Heidi: practice management, patient engagement, and benchmarking platforms. Bringing AI inside the products our clients already use makes them smarter, stickier, and more valuable without asking clients to buy something new. The outcome shows up in retention, expansion, and the strength of our existing revenue base. The third is building entirely new AI products for discrete, high-value problems in healthcare operations. Stratus AI front desk agent and Cirrus AI nodes are the two most visible examples today. With AI prior authorization, AI-assisted medical coding, and additional clinical documentation capability and active development. The outcome is new revenue lines as those products mature. These three tracks are not separate strategies competing for resources. They are the same investment compounding three different ways. Let me walk you through each one's stance at the end of Q1. On the backend track, we continued in Q1 to apply AI across our own RCM financial and administrative operation. This is the track that gets the least external attention, but it is where AI is creating its most measurable near-term impact. Inside our RCM operations, AI is reducing claim errors, improving documentation accuracy, and increasing first pass acceptance rates . Across our administrative and financial functions, it is helping our internal teams handle higher volumes with the same headcount. We are also adopting AI-driven tools across the software development lifecycle, such as code generation, code review, QA and testing, and application design. This is the same productivity revolution the broader software industry is going through, and we are participating in it as a deliberate strategy. Over time, we expect two compounding outcomes, higher code quality and meaningfully more output per engineer. For a company shipping across a wide product surface EHR, RCM, practice management, patient engagement, benchmarking, and an expanding AI portfolio, that engineering leverage matters. How we measure progress on this track matters. We are not just tracking lag indicators. Outcomes like acceptance rates and denial ratios that tell you what already has happened. We are actively monitoring lead indicator, the signals that predict revenue cycle performance before it shows up in the financials. How early errors are caught, how many claims are pre-validated before submission, how much human intervention is required per claim, and how effectively our AI predicts denial so that rules can be configured proactively, not reactively. These upstream metrics are where AI creates its leverage. And they are what give us confidence in where the trajectory is heading, not just where it has been. Our longer-term ambition is to set a new industry benchmark, zero-touch claims, a fully automated workflow where AI handles intake, validation, submission, and follow-up with minimal human intervention, allowing billing teams to focus on exceptions rather than routine processing. Q1 was a quarter of measurable progress on the underlying lead indicators that bring that vision closer. The second track is bringing AI into the products our clients already use every day. Our existing suite, EHR practice management, patient engagement, benchmarking represents thousands of touch points per client per day. Everyone is an opportunity to make our software more intelligent without asking the client to buy something new. This creates more lasting AI value than launching a new product because it improves everything already deployed with customers. In Q1, we continued deepening AI inside these platforms, improving how our EHR surfaces relevant information at the point of care, making our practice management system more predictive about scheduling and intake, and enhancing the analytical depth of our benchmarking capabilities. None of this is a new product announcement. It is continuous embedded improvement to platforms our clients are already paying for. The most successful version of this track is one where AI inside the product is invisible to the user. They simply find that the software is doing more for them than it used to. We will share specific results as they become meaningful to disclose. This track is also where leverage on our acquisitions pays out. Some of the platforms we brought in through Medsphere and the MAP app serve a different client segment than our ambulatory base. Hospital systems, health networks, and emergency departments. The AI work there is in earlier stages, but the principle is the same. The platforms get more value when AI is part of them, and that value accrues to clients already on them. That is leverage we paid for, and we are working through it methodically. The third track is the one that gets the most public attention. new standalone AI products for specific high-value workflows. This is where Stratus AI front desk agent and Cirrus AI nodes live and where our development pipeline continues to expand. Let me start with Stratus AI front desk agent, our agentic AI front desk solution. We continue to sign new business in Q1 almost entirely from within our existing client base, exactly the motion we wanted at this stage. Our priority right now is not maximizing contract sign. It is making sure every agent we sign is implemented well, completes its trial successfully, and earns the right expand inside this account. Expansion means more agents per client, additional functions, extended coverage hours, and broader use cases. This is a curve we are deliberately working depth before breadth. because it produces durable, expanding revenue rather than a flurry of signed contracts that don't convert into real usage. Within the desk agent suite, Stratus AI voice audit continues to play an important complementary role, giving practice administrators visibility into both AI-handled and staff-handled calls. Some clients adopt voice audit alongside desk agent from day one. Others bring it on later as their AI deployment matures. Either way, it deepens over a broader Stratus AI footprint inside the account. Turning to Cirrus AI Nodes, our ambient documentation product, Nodes continues to be an entry point for many providers into the Cirrus AI family on ambulatory side, where it serves the most acute pain point in clinician stay. What I want to highlight this quarter is the integration efforts underway to bring Cirrus AI Nodes into the inpatient platforms we acquired through MedSphere. opening the door to AI-assisted documentation inside hospitals and health systems, a different clinical workflow, user, and buying center that ambulatory market we have served historically. This is exactly the cross-pollination between our acquisitions and our AI portfolio that we described as the multiplied effect when we closed MedSphere. Beyond front desk agent and notes, our pipeline continues to advance, AI prior authorization, AI-assisted medical coding, and additional clinical documentation capability are all in active development inside the AI Center of Excellence. And bringing those to market is a goal for this year. We will share more on each as they get closer to client readiness. Let me close by coming back to the three-track framework, because I think this is where the strategic picture comes together. A company pursuing only the third track only new AI products, is making a bet that depends entirely on those products achieving scale. A company pursuing only the first track, only internal cost optimization, captures margin, but doesn't differentiate its products. A company pursuing only the second track, only embedding AI into existing apps, strengthens retention, but doesn't create new revenue lines. GitHub is doing all three at once, and the reason that matters is is that each track de-risks the other. Internal AI improves our economics regardless of how fast the new AI products go. Embedded AI strengthens our existing revenue base regardless of how fast we capture new markets. And new AI products give us a path to entirely new revenue lines built on top of an installed base that AI is already making stronger every day. Q1 was a quarter where each of those three tracks move forward Each one continue to compound in the direction we have been describing, and together they form the durable, profitable AI strategy we are executing. With that, I will turn it over to Norm to walk you through the financials.
Norm Roth: Norm? Thanks, Heidi, and thanks, everyone, for joining our call today. As you have just heard, we had another strong quarter and are moving forward with our plans for the remainder of the year. In particular, we are continuing to generate sufficient amounts of free cash flow, and in May, will liquidate all of the outstanding Series B preferred shares. Revenue for the first quarter of 2026 was $31.3 million, compared to $27.6 million for the first quarter of 2025. Recurring technology-enabled business solution revenue was $23 million during the first quarter of 2026, up approximately $5.3 million from the first quarter of 2025, while the non-recurring project-based professional services revenue from MedSR decreased approximately $2.9 million. First quarter 2026 GAAP net income was $922,000 as compared to net income of $1.9 million in the same period last year. This is our eighth consecutive quarter of positive GAAP net income. Although our revenue has increased, we are continuing to integrate the MedSphere acquisition and eliminating duplicative costs. As a result of the 2025 acquisitions, there was also an increase in the amortization of intangibles and transitional costs impacting that income. We generated $2.4 million of free cash flow for the first quarter of this year compared to $3.6 million last year. Again, the decrease resulted primarily from the mid-sphere integration. Adjusted EBITDA for the first quarter of 2026 was $5.4 million, or 17% of revenue, compared to $5.6 million in the same period last year. Adjusted net income was $2.2 million, or 5 cents per share, compared to $2.3 million in the same period last year, calculated using the end-of-period common shares outstanding. As of March 31, 2026, the company had approximately $3.9 million of cash and networking capital was $2.6 million, both of which have slightly improved since year-end. We are fortunate that we have not been affected by any of the tariffs that were instituted or are contemplated since tariffs are being applied to physical glids, not services. Even better, the revenue of doctor's practices, our customers, should not be significantly affected by the tariffs or the uncertainty of potential recessions or inflation, so we don't anticipate the pressure of reduced demand for our services. The conflicts in the Middle East and Ukraine have also not impacted us. Our financial position remains strong as the company continues to take a disciplined approach to spending, ensuring our investments are aligned with clear returns. We are encouraged by the progress we've made and remain focused on executing through the remainder of the year. We look forward to reporting strong results for the remainder of 2026. With that, I'll now turn the call over to our chairman, Mahmoud, for his closing remarks.
Mahmoud: Mahmoud? Thank you, Noam. CareCloud is a profitable growing company. The full redemption of our Series B preferred and last year's Series A conversion mark a major step towards a simpler capital structure and a stronger story for our investors. We are also focused on leading the industry transformation, and our AI strategy positions us well for what's ahead.
Operator: thank you to our employees clients and shareholders for their continued support operator please open the line for questions we will now begin the question and answer session and if you wish to ask a question please press star and one on your telephone keypad and wait for your name to be announced once again star and one if you wish to ask a question We will now take our first question, and this comes from the line of Alan Klee from Maxim Group. Your line is now open. Please go ahead.
Alan Klee: Hello. Good morning. To start with, in the in-house patient software segment, talk a little about your traction and the plans to, it seems like you have a good strategy there, but this seems like this could be a big driver for the future. So if you could maybe just highlight kind of what you're focused on strategically.
Noam: Good morning, Adam.
Heidi: Thanks for joining. And that's a great question. And I think I will use this as an opportunity to dive into little bit details about what we are, whatever roadmap or the strategy is when it comes to the MedSphere products. So as you know, this acquisition brought us a comprehensive suite of platforms across the inpatient and hospital ecosystem. As an example, WellSoft and Emergency CareView for inpatient EHR, MarketWare for physician relationship management, and Healthline for hospital supply chain. Across all four, we are executing on a deliberate value creation strategy with four parallel work streams. So, first one is, if you think about the technical debt remediation and modernization. So, it's BenchSphere had paused most enhancement activity going into the acquisition. So, the foundational catch-up has been substantial. So, mobile soft care view, they are being modernized from tech client desktop application to fully cloud-based SaaS platforms. To put one number on it, just if you think about the RCN side only, we are closing more than 50 carry forward items this quarter to bring desktop and cloud to functional parity. Similar work is running in parallel across the entire portfolio. Our second one is the net new capability development. Moving these platforms well beyond where We acquired them. On MarketWare alone, more than 20 new features are in active development this quarter, including our flagship integration with Practice Match. That's the leading physician talent network that automates candidate data transfer and streamline recruiter workflows. On the supply chain side, we have already delivered web-based mobility for warehouse workflows. and we are building expiration and implant log tracking as an example. Third is our cross-portfolio integration with the existing CareCloud suite. being integrated with our patient experience platform, which will bring a seamless patient engagement layer into the emergency department. And we are also connecting Wellsoft to CareCloud's RCM infrastructure to extend RCM capabilities into urgent care. And the fourth one is over AI infusion. The clearest example is integration of Cirrus AI into Wellsoft emergency department workflows. ambient clinical documentation and care setting that has historically been an underserved AI innovation, as we believe. We are also embedding AI into marketware to surface intelligent candidate recommendation, turning it from a relationship management tool into an AI-powered recruitment engine. In addition to that, there's a lot of other things from the ONC, from the compliance standpoint, ONC secure certification, SOC 2, Type 2, 4, EPCS migrations and the like. So we are, our focus at the moment is just making sure we go through these four tracks simultaneously. And we already, the teams have started to reach out to the customers where we can bring the value in and start cross-selling and up-selling activity. And I'm sorry for the long answer, but I just want to take this opportunity to give you our strategy and the roadmap for the entire No, that was great.
Alan Klee: Thank you. In terms of some of your new AI products like Stratus AI, Voice Audit, and Notes, can you just give us a sense of how customers have been, any feedback you've been getting?
Heidi: Right. So first of all, there has been no lack of interest at all from the customers. We are getting a lot of traction. We continue to close the new business from the existing client base in the throughout the first quarter. And as you know, our strategy has been the first after the signing of the contract, they will be going through initial implementation. Then there is a 30 days trial. Many times the customers say, just because of the first AI adoption resistance, you would say, or, okay, we'll only implement refill agent as an example. So we go through those one by one. And as I mentioned in my remarks earlier, our goal today is that every single customer and the agent is implemented, complete the trial successfully, and start growing beyond just the trial and keep adding and activating more agents. So answering your question, we are getting a lot of traction. There are no issues in terms of finding the interest and drawing the contracts. We are right now laser focused on implementation and expansion.
Alan Klee: Thank you. My last question now is you showed your pipeline of AI prior authorization, AI assisted medical coding, and additional clinical documentation, how do you think about what the opportunity is here?
Heidi: Well, for both of those, and just to give a little more detail as an example for medical coding, we already have started to deploy internally because, as you know, we provide the medical coding to many, many clients today. So internally, we have, and that will be used as a true point and maturing and refining the product to achieve the right accuracy levels. And then we can start expanding and start selling into the client base where we are not doing the coding as an example today. And then also, this also helps us define further our CSI notes application because our long-term vision is it should be a one cohesive starting from this notes. The coding should be done automatically right off of that. So that's our, and these pieces will eventually will be integrated into that entire workflow or this training. Same case goal for the prior authorizations, since we also, in addition to the AI-based development on our side, we also need to complete our integration with external clearing houses and the pairs so we can submit those authorizations electronically. We have significant milestones in terms of the completing the testing and the testing environment. We are in the initial phase of picking up the pilot customers to deploy this AI authorization. So if you think about both of these two things and authorization as an example, I don't have the industry numbers in front of me at the moment, but this is one of the most, one of the pain points, especially in this healthcare industry for specialties such as orthopedics, for neurosurgery, where you really need these authorizations to be done accurately on time before the procedure is done. And then in the hospital space from the MedSphere, we see a tremendous opportunity there once these products get materialized.
Alan Klee: That's great. I'll get back in the queue. Thank you so much.
Noam: Thank you.
Operator: Yes, sir. Thank you. And the next question comes from Lisa Thompson from Zacks Investment Research. Your line is now open. Please go ahead and ask your question.
Lisa Thompson: Good morning. I have a few questions for you. First off, I would like for you to discuss the Series B redemption. I know it's a good thing and you enumerated some things that were positive, but could you talk about the timing? Why now?
Noam: For sure. Thanks for the question, Lisa.
Steve: So as you mentioned, this probably is the single biggest capital structure simplification in our history, at least as a public company. The Series B redemption removes a preferred equity overhang that has existed since shortly after IPO. But it's a good question, like, why now? Why is now the right time to make sure that we remove that overhang? And at least from our perspective, there are Three main reasons. That first is from an operating performance and pre-cash flow. We've really reached an inflection point. We're generating the cash to support a senior debt-funded redemption. So we have the capacity, we have the capability to do it. That's one. Second would be from a credit market perspective, we're able to secure an attractive senior debt facility with attractive economics. for the $50 million facility. So the ability to move forward with very attractive senior debt economics was another key driver. And then the third thing was the fact that we're eliminating the preferred dividend burden. And that really frees us up from a cash flow perspective to redirect the capital to growth investment, M&A, and common shareholders. So, from a strategic perspective, there's been a longstanding complexity in our equity story that really is driven by the preferred. It's something that we've heard in the majority of the conversations we have with institutional investors, and we really believe that this transformation allows us with zero dilution to create an investment in the common shares that's far more attractive for a broader base of investors. So for a variety of reasons, we thought the time is now, and we're excited about being able to move forward with that redemption. Of course, the official redemption will occur later this month on the 15th.
Lisa Thompson: Okay, great. And as far as the ATM goes, you said that you would be using it when appropriate. Could you give us some examples of when that might be appropriate?
Steve: Sure. So think about the ATM visa as really simply a tool that gives us optionality, not as a plan. So our default posture has always been, will continue to be a very conservative posture. We've intentionally refrained from issuing new common equity opportunistically. and we'll continue to do that. So it's not a general financing source. When would we consider it? We'd really consider it in a few different circumstances. One, we would consider it to fund attractive and creative M&A transactions where the strategic value is moving quickly and we can do so without dilution. So that would be one to be able to fund M&A transactions. The second would be if the stock price is trading at a level where we're able to opportunistically to risk the balance sheet, we'd consider it then. And then maybe a final point would be more so to support clear growth objectives. So investments with a defined return profile So, those would be really the 3 main of main reasons why we would use it. But again, I. I think it's important to remember that again, our posture has been very conservative. We'll continue to be very conservative. We'll only use the proceeds when there's when there's a clearly a creative acquisition or 1 of these other criteria is met.
Lisa Thompson: Great. That makes sense. I was wondering if you could just talk about. where you are with AI versus competitors. Are there other people out there with the same capabilities? And in that respect, what functionality is AI giving you that's most helpful for the sales force when they're going out versus the competition?
Steve: Absolutely. I'll let Hadi dive into that a little bit more, but the common theme that we hear is that AI incorporated into the fully integrated system, which includes EHR, the practice management system, and patient health experience, that that AI that's embedded within that ecosystem or that environment is really what unlocks the utility, the usefulness of AI. So, really where we've been focusing from a sales perspective has been on things like Stratus AI, where there's a very clear picture from a healthcare provider's perspective in terms of the return on that investment. So, they're able to see a very clear path towards return on that investment. Um, and, uh, to free up their internal resources to focus on higher value activities. So, really stress, I think exemplifies 1 of the key areas where our health care providers are increasingly appreciating that the value of AI and are embracing it. But I'll let Hadi address that more broadly.
Heidi: Sure. And as Steve mentioned, Lisa, there is no shortage of point solution AI vendors. They are targeting individual workflows in healthcare. As an example, you might find many vendors who are providing the ambient solutions. Others, you will find vendors who are providing something similar to what we are with our strategy AI friend desk assistant agent as an example. But what really differentiates us is it's a full embedded integrated solution versus a bolt-on solution, which most of these vendors are providing. So as of overall, AI strategy is a three-pronged approach. So the backend optimization to the embedding the AI into the existing platform, as Steve was saying. And the third one is the stratosphere with the ambient solution over stratosphere and most application and the like. So, those are the ones from the net new revenue perspective where the sales team is focusing on.
Lisa Thompson: Great, thank you. That's all my questions.
Noam: Thank you.
Unknown: Yes, thank you.
Operator: And we have a follow-up question from Alan Clee from Maxim Group. Your line is now open. Please go ahead.
Alan Klee: Yes, hi. You stated that you're reaffirming your full-year guidance, and the first quarter is seasonally always the lowest quarter, and then you had the integration-related items during the quarter. But I thought it was important how you said that margins you expect to improve throughout the year. Could you comment a little on how you think about how that progresses in any seasonality? Thank you.
Noam: For sure. Thanks, Alan. And I'll let Norm jump in.
Steve: But to your point, quarter one is always a seasonally weak quarter for us because of deductibles and other factors. So that not only compresses our overall top line, but also from a profitability perspective, you see the impact associated with that reduced revenue. But I'll let Norm talk about it in a little bit more detail. Sure.
Norm Roth: Thank you, Steve. Thanks, Alan. So, you know, we went to MedSphere, you know, corporation in August of 23. So even in the first quarter, we were eliminating some duplicative costs with some transitional costs and integration costs. So we're trying to get through those, you know, sometimes duplicative personnel. Also, you can see in our purchase price allocation, a significant amount of intangible assets that are advertised. We advertise them on a double declining balance, so that amortization is going to decrease over time. So as we, you know, digest the acquisition, remove the, you know, duplicative costs and get past the transitional costs, we would expect margins to improve.
Noam: And Ellen, maybe one other thing to think about.
Steve: Sorry, I'm just going to mention one other thing to think about in terms of margins for the year is as we progress through the year, as you get, especially as we get into the back half of the year, you'll see those margins continue to grow. And if you just think about the kind of the typical average month, we believe that free cash flow will exceed $2 million on average during any given month. If you kind of counterbalance that against our obligations, the obligations associated with the loan will result in payment obligations of about one, $1.1 million. So, from a cash flow perspective, we have that cash to continue to reinvest in attractive M&A opportunities. We have the cash to continue to invest in other growth opportunities and the like. So even from an ATM perspective, that's why we truly say that ATM is really a tool to give us optionality down the road, really not a plan. Obviously, we went public at, or you may recall, we went public at $5 per share. there'd really have to be a very compelling reason to sell shares at less than that. Doesn't mean it's impossible, but there'd have to be a very compelling thesis to sell shares at something lower than $5. And that's because we're generating this cash flow internally. If you think about the acquisitions last year, we closed four total acquisitions and those acquisitions were paid with zero common shares, I mean, zero dilution and paid from our internally generated cash flow. So, we continue to see really that being the proper path for us as we move forward.
Noam: That's great. Is it available, any of the terms on the new credit facility? Yes, Alex, we filed an 8K, and in there is all the exhibits, you know, as required in the 8K, so you can see all the related documents. Great. Thank you. And maybe the last thing.
Alan Klee: You guys had a history of, like, you could buy things with a better cost of customer acquisition cost than doing it organically. But now it seems like you have the opportunity on both sides. In terms of, like, having a sales force to go after the opportunities you have, how are you approaching that?
Steve: So from a Salesforce perspective, our Salesforce today is multiple times what it was at the same time last year. So I would say it's grown probably three times compared to what it was last year at the same time. So that sales team is focused on cross-selling within our existing base, and as our existing base, continues to grow through the Bedsphere acquisition and through organic growth and through the other acquisitions, then the overall size and scope of that cross-selling campaign continues to increase. So that team is really primarily focused on sales activities that are oriented towards expanding the wallet share within our existing base. So, I think that will continue to be the case. But I think what we have now is now we have really two prongs from the growth strategy perspective that we're comfortable with. One prong being the organic growth and the other prong being the acquisitive growth or the inorganic growth. From a cost perspective, you'll recall that the acquisitive growth for us generally is somewhere between 0.6 and one times revenue is the cost of acquiring portfolios of customers, recurring revenue relationships in the context of these acquisitions. In our space, of course, the industry average is somewhere between 1.2 to 1.4 times revenue for that same cost of acquiring that customer relationship. We're attempting to do that at a lower cost And again, you'll appreciate the fact that we're relatively early in terms of this overall expansion. So the jury is still out quite candidly in terms of whether we can do that at a comparable CAC to our acquisitive group, but that's what we're endeavoring to do. We have the capital to push forward and to give that a full try, which is what we're doing. With the capacity, with the capital to be able to invest in that two-pronged strategy, that's what we're doing. And we believe that the results will bear out the wisdom of that overall approach.
Noam: But again, time will tell. Okay. That's a lot. Thank you. Thank you so much.
Unknown: Certainly. Thank you.
Operator: Yes, sir. Thank you. And there are no further questions that came through at this time. I'll now turn the call over back to Norman Roth for any closing remarks. Please go ahead, sir.
Norm Roth: Yes. Thank you, everyone, for attending our call today. Hope you have a great day. Thank you.
Operator: Thank you. This concludes our conference call for today. Thank you all for participating. You may now disconnect.
