CloudMD Software & Services Inc.

CloudMD reported Q3 2023 revenue from continued operations of $23.6 million, up 0.3% year over year on a reported basis and 8% on a normalized basis. Health and Wellness Services revenue was $22.3 million, up from $21.7 million in Q2, while Health and Productivity Solutions revenue was $1.3 million versus $1.4 million in Q2 excluding divested and held-for-sale assets. Gross margin from continued operations was 35.9%, down from 38.2% in Q2, but 150 basis points higher than the prior year. Adjusted EBITDA was positive $49,000, compared with negative $3.2 million in the prior year and negative $700,000 in Q2. The company ended the quarter with $13.3 million in cash, paid down $1.8 million in debt, and said normalized cash usage was $2.3 million versus $3.1 million in Q2; adjusted net operating cash used was $300,000 after adjustments. Forward-looking, management reiterated that the RPM contract should ramp over Q1 and Q2 2024 to deliver $3 million to $4 million per quarter once fully deployed, and said it expects continued margin expansion, positive adjusted EBITDA, and near-term positive cash flow, while also targeting a sale of VisionPros before year-end if possible and ongoing debt maturity negotiations.

Karen Adams framed the quarter as proof that CloudMD is following through on its path to profitability, emphasizing revenue growth, margin expansion, and a quarter-ahead move to positive adjusted EBITDA. Her tone was upbeat but measured: she repeatedly pointed to ongoing seasonality, mix shifts, and inflation-related pressures, while stressing that automation, shared services, and AI should keep improving efficiency. She also highlighted strategic priorities around cross-sell, U.S. RPM expansion, and building a more integrated platform.

Prakash Patel focused on the financial turnaround: $23.6 million in revenue, 35.9% gross margin, and positive adjusted EBITDA of $49,000. He said SG&A fell from 47% of revenue last year to 37% this quarter, representing about $4 million in annualized SG&A taken out of the business, and noted another $1 million of annualized savings from tech-stack, payroll, and platform consolidation. On liquidity, he cited $13.3 million in cash, $1.8 million of debt paydown, $2.3 million of normalized cash usage, and $16.5 million of short-term debt that the company is actively renegotiating; he also said VisionPros currently consumes about $400,000 per quarter and that the company expects to limit that cash drain through divestiture.

Analysts pressed for details on near-term large renewals, RPM onboarding metrics, the pace of additional network signings, VisionPros timing, cost-savings runway, and debt refinancing. Management said there are no other large significant renewals expected soon, and that the main RPM metric is patient onboarding, supported by engagement metrics and service-level targets; they said the hospital network is actively helping identify the 25,000 patients and is incentivized through Medicare/Medicaid revenue codes. On VisionPros, management said the target is to sell the asset before year-end, though holiday timing could complicate closing, and on debt they said discussions are ongoing, cooperative, and focused first on extending maturity before pursuing additional non-dilutive capital.