CareCloud (CCLD) Q2 EPS Turns Positive

Key Points

• CareCloud reports its first-ever positive GAAP EPS in Q2 2025, beating both non-GAAP EPS and GAAP revenue expectations.

• GAAP revenue declined 2.5% year-over-year, but exceeded analyst forecasts for non-GAAP EPS and GAAP revenue, amid clear improvement in GAAP and non-GAAP operating margins.

• Major progress on AI technology and cost discipline.

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CareCloud (NASDAQ:CCLD), a healthcare technology firm specializing in cloud-based solutions and revenue cycle management (RCM), reported Q2 2025 earnings on August 5, 2025. The key headline: positive GAAP earnings per share (EPS) for the first time since going public in 2014, with non-GAAP EPS of $0.07, handily beating the $0.01 non-GAAP consensus. GAAP revenue of $27.4 million also outperformed the $26.69 million GAAP analyst estimate, though

GAAP revenue was $27.4 million, compared to $28.1 million in Q2 2024.

These results reflect strong operational leverage, major cost controls, and early returns from a renewed push in artificial intelligence (AI). Despite a dip in sales, profitability and cash generation showed substantial improvement in Q2 2025, making this a milestone period for the company.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Priorities

CareCloud develops software and technology-enabled services tailored for healthcare practices and systems. Its offerings include electronic health record (EHR) platforms, patient engagement tools, revenue cycle management services, and practice management software, all built on a cloud-based model. The company serves more than 40,000 healthcare providers, aiming to digitize and simplify clinical and administrative workflows.

In the past year, CareCloud has focused sharply on expanding its product suite through AI integration, emphasizing automation, specialty-specific tools, and value-driven operational support. Success depends on product innovation, regulatory compliance, and the ability to win, serve, and expand accounts in a very competitive healthcare IT landscape.

Quarter Review: Financial Performance and Business Initiatives

This was the first quarter CareCloud achieved positive GAAP EPS since its public market debut, marking a major financial turnaround. Non-GAAP EPS of $0.07 was a sixfold beat over analyst predictions. Adjusted EBITDA came in at $6.5 million, a slight rise from $6.4 million in Q2 2024, and adjusted net income reached $3.3 million, compared to $3.0 million in Q2 2024.

The company generated $5.4 million in free cash flow (non-GAAP), driven by operational efficiency measures and reductions in preferred dividend commitments following a strategic conversion of preferred shares in Q1 2025. Cash on hand more than doubled from $5,145 thousand at December 31, 2024, to $10,440 thousand at June 30, 2025, and the GAAP operating margin rose to 10.9% from 8.1% in Q2 2024.

Despite these strong results, GAAP revenue edged down by 2.5% year-over-year. However, recurring revenue from technology-enabled solutions such as EHR and RCM remains a foundational strength.

CareCloud made visible progress in product and technology innovation. The launch of its AI Center of Excellence, with plans to grow from over 50 to 500 AI-focused team members by the end of the year, underpins several new offerings. Noteworthy are cirrusAI Notes (an AI documentation product embedded in the EHR), cirrusAI Voice (an AI voice analytics and auditing tool for call centers), and specialty-specific EHRs tailored for high-value fields such as dermatology and cardiology. While these products received positive early feedback, the company has yet to provide clear data on their overall adoption or contribution to revenue.

Operational leverage and margin improvement were recurring themes. R&D spending rose in Q1 2025 compared to Q1 2024, while sales and marketing outlays trended downward in Q1 and Q2 2025 compared to the same periods in 2024. The cost structure was further aided by a dual-shore workforce and proprietary software stack.

Acquisitions also returned to the foreground. CareCloud closed two small “tuck-in” deals in the quarter—MesaBilling and RevNu Medical Management—designed to bring new customer relationships at a lower cost than organic sales. These M&A efforts complement the company’s up-selling initiatives to expand the share of wallet within its large installed base. However, as 80 % of clients have joined via prior acquisitions, sustainability of organic growth remains a consideration.

Importantly, The company’s preferred dividend obligation dropped significantly, from $3.9 million per quarter in Q1 2024 to about $1.5 million per quarter in Q1 2025, thanks to conversions. This resulted in increased free cash available for reinvestment or further M&A. There was no dividend declared or paid to common shareholders.

In product-level detail, cirrusAI Notes is an AI documentation assistant embedded in CareCloud's EHR that streamlines provider note-taking and billing accuracy. cirrusAI Voice audits call center interactions using natural language processing, helping healthcare providers improve compliance and efficiency. Specialty EHRs—customized for specific medical fields—are set to expand the company’s addressable audience. While early user stories are positive, exact revenue attribution from these products is not yet reported.

Outlook and What to Watch

Management reaffirmed full-year FY2025 guidance for revenue of $111 million to $114 million. Adjusted EBITDA is forecast at $26 million to $28 million for FY2025, and GAAP net income per share is projected at $0.10 to $0.13 for FY2025. These expectations rest largely on recurring revenue from existing clients, new client adds, and further tuck-in acquisitions. No material change or update was made to this guidance during the earnings release.

The dilution from preferred conversions, while bolstering cash flow, increases the share count and thus may impact future EPS growth. No dividend is currently paid to common shareholders.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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