10-K: CareCloud Reports Strong 2025 Growth, AI Expansion, and Dividend Progress

CareCloud, Inc. announced a 9% revenue increase and a 37.5% rise in GAAP net income for 2025, driven by strategic acquisitions and significant investment in AI technology, while also addressing preferred stock dividend arrears.

Summary

• Net revenue increased by 9% to $120.5 million for the year ended December 31, 2025, up from $110.8 million in 2024.
• GAAP net income rose by 37.5% to $10.8 million in 2025, compared to $7.9 million in 2024.
• Adjusted EBITDA increased by 14.5% to $27.5 million in 2025, from $24.1 million in 2024.
• Basic earnings per share turned positive at $0.10 in 2025, a significant improvement from a loss of $(0.28) in 2024.
• The company completed several acquisitions in 2025, including Medsphere Systems Corporation ($16.5 million purchase price, contributing $10.5 million in revenue), MAP App, and RevNu Medical Management.
• Preferred stock dividend payments, suspended in December 2023, resumed in February 2025, with one month of arrearage paid each month for the remainder of the year.
• As of December 31, 2025, approximately $6.8 million in preferred stock dividends remained in arrears.
• The company served approximately 45,000 providers across 2,900 practices in 2025, an increase from 40,000 providers and 2,600 practices in 2024.
• Research and development expenses increased by 69% to $6.4 million in 2025, reflecting increased investment in AI capabilities and offshore headcount.
• Cash used in investing activities significantly increased to $24.5 million in 2025, primarily due to payments for acquisitions totaling $16.5 million.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, demonstrating strong revenue and profit growth, successful integration of acquisitions, and a clear strategy for AI and market expansion. However, the ongoing preferred stock dividend arrears and the inherent risks of a highly competitive and regulated healthcare IT market temper the overall sentiment.

Positives

• Net revenue grew by 9% to $120.5 million in 2025, indicating strong top-line performance.
• GAAP net income increased substantially by 37.5% to $10.8 million, demonstrating improved profitability.
• Adjusted EBITDA saw a healthy increase of 14.5% to $27.5 million, reflecting operational efficiency.
• Basic earnings per share turned positive to $0.10 in 2025, a notable turnaround from a loss in the prior year.
• Strategic acquisitions of Medsphere, MAP App, and RevNu expanded the company's market presence, client base, and technology offerings, particularly in AI and inpatient/ambulatory markets.
• The company successfully resumed preferred stock dividend payments in February 2025 and has a plan to address remaining arrears by paying double dividends on Series B Preferred Stock starting February 2026.
• Expansion of AI capabilities, including CareCloud cirrusAI and Stratus AI Desk Agent, positions the company for future innovation and efficiency gains in healthcare.
• The company's offshore operations provide a significant cost advantage, with labor costs approximately 15%-17% of comparable U.S. employees, contributing to competitive pricing and profitability.

Negatives

• The customer renewal rate decreased to 91% in 2025 from 95% in 2024, indicating a slight decline in client retention.
• Working capital decreased to $1.3 million in 2025 from $5.2 million in 2024, suggesting a tightening of short-term liquidity.
• Cash and restricted cash balances decreased to $3.6 million in 2025 from $5.1 million in 2024.
• Approximately $6.8 million in preferred stock dividends remained in arrears as of December 31, 2025, despite resumed payments.
• The company anticipates further reducing its employee count during 2026, which could impact morale or operational capacity if not managed carefully.
• Increased cash used in investing activities, primarily for acquisitions, could strain cash reserves if not balanced by strong operational cash flow.

Risks

• The continued success of the business model is heavily dependent upon offshore operations in Pakistan and Sri Lanka, which are exposed to political and social unrest, currency fluctuations, and changes in local laws.
• Challenges associated with the development, deployment, and regulation of AI technologies, including potential for inaccurate outputs, biases, cybersecurity incidents, and compliance costs, could adversely affect the business and reputation.
• Operating in a highly competitive industry means competitors may evolve more rapidly or have greater resources, potentially impacting market share and growth rates.
• Inability to successfully introduce new products or services or keep pace with technological advances could lead to obsolescence and loss of customers.
• Changes in the healthcare industry, such as consolidation of providers and shifts to value-based care models, could reduce demand for services and impact revenues.
• Failure to retain clients or maintain revenue levels, especially following acquisitions, could adversely affect financial performance.
• The company faces risks related to data privacy, identity protection, and information security compliance, including potential for security incidents, fines, litigation, and reputational harm.
• Loss of key management personnel, particularly Mahmud Haq (Executive Chairman), Stephen Snyder (CEO), and A. Hadi Chaudhry (CSO), could harm business operations.
• Inability to adequately establish, protect, or enforce intellectual property rights, or claims of infringement by others, could result in significant costs or business disruption.
• Current and future litigation, including claims from customers or related to acquisitions, could be costly and time-consuming.
• Deficiencies in financial reporting or internal controls could adversely affect the business and stock price.
• Goodwill was subject to impairment in 2023 ($40 million) and may be subject to further impairment in the future, which could materially affect financial results.
• Related-party agreements with the founder and Executive Chairman, Mahmud Haq, involve significant contractual obligations and potential conflicts of interest.
• Regulatory risks, including compliance with HIPAA, HITECH Act, Cures Act, anti-kickback statutes, and false claims laws, could lead to significant liabilities and penalties.
• The conversion of Series A Preferred Stock into common stock in March 2025 increased outstanding shares, potentially diluting existing common shareholders' equity and voting power.
• Mahmud Haq's 12% control of outstanding common stock limits other investors' influence on significant corporate decisions.
• The company does not intend to pay cash dividends on common stock, making capital appreciation the sole source of gain for common shareholders.

Future Outlook

The company expects to enhance its software capabilities and offer additional complementary business services, particularly leveraging AI, to address the evolving needs of the U.S. healthcare market. It plans to continue investing in research and development, expand into new categories and markets, and drive organic growth by increasing its client base and up-selling existing clients. The company also anticipates further reducing its employee count during 2026 and will pay double dividends monthly on Series B Preferred Stock starting February 2026 to clear remaining arrears. The aircraft loan from Republic Bank & Trust Company is planned for liquidation within the next two years.

Management Comments

• "We believe we continue to be uniquely positioned to provide tremendous value and support for our clients."
• "We believe there are dynamics at play that are significantly increasing the market need for our products and services."
• "Our mission is to redefine the next generation of technology-enabled revenue cycle solutions."
• "We expect to have increased software capabilities and offer additional complementary business services that will address the needs of the ever-changing, dynamic market conditions of the U.S. healthcare space."
• "We believe that the labor costs in our Offshore Offices are approximately 15% 17% of the cost of comparably educated and skilled workers in the U.S."
• "Our unique business model has allowed us to become a leading consolidator in our industry sector, gaining us a reputation for acquiring and positively transforming distressed competitors into an accretive acquisition."
• "During 2026, we anticipate further reducing our employee count."

Industry Context

StockSavvy.ai notes that CareCloud operates within a rapidly expanding U.S. Healthcare IT market, projected to grow from $322.59 billion in 2024 to $792.05 billion by 2034, with key sub-segments like Revenue Cycle Management (RCM) and Telehealth also showing robust growth. The industry is undergoing significant transformation due to a shift towards value-based care, increasing regulatory complexities, rising healthcare costs, and accelerated digital adoption post-COVID-19. CareCloud's focus on AI-driven solutions and strategic acquisitions aligns with these trends, positioning it to capitalize on the market's demand for integrated, efficient healthcare technology. The fragmented nature of the RCM market also presents ongoing consolidation opportunities, which CareCloud actively pursues.

Comparison to Industry Standards

• CareCloud's offshore labor costs, estimated at 15%-17% of comparable U.S. employees, provide a significant competitive advantage over domestic RCM companies and those with offshore operations in higher-cost countries like India and the Philippines.
• The company's strategy of acquiring distressed competitors and integrating them into its cost-effective offshore model allows it to achieve accretion, a differentiator in the fragmented Healthcare IT industry.
• CareCloud competes with larger healthcare IT companies such as athenahealth, eClinicalWorks, Greenway Medical Technologies, NextGen, R1 RCM, and Veradigm, which often possess greater financial, marketing, and brand recognition resources.
• The company's investment in AI capabilities, such as CareCloud cirrusAI and Stratus AI Desk Agent, is in line with broader industry trends towards leveraging advanced technology for clinical decision support, workflow automation, and patient engagement.

Management Changes

Corporate Governance

Legal Proceedings

• Settlement of $117,000 awarded to Ramapo Anesthesiologists, PC in December 2023 for alleged breach of contract, with CareCloud paying $32,000 in Q1 2024.
• Settlement of $200,000 paid in July 2024 for a former customer's contract claims (initial claim of $750,000).
• Settlement of $316,000 paid in September 2024 for transition-related costs from a prior acquisition (seller alleged $800,000).
• Settlement of $100,000 offered in December 2024 and paid in February 2025 for a former customer dispute (initial demand over $2 million).
• Settlement of $29,000 offered in March 2025 and paid in June 2025 for a former customer dispute (initial demand over $2.5 million).
• Settlement of $24,000 accrued at December 31, 2025, and paid in January 2026 for a current customer dispute.

Related Party Transactions

• Sales to a physician (wife of the Executive Chairman) totaling approximately $125,000 in 2025 and $138,000 in 2024.
• Leases for corporate offices, temporary housing, storage, and operations centers in Pakistan and Dubai from the Executive Chairman, with rent expense of approximately $285,000 in 2025 and $281,000 in 2024.
• Expenditures of approximately $1.6 million in 2025 and $979,000 in 2024 to upgrade related-party leased facilities, primarily for the expansion of the company's AI center in 2025.
• Leases for two temporary housing facilities from a management employee for approximately $6,700 per month.
• Employment of the son of the current Chief Executive Officer, with a salary expense of approximately $38,000 in 2025.
• Consulting agreement with an entity owned and controlled by the son of the Executive Chairman for AI technology services, incurring an expense of approximately $83,000 in 2025.
• Consulting agreement with an entity owned and controlled by a Board member for investor relations and other services, incurring an expense of approximately $13,000 in 2025 and $75,000 in 2024; terminated effective February 22, 2026.
• The company has paid approximately $6,500 cumulatively on behalf of talkMD Clinicians, PA, a variable interest entity controlled by the company and formed by the wife of the Executive Chairman, for income taxes.

Stakeholder Impact

• Shareholders: Common shareholders experienced dilution from the Series A Preferred Stock conversion, but also saw positive EPS. Preferred shareholders are benefiting from resumed dividend payments and a plan to clear arrears, but their shares rank junior to debt and have limited voting rights.
• Employees: The company anticipates further reducing its employee count in 2026, which could lead to job insecurity for some, while the offshore workforce continues to be a key cost advantage.
• Customers: Benefit from an expanded suite of technology-enabled services, including new AI capabilities and offerings from recent acquisitions, aimed at improving financial and operational performance. However, they face risks related to service disruptions and data security.
• Creditors: The company is in compliance with its loan covenants, but preferred stock ranks junior to all indebtedness, which could affect recovery in a liquidation scenario.
• Management: Key executives have new employment agreements, and the management team is focused on strategic growth, AI integration, and cost optimization, with increased responsibilities due to the company's growth and regulatory changes.

Next Steps

• Continue declaring monthly dividends until the preferred stock arrearage is fully satisfied.
• Begin paying double dividends monthly on Series B Preferred Stock starting February 15, 2026, to accelerate the reduction of arrears.
• Further reduce employee count during 2026 as part of ongoing optimization efforts.
• Liquidate the $1,032,000 aircraft loan from Republic Bank & Trust Company within the next two years.
• Hold the Annual Meeting of Shareholders on June 4, 2026.

Key Dates

Recommendation

CareCloud demonstrates solid revenue growth and improved profitability, driven by strategic acquisitions and a focus on AI. The resumption of preferred stock dividends and plans to clear arrears are positive for preferred shareholders. However, the highly competitive healthcare IT market, ongoing integration risks, and the inherent challenges of managing offshore operations warrant a cautious 'Hold' recommendation. The dilution from preferred stock conversion and the significant influence of the Executive Chairman also present considerations for common shareholders.

Keywords

Healthcare IT, Revenue Cycle Management, Artificial Intelligence, EHR, Practice Management, Acquisitions, Financial Results, SEC Filing, Preferred Stock, Dividends, Cybersecurity, Telehealth, Corporate Governance