Carecloud (NASDAQ:CCLD) Q4 2021 Earnings Call

0:00 Please stand by. We're about to begin. Good day, everyone. Welcome to the CareCloud, Inc., fourth quarter 2021 results call. At this time, all participants are in a listen-only mode. Later, we'll conduct a questions and answers session. And if you'd like to ask a question, please signal by pressing star 1 on your touchtone phone. Please note this event is being recorded. I'd now like to turn the call over to Kim Blanch, CareCloud's general counsel. Ms. Blanch, the floor is yours. Good morning, everyone, and welcome to the CareCloud fourth quarter 2021 conference call. On today's call are Mahmud Haq, our founder and executive chairman, A. Hadi Chaudhry, our chief executive officer, president, and a director, Bill Korn, our chief financial officer, Stephen Snyder, our chief strategy officer and a director, and Carl Johnson, president of CareCloud Force.

0:51 Before we begin, I would like to remind you that certain statements made during this conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. All statements other than statements of historical fact made during this conference call are forward-looking statements, including, without limitation, Statements regarding our expectations, guidance, and guidance for future financial and operational performance, expected growth, business outlook, and potential organic growth and acquisition. Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, upcoming, believe, estimate, or similar terminology, and the negative of these terms.

1:48 Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. These statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise these forward-looking statements in light of new information or future events. Please refer to our press release and report filed with the Securities and Exchange Commission where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward-looking statements. For anyone who dialed into the call by telephone, you may want to download our fourth quarter 2021 earnings presentation.

2:39 Please visit our investor relations site, ir.carecloud.com, Scroll down to Upcoming Events, click on Fourth Quarter 2021 Results Conference Call, and download the earnings presentation. And finally, on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our Fourth Quarter 2021 results for reconciliation of these non-GAAP performance measures to our GAAP financial results. And with that said, I'll now turn the call over to our CEO, Hadi Chaudhry. Hadi? Thank you, Kim. Thank you, everyone, for joining us this morning to discuss our fourth quarter and full year 2021 results.

3:24 In the call, I will cover our 2021 results, discuss our emerging organic growth opportunity, review the strategic acquisition of Medisar, and conclude by talking about the evolution of our company. I would like to begin by highlighting some of CareCloud's financial accomplishments for last year. We are very pleased to report another year of strong financial results with record levels of revenue, EBITDA, non-GAAP net income, and free cash flow. Revenues were approximately $140 million, an increase of 33% year-over-year. Adjusted EBITDA was $22.1 million, which was more than double of 2020 levels. and we delivered adjusted net income of $18.5 million or $1.24 per share compared to $8.5 million or $0.63 per share in 2020.

4:25 Turning to our operational highlights for the full year, we made one strategic acquisition headlined by the June acquisition of certain assets of MedMedica and Santa Rosa Consulting. We subsequently rebranded it as MedSR. This acquisition gives us new service offerings and staffing capabilities and expands our footprint into the health systems market. This provides us with greenfield opportunities to cross-sell our RCM and technology solutions, such as business intelligence and robotic process automation. We continued on the path of innovation as we introduced several new products during the year, like CareCloud Conductor, a family of technology solutions rich with interoperability and data exchange capabilities to accommodate more and bigger customers.

5:16 We integrated our various acquired platforms with CareCloud's proprietary rule-based claim scrubbing engine, CollectiveIQ, that includes custom rules for over 80 medical specialties. This integration of collective IQ with these acquired platforms enables our clients to achieve an industry-leading first pass rate of up to 97%. And we are planning to launch this platform for healthcare IT industry very soon. We are pleased with the uptake and continued high utilization of virtual care visits on our platform. During the quarter, telehealth visits were 26 times that of pre-pandemic levels, and at the peak of the pandemic, a 44 times increase versus pre-COVID.

6:05 We also took steps to strengthen our management team, particularly in the area of operations and sales and marketing. Today we announce the appointment of Steve Link as Chief Operating Officer of CareCloud. In this role, he will be leading the company's revenue cycle management operations, including all functional components of service delivery and client success. Steve was previously Senior Vice President of Client Operations at CareCloud and brings to the company 30 years of operations, strategy, and process improvement experience, including leading multiple business units at Athena Health. Additionally, we hired Brian Zelenka as Vice President of Marketing who joins CareCloud with greater than 25 years of healthcare and technology experience building and leading high performance teams.

6:58 He has an impressive track record implementing data driven marketing strategies that accelerate growth and profitability. With respect to sales and operations, We appointed Patty Peetz as Senior Vice President of Sales to lead the company's sales growth and market expansion strategy and execution. Ms. Peetz joined CareCloud in 2014 and was previously Vice President of ClientOps Solutions. She has 30 years of sales, consulting, and healthcare experience, including Sage and NextGen Healthcare. Last but not least, we appointed Karinda Cox as Vice President of Sales Operations. She has 17 years of experience, including managing sales team at Change Healthcare, where she succeeded both growth and booking strategies in the ambulatory small practice channel.

7:55 I would like to point out that our sales team is now roughly 30 people, up from one or two employees at the time of the IPO. As I will discuss shortly, we look to continue to expand our sales resources over the course of the year. Our focus will be signing new clients as well as leveraging our vast customer base through the cross-sell and up-sell of CareCloud solutions. We would now like to take a deeper dive into our organic growth strategy, which has evolved over time from our prior history as a pure consolidator of billing companies. Coinciding with our diverse portfolio of products and services that we have amassed over the years, we have increased our sales and marketing efforts to fully capitalize on the addressable market opportunity that exists across our family of products.

8:46 As an illustration of our increasing focus on organic growth, we invested just 2% of revenue on sales and marketing in 2019, while in 2021, we tripled that spend to north of 6%. Further, we intend to increase our sales and marketing investment by 20% to 25% this year, positioning us to execute on the marketing opportunities ahead. To help manage this increased sales and marketing effort, we have, as mentioned, expanded our sales leadership team with extensive digital health experience. We believe that this stepped-up effort in sales and marketing will return higher level of organic growth versus what we have achieved in the past. Namely, new incremental business frequently carries with its higher margin than existing contracts from acquired businesses, contributing to a higher margin profile moving forward.

9:42 Turning to our recent acquisition of MedSR, we are now more than six months into the acquisition since it closed in June of 2021 and are pleased to provide an update of our progress. To review, the acquisition of Medisar provides strategic value to CareCloud on at least two fronts, scale and expertise. Over the last two years alone, Medisar has worked with greater than 100 hospitals, providing a solid foundation upon which CareCloud can cross-sell products and services. Medisar has entrenched relationships with the C-suites of these customers, providing CareCloud a warm introduction that we believe will bear fruit versus a pure cold calling effort. The Medisar acquisition is unique for us as it helps expand CareCloud's footprint in the hospital and health system space, an area in which until now had only a small presence. The current labor shortage environment in hospitals, combined with increased inflation, provides a solid backdrop upon which MedSR can thrive, given the company's value proposition of staffing high-level FTEs for short- and long-term consulting engagements.

10:53 Six months in, we have completed most of the integration and training of employees, setting us up for cross-sell of products and services into the MedSR base and vice versa. We continue to expect the transition to be accretive to our 2022 financial performance. The transaction is consistent with GearCloud's strategy of targeting high-quality, undervalued companies whose IP, human capital, and or financial profile is something that we can leverage across our vast platform. Our acquisition pipeline remained robust, and we feel that we are in a viable position to be a consolidator in the industry, as many companies with less solid footing have been victim to increasingly stringent regulations, COVID-related fallout, labor shortages, and inflation.

11:46 This month marks my one-year anniversary as CEO of CareCloud and I couldn't be prouder of our accomplishment this year and throughout our history. I believe the company truly sits at an inflection point as we have evolved over the last 20 years since I joined the company. We began as a pure play revenue cycle management company, became the leading consolidator of the industry, and evolved into a fully diversified provider of digital health and technology solutions and services. As slide four depicts, we now offer leading solutions in practice management and RCM, electronic health records, project management, staffing, and digital health solutions, improving the patient experience, including telemedicine and digital front door tools. This breadth of overall capabilities is a key differentiator of ours and continues to attract prospects seeking a single partner to accommodate their digital health requirements.

12:47 Our clients tell us that they prefer to work with vendors. They can offer a wide variety of solutions to meet their ever-changing needs they face as they navigate through the complex healthcare environment. I would like to take a moment to illustrate how our diversified portfolio positively impacts the outcomes of our customers. As just one example, we have been working with the Hutchinson Clinic in Kansas across a variety of initiatives since 2020 to address collection challenges, among other issues. During a recent interview, we were reminded by their CEO and CFO of the great work both of our teams had been doing together. Over the past several months, we have been deploying additional workforce, software, and automation that has delivered a dramatic impact to their bottom line.

13:39 While this increase in revenue and proper reimbursement is important, it is crucial to remember that the business of medicine is not just about bottom line results, but rather it has the opportunity to make an even broader impact on the community and those near and around Central Kansas. and as shown on slide five, we have expanded our customer base from initially small physician practices to large practices and clinics, hospitals and health systems spanning from 100 beds to 1,000 beds, specialists, labs, peers and vendor partners. With this backdrop exiting 2021, we are very excited about our prospects for 2022 as Bill will share later in our outlook.

14:27 Our newly issued 2022 guidance implies 10% revenue growth at the midpoint and low-teens EBITDA growth, which is a combination of organic growth and attacking acquisitions. We plan to increase wallet share within our vast client base, introduce new solutions that build on innovation we have forged in the area of digital health and patient experience by looking opportunistically at acquisitions. We note that our guidance does not contemplate any large, transformative acquisitions. Before turning over the call to Bill, I want to reiterate CareCloud's three pillars of growth as outlined on slide six. Organic growth through adding new customers, products, and the cross-sell of products and services into our client base.

15:17 Acquisitions which have always been part of CareCloud's DNA to drive long-term shareholder value. and partnerships, namely through our force initiatives in which we work with partners by leveraging our staffing, RCM and technology capabilities. In fact, we have seen increased interest in force to help mitigate labor shortages that are rapidly becoming more prevalent across the hospital settings. We are well positioned in the market to deliver positive outcomes and help drive the success of our 2600 strong customer base of medical practices and healthcare institutions. Our 2021 performance in these unprecedented times gives us confidence in our ability to achieve our 2022 outlook and emerge from this year even stronger than last.

16:07 I will now turn the call over to Bill Korn, our Chief Financial Officer, to provide an update on companies' full-year and fourth-quarter financials, as well as comment on our 2022 outlook. Bill? Thank you for joining us all on the call this morning. I want to reiterate Hadi's sentiment that we are really proud of our fourth-quarter results and what we achieved in 2021. On today's call, I'm going to share some 2021 financial highlights, review our fourth quarter results, and close by providing some color on our initial 2022 outlook. First, I want to cover some of our financial accomplishments from last year. I feel strongly that our performance reflects continued traction in the marketplace.

16:55 Revenue increased 33% year over year to $139.6 million, and Technology Solutions represented 83% of the total. Thinking back three years ago, prior to our acquisition of CareCloud and midway through our pivot to become a more technology-driven company, technology-enabled solutions only accounted for 58% of our total revenue. Taking a close look at the technology-enabled revenue, 49% of revenue was from clients using our core technology suite of electronic health records and practice management solutions. 21% was from clients using one or more components of our technology. 13% was from clients for whom we're providing IT services using our technology processes and know-how.

17:47 Of the remaining revenue, 6% of revenue is from pure revenue cycle management. And as a quick comparison, Pure RCM represented 26% of our total revenue three years ago and 75% of revenue at the time of our IPO in 2014. Clients where we provide comprehensive medical practice management services were 9% of revenue and other services accounted for the last 2%. All of these breakouts can be found in our earnings press release and our 10K. Now, while our revenue growth was impressive, Our improvements in profitability were even more noteworthy. GAAP net income of positive $2.8 million for the year compared very favorably to a net loss of $8.8 million last year.

18:38 I want to call out that 2021 includes $2.5 million related to a gain in the change of fair value of the contingent consideration from the MED-SR acquisition, and this $2.5 million has been excluded from our non-GAAP-adjusted results. However, even without this non-cash gain, we delivered positive GAAP net income for the year for the first time since going public in 2014. For non-GAAP adjusted net income, we generated $18.5 million, or $1.24 per share, an increase of $10 million over adjusted net income of $8.5 million in 2020. Adjusted EBITDA? of $22.1 million, more than doubled in 2021, while adjusted EBITDA margins increased 550 basis points to 15.8%.

19:35 During the year, we completed the strategic acquisition of MedSR that Hadi mentioned, which added professional services to our offering and gave us a sizable footprint in new markets, including health systems and hospitals, in which we believe there's a meaningful opportunity to cross-sell some of our technology solutions. As you can see, we are making progress on all fronts. Now, turning to fourth quarter highlights, revenue of $37.5 million increased 17% compared to a year ago. From a revenue standpoint, this quarter we saw patient volumes return to a more normal cadence, continuing our pattern of normal organic growth. Gap net income of $3.5 million compared favorably to $155,000 last year.

20:26 Please note that this includes the $2.5 million gain in the change of fair value related to the MedSR acquisition that I mentioned a moment ago. Even without the change in the estimated value of the earn out, we would have reported a gap net income in excess of $1 million. Bill, I think it's some technical glitch. Maybe we stopped hearing you. Hadi, can you hear me?

21:22 Yes, we can hear you now. Okay. Now turning to the fourth quarter results. Revenue of $37.5 million increased 17% compared to a year ago. From a revenue standpoint, this quarter we saw patient volumes return to a more normal cadence, continuing our pattern of organic growth. Gap net income of $3.5 million compared favorably to $155,000 last year. Please note that this includes the $2.5 million gain in the change of fair value related to the MEDSR acquisition that I mentioned a moment ago. Even without the change in the estimated value of the earn-out, we would have reported a GAAP net income in excess of $1 million in the quarter.

22:12 Non-GAAP adjusted net income of $5 million was flat with last year. Adjusted EBITDA of $6.1 million increased 7% compared to $5.7 million last year. This increase was primarily driven by the realization of synergies from our prior acquisitions. Adjusted EBITDA margins came in at 16.3% compared to 17.8% a year ago. The fourth quarter adjusted EBITDA margins were slightly impacted by the addition of professional services revenue from our mid-year acquisition of MedSR. Turning to our balance sheet and cash flow, we ended the year with $10.3 million in cash, including $1 million in restricted cash from the MetSR transaction, and generated $6.1 million in cash flows from operations in the quarter.

23:08 And we ended the year with net working capital of $6 million. Finally, guidance for the full year 2022, we expect revenue to be in the range of $152 and $155 million, which represents 10% growth at the midpoint, and adjusted EBITDA to be between $24 and $26 million, reflecting 13% annual growth at the midpoint, even after the incremental sales and marketing investments. Now, let me provide some additional color that is underpinning our guidance. As always, our annual guidance is based on a combination of organic growth, and growth from tuck-ins and excludes major acquisitions.

23:56 While we don't normally guide to quarters, I want to provide a reminder of the fourth quarter to first quarter seasonality in our industry. We typically see a sequential decline in revenue from Q4 to Q1 due to patient deductibles resetting on January 1st. This has historically been partially offset by flu-driven visits in Q1. but we are seeing a very mild flu season as we did in Q1 2021, given the social distancing and increase in people working from home. Given the puts and takes, we're expecting a roughly 10% sequential step down in revenue and a similar dollar decline in adjusted EBITDA, since our costs are related to the volumes of activity and not to payments.

24:46 Looking over the course of 2022, Our third quarter is typically the high point of the year as physician visits related to the start of the school year pick up and flu shots are being administered. Adjusted EBITDA generally follows the same seasonal pattern. I'd like to close by talking about our capital structure. Earlier this year, we took our first small step towards reducing our cost of capital by launching a Series B preferred stock with an 8.75% dividend rate. As of the end of February, we raised approximately $27 million on a net basis and are using the proceeds to retire $20 million of our higher dividend Series A preferred.

25:31 We are grateful to our Series A investors as this was an important financial instrument that allowed us to fund our growth strategy and reach the point we are at today. Our goal is to reduce our exposure to Series A and lean on more cost-effective sources of capital in the future. We're considering several paths forward depending on market conditions, including offering an exchange to allow Series A shareholders to exchange for Series B shares, selling more Series B and using the proceeds to redeem more Series A, considering debt options to allow us to redeem more Series A, and selling common equity to retire Series A. We are fortunate to have multiple options and are cognizant of potential shareholder impacts of our choices.

26:21 Rest assured, we will choose the best combination of actions that we anticipate will produce the highest expected return at the lowest risk for common shareholders. Look out for further steps to reduce our cost of capital as the year progresses. In conclusion, we are pleased with our 2021 performance and believe we are well positioned to continue to execute our strategic initiatives and look forward to keeping you posted over the course of the year. With that, I'll turn the call over to Mahmud for his closing remarks. Thank you, Bill. We are pleased to report another year of record financial performance and look forward to setting new records in 2022 and beyond.

27:07 I would like to thank our customers, shareholders and employees for their continued support of CareCloud mission. We will now open the call to questions. Operator? Thank you, sir. If you'd like to ask a question at this time, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, that's star 1 if you'd like to ask a question. We'll take our first question from Jeffrey Cohen with Ludenberg Thalmann. Good morning, everyone. How are you? Good morning, Dave. Good. How are you? Just fine. So I guess firstly, if you could discuss in further detail your guidance for 22.

27:56 It seems a little lighter than we had previously expected. What are the inputs and factors that you're taking into account when taking birth rates down toward the 10% as a midpoint? Thanks for the question, Jeff. As we put forward our guidance, we're always torn between expressing the optimism we have to grow the business, the opportunities to have step function growth from acquisitions, as well as setting reasonable expectations for the marketplace based on pure organic growth. Based on that, as we look at the volume of customers, we look at the volume of healthcare visits, we think getting to that net growth that you see in our guidance is a good approximation of where we'd be without doing anything major and strategic. Now, rest assured, we're always looking for great opportunities for step function growth.

29:07 but it's impossible to predict those and therefore we always leave those out of the guidance. So we've tried to balance this and be conservative. I think it's all of our goals to exceed the numbers that we've put forward but we don't want to set unrealistically high expectations and then run the risk that people are disappointed in the future. Secondly, could you talk a little bit about your current base of customers and going forward over at least this year, if not next year as well, talk a little bit about the offerings and the platform and where you're expecting most of the growth from current customers, whether it be the larger companies or the onesies and twosies on the smaller sides?

30:01 Thank you, Jeff. Jeff, as we mentioned earlier, there are three major areas for us, the set of customers who use our core technology, so we still continue to see revenue, about roughly 50% of the revenue coming from the clients who are using our core technology platform, whether it's our EHR or practice management and the like. and we still see about 20% plus customers roughly who have been using at least some component of our technology, at least one component or more components of the technology but may not be the core component. Our professional IT services, that number stands somewhere around at 13%. and this is primarily the projects that we are doing with the help of our Medisar division. And the rest of the revenue is being generated by different either pure RCM services or forced deals and the like.

31:00 In terms of the future opportunities, we do see some increase in the forced deals, and Carl can talk a little bit more about the more opportunities we see there. In terms of, I think we will continue to grow in the same way, 50% plus. Our goal is to keep on increasing this 50%. The revenue share utilizing the core services. And then over the next priority or the next segment is of course the 20%, which is today, which is at least one component of the products and the services that the client should be using. So we see the same attraction. With the help of the Merisar, as we mentioned earlier, we do see more and more opportunities as we have ramped up our sales and marketing efforts and planning to increase it further in this coming year.

31:53 With those additional connections coming in with the help of the Merisar and other related opportunities, we do see that we should be signing more business into the large enterprise space. Carl, would you like to talk about the opportunities that we see on the foreside? Yes, I'd be happy to add a little color to what you've already said, which is right on point. Certainly overall, if we compare Q4 to where we were a year ago, the percentage of forced sales is almost triple where we were. And I think I attribute that to a number of factors.

32:45 One is just an increased effort on the sales and marketing side with net new deals. Two, definitely there's a dramatic shortage of qualified workers in the U.S. at hospitals, large practices, revenue cycle companies that we've been able to tap into and to meet a need there. And three, the acquisition of MetaSR has gained us a whole new set of connections at an executive level. And we've already seen a number of very strong deals, you know, come into play that really, really have enhanced what we're providing in the way of force. Thank you, Hadi. Okay.

33:31 And just one more quick one, if I could. For Bill, on the adjusted EBITDA guide of 24 to 26, so it looks like you would expect that the adjustments would be similar to 2021 with the GAAP gain being at or slightly larger than the 2.84 from 2021. Is that a good way to phrase it? I think so. In terms of the adjustments between GAAP net income and non-GAAP or adjusted EBITDA, One of the things to take into account is that if we were to do a large-scale acquisition, that might raise amortization of intangibles, that might raise the transaction and integration cost, but doesn't really change the long-term impact of the business.

34:17 So in some ways, the adjusted EBITDA is a more steady state number that you can look forward to. And when you think about the adjusted EBITDA growth, recognize that we are also increasing our investment in sales and marketing from where we were in 2021. So despite increasing the sales and marketing investment, we'll still be growing the bottom line. Perfect. Okay, got it. Thanks for taking our questions. Thanks, Jeff. Thank you. Next question will come from the line of Mark Weisenberger with B. Reilly Securities. Thank you. Good morning. Appreciate taking the questions. Bill, if you could just follow along with that kind of commentary on the sales and marketing investment, and when should we expect the revenue to flow through from those investments?

35:12 Is that going to come more in the second half of the year? Good question, Mark. So as CFO, you love to be able to hire a salesperson, and on the first day that they arrive, They sign a million-dollar customer who goes live that minute, sees a patient, and insurance pays them within 24 hours of the visit. But then the reality comes in, which is that it does take people a little bit of time to ramp up. Bigger clients take a little longer to sign. Sometimes there's a month before we're going live, often because they need to give notice to a previous provider. And then they see patients. but of course we get paid at the point that the doctor gets paid. So I guess that's a long-winded answer to say when we make those investments in the first quarter of the year, you start to see the results in the second half of the year.

36:09 As you make the investments during second quarter, you really only see some incremental results in Q4. Now, from our perspective, the investments we're making now really are driving Thank you very much. Just to elaborate a little more, thank you, to add to what Bill had said. On the enterprise side, what we have seen is, historically, it takes roughly for us between five to seven months for an account to go live because, as Bill mentioned, the notice period and then the basic initial integration, configurations, and the like. Then another probably three more months when they get actually fully ramped up.

37:04 So as we are shifting a little more focus towards the enterprise size or the large customer, that's roughly five to seven months and three more months. On the mid-size, somewhere between three to five months, and then you can add another two to three months on the go-live side, just to add some more color to what Bill has said. That was very helpful. I appreciate it. Bill, if you could also talk about kind of the trajectory that we saw in the gross margin kind of throughout 21, kind of compare and contrast the first half of the year versus the second half of the year. And then how do we think about that moving throughout 2022? Yeah, good question. So when you think about the gross margin, recognize that when we bought MedSR, We picked up a revenue stream that's a little bit different, and I'd say in MED-SR, because it's really sort of service-driven, the direct operating cost is usually a little bit bigger percentage of revenue than it is for either our SaaS business or our RCM business.

38:16 So in some respects, when you think about the gross margin, Gross margin declined in the second half of 2021, primarily due to the fact that MedSR was there. So when we think about 2022, you're going to start at a little bit lower level. I expect that assuming we don't do any other major acquisitions by the end of 2022, you'll be back to the gross margin levels that you saw at the beginning of 2021. which really means improvement in gross margins, improvement in profitability throughout a combination of efficiencies and leveraging our technology and our offshore team throughout the business. And, of course, depending on what happens, where we define another really compelling strategic opportunity, depending on the margin profile of that business, It might increase or it might decrease the gross margins going forward.

39:18 Understood. Could you shed light on the conversations you're having with the midsize and large practices as well as the health systems and how they're communicating their financial positions? And does that have any impact on the outlook for MedSR? And how has your expectations for that business kind of changed over the second half of 2021 into the first half of 2022? and then also comments on the Oracle and Cerner acquisition as potential opportunities for MedSR would be helpful too. Let me just try to answer the part of the question, and Bill, feel free to jump in. When it comes in terms of any of these clients sharing with us their financial positions or their goals, not specifically that by design anyone does that, but for all the rest of the existing clients that we have, we do have, based on their historical numbers, financial numbers, we do do our own internal forecast.

40:19 and we understand that over the next couple of quarters how we see the growth coming up and those growths have already been incorporated into our financial forecast. In terms of stepping into these other larger groups, we have not yet seen or have not been to the point where we want to be just because of the fact that These large deals through the health system typically takes a little more time than a typical small to medium size closing a small practice deal because of the different board members, the C-level, and the process they have to go through to get the deal closed with any new vendor. Since the acquisition of Medisar, in the annualized recurring revenue side of it, leveraging the existing relationships, We have made a small and some decent success in terms of closing $800,000 to $900,000 in annualized recurring revenue.

41:20 But our active pipeline, and when I say pipeline, where we are in active conversation with some of the dealers at different stages, whether we are going through the RFP process or we have some discussion, that pipeline is somewhere between $4 million to $5 million. And the active overall pipeline is even much bigger at this point. But again, I just want to remind the fact that typically these deals, they take even much more longer than compared to the small to medium-sized practices. And even in many cases, the non-health system-based enterprise clients, these deals take even more time to get closed. Helpful. Appreciate it. And then just the final one for me. You have data from across approximately 40,000 providers.

42:07 Wondering what your plans are to potentially monetize the data that you get from patients, maybe in an anonymized way and leverage kind of customers of payors or even life science companies. Thank you very much. Great. Thank you. Very good question. Actually, as you're saying, we are in at least with one opportunity with an act of conversations. Nothing has yet been finalized. But if that happens, this will be our first line towards that direction, and we are seriously considering that part. It has not been signed, but we believe we are very far ahead in the conversation. And if that gets materialized, we will make an announcement accordingly. Great. Thank you very much.

42:53 Thank you for the question. Thank you. The next question comes to the line of Alan Klee with Maxim Group. Good morning. If we look at your CapEx and your capitalized software in 21, I think They were around 3 million and 8 million or so. How do you think about the direction of those two numbers for 22? Good question, Alan. So when we think about it, I would say think about those numbers being fairly equivalent. Capital expenditures in our business aren't huge amounts, but as we continue to grow, we're always adding facilities.

43:41 Adding computers, we do leverage a lot of cloud services, so a lot of our compute power, we don't actually have to go buy the servers Amazon or Google does. In terms of the capitalized software, as you know, when you're developing new software, there are specific rules in GAP as to when it gets capitalized versus expensed. and so basically work on new products that are not yet in production gets capitalized. And so that's the investment that you see in 2021. You should continue to expect to see that going forward into 2022 as well. Okay, thank you. All right, and one more time, everyone. That is star one if you'd like to ask a question.

44:27 We'll pause for just one moment. Kevin Deedy, HCW Good morning, Kevin, and thank you for joining, and thank you for the question. You're very right about that, as you remember that this product is, for us, we are stepping into a different market segment.

45:19 There were two-fold purposes of the conductor. One is for us. creating or creating a database, a library of all the interfaces that we have created since the inception of the company and or that now we have the capability because of the different acquisitions we have done. So this product, by creating this product internally, this is giving us a better, this is putting us in a better position for future acquisitions where there's another company required so their platform is there. We can and many more. So as far as the internal implementation is concerned, we virtually have completed the incorporation or integration of this new product.

46:21 When it comes to the external, since we are hitting now this, with the help of this product, the vendors, the target market, the segment is the different vendors, and whether it's an EMR vendors or practice management vendors, or some of the enterprise groups, we conducted, so far, have some webinars and have done at least one campaign. There are interests out there. So far, we did not have any success, but we are still optimistic of this technology for hitting because all which we need is a couple of the closing, a couple of the signings through the year to get to generate a decent number in terms of the revenue. But internal efficiencies have already kicked in because of The development or the launch of this product.

47:14 And Hadi, you mentioned that you had 30 salespeople on staff. Now, where do you think that number goes this year? Good question, Kevin. We have not specifically defined the number of employees to grow, but we do anticipate, as I mentioned, increasing the sales and marketing spend by 20% to 25%, which will be a combination of additional resources, some additional campaigns, even investment in some of the The media campaigns and all of those pieces together. So keeping in view wherever we see more results coming in, we will keep on investing on that side. But yes, it will be a combination of some additional resources on the enterprise sales side because of the opportunities we see now through either the Metasol or our own pipeline and in the medium-sized segment as well.

48:18 Okay, fair enough, Hadi. Now, in that expansion of budget, have you classified some of the expense for campaigns? Do you think most of it will be digitally focused print? Can you give us a little insight on how we might actually see you raise the CareCloud brand through media? No, absolutely. It is a combination of all of those and the one of the interview that I was referring to for Hutchinson as well. So we are doing a campaign as an example in that area based on how good we have performed with that one health system. As one of the examples, there are a number of others after that we'll be moving forward to in a couple of other states as well. But to answer your question, it is a combination of whether it's digital campaigns or even door-to-door campaigns based on some of these anchor clients where we have tremendously improved the overall performance and have created an impact in the community.

49:22 But in terms of how much of what that split is, those are the numbers, Kevin, we would like not to disclose. That's something internally we would like to continue and improve the overall deliverability. Fair enough, Hadi. Thank you. Bill, could you give us the count? The Series A and the Series B count at this point? Rather than giving as a count, I'll try to do this a little simpler and do it in dollar terms. Over the life of our Series A, over the six years that we were selling it, ranging from the first $5 million that we sold back in 2015, we sold a total of about $133 million worth of Series A.

50:09 and as you've seen now that we've launched Series B, we are redeeming the first $20 million of Series A that will happen at the end of this week. We have sold so far about $27 million worth of Series B. As we think about our prospects going forward, we don't have to do anything, but we will look out at options to to either offer Series A shareholders maybe the chance to convert their shares to or exchange their shares for Series B. That would lower their coupon a little bit but would have given them a couple years of call protection. We might decide that it makes sense to sell some more Series B and use the proceeds to redeem Series A.

50:57 We've had discussions with banks and we'll look at whether it makes sense to take on some debt to redeem Series A. and finally, not at today's share price, but maybe we'll see a point where the market looks at us and says, gee, $152, $155 million company, $24 to $26 million of adjusted EBITDA, maybe the share price is not appropriate and maybe we'll see that share price get to a level where it makes sense for us to sell some common stock and use the proceeds to redeem Series A. I'm not sure which of those paths we'll take, but if I had my crystal ball, I'd say that 12 months from now, you might not see a whole lot of Series A left on the balance sheet.

51:43 You might see lower cost of capital. Fair enough. Thanks, Bill. Thanks, Hadi. Thank you, Kevin. All right. One more time. That is star one. If you'd like to ask a question, we'll pause for another moment to allow everybody the opportunity to signal. Again, please make sure that your mute function is turned off to allow your signal to reach our equipment. We'll pause for just another moment to allow everybody the chance to signal. Okay, it looks like we have no further questions at this time, so I'd like to turn it back over to Ms. Blanch for any additional or closing remarks.

52:30 I'd like to thank everyone who's joined us on today's call. We appreciate your participation and your interest in us as a company, and we look forward to speaking with you again next quarter. Thank you all, and have a great day. Let us conclude today's conference. We thank everyone again for your participation.