highly competitive industry, and competitors may be able to compete more efficiently or evolve more rapidly, potentially diminishing CareCloud's competitive edge if similar offshore operations are developed by competitors ¹. The company's ability to successfully introduce new products or services and keep pace with technological advances is critical, as failure could lead to customer loss and hinder business growth ¹. Changes in the healthcare industry, such as consolidation of healthcare providers, could reduce demand for services and make it difficult to negotiate new contracts ¹. The variable sales and implementation cycles mean the company may be unable to recognize revenue from prospective customers on a timely basis and may not offset expenditures ¹.

Geographic, regulatory, and macro factors identified as constraints include risks associated with offshore operations in Pakistan and Sri Lanka, such as political and social unrest, war, acts of terrorism, currency fluctuations, cost of labor and supplies, power grid and infrastructure issues, vandalism, and changes in local laws, as well as U.S. laws relating to these countries ¹. Compliance with a myriad of federal, state, foreign, local, payor, and industry requirements, regulations, rules, laws, and contracts is a continuous challenge ¹. The rapidly evolving legal and regulatory framework governing AI is also a risk, potentially increasing compliance costs or limiting deployment of AI-enabled solutions ¹. Adverse macroeconomic conditions, including slow growth or recession, high unemployment, inflation, tariffs, tighter credit, higher interest rates, labor shortages, and currency fluctuations, can adversely impact demand for customer services and increase credit and collectability risk on trade receivables ¹.

CareCloud faces material risks including its heavy dependence on offshore operations in Pakistan and Sri Lanka, where approximately 3,300 employees are located, and any disruption due to political instability, natural disasters, or changes in U.S. or foreign sanctions could significantly diminish its competitive cost advantage (labor costs are 15% to 17% of comparable U.S. costs) and materially impact its business ¹. The company operates in a highly competitive healthcare IT industry, with larger competitors possessing greater resources and brand recognition, and faces the risk that competitors could develop similar offshore operations, leading to pricing pressures and negative impacts on margins, growth rate, and market share ¹. Cybersecurity threats, including evolving attacks, system failures, and unauthorized access to sensitive data, pose a significant risk, potentially leading to reputational damage, customer loss, regulatory enforcement actions, litigation, and substantial remediation costs, especially given the use and planned expansion of AI technologies which introduce additional technical, operational, legal, and privacy risks ¹. Regulatory risks are substantial due to the heavily regulated healthcare industry, with potential liabilities arising from non-compliance with HIPAA, HITECH Act, Cures Act, anti-kickback statutes, and false claims laws, which could result in civil and criminal penalties, exclusion from government healthcare programs, and adverse effects on business and financial condition ¹. Furthermore, the company's goodwill was subject to impairment in 2023, recording approximately $42 million in charges, and may be subject to further impairment in the future if key assumptions change, which could materially adversely affect results of operations and financial condition ⁴.

Management's message to shareholders emphasizes a strategic focus on reducing costs, maintaining profitability, and generating positive free cash flow to ensure the continued payment of Preferred Stock dividends, including those in arrears ¹. The company resumed monthly dividend payments in February 2025, paying one month of arrearage each month for the remainder of the year ¹. Management has also announced that starting with the February 2026 dividend payment, it will begin paying double dividends monthly on the Series B Preferred Stock to reduce the accumulated and unpaid dividends ¹. Key strategic priorities include providing comprehensive next-generation RCM solutions, enhancing existing solutions with new functionality and features through R&D and acquisitions, expanding into new categories, specialties, and markets, relentlessly driving organic growth to expand the client base, and extending relationships with existing clients by up-selling additional solutions and converting SaaS clients to higher-revenue offerings ¹. Management also highlights leveraging its significant cost advantages from proprietary technology and a global workforce, particularly its cost-effective offshore team, and developing its partner ecosystem to broaden its product set and facilitate frictionless information flow and care-coordination capabilities ¹.