Bilbel Capital Fund LP / Bilbel Capital LLC on CareCloud, Inc.
Thesis
Bilbel still considers CareCloud undervalued, although it sold most of the position because it found even more undervalued opportunities elsewhere. The core TEBS business showed roughly 5.6% organic revenue decline after adjusting for acquisitions, which is consistent with the company's normal structural churn rather than a major deterioration. CareCloud acquires struggling medical-billing businesses cheaply and can use lower-cost staff, software and AI to improve their economics. Revenue-cycle-management switching is slow and risky for healthcare providers, creating customer stickiness, while CareCloud's cost base is lower than competitors such as TruBridge. If AI makes switching easier and forces prices down, the manager believes CareCloud can still compete because its lower costs allow it to remain profitable at prices that would eliminate competitors' margins.
“We think CareCloud is undervalued. But we found companies that are more undervalued.”
Key risks
- AI could increase customer-acquisition costs
- AI-driven competition could force lower prices or customer losses
- AI could reduce the revenue collected by CareCloud's healthcare clients and therefore reduce CareCloud's revenue