CareCloud Capital Structure Update

Rhea-AI Summary

CareCloud, Inc. received an unsolicited offer to acquire the company for $5.00 per share of common stock and $25 redemption price per share of its Series B Preferred Stock. The Board of Directors declined the offer after thorough evaluation and retained an investment bank to assess the terms of its Series A Preferred Stock.

Insights

Financial Analyst

The proposed acquisition price for CareCloud's common stock reflects the acquirer's valuation, which investors should compare with current market valuation and historical prices to gauge potential premium or discount. In addition, the specific mention of Series B Preferred Stock redemption at $25 shows a clear strategy toward preferred shareholders. Investors need to understand the implications of the different treatment of Series A Preferred Stock and Series B Preferred Stock in such transactions. Typically, preferred stocks have priority over common stocks in receiving dividends and during liquidation, but may have different clauses when it comes to redemption, which could significantly affect their value in a change of control scenario. The Board's decision to decline suggests either a belief in higher intrinsic value or an incomplete offer not adequately compensating all shareholders. The retention of an investment bank indicates a strategic review of the capital structure to potentially amend terms and enhance shareholder value.

M&A Legal Expert

The non-binding nature of the acquisition interest means it’s an initial proposal and not a definitive agreement. Investors should note that such proposals can change materially after due diligence is conducted. Legal intricacies surrounding the redemption provisions of Series A and Series B Preferred Stock could offer significant negotiation leverage or could end up being an impediment in the transaction. The Board's fiduciary duty is to act in the best interest of all shareholders, which may require a careful balance between the immediate benefits of a sale and the long-term prospects of the company. When evaluating such news, investors should be aware of the potential for negotiations to reopen or for other bidders to emerge, which could create volatility in the stock price.

Investment Banker

The engagement of an investment bank suggests CareCloud is actively considering how to optimize its capital structure, potentially to the benefit of its shareholders. From an investment banking perspective, the evaluation of the Series A and Series B Preferred Stock terms could lead to restructuring that might make the company more attractive for future acquisition or better suited for growth. While the immediate impact on the stock might be neutral, these strategic reviews have the potential for long-term implications based on the recommendations and subsequent actions taken by the Board.

SOMERSET, N.J., May 13, 2024 (GLOBE NEWSWIRE) -- CareCloud, Inc. (the “Company” or “CareCloud”) (Nasdaq: CCLD, CCLDP and CCLDO), a leader in healthcare technology solutions for medical practices and health systems nationwide, today released details regarding its receipt of an unsolicited, non-binding indication of interest dated March 4, 2024, to acquire the Company for $5.00 per share of its common stock, and the $25 redemption price per share of its 8.75% Series B Cumulative Redeemable Perpetual Preferred Stock (“Series B Preferred Stock”). The indication of interest was subject to satisfactory due diligence.

The letter made no mention of the treatment of the Company’s 11% Series A Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”), which the Company believes was due to their respective redemption provisions on a change of control that enables a buyer to take the Company private while leaving the Series A Preferred Stock as a publicly traded security. The Company’s Board of Directors thoroughly evaluated the indication of interest and determined it was in the Company’s best interests to decline it in its present form.

Prompted by the indication of interest, the Company retained an investment bank to examine and evaluate the terms of its Series A Preferred Stock, including the differing redemption rights afforded to Series A preferred stockholders as compared to Series B preferred stockholders, and to make recommendations to the Board of Directors that may be beneficial to the Company and its shareholders.

Forward-Looking Statements

This press release contains various forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements relate to anticipated future events, future results of operations or future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “shall,” “should,” “could,” “intends,” “expects,” “plans,” “goals,” “projects,” “anticipates,” “believes,” “seeks,” “estimates,” “forecasts,” “predicts,” “possible,” “potential,” “target,” or “continue” or the negative of these terms or other comparable terminology.

Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Forward-looking statements in this press release include, without limitation, statements reflecting management's expectations for future financial performance and operating expenditures, expected growth, profitability and business outlook, the impact of pandemics on our financial performance and business activities, and the expected results from the integration of our acquisitions.

These forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are only predictions, are uncertain and involve substantial known and unknown risks, uncertainties and other factors which may cause our (or our industry’s) actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all of the risks and uncertainties that could have an impact on the forward-looking statements, including without limitation, risks and uncertainties relating to the Company’s ability to manage growth, migrate newly acquired customers and retain new and existing customers, maintain cost-effective global operations, increase operational efficiency and reduce operating costs, predict and properly adjust to changes in reimbursement and other industry regulations and trends, retain the services of key personnel, develop new technologies, upgrade and adapt legacy and acquired technologies to work with evolving industry standards, compete with other companies’ products and services competitive with ours, manage and keep our information systems secure and other important risks and uncertainties referenced and discussed under the heading titled “Risk Factors” in the Company’s filings with the Securities and Exchange Commission.

The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligations to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

About CareCloud

CareCloud (Nasdaq: CCLD, CCLDP, CCLDO) brings disciplined innovation to the business of healthcare. Our suite of technology-enabled solutions helps clients increase financial and operational performance, streamline clinical workflows and improve the patient experience. More than 40,000 providers count on CareCloud to improve patient care, while reducing administrative burdens and operating costs. Learn more about our products and services, including revenue cycle management (RCM), practice management (PM), electronic health records (EHR), business intelligence, patient experience management (PXM) and digital health at www.carecloud.com.

Follow CareCloud on LinkedIn, Twitter and Facebook.

For additional information, please visit our website at www.carecloud.com. To view CareCloud’s latest investor presentations, read recent press releases, please visit ir.carecloud.com.

SOURCE CareCloud

Company Contact:
Norman Roth
Interim Chief Financial Officer and Corporate Controller
CareCloud, Inc.
ir@carecloud.com

Investor Contact:
Bill Korn
CareCloud, Inc.
ir@carecloud.com

FAQ

What offer did CareCloud receive?

CareCloud received an unsolicited offer to acquire the company for $5.00 per share of its common stock and $25 redemption price per share of its Series B Preferred Stock.

What did the Company's Board of Directors do after evaluating the offer?

The Board of Directors declined the offer after a thorough evaluation.

What did the Company do in response to the offer?

The Company retained an investment bank to assess the terms of its Series A Preferred Stock.