Company Overview: CareCloud Inc.
Hospital and clinic administrators throughout the United States have come to know CareCloud Inc. as a leading healthcare technology company, offering them a complete suite of proprietary, fully integrated cloud-based solutions for optimizing clinical, patient, and financial workflows across a diverse addressable market. CareCloud has the technology and experience to deliver reliable, secure, outcomes-based solutions that our clients value most, and the scale to deliver cloud services at a reasonable cost.
Who is CareCloud?
CareCloud was founded as MTBC in 2000 by its current executive chairman, Mahmud Haq. Prior to founding CareCloud, Mr. Haq had served as President and CEO of Compass International Services Corporation (NASDAQ:CMPS), after 11 years as Vice President of Global Risk Management for American Express (NYSE: AXP).
On the occasion of renaming MTBC as CareCloud Inc. in March 2021, Mahmud Haq said, “Over the past 20 years, we have created a tradition of making bold moves, penetrating new markets, and delivering scalable, powerful, cloud-based solutions to our clients.”
“Today, we innovate in an enviable position as we have made massive progress in expanding our modern technology-enabled offerings, broadening our market presence, and solidifying our vision for the future,” added Hadi Chaudhry, current President, Chief Executive Officer, and Director of CareCloud Inc. “Our name has changed, but our values and our commitment to excellence have not. We are steadfastly committed to the delivery of unparalleled value to our clients, partners, and investors.”
CareCloud’s Value Proposition
CareCloud Inc. is a technology-enabled software and services company that provides its healthcare clients with cloud-based clinical, financial, and operational solutions. The majority of the company’s revenues derive from monthly payments healthcare providers make to maintain access to their software. CareCloud also earns revenue from professional services, including implementation, demand-staffing, revenue management, and advisory services. The company also offers printing and mailing services.
CareCloud’s technology-enabled solutions support their customers with electronic health records, practice management, patient experience management, telehealth, healthcare analytics, workforce extension, and more. To sum up, the main business of CareCloud is providing practices, large and small, with everything they need to lower costs, run more efficiently, and prevent practitioner burnout.
CareCloud’s Marketplace Ethics Results in Marketplace Success
For 20 years, CareCloud has pursued a unique pathway to growth that has allowed it to focus on providing the best possible outcomes for customers. CareCloud Inc. has favored organic growth over advertising. Less than 6 percent of CareCloud’s budget is spent on marketing. To put that figure into perspective, TelaDoc spends over 20 percent of its budget on marketing. CareCloud has always preferred to grow its revenues by cross-marketing, always finding ways to deliver more value to its customers.
CareCloud has a unique view of its competitors: CareCloud has always sought to turn its competitors into customers. In this way, the company leverages its technological advantages and its world-wide on-demand workforce.
When CareCloud has made acquisitions, it has chosen complementary companies. It has created efficiencies to lower costs and increase EBITDA.
This marketplace ethic has translated into outstanding financial success. Between 2017 and 2021, CareCloud’s revenues grew at a 44 percent compound annual growth rate, from $31.8 million in 2017 to an estimated $135 to $138 million in 2021—representing 28 to 31 percent growth over 2020. Over the same five years, CareCloud’s EBITDA has grown at an astonishing 79 percent compound annual growth rate, from $2.3 million in 2017 to an estimated $22 to $25 million in 2021. Bottom-line earnings estimates for 2021 represent a 102 to 130 percent improvement over 2020.
CareCloud’s financial results, particularly the ability to expand revenues at a high rate while increasing its already-positive EBITDA margin, demonstrate that its management can implement a growth strategy while preserving capital. This is a trait that very few companies possess. Not only is CareCloud’s EBITDA greater than its peers, it is the only company among 12 similarly sized companies to maintain positive earnings before interest, taxes, depreciation, and amortization over the last year.
Catalysts for Continued Growth at CareCloud
Two major catalysts ensure CareCloud’s continued growth: its acquisitions and the growth of the virtual healthcare market.
The acquisitions of companies such as medSR and Meridian Medical Management were strategic moves to improve and expand CareCloud’s product offerings. The acquisition of medSR drove growth in sales through medSR’s relationships with hospitals and healthcare systems. The Meridian Medical Management acquisition helped CareCloud improve its software offerings with digital assistance and robotic process automation, making the company’s software solutions even more robust.
A second catalyst for CareCloud’s increasing value is the growth of the virtual care and HealthTech market. The US virtual care and HealthTech market is expected to grow at a compound annual rate of 28 percent through 2028, giving CareCloud Health copious opportunities to grow within the sector at a strong rate. These factors together have led some analysts to rate CareCloud as a value stock.
CareCloud’s management strategies pose clearly identified risks for investors.
The most prominent exposure of the company results from the choice to outsource the majority of its labor to Pakistan and Sri Lanka. Outsourcing to these countries provides the company with a considerable cost advantage, but leaves it exposed to greater geopolitical risk than in the United States and other developed countries. Were political pressures in Pakistan or Sri Lanka to force CareCloud to relocate its offshore labor, they would lose some of their cost advantage.
A second risk facing the company, from an investor’s point of view, is the company’s pattern of raising capital with preferred shares. CareCloud is currently paying 11 percent on 5 million-plus shares with an equity value greater than the company’s current market valuation.
However, as stated earlier, analysts concur that CareCloud stock is currently underpriced.
Neither of these two factors poses a significant risk to CareCloud customers.
CareCloud’s cost advantages and acquisitions, and the continuing growth of the virtual healthcare market, present opportunities for massive growth in revenues, EBITDA, and stock price for the company. CareCloud’s financial strength ensures that it will continue to deliver cutting-edge cloud solutions for the benefit of its customers.
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