Voting on CareCloud’s Series A Proxy Reveals an Encouraging Trend

Rhea-AI Summary

CareCloud (CCLD) reports encouraging trends in the voting on its Series A Preferred Stock proposal. 72% of Series A Preferred Shares that have returned proxies to date approve the Preferred Stock Proposal. The company needs an affirmative vote of at least two-thirds of all outstanding Series A Preferred Stock (about 3 million of 4.5 million shares) for the proposal to pass.

If approved, the proposal would grant Series A Preferred Stockholders similar change of control protections as Series B Preferred Stockholders, align the dividend with Series B Preferred Stock, and allow CareCloud to exchange Series A Preferred Stock for common stock at the $25/share liquidation preference value plus accrued dividends. The voting deadline is August 21, 2024.

Positive

• 72% of returned proxies approve the Preferred Stock Proposal
• If approved, Series A Preferred Stockholders would receive enhanced change of control protections
• Proposal approval would allow CareCloud to exchange Series A Preferred Stock for common stock at $25/share plus dividends

Negative

• Only 11% of Series A Preferred Stock shares have provided voting instructions so far
• Proposal requires approval from two-thirds of all outstanding Series A Preferred Stock to pass
• Non-voted shares are counted as 'no' votes, making it harder to achieve the required two-thirds majority

Insights

Financial Analyst

This development regarding CareCloud's Series A Preferred Stock proposal carries significant implications for the company's financial structure and shareholder value. If approved, the proposal would align the terms of the Series A Preferred Stock with those of the Series B Preferred Stock, particularly in terms of dividend payouts and change of control protections. This alignment could simplify the company's capital structure and make it more attractive to investors by providing uniformity and predictability.

From a financial perspective, the approval would allow CareCloud to exchange Series A Preferred Stock for common stock at a liquidation preference value of $25 per share plus accrued dividends. This conversion could affect the stock's liquidity and pricing dynamics. For retail investors, understanding that the approval could lead to a potential dilution of common stock is crucial. However, it could also stabilize the company's financial standing by potentially reducing dividend liabilities over the long term.

Importantly, the 72% approval rate among those who have voted is a positive indicator, but the challenge remains to reach the two-thirds threshold, especially since non-voting shares will count as 'no' votes. This adds a layer of uncertainty to the outcome and investors should be cautious about the possible risks of the proposal not passing.

Market Research Analyst

From a market dynamics standpoint, the ongoing proxy solicitation reflects underlying shareholder sentiment and the confidence in CareCloud's management strategy. Aligning the terms of Series A Preferred Stock with Series B might be seen as a move towards operational and financial consistency, which can enhance investor confidence and potentially lead to greater market stability for the stock.

This proposal could also signal to the market that CareCloud is positioning itself for a more streamlined and possibly more aggressive growth trajectory. By having the right to exchange preferred stock for common stock, CareCloud might be preparing for future capital raising activities or acquisitions that would benefit from a simplified equity structure.

Retail investors should note the reference to New Fortress Energy’s acquisition of Golar LNG Partners as an illustrative case. This comparison suggests potential restructuring scenarios that could play out similarly if the proposal passes, thereby offering a lens through which to assess the possible future state of CareCloud's securities post-approval.

Legal Expert

From a legal perspective, the proposal to amend the Certificate of Designations, Preferences and Rights of CareCloud’s Series A Preferred Stock carries notable implications for shareholder protections and corporate governance. The proposed changes would provide Series A shareholders with change of control protections similar to those of Series B shareholders, which is a substantial enhancement of their rights.

This move could be interpreted as an effort by CareCloud to mitigate potential legal risks associated with future mergers or acquisitions. By ensuring that Series A shareholders have comparable protections, the company may be reducing the likelihood of contentious legal battles or resistance from this shareholder group in the event of a significant corporate transaction.

However, the legal requirement for a two-thirds affirmative vote highlights the challenge CareCloud faces. The company needs to ensure a high turnout among shareholders to avoid non-votes counting as 'no' votes. This situation underscores the importance of thorough communication and legal compliance in the proxy solicitation process to achieve the desired outcome.

72% of Series A Preferred Shares that Have Returned their Proxies to Date Approve of the Preferred Stock Proposal

SOMERSET, N.J., July 23, 2024 (GLOBE NEWSWIRE) -- CareCloud, Inc. (the “Company”) (Nasdaq: CCLD, CCLDO, CCLDP), a leader in healthcare technology solutions for medical practices and health systems nationwide, today announced that it continues to solicit proxies from the holders (the “Series A Preferred Shareholders”) of its 11% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”) to approve an amendment to the Company’s Certificate of Designations, Preferences and Rights of its Series A Preferred Stock (the “Preferred Stock Proposal”). With approximately 11% of the shares of Series A Preferred Stock having provided their voting instructions by proxy to date, the Company’s Board of Directors is encouraged to see that approximately 72% of these shares are in favor of the changes recommended in the Preferred Stock Proposal.

“This is an important vote for Series A Preferred Shareholders,” said Stephen Snyder, President of CareCloud. “To become effective, the proposal needs the affirmative vote of at least two-thirds of the shares of all outstanding Series A Preferred Stock – or about 3 million of the outstanding 4.5 million shares. Series A Preferred Shareholders who would like to submit their voting instructions can do so now through August 21, 2024, by calling 844-874-6164, by visiting www.aalvote.com/ccld, or by mailing back the completed proxy card received from the Company. If you vote by phone or over the internet, you will need your control number from your proxy card. However, those who would instead prefer to attend the Special Meeting in person can do so by following the instructions contained in the Definitive Proxy materials filed with the SEC.”

If the Preferred Stock Proposal is ultimately approved, holders of Series A Preferred Stock would receive similar change of control protections to those afforded to holders of the Company’s Series B 8.75% Cumulative Redeemable Perpetual Preferred Stock (the “Series B Preferred Stock”). Also, the dividend of Series A Preferred Stock would mirror that of the Series B Preferred Stock, and the Company would, going forward, have the right to exchange the shares of Series A Preferred Stock for common stock at the liquidation preference value of the $25/share, plus accrued and unpaid dividends.

If the Preferred Stock Proposal is not approved, the terms remain the same as when the Series A Preferred Stock was issued as previously disclosed in the prospectus. Accordingly, a potential acquirer of the Company could acquire the common stock of the Company, while leaving the Series A Preferred Stock outstanding as a security of a public reporting company. As an example of securities remaining outstanding after an acquisition, investors may find New Fortress Energy’s (Nasdaq: NFE) acquisition of Golar LNG Partners (Nasdaq: GMLP) to be a helpful, albeit somewhat different and distinguishable, reference point.

Proxy solicitation is ongoing and the Company cannot predict future proxy or voting results, which could be more or less favorable than the trends seen to date. Any shares that are not voted will be deemed “no” votes, making it more difficult for the Company to achieve the minimum two-thirds vote in favor of the Preferred Stock Proposal.

The information contained in this press release is a summary of certain relevant portions of the Definitive Proxy Statement and other materials filed with the SEC. It is important that Series A Preferred Shareholders review the entirety of the filings, which are available on the SEC’s website and on https://ir.carecloud.com/series-a-special-proxy.

About CareCloud

CareCloud 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 help them 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.

Important Additional Information and Where To Find It. CareCloud filed with the SEC a definitive proxy statement on Schedule 14A on July 8, 2024, with respect to its future solicitation of proxies for the Special Meeting of Series A Preferred Stock shareholders (including any and all adjournments, postponements, continuations, and reschedulings thereof, the "Special Meeting"). The information contained in this press release is merely a summary of certain relevant portions of the Proxy Statement and it is important that Series A Preferred Stock shareholders review the entirety of the filing. SERIES A PREFERRED STOCK SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND ANY OTHER AMENDMENTS OR SUPPLEMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT CARECLOUD'S FILING. Investors and security holders may obtain copies of these documents and other documents filed with the SEC by CareCloud free of charge through the website maintained by the SEC at www.sec.gov. The Notice of the Special Meeting of Series A Preferred Stockholders and our Proxy Statement for the Special Meeting, the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024 are available at www.sec.gov.

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,” “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. We do not have an ongoing obligation to update shareholders regarding future proxy or vote trends, even if they are materially different from those experienced to date. 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, 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.

SOURCE CareCloud

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

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

FAQ

What percentage of CareCloud's (CCLD) Series A Preferred Shares have approved the Preferred Stock Proposal?

72% of Series A Preferred Shares that have returned their proxies to date approve the Preferred Stock Proposal.

How many votes does CareCloud (CCLD) need to pass the Preferred Stock Proposal?

CareCloud needs an affirmative vote of at least two-thirds of all outstanding Series A Preferred Stock, which is about 3 million of the 4.5 million outstanding shares.

What is the voting deadline for CareCloud's (CCLD) Series A Preferred Stock proposal?

The voting deadline for CareCloud's Series A Preferred Stock proposal is August 21, 2024.

What changes would occur if CareCloud's (CCLD) Preferred Stock Proposal is approved?

If approved, Series A Preferred Stockholders would receive similar change of control protections as Series B Preferred Stockholders, the dividend would align with Series B Preferred Stock, and CareCloud could exchange Series A Preferred Stock for common stock at $25/share plus accrued dividends.