CareCloud, Inc.

Previous wording

The following is a discussion of our condensed consolidated financial condition and results of operations for the three and six months ended June 30, 2026 and 2025, and other factors that are expected to affect our prospective financial condition. The following discussion and analysis should be read together with our Condensed Consolidated Financial Statements and related notes beginning on page 4 of this Quarterly Report on Form 10-Qand our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026.

Current wording

The following is a discussion of our condensed consolidated financial condition and results of operations for the three and nine months ended September 30, 2026 and 2025, and other factors that are expected to affect our prospective financial condition. The following discussion and analysis should be read together with our Condensed Consolidated Financial Statements and related notes beginning on page 4 of this Quarterly Report on Form 10-Qand our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026.

Previous wording

The Company maintains cash balances at Provident Bank (“Provident”) in excess of the FDIC insurance coverage limits. The Company performs periodic evaluations of the relative credit standing of Provident to ensure their credit worthiness. As of June 30, 2026 and December 31, 2025, the Company held cash of approximately $1.3 million and $1.1 million, respectively, in the name of its subsidiaries at banks in Pakistan and Sri Lanka. The banking systems in these countries do not provide deposit insurance coverage. The Company has not experienced any losses on its cash accounts.

Current wording

The Company maintains cash balances at Provident Bank (“Provident”) and Citizens Bank, N.A. (“Citizens”) in excess of the FDIC insurance coverage limits. The Company performs periodic evaluations of the relative credit standing of Provident and Citizens to ensure their credit worthiness. As of September 30, 2026 and December 31, 2025, the Company held cash of approximately$1.4 millionand $1.1 million, respectively, in the name of its subsidiaries at banks in Pakistan and Sri Lanka. The banking systems in these countries do not provide deposit insurance coverage. The Company has not experienced any losses on its cash accounts.

Previous wording

We are able to deliver our industry-leading solutions at very competitive prices because we leverage a combination of our proprietary software, which automates our workflows and increases efficiency, together with our team of approximately 250 experienced health industry experts throughout the United States. These experts are supported by our highly educated and specialized offshore workforce of approximately 3,100 team members that are approximately 17% of the cost of comparably educated and skilled workers in the U.S. Our unique business model also allowed us to become a leading consolidator in our industry sector, gaining us a reputation for acquiring and positively transforming distressed competitors into profitable operations of CareCloud.

Current wording

We are able to deliver our industry-leading solutions at very competitive prices because we leverage a combination of our proprietary software, which automates our workflows and increases efficiency, together with our team of approximately 250 experienced health industry experts throughout the United States. These experts are supported by our highly educated and specialized offshore workforce of approximately 3,000 team members that are approximately 17% of the cost of comparably educated and skilled workers in the U.S. Our unique business model also allowed us to become a leading consolidator in our industry sector, gaining us a reputation for acquiring and positively transforming distressed competitors into profitable operations of CareCloud.

Previous wording

Our offshore operations in the Pakistan Offices and Sri Lanka together accounted for approximately 17% and 18% of total expenses for the six months ended June 30, 2026 and 2025, respectively. A significant portion of those foreign expenses were personnel-related costs (approximately 73% and 77% for the six months ended June 30, 2026 and 2025, respectively). Because personnel-related costs are significantly lower in Pakistan and Sri Lanka than in the U.S. and many other offshore locations, we believe our offshore operations give us a competitive advantage over many industry participants. We are able to achieve significant cost reductions and leverage technology to reduce manual work and strategically transition a portion of the remaining manual tasks to our highly-specialized, cost-efficient team in the U.S., the Pakistan Offices and Sri Lanka. Our offshore operations are subject to geopolitical, economic and operational risks; see “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K.

Current wording

Our offshore operations in the Pakistan Offices and Sri Lanka together accounted for approximately 17% of total expenses for both the nine months ended September 30, 2026 and 2025, respectively. A significant portion of those foreign expenses were personnel-related costs (approximately 74% and 77% for the nine months ended September 30, 2026 and 2025, respectively). Because personnel-related costs are significantly lower in Pakistan and Sri Lanka than in the U.S. and many other offshore locations, we believe our offshore operations give us a competitive advantage over many industry participants. We are able to achieve significant cost reductions and leverage technology to reduce manual work and strategically transition a portion of the remaining manual tasks to our highly-specialized, cost-efficient team in the U.S., the Pakistan Offices and Sri Lanka. Our offshore operations are subject to geopolitical, economic and operational risks; see “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K.

Previous wording

Set forth below is a presentation of our adjusted EBITDA for the three and six months ended June 30, 2026 and 2025:

Current wording

Set forth below is a presentation of our adjusted EBITDA for the three and nine months ended September 30, 2026 and 2025:

Previous wording

Set forth below is a presentation of our adjusted operating income and adjusted operating margin, which represents adjusted operating income as a percentage of net revenue for the three and six months ended June 30, 2026 and 2025:

Current wording

Set forth below is a presentation of our adjusted operating income and adjusted operating margin, which represents adjusted operating income as a percentage of net revenue for the three and nine months ended September 30, 2026 and 2025:

Previous wording

No tax effect has been provided in computing non-GAAP adjusted net income and non-GAAP adjusted net income per share as the Company has sufficient carry forward net operating losses to offset the applicable income taxes. The following table shows our reconciliation of GAAP net income to non-GAAP adjusted net income for the three and six months ended June 30, 2026 and 2025:

Current wording

No tax effect has been provided in computing non-GAAP adjusted net income and non-GAAP adjusted net income per share as the Company has sufficient carry forward net operating losses to offset the applicable income taxes. The following table shows our reconciliation of GAAP net income to non-GAAP adjusted net income for the three and nine months ended September 30, 2026 and 2025:

Previous wording

Providers and Practices Served: As of June 30, 2026 and 2025, we provided services to approximately 44,000 and 40,000 providers, respectively (which we define as physicians, nurses, nurse practitioners, physician assistants and other clinical staff that render bills for their services), representing approximately 2,900 independent medical practices, hospitals and service organizations. The foregoing numbers include clients leveraging any of our products or services and are based in part upon estimates in cases where the precise number of practices or providers is unknown.

Current wording

Providers and Practices Served: As of September 30, 2026 and 2025, we provided services to more than 40,000 providers, (which we define as physicians, nurses, nurse practitioners, physician assistants and other clinical staff that render bills for their services), representing approximately 2,900 independent medical practices, hospitals and service organizations. The foregoing numbers include clients leveraging any of our products or services and are based in part upon estimates in cases where the precise number of practices or providers is unknown.

Previous wording

Revenue: We primarily derive our revenue from subscription-based technology-enabled business solutions, reported in our Healthcare IT segment, which are typically billed as a percentage of payments collected by our customers. This fee includes technology-enabled RCM, as well as the ability to use our EHR, practice management system and other software as part of the bundled fee. These solutions accounted for approximately 75% and 69% of revenue for the three months ended June 30, 2026 and 2025, respectively, and 74% and 67% of revenue for the six months ended June 30, 2026 and 2025, respectively. Other healthcare IT services, including printing and mailing operations, group purchasing and professional services, represented approximately 13% and 19% of revenue for the three months ended June 30, 2026 and 2025, respectively, and 14% and 22% of revenue for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Revenue: We primarily derive our revenue from subscription-based technology-enabled business solutions, reported in our Healthcare IT segment, which are typically billed as a percentage of payments collected by our customers. This fee includes technology-enabled RCM, as well as the ability to use our EHR, practice management system and other software as part of the bundled fee. These solutions accounted for approximately 72% and 69% of revenue for the three months ended September 30, 2026 and 2025, respectively, and 74% and 68% of revenue for the nine months ended September 30, 2026 and 2025, respectively. Other healthcare IT services, including printing and mailing operations, group purchasing and professional services, represented approximately 15% and 17% of revenue for the three months ended September 30, 2026 and 2025, respectively, and 14% and 20% of revenue for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

We earned approximately 12% of our revenue from medical practice management services during both the three and six months ended June 30, 2026 and 2025, respectively. This revenue represents fees based on our actual costs plus a percentage of the operating profit and is reported in our Medical Practice Management segment.

Current wording

We earned approximately 13% and 12% of our revenue from medical practice management services during the three and nine months ended September 30, 2026, respectively, and approximately 14% and 12% of our revenue from medical practice management services during the three and nine months ended September 30, 2025, respectively. This revenue represents fees based on our actual costs plus a percentage of the operating profit and is reported in our Medical Practice Management segment.

Previous wording

Comparison of the three and six months ended June 30, 2026 and 2025:

Current wording

Comparison of the three and nine months ended September 30, 2026 and 2025:

Previous wording

*Net Revenue.*Net revenue of $31.9 million and $63.2 million for the three and six months ended June 30, 2026, increased by $4.5 million or 16% and increased by $8.1 million or 15% from net revenue of $27.4 million and $55.0 million for the three and six months ended June 30, 2025, respectively. Revenue for the three and six months ended June 30, 2026 includes $24.0 million and $47.0 million relating to technology-enabled business solutions, $3.2 million and $6.3 million related to professional services and $3.7 million and $7.5 million for medical practice management services, respectively. Printing and mailing services and group purchasing services revenue was $1.0 million and $2.3 million for the three and six months ended June 30, 2026, respectively.

Current wording

*Net Revenue.*Net revenue of $33.7 million and $96.9 million for the three and nine months ended September 30, 2026, increased by $2.7 million or 9% and $10.8 million or 13% from net revenue of $31.1 million and $86.1 million for the three and nine months ended September 30, 2025, respectively. Revenue for the three and nine months ended September 30, 2026 includes $24.3 million and $71.4 million relating to technology-enabled business solutions, $3.6 million and $10.0 million related to professional services and $4.5 million and $12.0 million for medical practice management services, respectively. Printing and mailing services and group purchasing services revenue was $1.2 million and $3.5 million for the three and nine months ended September 30, 2026, respectively.

Previous wording

During the three and six months ended June 30, 2026, there was approximately $6.8 million and $13.6 million of revenue related to the Medsphere acquisition. The medSR revenue, which is project based, decreased approximately $1.3 million and $4.2 million compared to the three and six months ended June 30, 2025.

Current wording

During the three and nine months ended September 30, 2026, there was approximately $6.3 million and $19.9 million, respectively, andduring the three and nine months ended September 30, 2025 there was approximately $3.4 million revenue related to the Medsphere acquisition which was acquired on August 22, 2025. The medSR revenue, which is project based, decreased approximately $1.5 million and $5.7 million compared to the three and nine months ended September 30, 2025.

Previous wording

*Direct Operating Costs.*Direct operating costs of $17.5 million and $34.3 million for the three and six months ended June 30, 2026 increased by $3.0 million or 21% and increased by $4.4 million or 15% compared to direct operating costs of $14.5 million and $29.9 million for the three and six months ended June 30, 2025, respectively. During the three and six months ended June 30, 2026, salary costs increased by $889,000 and $769,000, outsourcing and processing costs increased by $1.9 million and $3.4 million and billable expenses decreased by $46,000 and $381,000, respectively.

Current wording

*Direct Operating Costs.*Direct operating costs of $16.7 million and $51.0 million for the three and nine months ended September 30, 2026 increased by $485,000 or 3% and $4.8 millionor 11% compared to direct operating costs of $16.2 million and $46.2 million for the three and nine months ended September 30, 2025, respectively. During the three months ended September 30, 2026, outsourcing and processing costs increased by $895,000, salary costs decreased by $296,000 and billable expenses decreased by $132,000. During the nine months ended September 30, 2026, outsourcing and processing costs increased by $4.3 million, salary costs increased by $473,000 and billable expenses decreased by $513,000.

Previous wording

*Selling and Marketing Expense.*Selling and marketing expense of $1.3 million and $2.7 million for the three and six months ended June 30, 2026 increased by $182,000 or 16% and $465,000 or 21% from selling and marketing expense of $1.1 million and $2.2 million for the three and six months ended June 30, 2025, respectively. The increase for the three and six months ended June 30, 2026 was primarily due to additional headcount.

Current wording

*Selling and Marketing Expense.*Selling and marketing expense of $1.3 million and $4.0 million for the three and nine months ended September 30, 2026 increased by $182,000 or 16% and $647,000 or 19% from selling and marketing expense of $1.1 million and $3.4 million for the three and nine months ended September 30, 2025, respectively. The increase for the three and nine months ended September 30, 2026 was primarily related to an increase in personnel cost.

Previous wording

*General and Administrative Expense.*General and administrative expense of $5.4 million and $10.9 million for the three and six months ended June 30, 2026 increased by $1.0 million or 23% and $2.2 million or 25% compared to general and administrative expense of $4.4 million and $8.7 million for the three and six months ended June 30, 2025, respectively. During the three and six months ended June 30, 2026, salary costs increased by $530,000 and $890,000, and insurance costs increased by $64,000 and $101,000, respectively. The costs for the newly purchased aircraft used to support business development and maintain client relationships were $276,000 and $438,000 for the three and six months ended June 30, 2026, respectively.

Current wording

*General and Administrative Expense.*General and administrative expense of $5.0 million and $15.8 million for the three and nine months ended September 30, 2026 increased by $64,000 or 1% and $2.2 millionor 16% compared to general and administrative expense of $4.9 million and $13.6 million for the three and nine months ended September 30, 2025, respectively. During the three months ended September 30, 2026, salary costs decreased by $210,000 and during the nine months ended September 30, 2026 salary costs increased by $679,000. The costs for the newly purchased aircraft used to support business development and maintain client relationships were $115,000 and $553,000 for the three and nine months ended September 30, 2026, respectively.

Previous wording

Change in Contingent Consideration. Change in contingent consideration of $(34,000) and $23,000 for the three and six months ended June 30, 2026 relates to adjustments for probable future payments required under the purchase agreement for certain acquisitions.

Current wording

Change in Contingent Consideration. Change in contingent consideration of $32,000 and $9,000 for the three and nine months ended September 30, 2026 relates to adjustments for probable future payments required under the purchase agreement for certain acquisitions.

Previous wording

*Depreciation Expense.*Depreciation expense of $748,000 and $1.5 million for the three and six months ended June 30, 2026 increased by $154,000 and $333,000 from depreciation of $594,000 and $1.2 million for the three and six months ended June 30, 2025, respectively.

Current wording

*Depreciation Expense.*Depreciation expense of $776,000 and $2.3 millionfor the three and nine months ended September 30, 2026 increased by $124,000 and $457,000 from depreciation of $652,000 and $1.8 million for the three and nine months ended September 30, 2025, respectively.

Previous wording

*Amortization Expense.*Amortization expense of $3.0 million and $6.3 million for the three and six months ended June 30, 2026 increased by $195,000 or 7% and $716,000 or 13% from amortization expense of $2.8 million and $5.6 million for the three and six months ended June 30, 2025, respectively. The increase in the expense is due to the amortization of the intangible assets acquired in the recent acquisitions.

Current wording

*Amortization Expense.*Amortization expense of $2.4 million and $8.7 million for the three and nine months ended September 30, 2026 decreased by $981,000 or 29% and $265,000 or 3% from amortization expense of $3.4 million and $8.9 million for the three and nine months ended September 30, 2025, respectively. The decrease in the expense is due to the run-off of older software amortization exceeding additions from technology acquired and newly capitalized projects.

Previous wording

Restructuring Costs. There were no restructuring costs for the three and six months ended June 30, 2026 as compared to $23,000 and $137,000 for the three and six months ended June 30, 2025, respectively, which primarily consists of severance and separation costs associated with the optimization of the Company’s operations and profitability improvements.

Current wording

Restructuring Costs. There were no restructuring costs for the three and nine months ended September 30, 2026 as compared to $17,000 and $154,000 for the three and nine months ended September 30, 2025, respectively, which primarily consisted of severance and separation costs associated with the optimization of the Company’s operations and profitability improvements.

Previous wording

*Interest Income.*Interest income of $73,000 and $83,000 for the three and six months ended June 30, 2026 increased by $22,000 and decreased by $10,000 from interest income of $51,000 and $93,000 for the three and six months ended June 30, 2025, respectively. The interest income represents late fees from customers and interest earned on temporary cash investments.

Current wording

*Interest Income.*Interest income of $81,000 and $164,000 for the three and nine months ended September 30, 2026 decreased by $14,000 and $24,000 from interest income of $95,000 and $188,000 for the three and nine months ended September 30, 2025, respectively. The interest income represents late fees from customers and interest earned on temporary cash investments.

Previous wording

Interest Expense. Interest expense of $815,000 and $873,000 for the three and six months ended June 30, 2026, respectively, increased by $747,000 for both the three and six months periods from interest expense of $68,000 and $126,000, respectively, in 2025. The interest expense increase was due to the borrowings under the term loan and the line of credit during 2026. Interest expense on the term loan was $621,000 for both the three and six months ended June 30, 2026, and includes fees related to the term loan. Interest expense on the line of credit was $121,000 for both the three and six months ended June 30, 2026, and includes fees related to the line of credit.

Current wording

Interest Expense. Interest expense of $1.8 million and $2.7 million for the three and nine months ended September 30, 2026, respectively, increased by $1.7 million and $2.4 million from interest expense of $147,000 and $273,000 for the three and nine months ended September 30, 2025, respectively. The interest expense increase was due to the amortization of the warrant of $934,000 awarded to the Executive Chairman as compensation for the pledge of collateral, and the borrowings under the term loan and on the line of credit during 2026. Interest expense on the term loan was $693,000 and $1.3 million for the three and nine months ended September 30, 2026, and includes fees related to the term loan. Interest expense on the line of credit was $125,000 and $246,000 for the three and nine months ended September 30, 2026, respectively, and includes fees related to the line of credit. The line of credit was drawn upon the closing of the loan agreement and remained outstanding until it was fully repaid during the third quarter of 2026.

Previous wording

*Other Income (Expense)–net.*Other income – net was $104,000 and $126,000 for the three and six months ended June 30, 2026 compared to other expense – net of $35,000 and $49,000 for the three and six months ended June 30, 2025, respectively. Other expense or income primarily represents foreign currency transaction gains or losses. These transaction gains or losses result from revaluing intercompany accounts which are denominated in U.S. dollars that represent amounts payable/receivable between the entities. Whenever the exchange rate varies, the gains or losses are recorded in the condensed consolidated statements of operations.

Current wording

*Other (Expense) Income–net.*Other expense – net was $1,000 and other income – net was $125,000 for the three and nine months ended September 30, 2026 compared to other expense – net of $55,000 and $104,000 for the three and nine months ended September 30, 2025, respectively. Other expense or income primarily represents foreign currency transaction gains or losses. These transaction gains or losses result from revaluing intercompany accounts which are denominated in U.S. dollars that represent amounts payable/receivable between the entities. Whenever the exchange rate varies, the gains or losses are recorded in the condensed consolidated statements of operations.

Previous wording

*Income Tax Provision.*The provision for income taxes was $102,000 and $154,000 for the three and six months ended June 30, 2026, respectively, compared to $42,000 and $83,000 for the three and six months ended June 30, 2025, respectively. The increase was primarily due to a $50,000 deferred income tax provision for the three and six months ended June 30, 2026 related to the amortization of goodwill for tax purposes. There was no deferred tax liability recorded at December 31, 2025. There were no deferred income taxes for the three months and six months ended June 30, 2025.

Current wording

*Income Tax Provision.*The provision for income taxes was $127,000 and $281,000 for the three and nine months ended September 30, 2026, respectively, compared to $43,000 and $126,000 for the three and nine months ended September 30, 2025, respectively. The increase was primarily due to a $45,000 and $95,000 deferred income tax provision for the three and nine months ended September 30, 2026. There was no deferred tax liability recorded at December 31, 2025. There were no deferred income taxes for the three and nine months ended September 30, 2025.

Previous wording

The current income tax expense for the three and six months ended June 30, 2026 was approximately $52,000 and $102,000, respectively, which represents state minimum taxes and foreign income taxes. Although the Company has returned to profitability, it incurred losses historically and there is uncertainty regarding sufficient future U.S. taxable income, which makes realization of deferred tax losses difficult to support in accordance with ASC 740. Accordingly, a valuation allowance was recorded against all deferred tax assets at June 30, 2026 and December 31, 2025.

Current wording

The current income tax expense for the three and nine months ended September 30, 2026 was approximately $82,000 and $186,000, respectively, which represents state income and minimum taxes and foreign income taxes. Although the Company has returned to profitability, it incurred losses historically and there is uncertainty regarding sufficient future U.S. taxable income, which makes realization of deferred tax assets difficult to support in accordance with ASC 740. Accordingly, a valuation allowance was recorded against all deferred tax assets at September 30, 2026 and December 31, 2025.

Previous wording

During April 2026, the Company terminated the credit line with Provident and entered into a $50 million joint credit facility with Citizens Bank, N.A. and Provident consisting of a four-year $40 million term loan and a $10 million revolving line of credit. As of June 30, 2026, there were $9.0 million outstanding on the line of credit and $39.2 million outstanding on the term loan. The Company fully redeemed the outstanding Series B Preferred Stock in May 2026. Approximately $41.6 million of the new credit facility was used for the redemption. As of June 30, 2025, there were no borrowings under the Provident credit facility.

Current wording

During April 2026, the Company terminated the credit line with Provident and entered into a $50 million joint credit facility with Citizens Bank, N.A. and Provident consisting of a four-year $40 million term loan and a $10 million revolving line of credit. As of September 30, 2026, there was nothing outstanding on the line of credit and $36.7 million outstanding on the term loan. The Company fully redeemed the outstanding Series B Preferred Stock in May 2026. Approximately $41.6 million of the new credit facility was used for the redemption. As of September 30, 2025, there was $6.5 million of borrowings under the credit facility.

Previous wording

As of June 30, 2026, the Company had total cash of $13.4 million and net working capital of $695,000. For the six months ended June 30, 2026, cash provided by operations was $10.7 million and cash provided by financing activities was $2.3 million, offset by cash used in investing activities of $3.2 million, resulting in an increase in cash of $9.8 million after accounting for the effect of $8,000 of exchange rate changes.

Current wording

As of September 30, 2026, the Company had total cash of $4.6 million and negative working capital of $4.2 million. The negative working capital resulted from redeeming Series B Preferred shares earlier in the year using funds from the credit facility, a portion of which is recorded as a current liability. For the nine months ended September 30, 2026, cash provided by operations was $16.3 million and cash used in financing and investing activities was $9.9 million and $5.4 million, resulting in an increase in cash of $1.0 million after accounting for the effect of $10,000 of exchange rate changes.

Previous wording

For the six months ended June 30, 2026, the Company recorded net income of $2.0 million. Management continues to focus on the Company’s overall profitability, including managing expenses, and to the extent possible growing revenue, and expects that these efforts will continue to enhance our liquidity and financial position. Our expectations regarding future financial performance, including revenue, adjusted EBITDA and earnings-per-share, are based on management’s current beliefs and assumptions regarding, among other things, the signing and continuation of certain client and vendor relationships, the anticipated timing and scope of client projects, and our timely execution of integration and expense-management initiatives intended to align our cost structure with those objectives. If these assumptions prove incorrect or these initiatives are delayed or not fully realized, our results may differ materially. Based on management’s forecasts, the Company will have sufficient liquidity to meet its obligations as they become due for the next twelve months from the date of the financial statements’ issuance.

Current wording

For the nine months ended September 30, 2026, the Company recorded net income of $6.8 million. Management continues to focus on the Company’s overall profitability, including managing expenses and expects that these efforts will continue to enhance our liquidity and financial position. Our expectations regarding future financial performance, including revenue, adjusted EBITDA and earnings-per-share, are based on management’s current beliefs and assumptions regarding, among other things, the signing and continuation of certain client and vendor relationships, the anticipated timing and scope of client projects, and our timely execution of integration and expense-management initiatives intended to align our cost structure with those objectives. If these assumptions prove incorrect or these initiatives are delayed or not fully realized, our results may differ materially. Based on management’s forecasts, the Company will have sufficient liquidity to meet its obligations as they become due for the next twelve months from the date of the financial statements’ issuance.

Previous wording

We have not been adversely affected by inflation as typically we receive a percentage of the fees our clients collect from our revenue cycle management services. Additionally, our medical practice management contracts are based on our costs plus a percentage of the medical practice’s operating income. We continue to monitor the impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions. In the event of inflation, we believe that we will be able to pass on any price increases for fixed rate contracts to our customers, as the prices that we charge are not governed by long-term contracts. The interest rate on the Citizens’ term loan and the line of credit is based on the secured overnight financing rate which has slightly declined since inception.

Current wording

The interest rate on the term loan and the line of credit is based on the secured overnight financing rate.

Previous wording

The income before income taxes was $1.2 million and $2.2 million for the three and six months ended June 30, 2026, respectively, which included $3.7 million and $7.8 million of non-cash depreciation and amortization, respectively. The income before income taxes was $2.9 million and $4.9 million for the three and six months ended June 30, 2025, respectively, which included $3.4 million and $6.7 million of non-cash depreciation and amortization, respectively.

Current wording

The income before income taxes was $4.9 millionand $7.1 millionfor the three and nine months ended September 30, 2026, respectively, which included $3.2 million and $10.9 million of non-cash depreciation and amortization, respectively. The income before income taxes was $3.1 million and $8.0 million for the three and nine months ended September 30, 2025, respectively, which included $4.0 million and $10.7 million of non-cash depreciation and amortization, respectively.

Previous wording

Net cash provided by operating activities was $10.7 million and $12.5 million during the six months ended June 30, 2026 and 2025, respectively. There was a decrease in net income of $2.8 million together with the following changes in non-cash items: an increase in depreciation and amortization of $1.0 million and a decrease in stock-based compensation of $91,000. Accounts receivable decreased $827,000 and increased $958,000 for the six months ended June 30, 2026 and 2025, respectively. Accounts payable and other liabilities decreased by $2.1 million and increased $377,000 during the six months ended June 30, 2026 and 2025, respectively. Other assets decreased by $73,000 and increased by $838,000 during the six months ended June 30, 2026 and 2025, respectively.

Current wording

Net cash provided by operating activities was $16.3 million and $19.9 million during the nine months ended September 30, 2026 and 2025, respectively. There was a decrease in net income of $1.1 million together with the following changes in non-cash items: an increase in depreciation and amortization of $147,000 and an increase in interest accretion of $928,000. Accounts receivable increased $1.9 millionand $796,000 for the nine months ended September 30, 2026 and 2025, respectively. Accounts payable and other liabilities decreased by $2.7 million and increased $2.1 million during the nine months ended September 30, 2026 and 2025, respectively. Other assets increased by $812,000 and $2.6 million during the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Net cash used in investing activities was $3.2 million and $3.5 million for the six months ended June 30, 2026 and 2025, respectively. Capital expenditures were $937,000 and $1.8 million for the six months ended June 30, 2026 and 2025, respectively. The capital expenditures for the six months ended June 30, 2026 and 2025 primarily represented computer equipment purchased and leasehold improvements for the Pakistan Offices. Software development costs of $1.6 million and $1.7 million for the six months ended June 30, 2026 and 2025, respectively, were capitalized in connection with the development of software for providing technology-enabled business solutions. Payment for acquisitions was $681,000 and $40,000 for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Net cash used in investing activities was $5.4 millionand $21.2 million for the nine months ended September 30, 2026 and 2025, respectively. Capital expenditures were $1.3 millionand $2.7 million for the nine months ended September 30, 2026 and 2025, respectively. The capital expenditures for the nine months ended September 30, 2026 and 2025 primarily represented computer equipment purchased and leasehold improvements for the Pakistan Offices. Software development costs of $3.1 millionand $2.5 million for the nine months ended September 30, 2026 and 2025, respectively, were capitalized in connection with the development of software for providing technology-enabled business solutions. Payments for acquisitions were $967,000 and $16 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Net cash provided by financing activities was $2.3 million during the six months ended June 30, 2026 compared to net cash used in financing activities of $3.7 million during the six months ended June 30, 2025. Cash provided by financing activities during the six months ended June 30, 2026 included $39.7 million of net proceeds from the term loan, $9 million of borrowings on the line of credit, offset by $6.4 million of preferred stock dividends, $1.2 million of repayments for debt obligations and $618,000 for payment of contingent consideration. Approximately $38.2 million was used for the redemption of the Series B Preferred stock. Cash used in financing activities during the six months ended June 30, 2025 included $3.3 million of preferred stock dividends, $355,000 of repayments for debt obligations and $22,000 of tax withholding obligations paid in connection with stock awards issued to employees.

Current wording

Net cash used in financing activities was $9.9 million during the nine months ended September 30, 2026 compared to net cash provided by financing activities of $1.2 million during the nine months ended September 30, 2025. Cash from financing activities during the nine months ended September 30, 2026 included $39.8 million of net proceeds from the term loan and $9.0 million of borrowings on the line of credit, offset by the repayment of the credit line of $9.0 million, $7.0 million of preferred stock dividends, $3.9 million of repayments for debt obligations and $677,000 for payment of contingent consideration. Approximately $38.2 million was used for the redemption of the Series B Preferred Stock. Cash used in financing activities during the nine months ended September 30, 2025 included $4.8 million of preferred stock dividends, $378,000 of repayments for debt obligations, $53,000 of payments for contingent obligations and $22,000 of tax withholding obligations paid in connection with stock awards issued to employees. Net proceeds and repayments on the line of credit were $6.5 million for the nine months ended September 30, 2025.

Previous wording

We had contractual obligations under our Provident line of credit and have contractual obligations under the new credit facility obtained in April 2026. We were in compliance with all covenants as of June 30, 2026. We also maintain operating leases for property and certain office equipment. For additional information, see Contractual Obligations and Commitments under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026.

Current wording

We had contractual obligations under our former Provident line of credit and have contractual obligations under the new credit facility obtained in April 2026. We were in compliance with all covenants as of September 30, 2026. We also maintain operating leases for property and certain office equipment. For additional information, see Contractual Obligations and Commitments under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026.

Previous wording

On March 16, 2026, the Company detected a security incident in its CareCloud Health division that affected the functionality and data access to one of its six electronic health record environments for approximately eight hours until the Company fully restored all functionality and data access during that evening. The forensic investigation determined that an unauthorized third party gained access to one cloud account supporting the previously identified electronic health record environment and found no evidence that any other Company platforms, divisions, systems, data or environments were affected. The investigation found no evidence of unauthorized activity related to the incident after March 16, 2026 and all affected systems remain fully operational. Subject to applicable policy terms, limits, retentions, exclusions and coverage determinations, the Company currently believes its available cybersecurity insurance coverage is likely to be sufficient for the losses it currently anticipates in connection with the incident. See Note 9, Commitments and Contingencies, of the Notes to Condensed Consolidated Financial Statements for additional information regarding the incident, including related legal proceedings.

Current wording

On March 16, 2026, the Company detected a security incident in its CareCloud Health division that affected the functionality and data access to one of its six electronic health record environments for approximately eight hours until the Company fully restored all functionality and data access during that evening. The forensic investigation determined that an unauthorized third party gained access to one cloud account supporting the previously identified electronic health record environment and found no evidence that any other Company platforms, divisions, systems, data or environments were affected. The investigation found no evidence of unauthorized activity related to the incident after March 16, 2026 and all affected systems remain fully operational. Subject to applicable policy terms, limits, retention, exclusions and coverage determinations, the Company currently believes its available cybersecurity insurance coverage is likely to be sufficient for the losses it currently anticipates in connection with the incident. See Note 9, Commitments and Contingencies, of the Notes to Condensed Consolidated Financial Statements for additional information regarding the incident, including related legal proceedings.