Press Release



CareCloud (formerly MTBC) Reports Continued Growth with First Quarter Results

May 06, 2021

Company Reports 36% Revenue Growth

SOMERSET, N.J., May 06, 2021 (GLOBE NEWSWIRE) -- CareCloud, Inc. (the “Company” or “CareCloud”) (Nasdaq: MTBC) (Nasdaq: MTBCP), a leader in healthcare technology solutions for medical practices and health systems nationwide, today announced financial and operational results for the first quarter ended March 31, 2021. The Company’s management will conduct a conference call with related slides today at 8:30 a.m. Eastern Time to discuss these results and management’s outlook.

Highlights

 ?Revenue of $29.8 million, 36% growth over Q1 2020
 ?GAAP net loss declined to $2.0 million, compared to a net loss of $2.5 million in Q1 2020
 ?Adjusted net income of $2.9 million, or $0.20 per share
 ?Adjusted EBITDA of $3.7 million, 381% increase from Q1 2020

“We are pleased to report a strong start to 2021, including a 36% year-over-year increase in first quarter revenue to $29.8 million, driven in large part by integration of our 2020 acquisitions,” said A. Hadi Chaudhry, CareCloud’s Chief Executive Officer and President. “We are also proud to report a 381% increase in adjusted EBITDA year-over-year, representing our sixteenth consecutive quarter of positive adjusted EBITDA.”

“This is our first financial report since we officially changed our name from MTBC, Inc. to CareCloud, Inc.,” said Chaudhry. “The CareCloud name reflects both our legacy and our future as a technology-first leader in the industry. As we look ahead into the future, we are excited to continue to make bold moves in pursuit of our growing customer base and expansive addressable market.”

First Quarter 2021 Financial Results

Revenue for the first quarter 2021 was $29.8 million, an increase of $7.9 million or 36% from the first quarter of 2020. Bill Korn, CareCloud’s Chief Financial Officer noted: “First quarter results always include an element of seasonality due to the early-year impact annual patient deductibles have on the 65% of our revenues tied to the money collected by the doctors who are our clients. The increasing contribution from organic revenue growth in the first quarter included revenue from new clients as well as additional revenue from cross-selling existing clients, both of which will provide a boost to coming quarters as well.”

The first quarter 2021 GAAP net loss was $2.0 million, as compared to a net loss of $2.5 million in the same period last year. The GAAP net loss reflects $2.8 million of non-cash depreciation and amortization expenses and $1.3 million of stock-based compensation. The GAAP net loss was $0.36 per share, based on the net loss attributable to common shareholders, which takes into account the preferred stock dividends declared during the quarter.

Non-GAAP adjusted net income for first quarter 2021 was $2.9 million, or $0.20 per share, and is calculated using the end-of-period common shares outstanding. Non-GAAP adjusted diluted net income per share is $0.17, using end-of-period shares outstanding plus common shares issuable upon exercise of in-the-money warrants and vesting of outstanding restricted stock units.

Adjusted EBITDA for first quarter 2021 was $3.7 million, or 12% of revenue, compared to $767,000 in the same period last year. CareCloud’s adjusted EBITDA increased by approximately $2.9 million from Q1 2020, in large part due to the cost savings after integrating the businesses the Company acquired during 2020.

Cash Balance and Capital

As of March 31, 2021, the Company had approximately $21.0 million of cash.

2021 Full Year Guidance

CareCloud previously provided the following forward-looking guidance for the fiscal year ending December 31, 2021:

For the Fiscal Year Ending December 31, 2021
Forward-Looking Guidance
Revenue  $133 – $137 million 
Adjusted EBITDA  $22 – $25 million 

Bill Korn noted that “our first quarter revenue is in line with our projections to achieve full year 2021 revenue of approximately $133 to $137 million, which represents growth of 27% to 30% over 2020 revenue. This includes organic growth from new clients as well as cross-selling new services to existing clients. The year-over-year guidance also reflects the fact that revenue from the Meridian acquisition did not start until mid-June 2020.”

“We anticipate this will be our fifth consecutive year with annual revenue growth of 25% or more, a record few public companies have been able to achieve,” Bill Korn continued. “Revenue guidance is based on management’s expectations regarding revenues from existing clients and new clients acquired through organic growth and/or tuck-ins, but excludes the effects of any additional, material acquisitions.”

“Adjusted EBITDA is still expected to be $22 to $25 million for full year 2021, growth of 102% to 130% over 2020 adjusted EBITDA, as the Company realizes the benefits of cost-savings and a full-year of additional scale from the CareCloud and Meridian acquisitions in 2020,” said Bill Korn. “Between the revenue seasonality and the cost reductions which are in place, we are comfortable reaffirming our $22 to $25 million full year adjusted EBITDA guidance.”

Conference Call Information

CareCloud management will host a conference call today at 8:30 a.m. Eastern Time to discuss the first quarter 2021 results. The live webcast of the conference call and related presentation slides can be accessed under Events & Presentations at ir.carecloud.com/events/. An audio-only option is available by dialing 323-289-6581 and referencing “CareCloud First Quarter 2021 Earnings Call.” Investors who opt for audio only will need to download the related slides at ir.carecloud.com/events/.

A replay of the conference call with slides will be available approximately one hour after conclusion of the call at the same link. An audio replay can also be accessed by dialing 412-317-6671 and providing access code 6820470.

About CareCloud

CareCloud (Nasdaq: MTBC) (Nasdaq: MTBCP) 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, telehealth and patient experience management (PXM) 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, and listen to interviews with management, please visit ir.carecloud.com.

Use of Non-GAAP Financial Measures

In our earnings releases, prepared remarks, conference calls, slide presentations, and webcasts, we use and discuss non-GAAP financial measures, as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the condensed consolidated financial statements. Our earnings press releases containing such non-GAAP reconciliations can be found in the Investor Relations section of our web site at ir.carecloud.com.

Forward-Looking Statements

This press release contains various forward-looking statements within the meaning of the federal securities laws. 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,” “should,” “intends,” “expects,” “plans,” “goals,” “projects,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” 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 the Covid-19 pandemic on our financial performance and business activities, and the expected results from the integration of our acquisitions.

These forward-looking statements 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, 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. In addition, there is uncertainty about the spread of the Covid-19 virus and the impact it may have on the Company’s operations, the demand for the Company’s services, and economic activity in general.

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:

Bill Korn
Chief Financial Officer
CareCloud, Inc.
bkorn@carecloud.com

Investor Contact:

Matt Kreps, Managing Director
Darrow Associates Investor Relations
mkreps@darrowir.com
(214) 597-8200

CARECLOUD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands, except share and per share amounts) 

  March 31, 2021  December 31, 2020 
  (Unaudited) 
ASSETS        
CURRENT ASSETS:        
Cash $20,995   $20,925  
Accounts receivable - net, of allowance for doubtful accounts of $517 and $522 at March 31, 2021 and December 31, 2020, respectively  12,419    12,089  
Contract asset  4,375    4,105  
Inventory  379    399  
Current assets - related party  13    13  
Prepaid expenses and other current assets  7,067    7,288  
Total current assets  45,248    44,819  
Property and equipment - net  5,323    4,921  
Operating lease right-of-use assets  7,075    7,743  
Intangible assets - net  29,166    29,978  
Goodwill  49,291    49,291  
Other assets  1,323    1,247  
TOTAL ASSETS $137,426   $137,999  
LIABILITIES AND SHAREHOLDERS’ EQUITY        
CURRENT LIABILITIES:        
Accounts payable $4,734   $6,461  
Accrued compensation  2,040    2,590  
Accrued expenses  10,215    8,501  
Operating lease liability (current portion)  4,236    4,729  
Deferred revenue (current portion)  1,225    1,173  
Accrued liability to related party  1    1  
Deferred payroll taxes  927    927  
Notes payable (current portion)  167    401  
Dividend payable  3,777    4,241  
Total current liabilities  27,322    29,024  
Notes payable  35    41  
Deferred payroll taxes  927    927  
Operating lease liability  5,220    6,297  
Deferred revenue  285    305  
Deferred tax liability  124    160  
Total liabilities  33,913    36,754  
COMMITMENTS AND CONTINGENCIES        
SHAREHOLDERS’ EQUITY:        
Preferred stock, $0.001 par value - authorized 7,000,000 shares at March 31, 2021 and December 31, 2020; issued and outstanding 5,502,961 and 5,475,279 shares at March 31, 2021 and December 31, 2020, respectively  6    5  
Common stock, $0.001 par value - authorized 29,000,000 shares at March 31, 2021 and December 31, 2020; issued 15,140,589 and 14,121,044 shares at March 31, 2021 and December 31, 2020, respectively; 14,399,790 and 13,380,245 shares outstanding at March 31, 2021 and December 31, 2020, respectively  15    14  
Additional paid-in capital  140,666     136,781  
Accumulated deficit  (35,853 )   (33,889) 
Accumulated other comprehensive loss   (659 )   (1,004) 
Less: 740,799 common shares held in treasury, at cost at March 31, 2021 and December 31, 2020  (662)   (662) 
Total shareholders’ equity  103,513    101,245  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $137,426   $ 137,999  

CARECLOUD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
($ in thousands, except share and per share amounts)

  March 31, 
  2021  2020 
NET REVENUE $29,768  $21,867 
OPERATING EXPENSES:        
Direct operating costs  18,060   13,567 
Selling and marketing  1,890   1,581 
General and administrative  5,624   5,593 
Research and development  2,026   2,333 
Depreciation and amortization  2,831   1,333 
Impairment and unoccupied lease charges  1,018   297 
Total operating expenses  31,449   24,704 
OPERATING LOSS  (1,681)  (2,837)
OTHER:        
Interest income  15   38 
Interest expense  (79)  (118)
Other (expense) income - net  (220)  445 
LOSS BEFORE (BENEFIT) PROVISION FOR INCOME TAXES  (1,965)  (2,472)
Income tax (benefit) provision  (1)  30 
NET LOSS $(1,964) $(2,502)
         
Preferred stock dividend  3,128   2,643 
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $(5,092) $(5,145)
         
Net loss per common share: basic and diluted $(0.36) $(0.42)
Weighted-average common shares used to compute basic and diluted loss per share  14,084,749   12,310,818 

CARECLOUD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
($ in thousands)

  2021  2020 
OPERATING ACTIVITIES:        
Net loss $(1,964) $(2,502)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:        
Depreciation and amortization  2,945   1,504 
Lease amortization  728   684 
Deferred revenue  32   (89)
Provision for doubtful accounts  192   281 
(Benefit) provision for deferred income taxes  (36)  15 
Foreign exchange loss (gain)  143   (423)
Interest accretion  139   167 
Gain on sale of assets  -   2 
Stock-based compensation expense  1,267   1,307 
Changes in operating assets and liabilities, net of businesses acquired:        
Accounts receivable  (522)  (302)
Contract asset  (270)  38 
Inventory  20   5 
Other assets  (10)  (110)
Accounts payable and other liabilities  (1,706)  (4,461)
Net cash provided by (used in) operating activities  958   (3,884)
INVESTING ACTIVITIES:        
Purchase of property and equipment  (695)  (539)
Capitalized software  (1,524)  (1,641)
Cash paid for acquisitions (net)  -   (11,853)
Net cash used in investing activities  (2,219)  (14,033)
FINANCING ACTIVITIES:        
Preferred stock dividends paid  (3,592)  (1,981)
Settlement of tax withholding obligations on stock issued to employees  (1,402)  (820)
Repayments of notes payable, net  (241)  (139)
Proceeds from exercise of warrants  6,392   - 
Proceeds from line of credit  -   9,750 
Net cash provided by financing activities  1,157   6,810 
EFFECT OF EXCHANGE RATE CHANGES ON CASH  174   (492)
NET INCREASE (DECREASE) IN CASH  70   (11,599)
CASH - beginning of the period  20,925   19,994 
CASH - end of the period $20,995  $8,395 
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:        
Preferred stock issued in connection with an acquisition $-  $19,000 
Dividends declared, not paid $3,777  $2,407 
Warrants issued $-  $300 
SUPPLEMENTAL INFORMATION - Cash paid during the period for:        
Income taxes $59  $6 
Interest $16  $41 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO COMPARABLE GAAP MEASURES (UNAUDITED)

The following is a reconciliation of the non-GAAP financial measures used by us to describe our financial results determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). An explanation of these measures is also included below under the heading “Explanation of Non-GAAP Financial Measures.”

While management believes that these non-GAAP financial measures provide useful supplemental information to investors regarding the underlying performance of our business operations, investors are reminded to consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition, it should be noted that these non-GAAP financial measures may be different from non-GAAP measures used by other companies, and management may utilize other measures to illustrate performance in the future. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP.

Adjusted EBITDA

Set forth below is a reconciliation of our “adjusted EBITDA” to our GAAP net loss.

  Three Months Ended
March 31,
 
  2021  2020 
  ($ in thousands) 
Net revenue $29,768  $21,867 
         
GAAP net loss  (1,964)  (2,502)
         
(Benefit) provision for income taxes  (1)  30 
Net interest expense  64   80 
Foreign exchange loss / other expense  244   (424)
Stock-based compensation expense  1,267   1,307 
Depreciation and amortization  2,831   1,333 
Transaction and integration costs  232   646 
Impairment and unoccupied lease charges  1,018   297 
Adjusted EBITDA $3,691  $767 

Non-GAAP Adjusted Operating Income

Set forth below is a reconciliation of our non-GAAP “adjusted operating income” and non-GAAP “adjusted operating margin” to our GAAP operating loss and GAAP operating margin.

  Three Months Ended
March 31,
 
  2021  2020 
  ($ in thousands) 
Net revenue $29,768  $21,867 
         
GAAP net loss  (1,964)  (2,502)
(Benefit) provision for income taxes  (1)  30 
Net interest expense  64   80 
Other expense (income) - net  220   (445)
GAAP operating (loss) / income  (1,681)  (2,837)
GAAP operating margin  (5.6)%  (13.0)%
         
Stock-based compensation expense  1,267   1,307 
Amortization of purchased intangible assets  2,135   1,015 
Transaction and integration costs  232   646 
Impairment and unoccupied lease charges  1,018   297 
Non-GAAP adjusted operating income $2,971  $428 
Non-GAAP adjusted operating margin  10.0%  2.0%

Non-GAAP Adjusted Net Income

Set forth below is a reconciliation of our non-GAAP “adjusted net income” and non-GAAP “adjusted net income per share” to our GAAP net loss and GAAP net loss per share.

  Three Months Ended March 31, 
  2021  2020 
  ($ in thousands except for per share amounts) 
GAAP net loss $(1,964) $(2,502)
         
Foreign exchange loss / other expense  244   (424)
Stock-based compensation expense  1,267   1,307 
Amortization of purchased intangible assets  2,135   1,015 
Transaction and integration costs  232   646 
Impairment and unoccupied lease charges  1,018   297 
Income tax (benefit) expense related to goodwill  (36)  15 
Non-GAAP adjusted net income $2,896  $354 
         
End-of-period shares  14,399,790   12,367,293 
         
Non-GAAP adjusted net income per share $0.20  $0.03 

For purposes of determining non-GAAP adjusted net income per share, we used the number of common shares outstanding as of March 31, 2021 and 2020.

  Three Months Ended March 31, 
  2021  2020 
GAAP net loss attributable to common shareholders, per share $(0.36) $(0.42)
Impact of preferred stock dividend  0.22   0.22 
Net loss per end-of-period share  (0.14)  (0.20)
         
Foreign exchange loss / other expense  0.02   (0.03)
Stock-based compensation expense  0.09   0.11 
Amortization of purchased intangible assets  0.14   0.08 
Transaction and integration costs  0.02   0.05 
Impairment and unoccupied lease charges  0.07   0.02 
Income tax (benefit) expense related to goodwill  (0.00)  0.00 
Non-GAAP adjusted earnings per share $0.20  $0.03 
         
End-of-period common shares  14,399,790   12,367,293 
In-the-money warrants and outstanding unvested RSUs  2,698,127   708,600 
Total fully diluted shares  17,097,917   13,075,893 
Non-GAAP adjusted diluted earnings per share $0.17  $0.03 

Explanation of Non-GAAP Financial Measures

We report our financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, management believes that, in order to properly understand our short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash or non-recurring items, when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in frequency and impact on continuing operations. Management also uses results of operations before such items to evaluate the operating performance of CareCloud and compare it against past periods, make operating decisions, and serve as a basis for strategic planning. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of our ongoing business with prior periods more difficult, obscure trends in ongoing operations, or reduce management’s ability to make useful forecasts. Management believes that these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors.

Management uses adjusted EBITDA, adjusted operating income, adjusted operating margin, and non-GAAP adjusted net income to provide an understanding of aspects of operating results before the impact of investing and financing charges and income taxes. Adjusted EBITDA may be useful to an investor in evaluating our operating performance and liquidity because this measure excludes non-cash expenses as well as expenses pertaining to investing or financing transactions. Management defines “adjusted EBITDA” as the sum of GAAP net income (loss) before provision for (benefit from) income taxes, net interest expense, other (income) expense, stock-based compensation expense, depreciation and amortization, integration costs, transaction costs, impairment charges and changes in contingent consideration.

Management defines “non-GAAP adjusted operating income” as the sum of GAAP operating income (loss) before stock-based compensation expense, amortization of purchased intangible assets, integration costs, transaction costs, impairment charges and changes in contingent consideration, and “non-GAAP adjusted operating margin” as non-GAAP adjusted operating income divided by net revenue.

Management defines “non-GAAP adjusted net income” as the sum of GAAP net income (loss) before stock-based compensation expense, amortization of purchased intangible assets, other (income) expense, integration costs, transaction costs, impairment charges changes in contingent consideration, any tax impact related to these preceding items and income tax expense related to goodwill, and “non-GAAP adjusted net income per share” as non-GAAP adjusted net income divided by common shares outstanding at the end of the period, including the shares which were issued but are subject to forfeiture and considered contingent consideration.

Management considers all of these non-GAAP financial measures to be important indicators of our operational strength and performance of our business and a good measure of our historical operating trends, in particular the extent to which ongoing operations impact our overall financial performance.

In addition to items routinely excluded from non-GAAP EBITDA, management excludes or adjusts each of the items identified below from the applicable non-GAAP financial measure referenced above for the reasons set forth with respect to that excluded item:

Foreign exchange / other expense. Other expense is excluded because foreign currency gains and losses and other non-operating expenses are expenditures that management does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expense is partially outside of our control. Foreign currency gains and losses are based on global market factors which are unrelated to our performance during the period in which the gains and losses are recorded.

Stock-based compensation expense. Stock-based compensation expense is excluded because this is primarily a non-cash expenditure that management does not consider part of ongoing operating results when assessing the performance of our business, and also because the total amount of the expenditure is partially outside of our control because it is based on factors such as stock price, volatility, and interest rates, which may be unrelated to our performance during the period in which the expenses are incurred. Stock-based compensation expense includes cash-settled awards based on changes in the stock price.

Amortization of purchased intangible assets. Purchased intangible assets are amortized over their estimated useful lives and generally cannot be changed or influenced by management after the acquisition. Accordingly, this item is not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are recorded.

Transaction costs. Transaction costs are upfront costs related to acquisitions and related transactions, such as brokerage fees, pre-acquisition accounting costs and legal fees, and other upfront costs related to specific transactions. Management believes that such expenses do not have a direct correlation to future business operations, and therefore, these costs are not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

Integration costs. Integration costs are severance payments for certain employees relating to our acquisitions and exit costs related to terminating leases and other contractual agreements. Accordingly, management believes that such expenses do not have a direct correlation to future business operations, and therefore, these costs are not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

Impairment and unoccupied lease charges. Impairment charges primarily represent remaining lease and termination fees associated with discontinued facilities 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. Accordingly, management believes that such expenses do not have a direct correlation to future business operations, and therefore, these costs are not considered by management in making operating decisions. Management does not believe such charges accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

Income tax expense (benefit) related to goodwill. Income tax expense (benefit) resulting from the amortization of goodwill related to our acquisitions represents a charge (benefit) to record the tax effect resulting from amortizing goodwill over 15 years for tax purposes. Goodwill is not amortized for GAAP reporting. This expense is not anticipated to result in a cash payment.


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