What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-21 compared with 2023-03-02 · 421 added, 309 removed, 449 unchanged (62% of the section changed)

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to healthcare providers and hospitals throughout the United States.

Our integrated SaaS platform includes technology-assisted revenue

cycle management (“RCM”), practice management (“PM”), electronic health records (“EHR”), business

intelligence, telehealth, patient experience management (“PXM”) solutions and complementary software tools and business services

for high-performance medical groups and health systems.

The SaaS component is not material to the overall contract compared

to the stand-alone value of RCM.

Our integrated SaaS platform includes technology-enabled revenue cycle management (“RCM”),

practice management (“PM”), electronic health records (“EHR”), artificial intelligence (“AI”) tools,

business intelligence, telehealth, patient experience management (“PXM”) solutions and complementary software tools and business

services for high-performance medical groups and health systems.

a high level, these solutions can be categorized as follows:

● Technology-enabled

business solutions, which are sometimes provided as individual offerings and often provided in combination with each other, including:

services including end-to-end medical billing, eligibility, analytics, and related services, all of which can be provided utilizing

our technology platform or through a third-party system;

which are easy to use and sometimes integrated with our business services, and enable our healthcare provider clients to deliver

better patient care, streamline their clinical workflows, decrease documentation errors and potentially qualify for government incentives;

software and related capabilities, which support our clients’ day-to-day business operations and financial workflows, including

automated insurance eligibility software, a robust billing and claims rules engine and other automated tools designed to maximize

reimbursement;

solutions designed to transform interactions between patients and their clinicians, including smartphone applications that assist

patients and healthcare providers in the provision of healthcare services, including contactless digital check-in solutions, messaging

and online appointment scheduling tools;

Wellness, a digital health solution which includes chronic care management interactions with certified care managers, remote patient

monitoring which feeds patient data directly to the EHR and highlights exceptions, and telehealth solutions which allow healthcare

providers to conduct remote patient visits;

intelligence and healthcare analytics platforms that allow our clients to derive actionable insights from their vast amount of data;

claims clearinghouse which enables our clients to electronically scrub and submit claims and process payments from insurance companies;

business solutions, which are sometimes provided as individual offerings and often provided

in combination with each other, including:

services including end-to-end medical billing, eligibility, analytics, and related services,

all of which can be provided utilizing our technology platform or through a third-party system;

tools are designed to serve as a digital healthcare assistant, helping to enhance clinical

decision-making, streamline workflows, reduce administrative burdens, optimize revenue management,

and promote patient-centered care;

which are easy to use and sometimes integrated with our business services, and enable our

healthcare provider clients to deliver better patient care, streamline their clinical workflows,

decrease documentation errors and potentially qualify for government incentives;

software and related capabilities, which support our clients’ day-to-day business operations

and financial workflows, including automated insurance eligibility software, a robust billing

and claims rules engine and other automated tools designed to maximize reimbursement;

solutions designed to transform interactions between patients and their clinicians, including

smartphone applications that assist patients and healthcare providers in the provision of

healthcare services, including contactless digital check-in solutions, messaging and online

appointment scheduling tools;

Wellness, a digital health solution which includes chronic care management interactions with

certified care managers, remote patient monitoring which feeds patient data directly to the

EHR and highlights exceptions, and telehealth solutions which allow healthcare providers

to conduct remote patient visits;

intelligence and healthcare analytics platforms that allow our clients to derive actionable

insights from their vast amount of data;

claims clearinghouse which enables our clients to electronically scrub and submit claims

and process payments from insurance companies;

○ Interoperability

and data transformation software to support the complex realities of data exchange with healthcare trading partners, including labs,

insurance companies, and other healthcare IT vendors;

applications, interfaces and a variety of other technology solutions that support our healthcare clients;

services consisting of application and advisory services, revenue cycle services, data analytic services and educational training

augmentation and on-demand staffing to support our clients as they expand their businesses, seek highly trained personnel, or struggle

with staffing shortages.

and data transformation software to support the complex realities of data exchange with healthcare

trading partners, including labs, insurance companies, and other healthcare IT vendors;

applications, interfaces and a variety of other technology solutions that support our healthcare

○ Professional

services consisting of application and advisory services, revenue cycle services, data analytic

services and educational training services;

augmentation and on-demand staffing to support our clients as they expand their businesses,

seek highly trained personnel, or struggle with staffing shortages.

practice management services are provided to medical practices.

In this service model, we provide the medical practice with appropriate

facilities, equipment, supplies, support services, nurses and administrative support staff.

We also provide management, bill-paying

and financial advisory services.

offshore operations in Pakistan and Sri Lanka together accounted for approximately 14% and 11% of total expenses for the years ended

December 31, 2022 and 2021, respectively.

A significant portion of those expenses were personnel-related costs (approximately 79% and

80% of foreign costs for the years ended December 31, 2022 and 2021, 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.

All of the medical billing companies that we have acquired used domestic labor or subcontractors

from higher cost locations to provide all or a substantial portion of their services.

We are able to achieve significant cost reductions

as we shift these labor costs to our offshore operations.

In this service model, we

provide the medical practice with appropriate facilities, equipment, supplies, support services,

nurses and administrative support staff.

We also provide management, bill-paying and financial

advisory services.

offshore operations in Pakistan and Sri Lanka together accounted for approximately 9% and 14% of total expenses for the years ended December

31, 2023 and 2022, respectively.

A significant portion of those expenses were personnel-related costs (approximately 76% and 79% of foreign

costs for the years ended December 31, 2023 and 2022, 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.

All of the medical billing companies that we have acquired used domestic labor or subcontractors from

higher cost locations to provide all or a substantial portion of their services.

We are able to achieve significant cost reductions as

we shift these labor costs to our offshore operations.

Performance Measures

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these adjusted performance measures.

EBITDA excludes the following elements which are included in GAAP net income:

tax expense or the cash requirements to pay our taxes;

expense or the cash requirements necessary to service interest on principal payments on our debt;

EBITDA excludes the following elements which are included in GAAP net (loss) income:

tax (benefit) provision or the cash requirements to pay our taxes;

expense or the cash requirements necessary to service interest on principal payments on our

currency gains and losses and other non-operating expenses;

compensation expense, which includes cash-settled awards and the related taxes, based on changes in the stock price;

● Stock-based

compensation expense, which includes cash-settled awards and the related taxes, based on

changes in the stock price;

● Depreciation

and amortization charges;

costs, such as severance amounts paid to employees from acquired businesses and transaction costs, such as brokerage fees, pre-acquisition

accounting costs and legal fees and exit costs related to contractual agreements;

loss on lease termination, impairment and unoccupied lease charges;

● Integration

costs, such as severance amounts paid to employees from acquired businesses and transaction

costs, such as brokerage fees, pre-acquisition accounting costs and legal fees and exit costs

related to contractual agreements;

impairment charges;

loss on lease terminations, unoccupied lease charges and restructuring costs;

in contingent consideration.

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($ in thousands)

GAAP net income

Provision for income taxes

GAAP net (loss) income

(Benefit) provision for income taxes

Net interest expense

Foreign exchange loss / other expense

Stock-based compensation expense

Stock-based compensation expense, net of restructuring costs

Depreciation and amortization

Transaction and integration costs

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease charges and restructuring costs

Change in contingent consideration

Adjusted EBITDA

operating income and adjusted operating margin exclude the following elements which are included in GAAP operating income:

operating income and adjusted operating margin exclude the following elements which are included in GAAP operating (loss) income:

● Stock-based

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related to contractual agreements;

loss on lease termination, impairment and unoccupied lease charges;

impairment charges;

loss on lease terminations, unoccupied lease charges and restructuring costs;

in contingent consideration.

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($ in thousands)

GAAP net income

Provision for income taxes

GAAP net (loss) income

(Benefit) provision for income taxes

Net interest expense

Other expense - net

GAAP operating income

GAAP operating (loss) income

GAAP operating margin

Stock-based compensation expense

Stock-based compensation expense, net of restructuring costs

Amortization of purchased intangible assets

Transaction and integration costs

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease charges and restructuring costs

Change in contingent consideration

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Non-GAAP adjusted operating margin

net income and adjusted net income per share exclude the following elements which are included in GAAP net income:

net income and adjusted net income per share exclude the following elements which are included in GAAP net (loss) income:

currency gains and losses and other non-operating expenses;

compensation expense, which includes cash-settled awards and the related taxes, based on changes in the stock price;

● Stock-based

compensation expense, which includes cash-settled awards and the related taxes, based on

changes in the stock price;

● Amortization

of purchased intangible assets;

costs, such as severance amounts paid to employees from acquired businesses and transaction costs, such as brokerage fees, pre-acquisition

accounting costs and legal fees and exit costs related to contractual agreements;

loss on lease termination, impairment and unoccupied lease charges;

● Integration

costs, such as severance amounts paid to employees from acquired businesses and transaction

costs, such as brokerage fees, pre-acquisition accounting costs and legal fees and exit costs

related to contractual agreements;

impairment charges;

loss on lease terminations, unoccupied lease charges and restructuring costs;

in contingent consideration;

tax expense resulting from the amortization of goodwill related to our acquisitions.

tax (benefit) provision resulting from the amortization of goodwill related to our acquisitions.

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.

following table shows our reconciliation of GAAP net income to non-GAAP adjusted net income for the years ended December 31, 2022 and

The following table shows our reconciliation of

GAAP net (loss) income to non-GAAP adjusted net income for the years ended December 31, 2023 and 2022:

Year Ended December 31,

($ in thousands)

GAAP net income

GAAP net (loss) income

Foreign exchange loss / other expense

Stock-based compensation expense

Stock-based compensation expense, net of restructuring costs

Amortization of purchased intangible assets

Transaction and integration costs

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease charges and restructuring costs

Change in contingent consideration

Income tax expense related to goodwill

Income tax (benefit) provision related to goodwill

Non-GAAP adjusted net income

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Impact of preferred stock dividend

Net income per end-of-period share

Net (loss) income per end-of-period share

Foreign exchange loss / other expense

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Transaction and integration costs

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease charges and restructuring costs

Change in contingent consideration

Income tax expense related to goodwill

Income tax (benefit) provision related to goodwill

Non-GAAP adjusted earnings per share

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Non-GAAP adjusted earnings per share and non-GAAP adjusted

diluted earnings per share do not take into account dividends paid on Preferred Stock.

diluted earnings per share do not take into account dividends on the Preferred Stock.

No tax effect has been provided in computing non-GAAP

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losses to offset the applicable income taxes.

Consolidated Statements of Operations Data

Statements of Operations Data

Years Ended December 31,

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Depreciation and amortization

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, impairment, unoccupied lease charges and restructuring costs

Total operating expenses

Operating income (loss)

Operating (loss) income

Interest expense - net

Other (expense) income - net

Income (loss) before provision (benefit) for income taxes

Income tax provision (benefit)

Net income (loss)

(Loss) income before (benefit) provision for income taxes

Income tax (benefit) provision

Net (loss) income

Preferred stock dividend

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Working capital - net (1)

Long-term debt

Total liabilities

Shareholders’ equity

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Depreciation and amortization

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease

charges and restructuring costs

Total operating expenses

Operating income (loss)

Operating (loss) income

Interest expense - net

Other (expense) income - net

Income (loss) before provision (benefit) for income taxes

Income tax provision (benefit)

Net income (loss)

(Loss) income before (benefit) provision for income taxes

Income tax (benefit) provision

Net (loss) income

Preferred stock dividend

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Reconciliation

of net income (loss) to adjusted EBITDA

following table contains a reconciliation of net income (loss) to adjusted EBITDA by year.

of net (loss) income to adjusted EBITDA

following table contains a reconciliation of net (loss) income to adjusted EBITDA by year.

Years Ended December 31,

($ in thousands)

Net income (loss)

Foreign exchange loss (gain) / other expense

Net (loss) income

Foreign exchange loss / other expense

Interest expense - net

Income tax provision (benefit)

Stock-based compensation expense

Income tax (benefit) provision

Stock-based compensation expense, net of restructuring costs

Transaction and integration costs

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, impairment, unoccupied lease charges and restructuring costs

Change in contingent consideration

Adjusted EBITDA

following table contains a reconciliation of net income (loss) to adjusted EBITDA by quarter.

following table contains a reconciliation of net (loss) income to adjusted EBITDA by quarter.

September 30,

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($ in thousands)

Net income (loss)

Net (loss) income

Foreign exchange loss (gain) / other expense

Net interest expense

Income tax provision (benefit)

Stock-based compensation expense

Income tax (benefit) provision

Stock-based compensation expense, net of restructuring costs

Transaction and integration costs

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease charges and restructuring

Change in contingent consideration

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Renewal Rate:

Our customer renewal rate measures the percentage of our RCM clients who utilize our technology platform who were

a party to a services agreement with us on January 1 of a particular year and continued to operate and be a client on December 31 of

the same year.

Our customer renewal rate measures the percentage of our RCM clients who utilize our technology platform who were a

party to a services agreement with us on January 1 of a particular year and continued to operate and be a client on December 31 of the

It also includes acquired accounts, if they are a party to a services agreement with the company we acquired and are generating

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particular year.

Our renewal rates for 2022 and 2021 were 98% and 91% of the practices, respectively.

These renewal percentages are not

indicative of the loss of revenue due to non-renewal.

Our renewal rates for 2023 and 2022 were 91% and 98% of the number of practices that renewed, respectively.

These renewal

percentages are not indicative of the loss of revenue due to non-renewal.

We primarily derive our on-going revenues from technology-enabled business solutions, reported in our Healthcare IT segment, which

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by those providers.

It also includes Software-as-a-Service (“SaaS”) fees, for clients not utilizing revenue cycle management

When clients utilize our revenue cycle management services, basic SaaS services are included at no additional charge.

is also generated from coding, credentialing, indexing, transcription and other ancillary services.

It also includes SaaS fees, for clients not utilizing revenue cycle management services.

When clients utilize our

revenue cycle management services, basic SaaS services are included at no additional charge.

Revenue is also generated from coding, credentialing,

indexing, transcription and other ancillary services.

professional services include an extensive set of services including EHR vendor-agnostic optimization and activation, project management,

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Costs associated with the implementation of new customers are expensed as incurred.

reported amounts of direct operating costs do not include depreciation and amortization, which are broken out separately

in the consolidated statements of operations.

Operations in our Offshore Offices together accounted for approximately 11% and 13% of direct

operating costs for the years ended December 31, 2022 and 2021, respectively.

As we grow, we expect to achieve further economies of scale

and to see our direct operating costs decrease as a percentage of revenue.

reported amounts of direct operating costs do not include depreciation and amortization, which are broken out separately in the consolidated

statements of operations.

Operations in our Offshore Offices together accounted for approximately 11% of direct operating costs for both

the years ended December 31, 2023 and 2022.

As we grow, we expect to achieve further economies of scale and to see our direct operating

costs decrease as a percentage of revenue.

and Marketing Expense.

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over a period of twelve years.

Loss on Lease Termination, Impairment and Unoccupied Lease Charges.

Net loss on lease termination represents the write-off of leasehold

improvements and gains or losses as the result of lease terminations.

Impairment charges represent charges recorded for a leased facility

no longer being used by the Company and a non-cancellable vendor contract where the services are no longer being used.

Unoccupied lease

charges represent the portion of lease and related costs for vacant space not being utilized by the Company.

The Company was able to

turn back to the landlord one of the unused facilities effective January 1, 2022.

Impairment Charges.

Goodwill impairment charges, which were related to the Healthcare IT reporting unit, represent the impairment

recorded as it was determined that the fair value of the goodwill was less than the carrying value.

Loss on Lease Terminations, Unoccupied Lease Charges and Restructuring Costs.

Net loss on lease termination represents the write-off

of leasehold improvements and gains or losses as the result of lease terminations.

Unoccupied lease charges represent the portion of

lease and related costs for vacant space not being utilized by the Company.

The Company was able to turn back to the landlord one of

the unused facilities effective January 1, 2022.

Restructuring costs, which were incurred in 2023, primarily consist of severance and

separation costs associated with the optimization of the Company’s operations and profitability improvements.

and Other Income (Expense).

Interest expense consists primarily of interest costs related to our line of credit, term loans and amounts

due in connection with acquisitions, offset by interest income.

Other income (expense) results primarily from foreign currency transaction

gains (losses) and income earned from temporary cash investments.

Interest income represents interest earned on temporary cash investments and late fees from customers.

Interest expense consists primarily of interest costs related to our line of credit, motor vehicle loans and amounts due in connection

with acquisitions.

Other income (expense) results primarily from foreign currency transaction gains (losses).

In preparing our consolidated financial statements, we estimate income taxes in each of the jurisdictions in which we operate.

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These differences result in deferred income tax assets and liabilities.

Company reported GAAP earnings in 2022, it incurred losses historically and there is uncertainty regarding future U.S.

taxable income,

which make realization of a deferred tax asset difficult to support in accordance with ASC 740.

Accordingly, a valuation allowance has

been recorded against all deferred tax assets as of December 31, 2022 and December 31, 2021.

Effective January 1, 2018, there is a global

intangible low-taxed income (“GILTI”) tax.

Companies can either account for the GILTI inclusion in the period in which they

are incurred or establish deferred tax liabilities for the expected future taxes associated with GILTI.

The Company elected to record

the GILTI provisions as they are incurred each period.

Company reported GAAP earnings in 2022, it incurred losses historically and in 2023 and there is uncertainty regarding future U.S.

income, which make realization of a deferred tax asset difficult to support in accordance with ASC 740.

Accordingly, a valuation allowance

has been recorded against all deferred tax assets as of December 31, 2023 and December 31, 2022.

For the global intangible low-taxed

income (“GILTI”) tax, companies can either account for the GILTI inclusion in the period in which they are incurred or establish

deferred tax liabilities for the expected future taxes associated with GILTI.

The Company records the GILTI provisions as they are incurred

Accounting Policies and Estimates

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The services include use of

practice management software and related tools (on a software-as-a-service (“SaaS”) basis), electronic health records (on

a SaaS basis), medical billing services and use of mobile health solutions.

We consider the services to be one performance obligation

since the promises are not distinct in the context of the contract.

The performance obligation consists of a series of distinct services

that are substantially the same and have the same periodic pattern of transfer to our customers.

practice management software and related tools (on a SaaS basis), electronic health records (on a SaaS basis), medical billing services

and use of mobile health solutions.

We consider the services to be one performance obligation since the promises are not distinct in

the context of the contract.

The performance obligation consists of a series of distinct services that are substantially the same and

have the same periodic pattern of transfer to our customers.

many cases, our clients may terminate their agreements with 90 days’ notice without cause, thereby limiting the term in which we

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Invoicing is primarily performed as of the end of

and mailing services:

Company provides printing and mailing services for both revenue cycle management customers and a non- revenue cycle management customer,

and invoices on a monthly basis based on the number of prints, the agreed-upon rate per print and the postage incurred.

The performance

obligation is satisfied once the printing and mailing is completed.

purchasing services:

Company provides group purchasing services which enable medical providers to purchase various vaccines directly from selected pharmaceutical

companies at a discounted price.

Currently, there are approximately 4,000 medical providers who are members of the program.

recognized as the vaccine shipments are made to the medical providers.

Fees from the pharmaceutical companies are paid either quarterly

or annually and the Company adjusts its revenue accrual at the time of payment.

The Company makes significant judgments regarding the

variable consideration which we expect to be entitled to for the group purchasing services which includes the anticipated shipments to

the members enrolled in the program, anticipated volumes of purchases made by the members, and the changes in the number of members.

The amounts recorded are constrained by estimates of decreases in shipments and loss of members to avoid a significant revenue reversal

in the subsequent period.

The only performance obligation is to provide the pharmaceutical companies with the medical providers who want

to become members in order to purchase vaccines.

The performance obligation is satisfied once the medical provider agrees to purchase

a specific quantity of vaccines and the medical provider’s information is forwarded to the vaccine suppliers.

The Company records

a contract asset for revenue earned and not paid as the ultimate payment is conditioned on achieving certain volume thresholds.

management services:

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is evaluated for impairment annually as of October 31 st , referred to as the annual test date.

The Company will also test for

impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

Impairment testing for goodwill is performed at the reporting-unit level.

The Company has determined that its business consists of two

operating segments and two reporting units (Healthcare IT and Medical Practice Management).

As a result of the annual

impairment test, an impairment of approximately $2 million was recorded.

The Company will also test for impairment between annual

test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

Impairment testing

for goodwill is performed at the reporting-unit level.

The Company has determined that its business consists of two operating

segments and two reporting units (Healthcare IT and Medical Practice Management).

Application of the goodwill impairment test

requires judgment including the use of a discounted cash flow and market approach methodology.

These analyses require significant assumptions

and judgments.

These assumptions and judgments include estimation of future cash flows, which is dependent on internal forecasts, estimation

of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, determination of our

weighted average cost of capital and the selection of comparable companies and the interpretation of their data.

Future business and

economic conditions, as well as differences in actual financial results related to any of the assumptions, could materially impact the

consolidated financial statements through impairment of goodwill or intangible assets and acceleration of the amortization period of

the purchased intangible assets which are finite-lived assets.

No impairment charges were recorded during the years ended December 31,

2022 or 2021.

requires judgment including the use of a discounted cash flow approach, the trading price of publicly traded stock and the guideline public

company method.

These analyses require significant assumptions and judgments.

These assumptions and judgments include estimation of

future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation

of the useful life over which cash flows will occur, determination of our weighted average cost of capital and the selection of

comparable companies and the interpretation of their data.

Future business and economic conditions, as well as differences in actual

financial results related to any of the assumptions, could materially impact the consolidated financial statements through

impairment of goodwill or intangible assets and acceleration of the amortization period of the purchased intangible assets which are

finite-lived assets.

There was a triggering event at August 31, 2023, but it was determined that there was no impairment.

triggering event in December 2023, an additional impairment test was performed.

As a result, the Company recorded an additional

impairment of approximately $40 million.

No impairment charges were recorded during the year ended December 31, 2022.

Combinations:

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Depreciation and amortization

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease charges and restructuring costs

Total operating expenses

Operating income

Operating (loss) income

Interest expense - net

Other expense - net

Income before provision for income taxes

Income tax provision

(Loss) income before (benefit) provision for income taxes

Income tax (benefit) provision

Net (loss) income

of 2023 and 2022

($ in thousands)

Net revenue of $138.8 million for the year ended December 31, 2022 decreased by

$773,000 or 1% from revenue of $139.6 million for

the year ended December 31, 2021.

Total revenue for the year ended December 31, 2022 included approximately $29.7

million as a result of the medSR acquisition compared to $15.9 million in 2021.

Revenue was negatively impacted by two large accounts

from a 2020 acquisition that were winding down at the time of the acquisition.

Revenue from these two customers for the years ended December

31, 2022 and 2021 was $12.1 million and $21.5 million, respectively, and is expected to be between $1 million and $2 million for the

Year Ended December 31,

Net revenue of $117.1 million for the year ended December 31, 2023 decreased by $21.8 million or 16% from revenue of $138.8

million for the year ended December 31, 2022.

Revenue for the years ended December 31, 2023 and December 31, 2022 includes $76.6 million

and $88.1 million relating to technology-enabled business solutions, $23.0 million and $34.0 million related to professional services

and $13.4 million and $13.6 million for medical practice management services, respectively.

was a $9.5 million decrease in project-based professional services revenue for the year ended December 31, 2023 as compared to 2022.

The 2023 technology-enabled business solutions revenue was negatively impacted by two large accounts that had each been previously acquired

prior to our beginning to serve them after a 2020 acquisition.

The services provided to them were each winding down at the time of our

acquisition and they both transitioned to the systems of their acquirers during 2022.

Revenue from these two customers for the year ended

December 31, 2023 was approximately $3.1 million, accounting for approximately $9.0 million of the decline in revenue.

Revenue from these

customers is expected to be approximately $300,000 for the year 2024.

(Refer to Forward-Looking Statements disclosure on page 2 of this

($ in thousands)

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Change in contingent consideration

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease charges and restructuring costs

Total operating expenses

Operating Costs.

Direct operating costs of $84.4 million for the year ended December 31, 2022 decreased by $2.5 million or 3%

from direct operating costs of $86.9 million for the year ended December 31, 2021.

Salary costs decreased by $4.7 million due to the

decrease in the Pakistan exchange rate, a decrease in the U.S.

headcount and the redeployment of employees performing functions that

were classified as direct operating costs to functions classified as research and development expense.

Outsourcing and other

customer processing costs increased by $1.9 million and an increase in the cost of vaccines by $514,000.

Direct operating costs of $70.8 million for the year ended December 31, 2023 decreased by $13.6 million or 16% from

direct operating costs of $84.4 million for the year ended December 31, 2022.

Salary costs decreased by $9.4 million due to the decrease

in the Pakistan exchange rate, a decrease in the U.S.

headcount and the redeployment of employees performing functions that were classified

as direct operating costs to functions classified as research and development expense.

Outsourcing and other customer processing costs

decreased by $3.1 million and other costs such as medical supplies, vaccines, rent and consultancy fees decreased by $957,000.

and Marketing Expense.

Selling and marketing expense of $9.8 million for the year ended December 31, 2022 increased by $1.0 million

or 11% from selling and marketing expense of $8.8 million for the year ended December 31, 2021.

The increase was primarily related to

additional emphasis on sales and marketing activities.

Selling and marketing expense of $9.7 million for the year ended December 31, 2023 decreased by $138,000 or

1% from selling and marketing expense of $9.8 million for the year ended December 31, 2022.

The decrease for the year ended December

31, 2023 was due to lower spending on selling and marketing activities.

and Administrative Expense.

General and administrative expense of $21.5 million for the year ended December 31, 2023 decreased by

$453,000 or 2% from general and administrative expense of $24.3 million for the year ended December 31, 2021.

$2.4 million or 10% from general and administrative expense of $23.8 million for the year ended December 31, 2022.

Salary costs decreased

by $1.1 million due to the decrease in the Pakistan exchange rate which was offset by the Company’s contributions to community

based projects and to a new academic institution in the Bagh area, a community where the Company has a large employee base.

by $1.1 million due to the decrease in headcount and the Pakistan exchange rate.

The Company’s contributions to community based

projects and to a new academic institution in the Bagh area, a community where the Company has a large employee base, decreased by $1.0

Other costs such as computer expenses, utilities and office supplies decreased by $646,000.

This increase was offset by a $635,000

increase in consulting expenses.

and Development Expense.

Research and development expense of $4.4 million remained consistent for the years ended December 31, 2022

During the years ended December 31, 2022 and 2021, the Company capitalized approximately $9.2 million and $7.6 million of development

costs in connection with its internal-use software, respectively.

Research and development expense of $4.7 million for the year ended December 31, 2023 increased by $335,000

or 8% from research and development expense of $4.4 million for the year ended December 31, 2022.

The increase was due to the redeployment

of employees performing functions that were previously classified as direct operating costs to functions classified as research and development

expense which was offset by a decrease in the U.S.

During the years ended December 31, 2023 and 2022, the Company capitalized

approximately $8.6 million and $9.2 million of development costs in connection with its internal-use software, respectively.

in Contingent Consideration.

The change of $3.1 million and $2.5 million for the years ended December 31, 2022 and 2021, respectively,

relates to changes in the fair value of the contingent consideration.

The change of $3.1 million for the year ended December 31, 2022 reflected the estimated decrease in

the fair value of the contingent consideration from the medSR acquisition.

There was no contingent consideration liability recorded at

December 31, 2023 or 2022.

Depreciation.

Depreciation of $2.0 million for the year ended December 31, 2022 increased by $25,000 or 1% from depreciation of $1.9 million for

the year ended December 31, 2021, primarily as a result of additional property and equipment purchases and the property and equipment

obtained from the medSR acquisition.

Amortization expense of $9.8 million for the year ended December 31, 2022 decreased by $495,000 or 5% from amortization

Depreciation was $2.0 million for both the years ended December 31, 2023 and 2022.

Amortization expense of $12.4 million for the year ended December 31, 2023 increased by $2.6 million or 27% from amortization

expense of $9.8 million for the year ended December 31, 2022.

The decrease in amortization expense was due to intangibles which were

previously capitalized becoming fully amortized.

Loss on Lease Termination, Impairment and Unoccupied Lease Charges.

Net loss on lease termination represents the write-off of leasehold

improvements and gains or losses as the result of lease terminations.

Impairment charges represent charges recorded for a leased facility

no longer being used by the Company and a non-cancellable vendor contract where the services are no longer being used.

Unoccupied lease

charges represent the portion of lease and related costs for that portion of the space that is vacant and not being utilized by the Company.

The Company was able to turn back to the landlord one of the unused facilities effective January 1, 2022.

The change was primarily due

to $842,000 of impairments being recorded in 2021, whereas in 2022, there were no impairments.

The increase in amortization expense was due to the amortization on certain

internal-use software placed into production.

Impairment Charges.

Goodwill impairment charges represent the impairment recorded as it was determined that the fair value of the

Healthcare IT reporting unit was less than the carrying value at both the annual impairment test date of October 31 and as a result of

a triggering event in December 2023.

Loss on Lease Terminations, Unoccupied Lease Charges and Restructuring Costs.

Net loss on lease terminations represents the write-off

of leasehold improvements and gains or losses as the result of lease terminations.

During the year ended December 31, 2023, the Miami

office lease that we assumed in connection with an acquisition ended and we entered into a new lease arrangement with the landlord for

significantly less space.

Charges of $102,000 for the year ended December 31, 2023, were incurred as a result of vacating the former

During the year ended December 31, 2022, a facility lease was terminated in conjunction with the Company ceasing its document

storage services resulting in additional costs for the year ended December 31, 2023 of $162,000.

In addition, during the year ended December

31, 2023, the Company paid $27,000 to settle a claim regarding a lease termination in India.

Unoccupied lease charges represent the portion

of lease and related costs for that portion of the space that is vacant and not being utilized by the Company.

The Company was able to

turn back to the landlord one of the unused facilities effective January 1, 2022.

Unoccupied lease charges for the year ended December

31, 2023 were $169,000.

In addition, there was $645,000 of restructuring costs being recorded in 2023, whereas in 2022, there were no

restructuring costs.

Restructuring costs consists of severance and separation costs associated with the optimization of the Company’s

operations and profitability improvements.

Year Ended December 31,

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Other expense - net

Income tax provision

Income tax (benefit) provision

Interest income of $154,000 for the year ended December 31, 2023 increased by $113,000 or 276% from interest income of $41,000

for the year ended December 31, 2022.

Interest income primarily represents interest earned on temporary cash investments and late fees

from customers.

Interest expense of $405,000 for the year ended December 31, 2022 decreased by $50,000 or 11% from interest expense of $455,000

for the year ended December 31, 2021.

Interest expense includes the amortization of deferred financing costs which was approximately

$124,000 and $200,000 during the years ended December 31, 2022 and 2021, respectively.

The interest income represents interest earned on temporary cash investments, which increased due

to rising interest rates and late fees from customers.

Interest expense of $1.2 million for the year ended December 31, 2023 increased by $789,000 or 195% from interest expense

of $405,000 for the year ended December 31, 2022.

The increase in interest expense was due to the increased use of the line of credit

and increases in interest rates.

Interest expense on the line of credit was $906,000 and $138,000 and the amortization of deferred financing

costs was $169,000 and $124,000 during the years ended December 31, 2023 and 2022, respectively.

Expense - net.

Other expense - net was $637,000 for the year ended December 31, 2022 compared to other expense - net of $96,000 for

the year ended December 31, 2021.

Other expense - net was $883,000 for the year ended December 31, 2023 compared to other expense - net of $637,000

for the year ended December 31, 2022.

Other expense primarily represents foreign currency transaction gains and losses.

There were foreign

exchange losses of $610,000 and gains of $16,000 for the years ended December 31, 2022 and 2021, respectively.

These transaction gains

and losses result from revaluing intercompany accounts which are denominated in U.S.

dollars that represent amounts receivable/payable

between the entities.

exchange losses of $790,000 and $610,000 for the years ended December 31, 2023 and 2022, respectively.

Transaction gains and losses result

from revaluing intercompany accounts which are denominated in U.S.

dollars that represent amounts receivable/payable between the entities.

Whenever the exchange rate varies, the gains and losses are recorded in the consolidated statements of operations.

Tax Provision.

There was a $177,000 provision for income taxes

for the year ended December 31, 2022, compared to the provision for income taxes of $157,000 for the year ended December 31, 2021.

current income tax expense for the year ended December 31, 2022 was approximately $101,000 compared to an income tax benefit of $132,000

for the year ended December 31, 2021.

In 2021, there was a net operating loss carryback of $285,000 recorded as a result of pre-acquisition

losses of Meridian.

The provision for 2022 and the balance for 2021 primarily relates to state and foreign income taxes.

income was $5.6 million and

$3.0 million for the years ended December 31, 2022 and 2021, respectively.

The Company has incurred losses historically and there is

uncertainty regarding future U.S.

taxable income, which make realization of a deferred tax asset difficult to support in accordance with

Accordingly, a valuation allowance was recorded against all deferred tax assets at December 31, 2022 and 2021.

Tax (Benefit) Provision.

There was a $364,000 benefit for

income taxes for the year ended December 31, 2023 compared to the provision for income taxes of $177,000 for the year ended December

current income tax expense for the year ended December 31, 2023 was approximately $161,000 compared to a current income tax expense of

approximately $101,000 for the year ended December 31, 2022.

The current provision for 2023 and 2022 primarily relates to state and foreign

income taxes.

The pre-tax loss and pre-tax income was $49 million

and $5.6 million for the years ended December 31, 2023 and 2022, respectively.

The Company has incurred

losses historically and there is uncertainty regarding future U.S.

taxable income, which make realization of a deferred tax asset difficult

to support in accordance with ASC 740.

Accordingly, a valuation allowance was recorded against all deferred tax assets at December 31,

2023 and 2022.

Company has recorded goodwill as a result of its acquisitions.

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The resulting deferred

tax liability, which is expected to continue to be recorded over the amortization period, will have an indefinite life.

As a result of

the Company incurring tax losses for 2022 and 2021 which have an indefinite life under the recent tax reform legislation, the federal

deferred tax liability resulting from the amortization of goodwill was offset against these indefinite federal operating net loss deferred

tax assets to the extent allowable.

The remaining deferred tax liability could remain on the Company’s consolidated balance sheet

indefinitely unless there is an impairment of goodwill (for financial reporting purposes) or a portion of the related business is sold.

tax liability, which is recorded over the amortization period, will have an indefinite life.

As a result of the Company incurring tax

losses for 2023 and 2022 which have an indefinite life under the recent tax reform legislation, the federal deferred tax liability resulting

from the amortization of goodwill was offset against these indefinite federal operating net loss deferred tax assets to the extent allowable.

The remaining deferred tax liability remains on the Company’s consolidated balance sheet indefinitely unless there is an impairment

of goodwill (for financial reporting purposes) or a portion of the related business is sold.

In 2023, there was a goodwill impairment

charge of $42 million, a portion of which was allocated to the tax deductible portion of the goodwill balance.

The impairment charge

resulted in the reversal of the entire deferred tax liability at December 31, 2023.

Company will maintain a full valuation allowance on deferred tax assets until there is sufficient evidence to support the reversal of

all or some portion of these allowances.

While the Company had GAAP earnings in 2022 and plans to be profitable in the future and begin

utilizing these deferred tax assets, the Company currently lacks sufficient evidence to allow it to release the valuation allowance in

2022 and 2021.

Release of the valuation allowance would result in the recognition of certain deferred tax assets and an income tax benefit

in the period of release.

of December 31, 2023, the Company has a total federal NOL carry forward of approximately $274 million of which approximately $198 million

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State of New Jersey.

These NOLs expire between 2034 and 2041.

These NOLs expire starting in 2025.

and Capital Resources

the year ended December 31, 2023, there was positive cash flow from operations of $15.5 million and at year-end, the Company had $3.3

million in cash and positive working capital of $12.3 million.

million in cash and negative working capital of $57,000.

During the year ended December 31, 2022, there was positive

cash flow from operations of $21.2 million and at year-end, the Company

had $10.3 million in cash and restricted cash and positive working capital of $6.0 million.

The Company has a revolving line of credit with SVB, and as of December 31, 2022, there was $8 million outstanding.

This was repaid in

early January 2023.

During the year ended December 31, 2022, the Company sold 1,324,858 shares

of Series B Preferred Stock and raised $30.9 million in net proceeds after fees and expenses.

the year ended December 31, 2021, the Company sold 346,389 shares of common stock and raised $2.7 million in net proceeds after fees

and expenses.

The exercise of 858,000 warrants resulted in net proceeds of $6.4 million.

had $12.3 million in cash and positive working capital of $12.3 million.

The Company has a revolving

line of credit with SVB, and as of December 31, 2023, there was $10 million outstanding.

During the year ended

December 31, 2023, the Company sold 59,773 shares of 8.75% Series B Preferred Stock and raised $1.4

million in net proceeds after fees and expenses.

During the year ended December 31, 2022, the Company sold

1,324,858 shares of 8.75% Series B Preferred Stock and raised $30.9 million in net proceeds after fees and expenses.

following table summarizes our cash flows for the years presented.

5 unchanged sentences

Effect of exchange rate changes on cash

Net increase (decrease) in cash and restricted cash

income before income taxes was $5.6 million for

the year ended December 31, 2022, of which $11.7 million was non-cash depreciation and amortization.

The income before income taxes for

the year ended December 31, 2021 was $3.0 million, of which $12.2 million was non-cash depreciation and amortization.

continues to focus on the Company’s overall profitability, including growing revenue and managing expenses, and expects that these

efforts will continue to enhance our liquidity and financial position.

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 financial statements issuance.

Net (decrease) increase in cash

loss before income taxes was $49 million for

the year ended December 31, 2023, of which $42 million was a non-cash goodwill impairment charge and $14.4 million was non-cash depreciation.

The income before income taxes for the year ended December 31, 2022 was $5.6 million, which included $11.7 million of non-cash depreciation

and amortization.

fiscal year 2023, the Company incurred a net loss of $48.7 million compared to $5.4 million of net income in fiscal year 2022, and at

December 31, 2023, had cash of $3.3 million and a working capital deficit of $57,000.

The decrease in cash for fiscal 2023 was $9 million

compared to an increase in cash of $2 million in fiscal 2022.

The Company also has $10 million drawn on its line of credit.

these factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

management has considered its plans to continue the Company as a going concern and believes substantial doubt is alleviated by

focusing on cost-control.

Management developed a plan that was substantially implemented during fiscal 2023 to improve liquidity in

its operations through reductions in payroll and operating expenses.

After the reduction is implemented and through employee

attrition, the Company expects an improvement of approximately $10 million in annualized free cash flow, which represents

approximately 14% of total payroll cost.

This reduction will result in approximately $5 million in annualized payroll expense

In addition, the Company instituted certain other expense reductions.

The Company also suspended its Preferred Stock

dividends in December 2023 resulting in cash savings of $1.3 million per month.

Additional headcount reductions occurred in early

Additional cost reductions will continue throughout the year.

The Company is focused on reducing costs, returning to

profitability, generating positive cash flow and maintaining compliance with its debt covenants.

Although there are no guarantees

that the Company will be successful, it believes that such initiatives will enable it to continue as a going concern through at

least the next twelve months.

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.

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.

have not been adversely affected by inflation as typically we receive a percentage of the fees our clients collect from our revenue cycle

6 unchanged sentences

for fixed rate contracts to our customers, as the prices that we charge are not governed by long-term contracts.

Additionally, we have

not been significantly impacted by the increase in worldwide interest rates as most of our financing has been through preferred stock,

which carries a fixed interest rate, and we have not maintained significant balances outstanding on our line of credit.

Company did not have any significant employee terminations or furloughs as a result of COVID-19.

Patient volumes are at or near normal

The interest rate on

our line of credit is based on prime rate which had been increasing through 2023 but now appears to be remaining steady.

provided by operating activities was $15.5 million and $ 21.2

million during the years ended December 31, 2023 and 2022, respectively.

The increase in the net income of $2.6

The decrease in the net income of $54.1

million included the following changes in non-cash items:

decrease in depreciation and amortization of $358,000,

a decrease in stock-based compensation of $482,000 , and an increase in the change in contingent

consideration of $575,000.

Revenue decreased by $773,000 for the year ended December 31, 2022 compared

to the year ended December 31, 2021, and operating expenses decreased by $3.9 million for the same period primarily due to a decrease

in salary costs.

receivable decreased by $1.5 million and increased by

a goodwill impairment charge of $42

million, an increase in depreciation and amortization of $2.6 million and

a decrease in the change in contingent consideration of $3.1 million .

Revenue decreased by $21.8 million for the year ended December 31, 2023 compared to the year ended

December 31, 2022, offset by a decrease in cash operating expenses of $15.8 million for the same period.

receivable decreased by $2.2 million and $1.5 million

for the years ended December 31, 2023 and 2022, respectively.

This excludes the acquired accounts receivable as part of the

medSR acquisition.

Accounts payable, accrued compensation and accrued expenses increased by $6.6 million

during the year ended December 31, 2022, compared with an increase o f $10.4 million for

the year ended December 31, 2021.

While the cash used to pay pre-acquisition accounts payable, accrued compensation and accrued expenses

was anticipated at the time of the medSR acquisition in 2021, and was considered as part of the purchase price of this transaction, it

is shown as cash used by operations to conform with GAAP.

Accounts payable, accrued compensation and accrued expenses increased by

$3.3 million and $6.6 million for the years ended December

31, 2023 and 2022, respectively.

used in investing activities during the year ended December 31, 2023 was $11.6 million , a decrease

of $11.4 million compared to $23.1 million during the year ended December 31, 2021.

change is due to the Company acquiring medSR for a cash consideration of $12.6 million during 2021.

Capitalized software was $9.2 million

and $7.6 million during the years ended December 31, 2022 and 2021, respectively.

used by financing activities during the year ended December 31, 2022 was $7.7 million, compared to $519,000 of cash used for the year

ended December 31, 2021.

of $154,000 compared to $11.8 million during the year ended December 31, 2022.

software was $8.6 million and $9.2 million during the years ended December 31, 2023 and 2022, respectively.

Purchases of property and

equipment were $3.1 million and $2.6 million during the years ended December 31, 2023 and 2022, respectively.

used by financing activities during the year ended December 31, 2023 was $13.3 million, compared to $7.7 million of cash used for the

year ended December 31, 2022.

Cash provided by financing activities during 2023 includes $1.4 million of net proceeds from issuing 59,773

shares of Series B Preferred Stock of which $20.0 million was used to redeem 800,000 shares of Series A Preferred Stock, offset by $1.0

million of repayments for debt obligations, and $15.3 million of preferred stock dividends.

Cash provided by financing activities during

2021 includes $6.4 million of net proceeds from issuing 858,000 shares from the exercise of common stock warrants and $2.7 million of

net proceeds after fees and expenses from issuing 346,389 shares of common stock via an “at-the-market” offering, offset

by $1.0 million of repayments for debt obligations, and $14.4 million of preferred stock dividends.

There was also $1.2 million of payments

to settle the tax withholding obligations in 2022 compared to $2.1 million in 2021.

The net proceeds from the line of credit were $8.0

million during the year ended December 31, 2021.

shares, offset by $888,000 of repayments for debt obligations, and $14.3 million of preferred stock dividends.

Cash provided by financing

activities during 2022 includes $30.9 million of net proceeds from issuing 1,324,858 shares of Series B Preferred Stock of which $20.0

million was used to redeem 800,000 shares of Series A Preferred Stock, offset by $1.0 million of repayments for debt obligations, and

$15.3 million of preferred stock dividends.

There was also $1.5 million of payments to settle the tax withholding obligations in 2023

compared to $1.2 million in 2022.

The net proceeds from the line of credit were $2.0 million during the year ended December 31, 2023.

There were no net proceeds from the line of credit during the year ended December 31, 2022.

26 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis