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| Item 2.05 | Costs Associated with Exit or Disposal Activities. |
On October 2, 2023, the Company committed to effectively align resources with business priorities and improve profitability through a reduction in its work force. 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 expense savings. The difference between the free cash flow and the expense savings represents amounts which were previously accounted for as part of software capitalization. A majority of the impacted employees will exit in the fourth quarter of 2023. The Company estimates that it will incur expenses of approximately $0.5 million related to the reduction in work force, of which approximately $0.4 million is expected to be incurred in 2023, with the remaining expenses to be incurred during 2024. These expenses will consist of one-time termination benefits, including but not limited to, severance payments and healthcare benefits.
The estimates of the charges and expenditures that the Company expects to incur in connection with the above, and the timing thereof, are subject to several assumptions and the actual amounts incurred may differ from these estimates. In addition, the Company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CareCloud, Inc. | ||
| Date: October 3, 2023 | By: |
/s/ A. Hadi Chaudhry |
A. Hadi Chaudhry | ||
| Chief Executive Officer | ||
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