By Michael Kim
READ THE FULL CCLD RESEARCH REPORT
Pre-market open on 11/6/25, CareCloud (NASDAQ:CCLD) reported 3Q25 earnings results. For the quarter, CCLD reported GAAP net income of $3.1 million – the company’s sixth consecutive positive net income quarter, and consistent with the year-ago quarter’s level. After taking into consideration preferred stock dividends, the company reported net income attributable to common shareholders of $1.7 million, or $0.04 per share, for 3Q25 – CCLD’s second consecutive profitable quarter, inclusive of preferred stock dividend payments, and a reversal from a net loss of $0.7 million, or ($0.04) per share, for 3Q24. Much of the year-over-year variance can be attributed to a 9% step up in revenue, combined with meaningfully lower preferred stock dividends, partially offset by higher operating expense (skewed by an increase in amortization of purchased intangible assets and transaction/integration costs).
Excluding stock-based compensation expense, amortization of purchased intangible assets, other (income)/expense, transaction and integration costs, as well as preferred stock dividends, Adjusted EPS totaled $0.10 based on our calculations, or a couple of pennies ahead of our $0.08 estimate. Relative to our model, higher-than-forecast revenue primarily drove the Adjusted EPS beat.
Focusing on the top line, CCLD generated $31.1 million of revenue during 3Q25, or 5% above our $29.5 million forecast, 9% higher relative to $28.5 million for the year-ago quarter. Total operating expenses of $27.9 million in 3Q25 were up 10% from the year-ago period, and came in 7% ahead of our $26.1 million forecast, with much of the unfavorable variance centered in higher G&A, R&D, and depreciation/amortization costs – though much of the step-ups can be attributed to non-cash intangible asset amortization (related to recent acquisitions) and non-recurring transaction/integration costs. Finally, Adjusted EBITDA totaled $7.7 million for 3Q25, up from $6.8 million in the year-ago quarter.
On a GAAP basis, our updated model calls net income attributable to common shareholders of $0.12 per share for 2025 (within management’s reiterated $0.10 to $0.13 guidance range) followed by $0.20 per share in 2026. Excluding stock-based compensation expense, amortization of purchased intangible assets, other (income)/expense, integration costs, transaction costs, goodwill impairment charges, changes in contingent considerations, and related tax impacts, as well as preferred stock dividends, we forecast Adjusted EPS of $0.35 for 2025 and $0.44 for 2026 (versus our prior estimates of $0.31 and $0.46, respectively). While the step up in EPS this year primarily reflected the 3Q25 beat and a modestly more favorable near-term revenue outlook, we took a more conservative stance on topline growth looking out to 2026. More specifically, we forecast total revenues of $118.5 million in 2025 (consistent with management’s recently updated guidance range of $117 million to $119 million) followed by $128.9 million in 2026 (at the midpoint of the $128 million to $130 million guidance range), as business development initiatives increasingly take hold and management captures incremental economics from existing customers via complementary services. Furthermore, senior executives reiterated 2025 Adjusted EBITDA guidance of $26 million to $28 million.
Turning to valuation, no change to $6.00 DCF-derived price target, representing meaningful upside potential from current levels. Despite the stock’s more recent outperformance, we continue to look for an upward revaluation for shares of CCLD, as awareness and appreciation of the company’s unique business model, durable competitive advantages, and reaccelerating growth prospects compound. Moreover, comparable Healthcare Information Services small cap stocks continue to trade at meaningfully higher Price-to-Earnings multiples across the board, thereby reinforcing our valuation work.
We highlight the following key takeaways from 3Q25 results:
1. Increasingly leveraging recent acquisitions: Following the closing of the Medsphere acquisition, management remains focused on tapping into Medsphere’s existing inpatient EHR and RCM relationships across small- and mid-sized hospitals. The transaction dovetails nicely with senior official’s initiative to further expand CCLD’s footprint to drive sustainable growth. To be sure, CareCloud’s EHR platform recently attained ONC Health IT Certification for Critical Access Hospitals (CAHs) – likely a key catalyst to increasingly penetrating a $1.5+ billion addressable market spanning more than 1,300 CAHs across rural markets needing to upgrade legacy EHR systems. From a financial perspective, management reiterated Medsphere annual revenue contribution of approximately $16.5 million. Moreover, we look for CCLD to realize meaningful cost synergies, as management increasingly rationalizes duplicative expenses, transitions R&D/QA responsibilities to lower-cost offshore personnel, and leverages overlapping vendor relationships to negotiate better terms over time.
Separately, CCLD closed the acquisition of MapApp, an operational/financial benchmarking tool for hospitals developed by the Healthcare Financial Management Association (HFMA) in early October. Importantly, MapApp enhances CCLD’s hospital analytics capabilities, particularly as it relates to RCM performance. Furthermore, management plans to leverage/integrate proprietary AI capabilities and link MapApp analytics to specific CCLD solutions, thereby enhancing win rates with prospective clients.
2. Accelerating operating cash flows: In the first nine months of this year, CCLD generated $19.9 million of cash flow from operations, up from $15.4 million in the year-ago period. Looking ahead, our model calls for continued growth reflecting rising revenues and ongoing margin expansion. To be sure, expenses continue to trend lower, with senior officials remaining committed to driving operational efficiencies and productivity gains. In light of CCLD’s disciplined execution, rising operating leverage, and improving financial performance (as reinforced by the second consecutive quarter of positive GAAP net income in 3Q25), the company maintains ample capacity to continue to reinvest for growth and capitalize on incremental M&A opportunities. Indeed, management recently closed a new $10 million credit facility with Provident Bank at more favorable terms (Secured Overnight Financing Rate plus 3%) relative to the prior note. Subsequent to closing, the company drew down $8.3 million to cover the upfront payment to Medsphere. Following recent payments, the balance is down to $4.9 million, with senior officials committed to paying off the facility over the next few months.
3. Ongoing focus on capitalizing on M&A: M&A remains a top priority for management, with CCLD closing four acquisitions since the first quarter of this year. Looking ahead, the M&A pipeline remains strong, particularly as it relates to non-core/distressed assets that bring clients/relationships at low Customer Acquisition Costs (CACs), as well as synergistic opportunities. From a valuation perspective, undifferentiated providers that lack value-added AI capabilities seem increasingly aware of the shifting competitive landscape, which is translating into softer transaction multiple expectations. While senior executives remain disciplined on strategic fit, management increasingly views M&A as an attractive path to enter new markets and drive incremental growth via cross-selling services and leveraging existing infrastructure/technology post-acquisition. From a structural standpoint, incremental deals likely follow management’s playbook focused on asset purchases at attractive valuations (<1x revenue) financed through combination of upfront internally generated cash and tapping the company’s credit facility at favorable terms/rates to preserve balance sheet flexibility, minimize shareholder dilution, and optimize accretion.
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