CareCloud, Inc. Q1 FY2026 Earnings Call

Good morning, ladies and gentlemen, and welcome to CareCloud, Inc. First Quarter 2026 Results Conference Call. This call is being recorded on Thursday, May 7, 2026. I would now like to turn the conference over to Brendan Covello, Legal Counsel. Please go ahead.

Good morning, everyone. Welcome to CareCloud's First Quarter 2026 Conference Call. On today's call are Mahmud Haq, our Founder and Executive Chairman; Stephen Snyder, our Chief Executive Officer; A. Hadi Chaudhry, our Chief Strategy Officer; and Norman Roth, our Interim Chief Financial Officer and Corporate Controller. Before we begin, I would like to remind you that certain statements made during this call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 of the Securities Exchange Act of 1934 as amended. All statements other than the statements of historical facts made during this call are forward-looking statements, including, without limitation, statements regarding our expectations and guidance for future financial and operational performance, expected growth, business outlook and potential organic growth and acquisitions. Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, approximately, upcoming, believe, estimate or similar terminology and the negative of these terms. 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 to 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 our reports filed with the Securities and Exchange Act 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 first quarter 2026 earnings presentation. Please visit our Investor Relations site, ircarecloud.com. Click on News and Events, then click IR calendar, click on first quarter 2026 results conference call and download the earnings presentation. Finally, on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our first quarter 2026 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results. With that said, I'll now turn the call over to our CEO, Stephen Snyder. Stephen?

Thanks, Brendan, and good morning, everyone. I'm pleased to report that the first quarter of 2026 marked a strong start to the year for CareCloud, with revenue growth of 13%, the broadest product portfolio in our history, accelerating commercial traction in our AI platform and a transformational simplification of our capital structure that we executed shortly after quarter's end. We delivered the kind of momentum we expected entering 2026, and we are reaffirming our full year guidance with great confidence. Let me start with our top line numbers. For the first quarter of 2026, we generated revenue of $31.3 million, up 13% from $27.6 million in Q1 of last year. On profitability, GAAP operating income was $1 million for the quarter and GAAP net income was $900,000 as anticipated, both lower than the prior year's quarter, driven primarily by increased amortization of acquired intangible assets and integration costs associated with the Medsphere acquisition. Adjusted EBITDA, adjusted net income, and adjusted EPS were each essentially in line with the prior year, and we generated $2.4 million in free cash flow. These non-GAAP measures are the cleaner read on our underlying operating performance, and they show a business that is holding margin while we absorb a material acquisition. Norm will walk you through this in more detail in a few minutes. Next, I'd like to spend some time on our capital structure, because what we executed in April represents the most significant simplification of CareCloud's balance sheet since our IPO. On April 13, we closed a new $50 million credit facility with Citizens Bank and Provident Bank, comprised of a $40 million term loan and a $10 million revolving line, which replaced our previous $10 million Provident Bank facility. In parallel, we also put an at-the-market, or an ATM, equity facility in place, not as a financing we plan to lean on, but as a flexible just-in-time tool we can deploy on opportunistic terms if and when it makes sense for our shareholders. The day after closing, on April 14, our Board elected to redeem 100% of our outstanding Series B preferred stock. The redemption is scheduled for May 15, and we have already prefunded approximately $41.6 million of the new credit facility to satisfy it. Let me underline what this means in plain terms. Together with the conversion of approximately 80% of the Series A preferred stock that we completed in March of last year, the full redemption of our Series B preferred stock effectively removes the preferred equity overhang that has shaped our capital structure for many years. We are exchanging high-cost preferred dividends for lower-cost senior debt, dramatically simplifying our story for investors. And we are doing it with zero common shareholder dilution from the redemption itself. This is more than a balance sheet exercise. A simpler capital structure broadens our investor universe, particularly among institutional investors who have historically been deterred by complex preferred equity stocks, improving the visibility of common shareholder economics and it lowers our weighted average cost of capital. In short, the structure of the company now aligns with the way we run it as a focused, profitable, growing healthcare IT technology platform. Turning to our acquisition portfolio. The integration of the transactions we completed in 2025 is progressing well. Through Medsphere, we entered the inpatient hospital market and significantly expanded our addressable market, adding the #1 Black Book-ranked Wellsoft emergency department information system, the CareView inpatient EHR, ChartLogic for surgical specialties, Marketware for physician relationship management, Offline for hospital supply chain and managed IT services. That portfolio took us from ambulatory first to care continuum. On MAP App, our HFMA partnership is opening hospital finance conversations that would have taken years to build organically. Hadi will walk you through how we're layering AI-driven recommendations on top of MAP App's benchmarking foundation. But the strategic point is quite simple: MAP App identifies where hospitals are underperforming and our RCM and AI capabilities demonstrate how to fix it. That is a powerful combination and 2026 is the year where we believe we'll scale it. As to our AI platform, it is really no longer a vision, it is a product line in the market with paying customers and measurable results. StratusAI Desk Agent, our agentic AI phone receptionist, reached full commercial release in December and is scaling. Across early adopters, the platform is now handling approximately 75% of inbound calls automatically, bringing Front Desk staff to focus on more complex patient needs and lifting the throughput of every practice that deploys it. Our AI Center of Excellence launched in April of last year is fully operational and is the engine behind everything in our AI portfolio. In a moment, Hadi will walk you through the 3-track framework we use to apply AI across the business: inside our own operations, embedded in the products our clients already use every day, and as a stand-alone AI solution. And where each track stands today? The point I want to leave you with is that the believed addressable market for our AI Front Desk capability alone exceeds $4 billion in the United States, and we are bringing it to the large provider customer base that already trust CareCloud with its core clinical and revenue cycle workflows. That integration advantage is hard to replicate. Our 2026 growth strategy is unchanged and fully on track. First, we are actively cross-selling stratusAI and our RCM services to our existing ambulatory client base. Second, we are penetrating the Medsphere installed base of hospital and health system customers with our RCM and AI capabilities, creating a multiplier effect on sales efficiency. Accordingly, we are reaffirming our 2026 guidance. We continue to expect revenue of $128 million to $132 million, adjusted EBITDA of $29 million to $31 million, and GAAP earnings per share of $0.20 to $0.23, which would represent more than a 100% increase over our 2025 EPS of $0.10. Our confidence in this outlook is grounded on our continued growth in our RCM business, accelerating AI revenue contribution from stratusAI and the synergy of cross-sell opportunities from our 2025 acquisitions, each of which we expect to ramp meaningfully through the back half of the year. A brief word on operational efficiency. We are also deploying AI inside our own back office and consolidating overlapping systems from our 2025 acquisitions, and we expect that work to be an ongoing source of margin improvement through 2026 and into 2027. Hadi will go deeper on this as the first of his 3 AI tracks. Stepping back, this is exactly the kind of quarter we wanted to deliver to start 2026. Revenue grew by 13%. Our AI platform is in-market and scaling. Our acquisition portfolio is contributing as planned. Our integration work on Medsphere is well underway, and we have used the early weeks of the second quarter to fundamentally simplify our capital structure, closing a new credit facility, putting an ATM in place and announcing the full redemption of our Series B preferred stock. The underlying business, recurring revenue, cash generation, the customer base, the product road map is moving in the right direction, and we are reaffirming our 2026 guidance, and we are entering the rest of the year with more capability, more scale and more momentum than at any point in our history. We are a profitable, growing company with a clear AI strategy and the operational discipline to execute on it. I look forward to sharing our progress with you throughout the year. With that, I'll turn the call over to Hadi Chaudhry, our Chief Strategy Officer, who will provide more details on our AI strategy and product road map. Hadi?

Thank you, Steve, and good morning, everyone. Before I get into first quarter, I want to remind everyone of the framework we are using to apply AI across CareCloud, because everything I'm about to walk you through fits inside that framework. And I think it's the clearest way to understand both what we are doing today and what compounds over time. As Steve mentioned, we are pursuing AI along three parallel tracks. The first is back-end cost and efficiency optimization, where AI is applied inside our own RCM, financial, and administrative operations to do the work we already do for our clients, but faster, more accurately and at a much lower cost. The economic outcome shows up in the margins. The second is embedding AI into our existing customer-facing applications—our EHR, 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. StratusAI Front Desk Agent and cirrusAI Notes are the two most visible examples today, with AI prior authorization, AI-assisted medical coding and additional clinical documentation capability in 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 where each one stands at the end of Q1. On the back-end track, we continued in Q1 to apply AI across our own RCM, financial and administrative operations. This is a 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 to payers. 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 the 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 indicators, 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 for a claim and how effectively our AI predicts denials 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 acceptance 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. Every touch point 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 plays 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 and 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 stand-alone AI products for specific high-value workflows. This is where stratusAI Front Desk Agent and cirrusAI Notes live and where our development pipeline continues to expand. Let me start with stratusAI 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 contracts signed, it is making sure every agent we sign is implemented well, completes its trial successfully and earns the right to expand inside this account. Expansion means more agents per client, additional functions, extended coverage hours and broader use cases. This is the curve we are deliberately working—depth before breadth—because it produces durable recurring revenue rather than a flurry of signed contracts that don't convert into real usage. Within the Desk Agent suite, stratusAI 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 our broader stratusAI footprint inside the account. Turning to cirrusAI Notes, our ambient documentation product. Notes continues to be an entry point for many providers into the cirrusAI family on the ambulatory side, where it serves the most acute pain point in clinician workflow. What I want to highlight this quarter is the integration efforts underway to bring cirrusAI Notes 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 than the ambulatory market we have served historically. This is exactly the cross-pollination between our acquisitions and our AI portfolio that we described as the multiplier 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 capabilities 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—bringing AI into existing apps—strengthens retention, but doesn't create new revenue lines. CareCloud is doing all three at once, and the reason that matters is that each track de-risks the other. Internal AI improves our economics regardless of how fast the new AI product sells. 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 moved forward. Each one continued 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?

Thanks, Hadi, and thanks, everyone, for joining our call today. As you've 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, we 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 ASR 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 net 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 Medsphere integration. Adjusted EBITDA for the first quarter 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 $0.05 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 net working 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 goods, not services. Even better, the revenue of doctors' 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, Mahmud, for his closing remarks. Mahmud?

Thank you, Norm. 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. Thank you to our employees, clients and shareholders for their continued support. Operator, please open the line for questions.

We will now take our first question, and this comes from the line of Allen Klee from Maxim Group.

To start with in the inpatient hospital software segment, talk a little about your traction and the plans— it seems like you have a good strategy there, but it 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?

Thanks for joining. That's a great question. I'll use this as an opportunity to dive into a little bit more detail about our roadmap and strategy for the Medsphere product portfolio. As you know, this acquisition brought us a comprehensive suite of platforms across the inpatient and hospital ecosystem—for example, Wellsoft in emergency, CareView for inpatient EHR, Marketware for physician relationship management and Offline for hospital supply chain. Across all of these, we are executing on a deliberate value creation strategy with four parallel work streams. The first is technical debt remediation and modernization. Medsphere had paused most enhancement activity going into the acquisition, so the foundational catch-up has been substantial. Wellsoft and CareView are being modernized from desktop client applications to fully cloud-based SaaS platforms. To put one number on it, just on the RCM side alone, we are closing more than 50 carryforward items this quarter to bring desktop and cloud to functional parity. Similar work is running in parallel across the entire portfolio. The second is 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 PracticeMatch, the leading physician talent network that automates candidate data transfer and streamlines recruiter workflows. On the supply chain side, we have already delivered web-based mobility for warehouse workflows, and we are building explant and implant log tracking as an example. Third is our cross-portfolio integration with the existing CareCloud suite. Wellsoft is 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 our AI infusion. The clearest example is integration of cirrusAI into Wellsoft emergency department workflows, enhancing clinical documentation in a care setting that has historically been underserved by AI innovation, as we believe. We are also embedding AI into Marketware to surface intelligent candidate recommendations, turning it from a relationship management tool into an AI-powered recruitment engine. In addition to that, there's a lot of compliance work—from ONC Cures Certification to SOC 2 Type 2 and EPCS migrations. Our focus at the moment is making sure we go through these four tracks simultaneously. The teams have already started to reach out to customers where we can bring the value and then start cross-selling and upselling activity. I'm sorry for the long answer, but I wanted to give you our strategy and the roadmap for the entire Medsphere platform portfolio.

No, that was great. In terms of some of your new AI products like stratusAI, Voice Audit and Notes, can you just give us a sense of how customers have been—any feedback you've been getting?

Right. First of all, there has been no lack of interest from customers. We are getting a lot of traction and we continue to close new business from the existing client base throughout the first quarter. Our strategy has been: after signing the contract, customers go through an initial implementation, then there is a 30-day trial, and many times customers, because of initial AI adoption resistance, will start with a subset— for example, only the refill agent. We go through those one by one. As I mentioned earlier, our goal today is that every single customer and each agent is implemented, completes the trial successfully and starts growing beyond just the trial, adding and activating more agents. So to answer your question, we are getting a lot of traction; there are no issues finding interest and rolling contracts. We are laser-focused on implementation and expansion.

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?

For medical coding, we have already started to deploy it internally because we provide medical coding to many clients today. That internal deployment will be used as a proof point, maturing and refining the product to achieve the right accuracy levels, and then we can start expanding and selling into other parts of the client base where we are not doing coding today. This also helps further define our cirrusAI and Notes application because our long-term vision is that it should be one cohesive workflow—starting with Notes, and coding should be done automatically right off of that. These pieces will eventually be integrated into that entire workflow. For prior authorizations, in addition to our AI development, we also need to complete integrations with external clearinghouses and payers so we can submit those authorizations electronically. We have completed significant testing milestones and are in the initial phase of picking pilot customers to deploy AI authorization. Prior authorizations are one of the biggest pain points in specialties such as orthopedics and neurosurgery, where authorizations must be done accurately and on time before procedures. In the hospital space through Medsphere, we see tremendous opportunity once these products materialize.

And the next question comes from Lisa Thompson from Zacks Investment Research.

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?

For sure. This is probably the single biggest capital structure simplification in our history as a public company. The Series B redemption removes a preferred equity overhang that has existed since shortly after our IPO. Why now? From our perspective, there are three main reasons. First, from an operating performance and free cash flow perspective, we've reached an inflection point and are generating the cash to support a senior debt-funded redemption. Second, from a credit market perspective, we were able to secure an attractive $50 million senior debt facility with good economics. Third, eliminating the preferred dividend burden frees cash flow to redirect to growth investment, M&A and common shareholders. Strategically, the complexity in our equity story driven by the preferred stock has been an impediment in conversations with institutional investors, and this transformation allows us, with zero dilution, to create a more attractive investment case for a broader base of investors. For these reasons, we thought the time was right. The official redemption will occur on May 15.

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?

Sure. Think about the ATM as a tool that gives us optionality, not a plan. Our default posture has been and will continue to be very conservative; we have intentionally refrained from opportunistic common equity issuance. When might we consider it? One, to fund attractive accretive M&A transactions where the strategic value moves quickly and we can do so without dilution. Two, if the stock price is trading at a level where we can opportunistically de-risk the balance sheet. And three, to support clear growth objectives—investments with a defined return profile. But again, our posture remains conservative and we'll only use proceeds when there's a clearly accretive acquisition or a similar clear rationale.

Okay. 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 salesforce when they're going out versus the competition?

Absolutely. I'll let Hadi dive into that a little bit more, but the common theme we hear is that AI incorporated into a fully integrated system—which includes the EHR, the practice management system and the patient experience—unlocks the utility and usefulness of AI. We've been focusing from a sales perspective on things like stratusAI, where there's a very clear picture from a healthcare provider's perspective in terms of the return on that investment. They can see a clear path to ROI and freeing up internal resources to focus on higher-value activities. Stratus exemplifies one of the key areas where providers are increasingly appreciating AI's value and are embracing it. But I'll let Hadi address that more broadly.

There is no shortage of point solution AI vendors targeting individual healthcare workflows. You will find many vendors providing documentation solutions or voice agents similar to components of our offering. What differentiates us is that we provide a full embedded, integrated solution versus a bolt-on. Our overall AI strategy—back-end optimization, embedding AI into existing platforms, and new AI products such as stratusAI—is what the sales team is focused on. The integrated nature of our offering, combined with our installed base and RCM capabilities, provides differentiated value to customers.

And we have a follow-up question from Allen Klee from Maxim Group.

You stated that you're reaffirming your full year guidance and that the first quarter is seasonally always the lowest quarter and then you had 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 and any seasonality?

Sure. Thanks, Allen. I'll let Norm jump in, but to your point, quarter one is always a seasonally weak quarter for us because of deductibles and other factors. That not only compresses our overall top line, but also impacts profitability associated with reduced revenue. I'll let Norm talk about it in a little more detail.

Sure. Thank you, Steve. Thanks, Allen. We bought Medsphere Corporation in August of 2023. Even in the first quarter, we were eliminating some duplicative costs along with transitional costs and integration costs. We are working through those duplicative personnel items. Also, you see in our purchase price allocation a significant amount of intangible assets that are amortized. We amortize them on an accelerated basis, so that amortization will decrease over time. As we digest the acquisition, remove duplicative costs and get past the transitional costs, we would expect margins to improve.

Allen, maybe one other thing to think about in terms of margins for the year is as we progress through the year—especially into the back half—you'll see those margins continue to grow. If you think about the typical average month, we believe that free cash flow will exceed $2 million on average. If you counterbalance that against our obligations, the obligations associated with the loan result in payment obligations of about $1 million to $1.1 million. So from a cash flow perspective, we have the cash to continue to reinvest in attractive M&A opportunities and to invest in other growth opportunities. From an ATM perspective, that's why we say the ATM is really a tool to give us optionality, not a plan. We went public at $5 per share; there would have to be a very compelling reason to sell shares at levels below that. We're generating cash flow internally. If you think about the acquisitions last year, we closed four acquisitions, and those acquisitions were paid with zero common shares—zero dilution—and funded from our internally generated cash flow. We continue to see that as the proper path for us as we move forward.

That's great. Is it available any of the terms on the new credit facility?

Yes, Allen, we filed an 8-K and in there are all of the exhibits as required, so you can see all the related documents.

Great. And maybe the last thing: you had a history of being able to buy portfolios at a better customer acquisition cost than doing it organically. But now it seems like you have the opportunity on both sides. In terms of having a salesforce to go after the opportunities you have, how are you approaching that?

From a salesforce perspective, our salesforce today is multiple times what it was at the same time last year—probably about three times larger. That sales team is focused on cross-selling within our existing base. As our existing base continues to grow through the Medsphere acquisition and through organic growth and other acquisitions, the size and scope of that cross-selling campaign continues to increase. The team is primarily focused on sales activities oriented toward expanding wallet share within our existing base. We now have two prongs to our growth strategy: organic growth and acquisitive growth. From a cost perspective, acquisitive growth for us has historically been somewhere between 0.6x and 1x revenue as the cost of acquiring portfolios of recurring revenue relationships. The industry average is typically higher—around 1.2x to 1.4x revenue. We're attempting to do this at a lower cost. We're relatively early in this expansion, so the jury is still out on whether we can achieve comparable CACs on organic growth to our acquisitive growth, but that's what we're endeavoring to do. We have the capital to push forward and give that a full try, and we believe the results will bear out the wisdom of that approach. Time will tell, but we are committed to it.

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.

Yes. Thank you, everyone, for attending our call today. Hope you have a great day. Thank you.

Thank you. This concludes our conference call for today. Thank you all for participating. You may now disconnect.