How should we think about the financial impact of the Empower acquisition – minor initially, then bigger from cross-selling?

The acquisition had minimal Q2 impact and won't materially impact overall financials initially. The benefit is twofold: incorporating compliance expertise into the platform for a future SaaS version and cross-selling existing RCM/EHR solutions to Empower's clients. The deal structure aligns with growth incentives. “from the perspective of Q2 results, it had minimal impact and frankly, overall it won't have a material impact on the financial data from the perspective of revenue contribution or overall EBITDA. But the benefit that we see really will be twofold.”

Can you elaborate on the "new business signed through Q2 and demand from across the client base" for Stratus AI Front Desk?

Demand for Stratus AI and other AI products is strong, with new deals being signed. The focus is currently on implementation and ensuring successful deployments before scaling revenue reporting. Management also mentioned active conversations with PE groups about AI-powered platform engagements for their portfolio companies. “we continue to see the demand. We continue to sign up more deals on from Stratus AI and other AI products. From VR in the extensively in the implementation phase, and and I think when we get to a point of where the numbers, the AI specific revenue numbers are scalable enough that we should be able to start disclosing, we will separate it out from the technology-enabled service revenue.”

Are cross-selling opportunities in early innings for both Empower and MedSphere, or just Empower? Have MedSphere opportunities been exhausted?

Cross-selling is well underway for Empower, though no new signings yet. For MedSphere, significant opportunities remain to expand share with existing hospital clients, and the company feels it's "just beginning" with MedSphere cross-selling. An active conversation with an existing PE-backed enterprise client for an AI-powered platform engagement was also mentioned. “From the MedSphere perspective, we still have significant opportunity to To score additional wins from a, from a mid sphere cross on perspective, we've already really seen some pretty significant traction in terms of the hospitals that we're working with from that sphere.”

CCLD

CareCloud (CCLD) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Health Care· Aug 6, 2026

Source: earnings call transcript

Executive summary

CareCloud Q2 FY26 — Strong Recurring Revenue Growth and Capital Structure Simplification

CareCloud delivered strong Q2 FY26 results, marked by 16% revenue growth and a significant shift towards recurring technology-enabled solutions, now comprising 75% of revenue. The company simplified its capital structure by fully redeeming Series B preferred stock, reducing future dividend obligations. Strategic investments in AI and the acquisition of Empower Healthcare position CareCloud for continued growth and market expansion, with a focus on a stronger second half to meet full-year guidance.

Highlights

Revenue grew 16% year-over-year to $31.9 million.
Recurring technology-enabled business solutions increased to 75% of total revenue, up from 69% a year ago.
Completed full redemption of Series B preferred stock, eliminating $3.3 million in annual preferred dividends.
Achieved ninth consecutive quarter of GAAP profitability with GAAP net income of $1.1 million.
Acquired Empower Healthcare and Compliance Partners, entering the healthcare compliance market.

Concerns

GAAP net income ($1.1M) and adjusted EBITDA ($5.9M) were lower than prior year due to strategic investments in AI, integration costs, and new interest expense.
R&D expense more than doubled as the company accelerates AI development.
Adjusted net income of $2.4 million ($0.06 per share) was lower than $3.3 million ($0.07 per share) in the prior year.
Year-to-date adjusted EBITDA was $11.3 million, down from $12.1 million in the same period last year.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Revenue	$128 to $132 million high materiality	FY26	High
Full-year 2026 Adjusted EBITDA	$29 to $31 million high materiality	FY26	High
Full-year 2026 GAAP Earnings Per Share	$0.20 to $0.23 high materiality	FY26	High

Product announcements

Product	Type	Timeline
AI-enabled compliance software solutions	launch	Fall 2026
AI prior authorization and AI assisted medical coding	roadmap	this year
Stratus AI Front Desk (AI voice agent)	update	early stages
Wellsoft modernization	milestone	later this year
Marketware (physicians' relationship platform)	update	this quarter

Deals & partnerships

Empower Healthcare and Compliance Partners Acquisition of a full-service compliance and advisory firm.

Acquired in May. Funded from operating cash flow. Takes CareCloud into healthcare compliance, audit defense, and regulatory readiness. Payment structure involved a minimal amount down (roughly 30% of trailing 12-month revenue) paid at closing, with the balance tied to Empower's growth and success in cross-selling initiatives.

Risks & headwinds

Payer scrutiny and audit activity ongoing

rising payer scrutiny and audit activity, industry-wide denial rates

Mitigation:Empower acquisition provides compliance and audit defense services.

Expanding privacy and security obligations ongoing

expanding privacy and security obligations

Mitigation:Empower acquisition provides regulatory readiness services.

Governance questions from AI adoption in healthcare ongoing

new layer of governance questions raised by the very AI adoption now sweeping through healthcare

Mitigation:Empower acquisition provides compliance services for AI.

Cyber security incident Q1 FY26 (March 16th)

March 16th incident affecting a single environment within CareCloud Health

Mitigation:System fully restored same day, bad actor expelled, forensic analyses performed, notices being sent to impacted patients, insurance coverage expected to cover all costs. No material impact on operations or financial conditions expected.

What to watch in Q3 FY26

Second-half revenue and EBITDA ramp

H2 FY26

Current H1 FY26 revenue $63.2M, Adjusted EBITDA $11.3M

Target Achieve full-year guidance of $128-$132M revenue and $29-$31M adjusted EBITDA, implying significantly stronger H2.

Why it matters

Critical for meeting full-year financial targets and demonstrating the payoff of H1 investments.

With $63.2 million in revenue and $11.3 million in adjusted EBITDA in the first half, our guidance implies a meaningfully stronger second half.

Find out whether CCLD delivers this. Inve re-checks your case every morning.

Q&A highlights

What factors will make H2 FY26 financially different/stronger than H1 FY26?

Management expects a stronger H2 due to natural seasonality, continued growth from existing business expansion, Empower cross-selling, and benefits from H1 investments in MedSphere integration and AI development. Reduced amortization and expense management will also contribute.

“the second half of the year, we expect to be much stronger than the first half of the year. Part of that is simply related to the natural seasonality that exists in our space.”

asked by Alan Klee · answered by Steven Snyder

2 min read 5 chapters

Detailed narrative

AI Strategy and Product Progress

CareCloud is advancing its AI strategy across three tracks: internal efficiency, embedding AI into existing products, and building new standalone AI products. AI prior authorization and AI-assisted medical coding are on track for market launch this year, with pilot deployments underway.

Stratus AI Front Desk is seeing strong demand and is in early-stage production, with a focus on implementation to build a durable recurring revenue foundation.

Platform Modernization and Integration

The company has completed parity gaps for its inpatient revenue cycle platform and CareVue, bringing legacy systems onto modern platforms. Wellsoft modernization to a full cloud-based SaaS platform is on track for completion later this year, with two integrations already live and a Stratis AI integration planned for next quarter.

Marketware saw over 20 enhancements, including an AI candidate matching engine and new integrations, transforming it into an AI-powered recruitment engine.

Capital Structure Simplification

CareCloud fully redeemed its Series B preferred stock on May 15th, funded by a new $50 million credit facility with Citizens Bank and Provident Bank. This action eliminates approximately $3.3 million in annual preferred dividends, significantly improving the flow-through of net income to common shareholders and simplifying the balance sheet. This structural shift is a key part of the reaffirmed EPS outlook.

Empower Healthcare Acquisition

In May, CareCloud acquired Empower Healthcare and Compliance Partners, marking its entry into the healthcare compliance, audit defense, and regulatory readiness market. This tuck-in acquisition, funded by operating cash flow, integrates Empower's expertise into CareCloud's platform. The company plans to launch AI-enabled compliance software solutions in Fall 2026, converting Empower's expertise into a scalable recurring revenue model.

Long-term Platform Vision

CareCloud is consolidating its independent platforms into a single, modular platform with a shared backend, common data, and AI fundamentals. This multi-year vision aims to create fewer, stronger platforms where new AI capabilities can be deployed universally. This unified foundation will support various modules like ambulatory, inpatient, revenue cycle, compliance, and patient engagement, all running on one patient record.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.