MSP Recovery Q1 2024 Earnings Report

MSP Recovery EPS Results

• Actual EPS: -$14.25
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

MSP Recovery Revenue Results

• Actual Revenue: $6.00 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

MSP Recovery Announcement Details

• Quarter: Q1 2024
• Date: 5/15/2024
• Time: N/A
• Conference Call Date: Thursday, May 16, 2024
• Conference Call Time: 8:30AM ET

MSP Recovery (NASDAQ:LIFW), doing business as LifeWallet, operates as a healthcare recovery and data analytics company in the United States and Puerto Rico. The company offers claims recovery services, including services to related parties or third parties to assist entities with pursuit of claims recovery rights. It also provides LifeWallet, a scalable and expandable data ecosystem where tokenized data is stored in a platform with multiple applications, including LifeWallet EHR for hospitals, medical providers, major medical laboratories, and governmental entities that gather and store electronic health records; Chase to Pay, a real-time, or near real-time analytics driven platform that identifies the proper primary payer at the point of care; LifeChain which is in development in order to tokenize healthcare claims and patient records using blockchain technology; LifeWallet 911 which is in development for utilization by emergency service organizations; LifeWallet Legal; LifeWallet Health; and LifeWallet Sports which connected brands with college athletes. MSP Recovery, Inc. was founded in 2014 and is headquartered in Coral Gables, Florida.

MSP Recovery Q1 2024 Earnings Call Transcript

[Operator]

Good day, and thank you for standing by. Welcome to the Life Wallet First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. As of the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

[Operator]

I now like to hand the conference over to your speaker today, Diana Diaz, Life Wallet's Chief Communications Officer. Please go ahead.

[Speaker 1]

Good morning, everyone, and welcome to Life Wallet's Q1 2024 Earnings Conference Call. Before we begin, please note that the statements made during this presentation, which state the company's or management's intentions, beliefs, expectations or predictions of the future are forward looking statements within the meaning of the Private Securities Litigation Reform Act, and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward looking statements is contained in the company's SEC filings. This includes, but is not limited to, risk factors contained in our SEC filings and in the accompanying press release issued. A copy of these materials can be found in the Investor Relations section of our website at lifewallet.com.

[Speaker 1]

Non GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non GAAP measures to the corresponding GAAP measures is included at the end of the presentation slides and can also be found in the Investor Relations section of the company website. The speakers on today's call will be John H. Ruiz, LifeWallet's Founder and Chief Executive Officer and Francisco Rivas Vasquez, Life Wallet's Chief Financial Officer. I'd like to turn the call over to John H.

[Speaker 1]

Ruiz.

[Speaker 2]

Good morning, everyone, and thank you for joining us. Today, we will cover the company's most recent highlights and an overview of our financials for the Q1 of 2024. Life Wallet continued to execute and advance its business, litigation, data analytics and recovery strategies in the Q1 of 2024, experiencing the most successful quarter to date since becoming a publicly traded company as it relates to claims recovery income by achieving 2 comprehensive settlements with multiple property and casualty insurers. The first settlement announced in March resolved claims with 28 affiliated property and casualty insurers. In addition to settling existing claims, the settlements established a going forward process to collaboratively and timely resolve future claims that are owed to Life Wallet.

[Speaker 2]

The settlement includes the settling insurers agreement to provide 10 years of historical data, identifying all claims processed from January 2014 through the present and data sharing of future claims extending out for 1 year, assisting Life Wallet in reconciling its current and future assigned Medicare claims. The settling insurer's implementation of Life Wallet's coordination of benefits clearinghouse solution, which I will detail shortly A 5 year agreement to resolve cooperatively or through binding mediation relevant Medicare claim liens that Life Wallet owns today and in the future. The settling insurers agreement that they are primary payers for any unreimbursed Medicare lien that Life Wallet identifies from data sharing and their agreement to assign all rights to collect against other third parties that either failed to pay liens or collected twice from Medicare funds and the settling insurers and a confidential cash payment to Life Wallet to settle existing historical claims. A second settlement followed with another group of affiliated property and casualty insurers. The settlement included an agreement to provide historical data for claimants and also assist Life Wallet in reconciling its relevant current and future assigned Medicare claims an assignment of all rights to collect additional sums from plaintiffs, attorneys and medical providers a 10 year agreement to resolve cooperatively or through binding mediation relevant Medicare claims that Life Wallet acquires in the future and non Medicare claims that it owns today and the property and casualty insurers agreement to assign all rights to collect against third parties that either failed to pay liens or collected twice from Medicare funds and the settling insurers.

[Speaker 2]

Through collaborative data sharing, these settlements provide the company with additional data that enhances its ability to identify the parties responsible for unreimbursed medical liens owned by Life Wallet. It also allows us to settlements. The company has implemented the terms of the March 2024 settlement by entering into a tri party data collaboration agreement between Life Wallet, Palantir Technologies and the 28 affiliated settling counterparties. The collaboration agreement allows for sharing of data in order to reconcile potential Medicare liabilities. This coordination of benefits clearinghouse solution is being used to reconcile existing owned claims and is part of the company's initiative to maximize its Chase to Pay platform.

[Speaker 2]

Beyond the March 2024 and April 2024 settlements, which included cash payments, LifeWallets management team believes that additional value lies in the company's identification and collection of unreimbursed liens from other responsible parties. To date, the company has identified thousands of unreimbursed claims and initiated the collections process. Any additional revenue from these potential collections will be reflected in future filings. In addition, the company is also currently in settlement negotiations with numerous other P and C insurers to resolve pending litigation under the same or similar framework. These settlements reflect our progress in advancing the company's core business model and the same structure can be potentially used to enhance recoveries from other property and casualty insurers, the amount and timing of which are subject to the completion of litigation, negotiation of settlements and the risk of delays associated with the litigation and settlement process.

[Speaker 2]

The company's goal is to build upon the foundation to create a potential revenue stream

[Speaker 3]

that is diversified and predictable. Now I'd like to turn things over to Francisco Rivas Vasquez, Life Wallet's Chief Financial Officer. Good morning, everyone. I'll be providing an overview of the company's Q1 2024 financials, including a review of our March 31, 2024 balance sheet, followed by the income statement, the non GAAP operating results for the quarter and sources of liquidity. Our total assets consist mostly of our intangible assets of $3,000,000,000 as of March 31, 2024.

[Speaker 3]

These assets are held at cost, not at fair value, and they are amortized over 8 years. Total assets decreased by $124,000,000 since December 31, 2023, primarily due to the amortization of the intangibles of $121,000,000 and an additional amortization of prepaid assets of $3,000,000 Other assets such as cash, PP and E and receivables increased on a combined basis by 125,000 from December 31, 2023. The company currently has $1,800,000,000 in liabilities, of which $83,000,000 are considered current liabilities. Within the current liabilities, 80% are either payable in stock or unaffiliated payable. This includes a warrant liability of $33,000,000 primarily related to Viroj warrants.

[Speaker 3]

This is described in our 10 Q filing. For non current liabilities, the majority are expected to be payable through claims recovery income. The guarantee obligation is related to the amounts due to Viraj for which the company extended the maturity date to September 30, 2025. As of March 31, 2024, the claims financing and notes payable of $575,000,000 mature on September 25 and afterwards. Interest expense is primarily paid in time.

[Speaker 3]

The decrease in December 31, 2023 was primarily driven to the settlement of interest payable to Viraj through the issuance of warrants. Please refer to Notes 4 and 11 of our 10 Q filing for additional information on the transaction with Verage and the warrant liability. Now related to our income statement for the quarter ended March 31, 2024. The company generated claims recovery income of $6,000,000 which is higher than the $3,500,000 generated in Q1 2023. In total, the company reported an operating loss of $130,000,000 93% of the loss is driven by noncash items, which consists mostly of claims amortization expense of $121,000,000 Other operating costs, excluding claims amortization expense, were $15,000,000 When looking at the non GAAP results, after adjusting for non cash items, the company had an adjusted operating loss of $8,700,000 versus the reported operating loss of $130,000,000 This primarily excludes the claims amortization expense of 121,000,000 dollars On an adjusted net loss basis, the company generated an adjusted net loss of $8,500,000 which excludes non cash items such as intangible amortization, interest expense and the fair value on warrant and derivative liabilities.

[Speaker 3]

With regards to liquidity, the company extended the Verage, Nomura and York recall obligations to 2025. In addition, we enter into a working capital credit facility in 2023 for which we have capacity to borrow an additional $14,000,000 in funding. Furthermore, we enter into a Yorkville Standby Equity Purchase Agreement Facility to potentially assist in raising funds. Therefore, as our recovery efforts continue to progress and given our expected funding from the working capital credit facility and potential access to the York facility, we anticipate that the company will have the liquidity to meet in cash based obligations over the next 12 months. We are confident in the company's future outlook, and thank you all for joining us today.

[Operator]

Thank you.