CareCloud, Inc. (CCLD) - Q1 2026 10-Q Summary
Business Context and Reporting Period
CareCloud, Inc. is a healthcare information technology company providing technology-enabled revenue cycle management (RCM), cloud-based software (SaaS), and medical practice management services. The company operates through two reportable segments: Healthcare IT and Medical Practice Management. This filing covers the quarterly period ended March 31, 2026.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Revenue | $31.27 million | $27.63 million |
| Operating Income | $1.00 million | $2.02 million |
| Net Income | $0.92 million | $1.95 million |
| Net Loss Attributable to Common Shareholders | $(0.44) million | $(0.86) million |
| Adjusted EBITDA | $5.37 million | $5.60 million |
| Cash and Restricted Cash | $3.85 million | $6.81 million |
| Net Working Capital | $2.63 million | Not explicitly stated |
| Preferred Stock Dividends Paid | $1.92 million | $1.73 million |
Material Changes vs. Prior Period
- Revenue Growth: Net revenue increased 13% year-over-year, driven primarily by the integration of recent acquisitions (Medsphere, MAP App, RevNu), which contributed approximately $7.3 million in revenue during the quarter.
- Profitability Decline: Operating income decreased by approximately 50% ($1.02 million) compared to Q1 2025. This was due to a 96% increase in Research and Development (R&D) expenses and a 27% increase in General and Administrative (G&A) expenses.
- Expense Drivers: R&D expenses rose to $2.42 million as fewer development costs qualified for capitalization. G&A expenses increased due to higher salary costs and legal/professional fees. Direct operating costs rose 9% primarily due to increased outsourcing and processing costs.
- Acquisition Activity: The company finalized the purchase price allocation for the MAP App acquisition and continued to integrate Medsphere and RevNu. Revenue from Medsphere clients was approximately $6.8 million.
Guidance, Outlook, Risks, and Unusual Items
- Cybersecurity Incident: On March 16, 2026, the company experienced a network disruption in its CareCloud Health division affecting one EHR environment for approximately eight hours. An unauthorized third party accessed the system, and data exfiltration is suspected. The company has engaged forensic experts and believes its cybersecurity insurance is sufficient, though class action complaints have been filed.
- Subsequent Financing: In April 2026, the company secured a new $50 million credit facility ($40 million term loan, $10 million revolver) with Citizens Bank and Provident Bank. Approximately $41.6 million of these proceeds were used to prefund the redemption of Series B Preferred Stock.
- Preferred Stock Redemption: The company elected to redeem all outstanding Series B Preferred Stock on May 15, 2026. This will eliminate the monthly dividend obligation associated with this series.
- ATM Program: The company entered into an At-The-Market (ATM) offering agreement to sell up to $60 million of common stock.
- Liquidity: Management expects sufficient liquidity to meet obligations for the next 12 months. Cash provided by operating activities was $3.61 million.
Investor Verification Checklist
- Cybersecurity Impact: Verify the final scope of data exfiltration, the number of patients affected, and the total cost of remediation and potential litigation.
- Preferred Stock Redemption: Confirm the successful redemption of Series B Preferred Stock in May 2026 and the resulting reduction in cash outflows for dividends.
- Debt Covenants: Review the covenants of the new $50 million credit facility and ensure compliance, particularly regarding the pledge of the Executive Chairman's securities.
- R&D Capitalization: Monitor the trend of R&D capitalization vs. expensing, as the shift in Q1 2026 significantly impacted reported operating income.
- Acquisition Integration: Assess the revenue retention and margin contribution of the Medsphere, MAP App, and RevNu acquisitions in subsequent quarters.