Adjusted EBITDA to GAAP Net Income (Loss) Set forth below is a reconciliation of our "adjusted EBITDA” to our GAAP net income (loss). Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 ($ in thousands)Net revenue $28,546 $29,280 $82,598 $88,643 GAAP net income (loss) 3,122 (2,749) 4,555 (4,982) Provision for income taxes 41 57 119 204 Net interest expense 162 300 764 705 Foreign exchange (gain) loss / other expense (57) 426 244 609 Stock-based compensation expense (benefit), net of restructuring costs 252 1,209 (191) 3,783 Depreciation and amortization 3,241 3,903 10,885 10,282 Transaction and integration costs 12 91 35 270 Loss on lease terminations, unoccupied lease charges and restructuring costs 67 8 505 430 Adjusted EBITDA $6,840 $3,245 $16,916 $11,301 Non-GAAP Adjusted Operating Income to GAAP Operating Income (Loss) Set forth below is a reconciliation of our non-GAAP "adjusted operating income” and non-GAAP "adjusted operating margin” to our GAAP operating income (loss) and GAAP operating margin. Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 ($ in thousands) Net revenue $28,546 $29,280 $82,598 $88,643 GAAP net income (loss) 3,122 (2,749) 4,555 (4,982)Provision for income taxes 41 57 119 204 Net interest expense 162 300 764 705 Other (income) expense - net (60) 422 227 591 GAAP operating income (loss) 3,265 (1,970) 5,665 (3,482)GAAP operating margin 11.4% (6.7)% 6.9% (3.9)% Stock-based compensation expense (benefit), net of restructuring costs 252 1,209 (191) 3,783 Amortization of purchased intangible assets 75 1,201 1,501 3,775 Transaction and integration costs 12 91 35 270 Loss on lease terminations, unoccupied lease charges and restructuring costs 67 8 505 430 Non-GAAP adjusted operating income $3,671 $539 $7,515 $4,776 Non-GAAP adjusted operating margin 12.9% 1.8% 9.1% 5.4% Non-GAAP Adjusted Net Income to GAAP Net Income (Loss) Set forth below is a reconciliation of our non-GAAP "adjusted net income” and non-GAAP "adjusted net income per share” to our GAAP net income (loss) and GAAP net loss per share. Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 ($ in thousands)GAAP net income (loss) $3,122 $(2,749) $4,555 $(4,982) Foreign exchange (gain) loss / other expense (57) 426 244 609 Stock-based compensation expense (benefit), net of restructuring costs 252 1,209 (191) 3,783 Amortization of purchased intangible assets 75 1,201 1,501 3,775 Transaction and integration costs 12 91 35 270 Loss on lease terminations, unoccupied lease charges and restructuring costs 67 8 505 430 Income tax provision related to goodwill - 17 - 81 Non-GAAP adjusted net income $3,471 $203 $6,649 $3,966 End-of-period shares 16,221,820 15,857,650 16,221,820 15,857,650 Non-GAAP adjusted net income per share $0.21 $0.01 $0.41 $0.25 For purposes of determining non-GAAP adjusted net income per share, we used the number of common shares outstanding as of September 30, 2024 and 2023. Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 GAAP net loss attributable to common shareholders, per share $(0.04) $(0.42) $(0.28) $(1.07)Impact of preferred stock dividend 0.23 0.25 0.56 0.76 Net income (loss) per end-of-period share 0.19 (0.17) 0.28 (0.31) Foreign exchange (gain) loss / other expense 0.00 0.02 0.02 0.04 Stock-based compensation expense (benefit), net of restructuring costs 0.02 0.08 (0.01) 0.24 Amortization of purchased intangible assets 0.00 0.07 0.09 0.23 Transaction and integration costs 0.00 0.01 0.00 0.02 Loss on lease terminations, unoccupied lease charges and restructuring costs 0.00 0.00 0.03 0.03 Income tax provision related to goodwill - 0.00 - 0.00 Non-GAAP adjusted earnings per share $0.21 $0.01 $0.41 $0.25 End-of-period common shares 16,221,820 15,857,650 16,221,820 15,857,650 Outstanding unvested RSUs 265,699 758,160 265,699 758,160 Total fully diluted shares 16,487,519 16,615,810 16,487,519 16,615,810 Non-GAAP adjusted diluted earnings per share $0.21 $0.01 $0.40 $0.24 Net cash provided by operating activities to free cash flow Set forth below is a reconciliation of our non-GAAP "free cash flow” to our GAAP net cash provided by operating activities. Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 ($ in thousands) Net cash provided by operating activities $7,068 $4,313 $15,413 $11,721 Purchases of property and equipment (334) (1,066) (759) (2,687)Capitalized software and other intangible assets (1,339) (2,179) (4,385) (6,635)Free cash flow $5,395 $1,068 $10,269 $2,399 Net cash used in investing activities 1 $(1,673) $(3,245) $(5,144) $(9,322)Net cash used in financing activities $(5,166) $(2,581) $(10,678) $(8,406) 1 Net cash used in investing activities includes purchases of property and equipment and capitalized software and other intangible assets, which are also included in our computation of free cash flow.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023($ in thousands) 2024 2023OPERATING ACTIVITIES: Net income (loss) $4,555 $(4,982)Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 11,138 10,672 Lease amortization 1,502 1,618 Deferred revenue 3 221 Provision for expected credit losses 284 389 Provision for deferred income taxes - 81 Foreign exchange (gain) loss (114) 596 Interest accretion 465 493 Stock-based compensation (benefit) expense (191) 3,783 Changes in operating assets and liabilities: Accounts receivable (388) 1,889 Contract asset 477 (549)Inventory (49) (97)Other assets (63) (117)Accounts payable and other liabilities (2,206) (2,276)Net cash provided by operating activities 15,413 11,721 INVESTING ACTIVITIES: Purchases of property and equipment (759) (2,687)Capitalized software and other intangible assets (4,385) (6,635)Net cash used in investing activities (5,144) (9,322)FINANCING ACTIVITIES: Preferred stock dividends paid - (11,691)Settlement of tax withholding obligations on stock issued to employees (200) (1,425)Repayments of notes payable (478) (717)Proceeds from issuance of Series B Preferred Stock, net of expenses - 1,427 Proceeds from line of credit - 14,700 Repayment of line of credit (10,000) (10,700)Net cash used in financing activities (10,678) (8,406)EFFECT OF EXCHANGE RATE CHANGES ON CASH (140) 114 NET DECREASE IN CASH (549) (5,893)CASH - Beginning of the period 3,331 12,299 CASH - End of the period $2,782 $6,406 SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES: Dividends declared, not paid $5 $4,125 Purchase of prepaid insurance with assumption of note $685 $620 Reclass of deposits for property and equipment placed in service $296 $- SUPPLEMENTAL INFORMATION - Cash paid during the period for: Income taxes $145 $131 Interest $642 $630 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO COMPARABLE GAAP MEASURES (UNAUDITED) The following is a reconciliation of the non-GAAP financial measures used by us to describe our financial results determined in accordance with accounting principles generally accepted in the United States of America ("GAAP”).
Third Quarter 2024 Highlights GAAP net income of $3.1 million, compared to a net loss of $2.7 million in Q3 2023Adjusted net income of $3.5 million, compared to $200 thousand in Q3 2023, an increase of 1,610%Adjusted EBITDA of $6.8 million, compared to $3.2 million in Q3 2023, an increase of 111%Free cash flow of $5.4 million, compared to $1.1 million in Q3 2023, an increase of 405%, highest ever achieved by the CompanyRevenue of $28.5 million, compared to $29.3 million in Q3 2023, a decrease of 2.5% Year-to-date 2024 Highlights GAAP net income of $4.6 million, compared to a net loss of $5.0 million in the same period last year Adjusted net income of $6.6 million, compared to $4.0 million in the same period last year, an increase of 68% Adjusted EBITDA of $16.9 million, compared to $11.3 million in the same period last year, an increase of 50% Free cash flow of $10.3 million, compared to $2.4 million in the same period last year, an increase of 328%, highest ever achieved by the Company Revenue of $82.6 million, compared to $88.6 million in the same period last year, a decrease of 6.8% Recent Operational Highlights Plans to resume dividends on March 15, 2025 for Series A and B Preferred StockFully repaid the Silicon Valley Bank ("SVB”) credit facility balance, which was $10 million on January 1, 2024, utilizing internally generated free cash flowReduced the SVB credit facility limit to $10 million, thereby reducing banking fees by $140,000CareCloud’s Series A Preferred Stock Special Proxy was approved by the shareholders, which will provide additional protection to Series A shareholders in the future, and eventually reduce cash requirements for future dividend payments by approximately $2.5 million a year "We’re proud to have achieved our profitability targets, underscored by the full repayment of our credit facility through internally generated cash flow,” said A.
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