CareCloud’s Earnings Call: Acquisition Financials, AI Revenue Timeline, Cross-Selling Signals Don’t Match

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $31.9M, up 16% from $27.4M in Q2 2025
• EPS: $0.06 per share (adjusted), compared to $0.07 per share in Q2 2025
• Gross Margin: Consistent between periods, no specific percentage provided

Guidance:

• Revenue for full year 2026 expected to be $128M to $132M.
• Adjusted EBITDA for full year 2026 expected to be $29M to $31M.
• GAAP EPS for full year 2026 expected to be $0.20 to $0.23 per share.

Business Commentary:

Revenue Growth and Strategic Acquisitions:

• CareCloud reported revenue of $31.9 million for Q2 2026, up 16% from $27.4 million in Q2 2025. For the first half of 2026, revenue was $63.2 million, up 15% year-over-year.
• The growth was driven by disciplined execution of strategic priorities, including the acquisition of MedSphere and the shift towards recurring subscription-based revenue, which now represents approximately 75% of total revenue.

Profitability and Capital Structure:

• GAAP net income was $1.1 million, marking the ninth consecutive quarter of profitability. Adjusted EBITDA was $5.9 million.
• Profitability reflects strategic investments in AI capabilities and recent acquisitions, with a focus on long-term growth. The redemption of Series B preferred stock simplified the balance sheet, eliminating approximately $3.3 million in annual preferred dividends and reducing future interest costs.

AI and Product Development:

• CareCloud's AI initiatives, including AI prior authorization and AI assisted medical coding, are on track for market release in 2026.
• Progress in AI is driven by the need to address increasing administrative burdens in healthcare and to enhance existing products, with a focus on scaling AI capabilities across the platform.

Cross-Selling and Market Expansion:

• The acquisition of Empower Healthcare and Compliance Partners is expected to facilitate cross-selling opportunities in healthcare compliance and audit defense.
• This strategic move is aimed at capitalizing on rising demand for compliance services and leveraging existing client relationships to expand into new market segments.

Operational and Financial Outlook:

• CareCloud reaffirmed its full-year 2026 guidance, expecting a stronger second half with increased revenue and adjusted EBITDA.
• The outlook is supported by continued growth in recurring revenue, expansion of enterprise client relationships, and the elimination of the Series B preferred dividend obligation in the second half of the year.

Sentiment Analysis:

Overall Tone: Positive

• CEO states: 'The second quarter reflected disciplined execution... another quarter of meaningful progress.' Also notes: 'The market opportunity in front of us is as large as it has ever been, and CareCloud is better positioned to capture it at any point in time in our history.'

Q&A:

• Question from Alan Klee (Maxim Group): What would you say are the major factors that you expect to make second half 26 different from first half from a financial perspective?
  Response: Second half is expected to be stronger due to seasonality, continued revenue growth from expansion and cross-selling, and benefits from completed Q2 investments (e.g., MedSphere integration and cost actions).

• Question from Alan Klee (Maxim Group): For the Empower Healthcare and Compliance Partners acquisition, should we be thinking of this as minor on a financial impact, but then maybe becomes bigger from the cross-selling perspective? Or how should we think about it?
  Response: The acquisition had minimal financial impact in Q2 and will not be material to revenue/EBITDA overall; its value is in cross-selling compliance services to existing client base and integrating expertise into a future SaaS platform.

• Question from Alan Klee (Maxim Group): Slide 11 of the presentation... I was wondering if you could dig into a little bit of when you say new business sign through Q2 and demand from across the client base.
  Response: Demand for AI products like Stratus AI is strong with new deals being signed; the company is also in early conversations with private equity groups about potential engagements, though no deals are confirmed.

• Question from Richard Hatke (Zax): I know, Hadi, you made a comment that you're in the early innings of cross-selling opportunities. Are you referring to... MedSpear? Have you exhausted all the opportunities there?
  Response: Cross-selling for Empower is well underway but no new signings yet; for MedSphere, significant wins have been made but the company believes it is just beginning in terms of cross-selling opportunities with that acquisition.

• Question from Richard Hatke (Zax): Lisa was of the understanding that you have tripled your sales force... How's that changed your expectations? Are they up to speed?...
  Response: The sales force is focused on cross-selling to existing customers, which is less expensive; the team is fully up to speed, with many joining via the MedSphere acquisition already familiar with the applications.

• Question from Richard Hatke (Zax): You had that cyber breach back... Any update on that?
  Response: The March 16 breach was contained to a single environment, fully restored the same day, and the threat was expelled; the company believes no material financial impact will result and insurance should cover all costs.

Contradiction Point 1

Financial Impact and Strategic Benefit of the Empower Acquisition

Contradicts the materiality of the acquisition's near-term financial impact versus its long-term strategic value.

Alan Klee (Maxim Group) - Alan Klee (Maxim Group)

2026Q2: The **financial impact in Q2 and for the full year is not material** (minimal revenue contribution, minimal EBITDA impact). The **strategic benefit is significant**: It provides a foothold in the accelerating compliance and audit defense market. - Stephen Snyder(CEO)

How should we assess the financial impact and cross-selling potential of the Empower Healthcare and Compliance Partners acquisition? - Allen Klee (Maxim Group LLC)

2025Q4: The primary 2026 opportunity is **deepening cross-selling and upselling to the ~100+ new hospitals and health systems acquired via Medsphere and MAP App.** The sales team has expanded 2-3x to focus on this. - Stephen Snyder(CEO)

Contradiction Point 2

AI Product Revenue Recognition Timeline

Contradiction on when AI-specific revenue becomes scalable and separately reportable.

Alan Klee (Maxim Group) - Alan Klee (Maxim Group)

2026Q2: Revenue recognition: AI-specific revenue is still early-stage and not yet scalable enough to disclose separately from technology-enabled services revenue. - Stephen Snyder(CEO) and Hadi Chaudhry(CSO)

Can you provide more details on the new business sign-through Q2 and the demand from the client base mentioned in the demand section of Slide 11? - Allen Klee (Maxim Group)

2026Q1: Strategy prioritizes successful implementation and trial completion before focusing on expansion... No issues closing contracts; focus is on ensuring adoption and deepening usage. - A. Hadi Chaudhry(CSO)

Contradiction Point 3

Stage of Cross-Selling for the MedSphere Acquisition

The characterization of remaining cross-selling opportunities with MedSphere appears to have shifted from "significant remaining opportunity" to "no new signings yet" and "well underway."

What was Richard Hatke's role in the Zax earnings call? - Richard Hatke (Zax)

2026Q2: There is significant remaining opportunity. The company has already expanded wallet share with some hospitals but believes it's just beginning with this acquisition. - Stephen Snyder(CEO) and Hadi Chaudhry(CSO)

Are the cross-selling opportunities you mentioned referring to both Empower and MedSpear or just Empower? - Richard Hansky (Zacks)

2026Q2: Cross-selling is well underway. There are no new signings yet, but it's only been a couple of months. - Stephen Snyder(CEO) and Hadi Chaudhry(CSO)

Contradiction Point 4

Timeline for Strategic Benefit and Financial Materiality of the Empower Acquisition

The expected timing for the Empower acquisition to become financially material appears to have shifted forward.

Alan Klee (Maxim Group) - Alan Klee (Maxim Group)

2026Q2: The financial impact in Q2 and for the full year is not material (minimal revenue contribution, minimal EBITDA impact). - Stephen Snyder(CEO)

How should we assess the financial impact and cross-selling potential of the Empower Healthcare and Compliance Partners acquisition? - Allen Klee (Maxim Group)

2026Q2: The company plans to launch AI-enabled compliance software as a scalable SaaS offering in the fall of 2026. - Stephen Snyder(CEO)

Contradiction Point 5

Strategic Focus on Cross-Selling Acquired Assets

Contradiction on the primary focus for driving value from recent acquisitions.

Alan Klee (Maxim Group) - Alan Klee (Maxim Group)

2026Q2: The path to value is through cross-selling: 1) Selling compliance/audit defense services to the existing CareCloud client base... 2) Selling CareCloud's RCM and EHR solutions to Empower's existing client base. - Stephen Snyder(CEO)

How should we assess the financial impact and cross-selling potential of the Empower Healthcare and Compliance Partners acquisition? - Allen Klee (Maxim Group)

2026Q1: Executing a four-track strategy for Medsphere platforms: ... 3. Cross-portfolio integration: Connecting Medsphere platforms with CareCloud’s existing suite... 4. AI infusion: Embedding AI into products... - A. Hadi Chaudhry(CSO)