CareCloud, Inc. (CCLD) stock intrinsic value fair value estimate & owner earnings analysis

CareCloud sells revenue-cycle management (medical billing and collections), cloud software (electronic health records, practice management, hospital and emergency-department systems) and AI tools to healthcare providers across the United States. About 3,300 employees work in offshore offices, 98% of them in Pakistan, which is the core of its cost advantage. Its largest revenue line, technology-enabled business solutions, fell from $88.1M in 2022 to $76.6M in 2023 and $73.7M in 2024, then recovered to $76.9M in 2025. Total revenue was $120.5M in 2025, including $10.5M from Medsphere, a hospital software business bought on August 22, 2025 for $16.5M. Excluding Medsphere, revenue was roughly flat at about $110M. One customer accounts for about 10% of revenue. How we measure earnings. We start from operating cash flow, remove swings in working capital, and subtract stock compensation and the money needed to keep the business running: equipment and capitalized software, plus lease payments. Growth spending is excluded only where revenue actually grew. On this basis owner earnings were about $4.9M in 2022, a loss of $2.0M in 2023 (heavy software spending, cash flow reduced by lower revenue), $15.7M in 2024 and $19.3M in 2025. We use the median of 2022-2025, about $10.3M a year, as the normal level. That window starts after the 2021 acquisition wave and the 2020-2021 outflows in payables and accrued liabilities, and it includes both a weak year and two strong ones. We do not treat 2024-2025 alone as normal. Capitalized software fell from $8.6M in 2023 to $3.2M in 2025, but research and development expense rose from $3.8M to $6.4M over 2024-2025, so part of the improvement is a shift in accounting rather than lower spending. Growth reconciliation: owner earnings grew 23% in 2025 ($15.7M to $19.3M); we assume 0% in year one because core revenue has only just stabilized and the first half of 2026 net income ($2.0M) and operating cash flow ($10.7M) were below the same period of 2025 ($4.9M and $12.5M). Working-capital outflows in the payables and accrued liabilities line recurred every year from 2020 to 2024 and we could not fully explain them from the filings. We removed them as timing, as our method requires; leaving them in would cut the normal level to roughly $6M and lower every case. Preferred stock comes before common shareholders. The company has about 985,000 Series A and 1.51 million Series B preferred shares outstanding, each paying 8.75% ($2.1875 per share a year, about $5.5M annually) with a $25 face value, or roughly $62M in total. Dividends were suspended in December 2023 and resumed in February 2025, and about $6.8M of unpaid dividends remained at the end of 2025; the company began paying double Series B dividends in February 2026 to clear them. The company has a right to redeem the Series A at $25 per share. Because these dividends are not deducted in operating cash flow, we subtract the preferred claim (face value plus arrears, about $69M) from the value of the business before dividing by 42.5M common shares. Bank borrowing was zero at the end of 2025 (a $10M Provident Bank line was drawn to fund Medsphere and repaid in the year), so leverage risk here comes from the preferred stock. In March 2025 most Series A preferred was converted into common, lifting the share count from about 16M to 42.5M, so per-share figures before 2025 are not comparable. Base case, $1.34 per share. Owner earnings stay at about $10.3M for five years, supported by recurring billing and software contracts and a core revenue line that has held at $74-77M for three years. After that they decline 3% a year, matching the 3% a year decline in that line from 2022 to 2025. The Medsphere acquisition is already paid for, but only 4.3 months of it are in 2025 results and we have no evidence of its profit margin, so no added profit is credited. Also not credited: new acquisitions, AI product growth, price increases and margin gains. Amortization of acquired customer relationships (about $12.4M in 2025) is added back as non-cash, and the declining path after year five is how we reflect that acquired relationships wear off. Value of the business is about $126M, less about $69M of preferred claims, or about $57M for common holders. Bear case, negative $0.63 per share. Owner earnings drop to about $4.9M (the 2022 level, when software spending was heavy) and decline 5% a year, in line with the roughly 6% a year fall in total revenue between 2021 and 2025 before Medsphere. The business would then be worth about $42M against roughly $69M of preferred claims. In this case the company appears to owe its preferred holders more than the business is worth, by about $27M, and common shares would be worth less than nothing on our numbers. Named risks: the dividend suspension in 2023-2025, the one customer at about 10% of revenue, dependence on Pakistan operations, and bank covenants that could block preferred dividends. Bull case, $4.22 per share. Owner earnings hold at about $17.5M, the average of 2024 and 2025, for ten years and then decline 2% a year, as the leaner cost base and full-year Medsphere contribution are sustained. Value of the business is about $249M less $69M of preferred claims. What would make this estimate wrong: a further drop in the core billing and software revenue line, a return to 2023-level software spending, or a shift in cash taxes as the company's roughly $57M federal loss carryforwards are used up (we did not model higher future taxes). Upside would come from higher-margin Medsphere and AI products than we can evidence today.