Welcome to CareCloud's Second Quarter 2022 Conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the one followed by the four on your telephone keypad. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, today's conference is being recorded. Now I'd like to turn the conference over to Kimberly Blanche, CareCloud's general counsel. Ms. Blanche, the floor is yours.
Good morning, everyone. Welcome to the CareCloud Second Quarter 2022 Conference call. On today's call are Mahmud Haq, our founder and our Chief Executive Officer, President, and a Director, and Bill Korn, our Chief Financial Officer. Before we begin, I would like to remind you that certain statements made during this conference call are forward-looking statements within the meaning of section 27A of the Securities Act of 1933 as amended, and section 21E of the Securities Exchange Act of 1934 as amended. All statements other than statements of historical fact made during this conference call are forward-looking statements, including without limitation, statements regarding our expectations and guidance for future financial and operational performance, expected growth, business outlook, and potential organic growth and acquisitions.
Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, upcoming, believe, estimate, or similar terminology and the negative of these terms. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. These statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise these forward-looking statements in light of new information or future events. Please refer to our press release and our reports filed with the Securities and Exchange Commission, where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward-looking statements.
Anyone who dialed into the call by telephone, you may want to download our Second Quarter 2022 earnings presentation. Please visit our investor relations site, ir.carecloud.com, scroll down to News & Events, click on Second Quarter 2022 Results call, and download the earnings presentation. Finally, on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our Second Quarter 2022 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results. With that said, I'll now turn the call over to our CEO, Hadi Chaudhry. Hadi.
Thank you, Kim, and thanks to all of you for joining us for our second quarter earnings call. On today's call, I would like to discuss a deeper dive into CareCloud's record bookings that are a direct result of our newly launched products and heightened focus on organic growth. Our soon-to-be-launched products for remote monitoring, a revision to our outlook that is attributable solely to a delay in our acquisition playbook, and finally, an update on our sales pipeline. To start with some highlights of the quarter, annualized recurring bookings of the new contracts of $5.5 million, excluding one-time fees, were the highest in the history of the company, almost double what we signed last year and compares to $1.6 million in the first quarter of 2022. Revenue of $37.2 million was up 9% year-over-year.
Adjusted EBITDA of $7 million increased 24% over second quarter of last year. Adjusted net income of $5.6 million increased 23% over the prior year period. Now taking a closer look at bookings, we are especially pleased with the results this quarter, which are directly correlated with our efforts to drive the organic growth that we have been speaking about the last couple of quarters. As we have discussed, our growth strategy in recent quarters has evolved from a pure consolidation playbook to one that strikes a balance of accretive acquisitions complemented by organic growth achieved through investment in sales. As mentioned, bookings from recurring sources were $5.5 million, up 97% year-over-year and a record for CareCloud.
Additionally, non-recurring professional services bookings of $6.7 million increased more than three times that of second quarter of 2021, due largely to the acquisition of medSR that was completed late in second quarter of last year. Additionally, while we want to stop short of giving bookings guidance, we have a high level of confidence that third quarter recurring bookings will meet or exceed those of second quarter and may represent another record for the company. Importantly, a meaningful component of bookings were derived from contracts for our newly introduced CareCloud Wellness that launched last quarter. Specifically, greater than 10% of non-recurring professional services bookings came from our new wellness product, demonstrating terrific early reception to this solution.
As a refresher, Wellness, which launched in late April, is an effective way for our practices to support the treatment and well-being of the chronically ill patient that they serve. Additionally, it is a great source of referral revenue with little to no upfront cost. Wellness' early results demonstrate that its value is clearly resonating with our physician space. While it is not the norm to get too granular around our booking metrics, we think it's important to share this information with you as it ties directly to the conversion of the robust pipeline activity that we provided a lot of details around last quarter. Most of all, it shows that our increased investment in product innovation and sales and marketing efforts are bearing fruit. Given the sensitivity around bookings and volatility by quarter, please note that investors should not expect us to provide bookings metrics every quarter.
We are pleased to be launching our forthcoming remote patient monitoring program this quarter. Remote patient monitoring, or RPM for short, is a digital health solution leveraging the Internet of Things which tracks and monitors chronic conditions and potential emergent situations in real time. In CareCloud's RPM solutions, metrics like blood pressure, glucose measurements, heart rate or pulse, weight, and sleep changes in the elderly, as well as fetal monitoring, can all be instantly transmitted from devices to patients' EHR, capturing a longitudinal view of the patient across the care continuum. We plan to offer a full service to the physician, providing care managers, supplying the device, and helping to populate the EHR with data transmitted from the cloud.
At a minimum, our solution promotes connectivity to healthcare data whenever and wherever it resides, and it at best can serve to situations and preempt them, improving outcomes and reducing costs in the process. We are excited to continue along the path of innovation by introducing this revolutionary digital health solution to the market. We size the total market opportunity at north of $100 billion over the next few years. Drilling down to the medical practice level, we believe a typical practice on average can drive incremental revenue of up to 1/3 annually through a combination of chronic care management and monitoring, of which we can capture a meaningful percentage. We note also that the timing of our RPM product launch may coincide with CMS' favorable treatment towards the proactive management of chronic care conditions. CMS increased reimbursement for chronic care management in 2022.
We believe that following additional work by the device providers, inclusive of proof points regarding adoption and improvement of outcomes, CMS may increase fees for remote monitoring in future years. These favorable rates may serve to incentivize providers to do more monitoring. With respect to our acquisition strategy, as has been the case for some time, we strive to balance accretive acquisitions that integrate well with our cloud platform and deliver value to our shareholders with a reasonable level of organic growth stemming from new customers, same-store sales and product innovation. While we are happily exceeding expectations with respect to the organic component of our strategy, our acquisition playbook took a pause through the first half of 2022. As we outlined in our outlook in March, our 2022 guidance always contemplated a small amount of acquired growth that would be required to hit our revenue and EBITDA targets.
While the acquisition pipeline remains robust and we continue to evaluate a number of opportunities, none felt compelling enough to execute from either an accretive or strategic standpoint. For one thing, private valuation expectations remain lofty despite the slide in the public company valuations year to date. In a recent industry report, it was noted that healthcare tech M&A was down in the first half of 2022 as acquirers struggled with valuation disconnect driven by the big step-ups resulting in lofty post-money valuations of the last couple of years. Given that our criteria for doing a deal requires us to target an ROI over 3-4 years, this fiscal discipline and selectivity left us with a gap to meeting our full year outlook. Meanwhile, we are hopeful that private company valuations will increase in the back half of the year.
In setting our guidance earlier in the year, we incorporated the anticipated wind down of revenue from two customers that came to us as part of a prior acquisition. At the time of acquisition, the client was in the process of merging their operations with another health system, each of whom had a different EHR mandate from what our clients were utilizing. As such, we believe there was a risk, and while this potential attrition was factored into our guidance, our expectation was to make up the revenue with acquired growth, which is now likely pushed out to 2023.
Accordingly, we now expect revenue in the range of $140 million-$143 million versus our prior expectations of $150 million-$155 million due to an expected shortfall in acquired revenue. In doing so, we are reducing our EBITDA guidance to a range of $22 million-$24 million from $24 million-$26 million previously. I want to reiterate that the fundamentals of our business remain strong as evidenced by our record bookings, and the absence of any tuck-in acquisition is the sole driver of the guidance reduction that Bill will expand upon. Before I turn it over to Bill for his financial review, I would like to comment on the health of our sales and pipeline activity.
Fair amount of detail last quarter about how our increased investment in sales and marketing and product innovation would lead to an uptick in organic growth. We are seeing early success of this in both the funnel of pipeline opportunities as well as bookings. We are pleased that our pipeline at the end of second quarter was $40 million, increase above the $25 million we had in the prior-year period. Moreover, the incremental pipeline built or creation was $21 million, up 50% prior-year period. Average contract value or deal size increased 42% over second quarter of last year, which is suggestive of two things. Larger customers in the pipeline and also group of products and services being delivered across our platform.
For example, enterprise accounts were 64% of the pipeline, while small accounts comprised of 16% and mid-size practices were the remaining 20%. Further, as an illustration of increased product density, our teams are actively working with clients representing an estimated $50 million in annualized revenue from CareCloud Wellness, which we introduced in the market just last quarter. All told, though we fell shy of our required revenue targets through the first half, the health of our pipeline, our sales motion and bookings strength has never been better in the history of our company. To summarize, we delivered record bookings in second quarter with an expectation for as good, if not better in third quarter. Year- to- date, we have announced innovative digital health solutions inclusive of wellness for chronic care management and the soon to be launched remote patient monitoring solution.
Our sales and marketing efforts continue to ramp and early results are encouraging as evidenced by CareCloud's record bookings. We continue to work through an active acquisition pipeline with the goal of completing one or more deals in the back half of this year or early 2023. We look forward to reporting our progress to you as we navigate through the rest of 2022. Now I will turn the call over, a closer look at our second quarter results. Bill?
Thank you, Hadi, and thanks everyone for joining us on the call today to discuss our second quarter results. The second quarter was in line with our expectations. On today's call, I'll review the quarterly and first half results and discuss our guidance revision in more detail. For the second quarter, we generated recurring bookings, which will produce annual recurring revenue of $5.5 million, almost double what we did in second quarter last year. As Hadi noted, we do not plan to provide bookings on a quarterly basis going forward, as they can be lumpy. Given our strong second quarter results, we thought you would appreciate the insight today. It is evident that our organic growth initiatives are starting to take hold as our newer products represent a significant portion of new recurring bookings.
Our second quarter revenue was $37.2 million, representing an increase of $3.2 million or 9% year-over-year. Our GAAP net income of positive $2.7 million compared to $227,000 last year. This represents the fourth quarter in a row where we've delivered more than $1 million in positive GAAP net income. Our GAAP net loss per share was $0.07 based on the net loss attributable to common shareholders, which takes into account the preferred stock dividends declared during the quarter. Our non-GAAP adjusted net income was $5.6 million, an increase of 23% year-over-year. Adjusted net income per share was $0.37 compared to $0.31 per share for the year-ago quarter.
Adjusted EBITDA of $7 million increased 24% year-over-year and set a new record. Our Adjusted EBITDA margin of 19% increased 220 basis points compared to last year and increased 540 basis points sequentially to the highest level since we went public in 2014. As we continue to reduce cost and drive further efficiencies from our previous acquisitions. Taking a look at our results for the first half. Revenue for the first six months of 2022 was $2.6 million, an increase of 14% compared to $63.8 million in the first six months of 2021, with 85% generated from our technology-enabled solutions.
For the first six months of 2022, our GAAP net loss of $9 million compared to a GAAP net loss of $2.2 million in the first six months of 2021. This equates to a loss of $0.26 per share after subtracting the preferred share dividends. Our non-GAAP adjusted net income for the first six months of 2022 was $9.1 million, or $0.60 per share. During the first half of 2022, our Adjusted EBITDA was $11.7 million, an increase of $2.4 million or 26% from $9.3 million in the same period last year. Now I'll turn to the balance sheet and cash flow.
We ended the second quarter with $10.2 million of cash and equivalents and generated $5 million of cash flow from operations during the quarter, and $8.1 million year- to- date. As Hadi mentioned, we are adjusting our guidance to reflect the fact that we have not made any acquisitions yet this year. Our original guidance for the year assumed we would complete one or two tuck-in acquisitions during the year, contributing approximately $13 million of revenue, which would have offset the revenue from the two customer transitions that Hadi mentioned. Though we factored in the wind down of this revenue in our guidance, we expected to replenish the loss of these customers with acquired revenue. However, we have not yet found a deal on terms we believe provided a compelling return to shareholders.
Prefer to pass on a deal, close it on terms which are not as favorable as we would like. With five months left in the year and the current disequilibrium between public and private valuations, we think it's unlikely that any potential acquisition will meet the assumptions baked into our original. We are always looking for game changer deals, and we will let investors know when we have something compelling to talk about, but we have removed any impact from our 2022 guidance. With that as a backdrop, we now expect 2022 revenue to be in the range of $140 million-$143 million and Adjusted EBITDA to be in the range of $22 million-$24 million.
Going into the second half of 2022, I'm pleased that our robust product solutions are resonating in the market and our organic growth strategy is starting to take hold. I look forward to keeping you posted on our progress in the remainder of the year. With that, I'll turn the call over to Mahmud for his closing remarks.
Thank you, Bill. I would like to thank our employees, customers and shareholders for their continued support. As Hadi mentioned, we are very pleased with the expansion of our platform, organic growth initiatives and resulting booking trends. We look forward to continuing to update you on our progress throughout the year. Thank you. Operator?
Thank you. If you'd like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. One moment please for the first question. Our first question comes from Mr. Cohen with Ladenburg Thalmann. Please proceed with your question.
Oh, hi, Hadi, Bill, Mahmud. Can you hear me okay?
Yes, we can. Good morning.
Wonderful. A couple questions. I guess firstly on the back half guide and Hadi's comments about the third quarter as good or not better than the second quarter. Could you talk about the cadence of back half for modeling purposes? It looks like probably $35 million or $35.5 million for Q3 and Q4. Any specific read-through into the cadence on the back half from your comments?
Sure. Thank you for the question, Jeff. Let me get started from the booking standpoint, organic sales strategy standpoint, then I'll turn it over to Bill for the back half of the year from the financial aspect. As we mentioned during the script, that second quarter, finally we were able to hit our record booking numbers. On the recurring revenue side, it's 5.5, and with the one-time fee, it was about $5.7 million. Roughly one third of that was coming from a recently launched product of Wellness. Based on these additional, so one, the Wellness product and our upcoming Remote Patient Monitoring Launch , which we will provide the details later in this in the third quarter. Also with the robust pipeline.
If I again, just, share the numbers for the pipeline. At the end of the second quarter, we have about $40 million in open pipeline, and this is excluding our current upsell opportunity from the wellness standpoint, even just only in the existing client base. We are actively currently working with up to the potential possible opportunity of clients which could generate about $50 million in annualized revenue. Of course, we cannot close all of it, even if we are able to close, let's say, half of it over the last one year to one and a half years. So that would be a good number.
With that, with this background, I think the visibility that we have into the level of the deals we are in the negotiation phases we are in. We are confident that the third quarter is going to be either the same or better than the second quarter in terms of the bookings. The fourth quarter optimistically could even be better than the third quarter because we anticipate some results from our Remote Patient Monitoring initiative as well.
Okay, I got it.
Jeff?
Third quarter better, but yet, that falls outside your guide of up to $143.
Jeff, I guess I would use our guidance for total revenue, and there's sort of two factors going into the cadence. As you know, normally for us, third quarter is our biggest quarter. However, we're getting more traction from new organic customers. And as more customers are signing up, you know, somebody who signs up today and goes live a month from now, well, you're gonna get a fraction of the quarter during third quarter, and you'll get a full quarter during Q4.
I think if I were you, I would actually spread it and, contrary to normal years, actually, put a little bit more into fourth quarter and a little bit less into third quarter for 2022.
Okay. I got it. Second from our side, could you talk a little bit about our CareCloud Force? I didn't hear any specific mention of that and how it's doing.
Yeah, that's great. I'll turn the floor over to him in a moment to Karl Johnson, who is our president of the Force corporate initiative. Yes, we continue to see more and more attraction towards the Force. If we talk about our second quarter booking, about 25% was coming from the Force bookings that we have. We continue to see more and more the increase in our pipeline for the Force, and we are also in some active conversations with some really large opportunities from the Force standpoint. With that backdrop and background, I'll turn it to Karl. Would you like to add some more?
Yes, absolutely. Thank you, Hadi. Certainly what we've seen is, you know, continued difficulties by hospitals and other large service organizations in finding employees. I would go on to say that that's not just a U.S. problem, but we've also seen that offshore. We've been very, very pleased with the revenues, as Hadi mentioned, from Force. The new sales, I'm sorry, were 25%, which is up from a year- ago, about 15%. It is the second quarter in a row that it's been in that range. The pipeline with the deals that Hadi mentioned, two very substantial deals that are in final stages of legal review, would certainly get us in that same range of percentage of sales. It's really looking very optimistic.
It's really kind of morphed into a core of what we're doing and continued to push forward our new growth. Thank you, Hadi.
Okay, perfect. That does it for us. Thanks for taking the questions.
Thanks, Jeff.
Thank you, Jeff.
Our next question comes from Mr. Weisenberger with B. Riley Securities. Please proceed with your question.
Thanks. Good morning. Appreciate you taking the question. I just wanted to follow up on a comment that was just made about tight labor market conditions domestically, and then I think internationally was said. Does that mean that you are potentially providing some of your services to international customers? Is that a change or expansion from any kind of previous scope of work?
Good morning, Marc.
No, I could.
Yeah, sure. Please go ahead, Karl.
Yeah, no, what I was talking about is the services, the labor services, the workforce extension we're providing is to U.S.-based customers exclusively. Many of those customers are used to utilizing offshore resources, which with the pandemic and other challenges, you know, have also been tight.
Got it. Understood. Appreciate that. Maybe just actually following up on that. In the current environment, are you seeing changes in terms of your customers' domestic customers' ability or willingness to leverage partners with OUS resources? I guess, does that any potential change there in your customers' preferences open up additional opportunities going forward?
Yes, absolutely. I would say you're spot on there. If we look at the bookings for Q2, a significant share of those bookings were from organizations who had immense challenges in using offshore resources in the past. Because of the pressure that they've had to get labor in the U.S., they've not been able to do that, have then turned to offshore resources. It certainly has opened up some new opportunities for us.
Got it. Appreciate that. As you're going to market with these expanded offerings, can you just talk about kinda the value proposition you're leading with? Have you had to change that messaging at all or adapt your pricing strategy? I guess, do you anticipate needing to do that going forward to drive accelerated adoption?
A great question, Mark. Our core offering, that remains the same. If you think about it, the future of the healthcare as more and more the whole industry is moving towards the digital health with the telemedicine or more going towards the risk management or pay-for-performance models or more proactive health management models. There has been a significant push from the CMS side as well on the care, the CCM point of view. Then we believe that after the Chronic Care Management, the Remote Patient Monitoring is going to get lot more attraction. If you think about it, more and more devices are now becoming available. The wearable devices are significantly advanced from the technology standpoint.
It will become more and more easier for the vendors to collect the data proactively from the patient's symptoms point of view and then crunch that data, analyze the data and to then raise the red flags and alerts into the EHR system. We have started to step in into the same, the next level, the next generation initiative. Yes, we even from internally we talk about Chronic Care Management. We saw a lot of tremendous excitement from our existing client base only, and there is an external too. We have launched initially from the upsell standpoint just into our existing client base because of the tremendous opportunity that was already there. Then these new products have become part of our overall offering.
From the pricing standpoint, from these two services, if I talk about the Chronic Care Management and the Remote Patient Monitoring, we are providing not only just the services and the technology, but also the resources. The care managers, for example, who will pick up the phone and talk to the patient. The pricing structure for Chronic Care Management and Remote Patient Monitoring is slightly different than our rest of the offering, but there is a comprehensive pricing model that exists for that. Of course these two come with the higher revenue models because if as an example for Remote Patient Monitoring, devices will also be involved. If it's an FDA-approved device, it will be reimbursed by Medicare, as an example. That will also become part of our revenue model.
Very helpful with all that detail. Appreciate it. Just two more from me, I guess. Love to hear about the medSR kind of activity and ability to convert project-based revenues to recurring revenue. Just the other one would be, I guess, as you think about the economy and if it should deteriorate a little further in the back half of the year, maybe into the beginning of next year, how should we think about what parts of your business might be impacted the most? Kinda thinking about exposure maybe to elective procedures or more discretionary spending from patients. Thank you.
Thanks. Thanks, Mark. On your first question, if I just take as an example, if I talk about it, before the acquisition or before we acquired medSR, the year before the acquisition, their RCM-related revenue was, let's say, about $1 million recurring or $1 million roughly revenue. This year, so far, we already have closed more than twice of that number, through the medSR help. Whether it's coming directly as an upsell RCM deal or with the help of our CareCloud Core. We already have started to see the results, and that's the reason our bookings are up. It's a combination of all of those pieces.
Some help, some support from that upsell through the medSR relationships, our existing core technology, and the services that we have been offering, and the new products that we are in the process of launching or have already launched as chronic care management. We do see that medSR, through the help of medSR, more and more sales coming in. Towards this, to the second question, if you think about it from the medSR standpoint only, that is more like a project-based revenue in terms of the consultancy or health system implementation and configuration. That would continue to be the same. We do not see any impact on that revenue.
To address if you just talk about the patient from the elective surgeries and those standpoints, there were some downward force, some changes during the COVID, but even that backlog is coming back now. At least in the near future, if we look at that timeframe, we do not see any impact from either one of those things or the two concerns. I hope I answered the question.
Understood. Thank you very much. Yep, thank you.
Perfect. Thank you. Thanks, Mark.
Our next question comes from Mr. Klee with Maxim Group. Please proceed.
Yes, good morning. Just following up on remote care and Wellness. Just to understand it a little better. When you talk about launching Remote Patient Monitoring this quarter, is this new from your Wellness offering in addition to that? And then, you mentioned also some new CMS is gonna have some new rates. Can you go into a little more color on that also? Thank you.
Good morning, thank you for the question. There's a slight difference between them. In the overall context, whether we talk about Chronic Care Management or Remote Patient Monitoring, both are towards, one, the digital health, and the second thing is the preventative health management or the proactive management or the well-being of the patient. In Chronic Care, the patients that have one or more chronic conditions. Those are being proactively managed with the help of the care providers, the caregivers, who connect with the patient, go through their medical records, talk to the patient for a certain number of minutes each month, and provide them the guidance what they should be doing during the month.
For example, for diabetic patients, where they can be a half-hour call where the caregiver will get on the phone with the patient, looking at the chart of their diabetic results, and can guide the patient what the patient should be doing, whether it's exercises, whether it's the change in the diet plans or whatever it will. If there is some change in the medication that needs to be done. That's how that care, Chronic Care Management is handled. From the reimbursement standpoint, CMS and the insurances are reimbursing the time of provided by the caregivers to the patient under that Chronic Care Management guidelines. In the bigger picture, this will reduce the hospitalization rates, and they already have started to see the change in the hospitalization rate.
This was the first step towards that preventative, the futuristic, health management. Now, the next level is going to be the Remote Patient Monitoring, where the devices will be involved. If you think about the chronic care, it's just only that you're talking to the patient and asking the question by looking at the existing, charts and based on the questions the caregiver will be asking. In the second one, for example, if you are wearing a smartwatch which can capture your blood pressure, your oxygen level, and the like. That data is automatically over the internet gets transmitted to the EHR, gets compiled, and meaningful alerts gets fired to the doctor, and the doctor can pick up the phone and call the patient and asking them, "Okay, we see that your oxygen level has dropped, your temperature is high.
You may have ABC problem. Come and see us for the treatment or go to a lab for a lab test, as a basic, as a simple example. In terms of the reimbursement, the government, the CMS increased the rate for Chronic Care Management in 2020 to almost doubled on the certain procedure basis. For Remote Patient Monitoring in this year, they did not do that. We believe that one of the reasons is the high from the adoption standpoint. It will take little more time for the patient to adapt to these or to convince to use these devices for the betterment of the healthcare.
Based on these, we believe as more vendors are coming and the results and the outcomes will be available, the CMS should be increasing, hopefully, the reimbursement to get it more attractive down the road over the next few years. Our uniqueness is going to be the same. On the remote patient monitoring as well, we will provide a comprehensive solution. The devices, the platform, our technology platform, our services when it comes to RCM, that we will make sure that the claims from those activities from those services get submitted to the right insurance at the right fee and get reimbursed at the right level. The third thing is the caregivers as well. It's going to be a comprehensive solution in our case and integrated, fully integrated with our EHR and practice management platform.
Well, thank you. My last. That's very helpful, very informative. My last question has to do with churn. I think the really key question here is what should we think that normalized churn is? Because as you talk, I mean, if you did $5.5 million of bookings, if we think about that, if that's like $22 million a year, and let's say you recognize half of that as revenue, $11 million, and you divide that by like around $140 million of revenue, that's like 7% organic growth. But that's before churn. We recognize that there were two big events that happened. Just going forward, what should we think that normalized churn should be so that how we should think about net organic growth? Thank you.
Great. Thank you, and a great question. Let's go back. If I talk about the last three years, excluding these two outliers, the two clients that we talked about, those were more like a calculated risk. There's a high level of risk and the visibility at the time of acquisition, and we bake that into our valuation when we are acquiring the company. Excluding those two outliers, our 2020 churn was about 10%, and we highlighted that. Then 2021, we improved it down to about 8 point some percent for the year in terms of the revenue. For 2022, right now we are on track to hit somewhere between 8%-9% as well. That's our churn excluding these outliers.
I think in this industry, anything around 1% a month is a norm. It seems like we have been doing better than 1% a month for the last few years, and it's continuously improving. Again, this one outlier aside. Now towards your other question, yes, that is right in terms of the organic growth. So far, as if you look, if you think about it, we have been entirely focused on growing through the acquisition or most of our. If you just talk about the balance, it was mostly acquisitive growth and very small focus on or no focus on the organic growth, the organic sales.
Over the last few years and primarily the last two years and then the last year and this year, the second half of the last year, we finally have started to see some results over organic growth activities, whether it's the marketing or the sales. We increased the number of employees on the sales and marketing. We hired the leadership. We started focusing on other marketing and brand recognition activities. Those have started to bear fruit, and that's why the second quarter is the highest one, record in our history. With all what I mentioned earlier, our third and fourth quarter looks like that it's going to be even better than that. The 2023, the way we are looking at it, and we will provide the guidance at the beginning of the next year.
We believe with everything on the horizon and our visibility, the next year should come as a full organic growth, at least in a single digit organic growth year for us, excluding any acquisition.
That's really helpful. Thank you so much.
Great. Thank you.
As a reminder, to register for a question, please press the one followed by the four on your telephone. Now our next question comes from Mr. Larsen with BTIG. Please proceed.
Hi. With CMS's proposed physician fee schedule, they talk a lot about shifting everybody into value-based care, and all of the major health plans are talking about digital-first products that have value-based care wrapped around them. With this Wellness solution and the Remote Patient Monitoring solution, first of all, with that $5.5 million in bookings, over what time period is that gonna get recognized? Is that like, can we think about that on an annual basis? Secondly, like, can you give a sense for what the upsell potential is into your existing customers? If every one of your existing clients purchased the Wellness platform, just any sense or color around what that total dollar revenue potential could, in theory, be?
Great. Thanks, David, for the question. Good morning. Yes, you're right. From the CMS, that's the digital first, and that is the reason I think we were focused at the same time, in addition to our core offering, whether it's the practice management or the EHR or the revenue cycle, we already have started to invest in that technology. From the revenue ramp-up standpoint, if by excluding wellness or remote patient monitoring, typically for small practices, it's about 30-60 days for 1-5 practices that we start recognizing the revenue. From mid-size practices for up to 25 providers, it could be somewhere between 3-6 months. Or between six months to close to a year on an enterprise client, 25+ provider clients.
This is also based on the type of service they have, they are looking forward to get from us. I think the average timeframe is comes down to about six months for us, where we are able to start recognizing the revenue out of these bookings. For wellness, though it's, we do not have much data with us right now because it's just hardly three months we are into this. We already have made live the clients who would generate about close to $600,000+ in annualized recurring revenue out of 1/3 of the booking that we had in the last year. I'm sorry, the last quarter. My whole point is that literally within the first three months, we were able to make about roughly five clients live within the three months time frame.
That's from that should help in giving some color on the ongoing live perspective. For same case from the Remote Patient Monitoring standpoint, we yet need to see in the fourth quarter after the launch that how much time it would take. It could be slightly more than the wellness because in this case, the hardware devices would be involved. Those needs to be sent to the patient. Patient needs to be trained to do it. They need to be convinced to use it. The going live time can be slightly. That's what we are predicting. But we yet need to see as we get into the next year.
any sense for the upsell potential if all of your customers purchase the Wellness?
Right.
Mm-hmm.
Perfect. If we think about, I mentioned in the second quarter for wellness, we already have, and out of the booking of $5.5, we closed one third of that was coming from the wellness. There is roughly the same number and actually slightly higher, which is already out for signatures. So far, our wins out of when the contract is out for signature is virtually 100%. We anticipate that to be closed. In addition to that, out of our existing client base, after reviewing everything, our crunching of the data and the numbers, there's roughly $50 million in annualized recurring revenue we can get if every single existing client signs up on for wellness. That's roughly the number.
As we always say, the $50 million, all $50 million is not going to get signed, but that's the full potential for opportunity in the existing client base. Now, in terms of the remote patient monitoring, just because of the adoption rate, all this $50 million virtually would also be eligible for the remote patient monitoring and even more than that, beyond that, because it's not necessary that you would only go for remote patient monitoring in the case, which is at this moment reimbursable by the insurance or the Medicare. The doctors can still monitor the patient and can call them for a different appointment based on that monitoring.
We think, we believe that even that potential is going to be more than the $50 million that we will, at this moment, we are going after for wellness program.
Great. Thanks very much. One more quick one. In the wellness solution, can you talk a little bit about your costs? If you have like an Uber-like model, where you know a member can basically access a home health individual or a nurse or a doc through an Uber-like solution.
Are you paying those providers on like a per hour basis so that the revenue is matched with the cost, or are those sort of full-time salaries that, you know, you're covering?
Yeah, that's a great question. Thank you. One is the devices and the other patients will get our branded devices through our provider, through the practices who will sign up for Remote Patient Monitoring. The FDA, some of the features, some of the devices are and will be FDA approved, so those will even get reimbursed by Medicare, so the patient won't even have to pay for those devices. The second part is, of course, our technology. The third case, the third thing which I talked about was the care managers. One, that the practice can opt to have their own providers, where they can provide, can reach out to the patient and provide those services, or they can just keep working as it is without a change, and we step in.
We provide them a full turnkey solution, devices, platform, revenue cycle, and also the caregiver, the care managers. Care manager can take the first step by connecting to the patient if there is a problem, and then can hand it over at a certain point to the provider or guide the provider that this is an alert that we have received or through a chronic care management call, this is the concern, and then the provider can take the next step. Yes, in this scenario we will be paying those care managers, and that will be part of the overall pricing package for the client.
Great. Thanks very much. Appreciate it.
Great. Thank you.
Our next question comes from Mr. Dede with H.C. Wainwright. Please proceed.
Thanks. Hadi, just real quick back on the care manager part of the wellness solution. I understand that you'll be bringing the first touch, but I'm just wondering if those people are medical professionals or just relationship managers. Where are you in building your staff to support that activity?
Good morning, Kevin. That's a good question. Thank you for the question. It's the combination, Kevin. It could be nurse practitioner under the supervision of a doctor or just the relationship managers under the supervision of the nurse practitioners. There is clear guidelines from the CMS and those care managers have to be complying with those requirements. That's exactly what it is. In some cases, we may be using some external help here if needed. We already have that staff available up and running, and that's why I mentioned that already five clients have gone live. We already have started to take care of the chronic care conditions of the patients.
Okay. Thanks, Hadi. The $40 million pipeline, I know you've talked to this a little bit, but I guess it just hasn't gelled for me. Can you just sort of review how long you think it'll take to convert it all? I understand a certain percentage short term, but I'm just wondering if you expect to convert it all or if it's absolutely solid signed business, or is it just feedback from sales on prospective business?
Great. Kevin, this $40 million that you're talking about has already gone through the process, the prospecting phase. The initial connection has been made, so we know that we are in at some stage of active conversation. With, like, with any company who are doing the sale, not all of them can be converted. For us, of course, our initial conversion rates were not great, which every quarter are continuously improving as our organic growth engine is getting further matured. You can already see the results in the second quarter.
I think the way I would look at it is, if we are able to hit that $5.5 million-$5.7 million in the annualized recurring revenue closing or the booking for the quarter, the record quarter, and we believe that the third quarter, based on the visibility that we have, we have good reasons to believe that third quarter is going to be either same or better than the last, the second quarter. Then based on these additional, the products, the fourth should even be better than that. I would just consider those numbers versus instead of at this point the conversion rates. Because that conversion rate is continuously improving as we are evolving and maturing our sales engine.
Okay, Hadi. Thank you very much for the additional color. Appreciate it.
Great. Thank you, Kevin.
Ms. Blanche, I'll turn the call back to you for closing remarks.
We'd like to thank everyone who's joined us today. We appreciate your interest in us as a company and your participation on today's call. We look forward to speaking with you again next quarter. Thank you all and have a great day.
Thank you, everyone.
Thanks.
Bye-bye.
That, concludes the conference call for today. We thank you for your participation and ask that you please disconnect your lines.