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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 11, 2022

 

 

MSP Recovery, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-39445	84-4117825
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
2701 Le Jeune Road Floor 10
Coral Gables, Florida				33134
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (305) 614-2222

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock, par value $0.0001 per share		MSPR		The NASDAQ Global Market
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share		MSPRW		The NASDAQ Global Market
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $0.0001 per share		MSPRZ		The NASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02 Results of Operations and Financial Condition.

 

On August 11, 2022, MSP Recovery, Inc. issued a press release announcing its results of operations for the second quarter ended June 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibit is furnished as part of this Current Report on Form 8-K.

Exhibit No.			Description of Document
99.1			Press Release issued by MSP Recovery, Inc. on August 11, 2022.
104			Cover Page Interactive Data File--the cover page XBRL tags are embedded within the Inline XBRL document.

 

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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 thereunto duly authorized.

			MSP Recovery, Inc.
Date:	August 11, 2022	By:	/s/ Calvin Hamstra
			Calvin Hamstra, Chief Financial Officer

 

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For Investors:

ICR, Inc.

Marc Griffin

Marc.Griffin@icrinc.com

 

For Media:

ICR, Inc.

MSP@icrinc.com

 

MSP Recovery Announces Fiscal Second Quarter 2022 Financial Results
Completed Business Combination Between Lionheart Acquisition Corporation II and MSP Recovery

Paid Value of Potentially Recoverable Claims Grew to $88.3 Billion During Quarter

Acquired Claim Recovery Rights and Rights to Cash Flows Increasing Balance Sheet Assets from $104 Million at December 31, 2021 to $6.6 Billion at June 30, 2022.
Executed Agreements which could provide approximately $1.5 Billion of Capital

 

Coral Gables, Florida, – August 11, 2022 – MSP Recovery, Inc. (NASDAQ: MSPR)("MSPR," "MSP Recovery," or the "Company"), a Medicare, Medicaid, commercial, and secondary payer reimbursement recovery and technology leader, today announced financial results for the second quarter ended June 30, 2022.

MSPR has seen substantial growth of assets from $104 million at December 31, 2021 to $6.6 billion at June 30, 2022. The company’s significant asset growth paves the way for future revenue generation and reflects increased demand from health plans, providers, and self-insured entities for MSPR’s services, expertise, and portfolio of revenue streams. With 27% of the U.S. automobile insurance market in data matching or settlement discussions, new contracts, and the deployment of new strategic alliances and strategies, company leadership believes the company is primed for future success.

“We are off to a strong start in 2022,” said MSP Recovery Founder and CEO, John H. Ruiz. “Our continued asset growth sets us up for significant future revenue generation. I truly believe that nobody has a better combined understanding of (1) healthcare, (2) healthcare data, and (3) the law; enabling MSP to recover improperly paid claims while also deploying revolutionary technology that we believe will correct the major flaws in the U.S. healthcare system – making our business unique and difficult to replicate."

“We have already exceeded projections for many of the Company's key performance indicators following the business combination thanks to the strength of our expanding claims portfolio,” said MSP Recovery Co-Founder and CLO, Frank C. Quesada. “We believe we will continue to see increased recoveries as our litigation process continues against multiple parties. The recent completion of our business combination was an important milestone for our company. It further increases the market's awareness of MSP Recovery and provides additional resources to execute our growth strategy.”

 

 

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“Cash flows from operations is one of MSPR’s main priorities and we continue to be focused on closing out pending cases as well as starting a general business practice of billing claims at large scale," said Ruiz. "MSPR has established, through court decisions, the rights of Medicare Part C entities as well as downstream providers to collect from those parties that are primarily responsible. Those rights were solidified by two recent decisions rendered by the Eleventh Circuit Court of Appeals in MSP v. ACE and MSP v. Metropolitan. As per our press release on June 13, 2022, we have commenced billing over $1.5 billion to payers. Coupled with the agreements with Prudent and Virage where MSPR can monetize its claims, the claims billed for which MSPR has begun collecting, and ongoing settlement discussions, I believe MSPR has a clear line of approach to meet our recovery projections.1”
 

 

Second Quarter 2022 Financial Highlights

 

1 The guidance provided is an estimate based on management’s knowledge. The nature of the Company’s business and the timing and amount of recoveries, can, depending on various factors, be unpredictable and the Company cannot provide assurances in that regard.

 

2 Additional information regarding the non-GAAP financial measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading “Non-GAAP Financial Measures.” A reconciliation of GAAP to non-GAAP financial measures has also been provided in the financial tables included below.

 

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Second Quarter 2022 Key Metrics

Since announcing the business combination with Lionheart Acquisition Corporation II, our portfolio has continued to grow. Below is detail on the increase in our portfolio since the announcement:

Select Portfolio Metrics
As of	June 30				September 30				December 31				March 31				June 30
(in millions)	2021				2021				2021				2022				2022
Total Paid Amount	$	66,011			$	67,162			$	364,438			$	366,879			$	370,154
Paid Value of Potentially Recoverable Claims (PVPRC)		14,340				15,248				86,629				87,284				88,305
Billed Value of Potentially Recoverable Claims (BVPRC)		53,710				55,366				363,231				367,836				371,321

 

As of June 30, 2022, MSPR has the following developments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio Growth:

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MSPR seeks assignment of recovery rights from secondary payers by acquiring the recovery rights to claims from secondary payers via Claims Cost Recovery Agreements (“CCRA”). Prior to executing a CCRA, the Company utilizes its proprietary internal data analytics platform to review the set of claims and identify claims with probable recovery paths. MSPR’s assets are these irrevocable assignments of health claims recovery rights that are automatic, all-encompassing and superior to other interests supported by Federal and State laws and regulations. The table below outlines the Company's growth in these assignments:

 

	MSP Recovery CCRA and Claims Growth by Year
	Year of CCRA			Claims Count				PVPRC				BVPRC				Total Paid Amount				Total Billed Amount
				(thousands)				(millions)				(millions)				(millions)				(millions)
	2014				9,400			$	668			$	3,286			$	3,077			$	13,187
	2015				8,390				819				3,207				3,589				13,279
	2016				20,186				3,305				18,233				14,261				75,623
	2017				65,704				5,824				14,108				19,775				53,527
	2018				23,742				3,407				10,831				17,920				62,483
	2019				29,094				2,645				10,281				15,515				59,155
	2020				171				19				128				68				429
	2021				490,269				71,617				311,248				295,949				1,275,489
	2022				-				-				-				-				-
	Total				646,956			$	88,305			$	371,321			$	370,154			$	1,553,172

 

Demand Letters:

MSPR recently announced a strategy whereby the Company is sending out individual demand letters on identified recoverable claims to responsible payers for prompt payment. We expect this strategy to result in more predictable and visible revenues. The table below outlines specific dollar amounts identified by the Company, broken down by litigation and demand letter type, that it plans to pursue against different responsible parties:

 

Recoveries Being Sought by Category
($'s in millions)		Identified Incidents				Total Claims				Paid Amounts				Billed Amounts Sought
Accident Related:
Data Matching(1)			334,622				58,605,326			$	4,472.50			$	17,821.70
Demand Letter(2)
1st Party Demands			11,807				1,328,278				117.60				818.30
3rd Party Demands			16,212				2,433,565				227.30				1,631.20
Case and Lien Recoveries			2,068				135,702				17.10				69.20
Fraud & Misconduct Cases:
Private Lien Resolution Programs(3)	342						33,244				4.40				23.00
Big Pharma/Product Liability(2)			1,683,811				56,635,380				5,274.70				17,032.10
Group Health Plan Recovery			15,792				21,589			N/A					13.00

 

Financial Outlook

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MSP Recovery is providing guidance for its full year 2022 as follows:

Additional information regarding the non-GAAP financial measures discussed in this release, including an explanation of these measures and how each is calculated, is included below under the heading “Non-GAAP Financial Measures.” A reconciliation of GAAP to non-GAAP financial measures has also been provided in the financial tables included below.

 

2 Total Gross Recoveries is the cash received or to be received by MSPR for recoveries that may be through consolidated or non-consolidated entities.

 

Quarterly Conference Call

MSP Recovery will host a conference call today at 8:30 a.m. Eastern Time to review the Company’s financial results for the second quarter ended June 30, 2022. To access this call, dial (866) 652-5200 for the U.S. or Canada, or (412) 317-6060 for callers outside the U.S. or Canada. A live webcast of the conference call will be accessible from the Investors section of MSP Recovery’s website at https://www.msprecovery.com/, and a recording will be archived and accessible at https://investors.msprecovery.com/. An audio replay of this conference call will also be available through November 11, 2022, by dialing (877) 344-7529 for the U.S. or Canada, or (412) 317-0088 for callers outside the U.S. or Canada, and entering 5611243.

About MSP Recovery

Founded in 2014, MSP Recovery has become a Medicare, Medicaid, commercial, and secondary payer reimbursement recovery leader, disrupting the antiquated healthcare reimbursement system with data-driven solutions to secure recoveries against responsible parties. MSP Recovery provides the healthcare industry with comprehensive compliance solutions, while innovating technologies to help save lives. For more information, visit: www.msprecovery.com.

 

 

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Forward Looking Statements



This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as "anticipate," "believe," "expect," "intend," "plan" and "will" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts, including for example guidance for 2022 portfolio recovery and total gross recoverables. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As a result, these statements are not guarantees of future performance or results and actual events may differ materially from those expressed in or suggested by the forward-looking statements. Any forward-looking statement made by MSP Recovery herein speaks only as of the date made. New risks and uncertainties come up from time to time, and it is impossible for MSPR to predict or identify all such events or how they may affect it. MSPR has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws. Factors that could cause these differences include, but are not limited to, MSPR’s ability to capitalize on its assignment agreements and recover monies that were paid by the assignors; litigation results; the validity of the assignments of claims to MSPR; the ability to successfully expand the scope of MSPR’s claims or obtain new data and claims from MSPR’s existing assignor base or otherwise; MSPR’s ability to innovate and develop new solutions, and whether those solutions will be adopted by MSPR’s existing and potential assignors; negative publicity concerning healthcare data analytics and payment accuracy; and those other factors included in MSPR’s S-1 Registration Statement dated July 7, 2022, Quarterly Reports on Form 10-Q and other reports filed by it with the SEC. These statements constitute the Company's cautionary statements under the Private Securities Litigation Reform Act of 1995.

 

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MSP RECOVERY, INC. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 

		June 30,				December 31,
(In thousands except per share amounts)		2022				2021
ASSETS
Current assets:
Cash and cash equivalents		$	25,045			$	1,664
Restricted cash			11,420				-
Accounts receivable			901				-
Affiliate receivable			2,111				4,070
Indemnification asset			719,413				-
Prepaid expenses and other current assets			36,890				13,304
Total current assets			795,780				19,038
Property, plant and equipment, net			950				750
Deferred tax asset			857				-
Intangible assets, net			2,095,735				84,218
Investment in rights to claim recovery cash flows			3,673,610				-
Total assets		$	6,566,932			$	104,006
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	29,575			$	4,609
Affiliate payable			20,202				45,252
Commission payable			476				465
Deferred service fee income			249				249
Derivative Liability			9,003				-
Warrant Liability			9,708				-
Guaranty obligation			719,413
Other current liabilities			11,057				3,489
Total current liabilities			799,683				54,064
Claims financing obligation & notes payable			111,395				106,805
Loan from related parties			125,759				-
Interest payable			111,324				94,545
Total liabilities		$	1,148,161			$	255,414
Commitments and contingencies (Note 12)
Class A common stock subject to possible redemption, 1,129,589 shares at redemption value as of June 30, 2022.			2,417				-
Stockholders' Equity (Deficit):
Class A common stock, $.0001 par value; 5,500,000,000 shares authorized; 66,051,029 issued and outstanding as of June 30, 2022		$	7			$	-
Class B common stock, $0.0001 par value; 0 and 10,000,000 shares authorized; 0 and 5,750,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021			-				-
Class V common stock, $.0001 par value; 3,250,000,000 shares authorized; 3,154,473,292 issued and outstanding as of June 30, 2022			315				-
Additional paid-in capital			187,269				-
Members' equity			-				(155,756	)
Accumulated deficit			(23,074	)			-
Total Stockholders' Equity		$	164,517			$	(155,756	)
Non-controlling interest			5,251,837				4,348
Total equity		$	5,416,354			$	(151,408	)
Total liabilities and equity		$	6,566,932			$	104,006

 

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MSP RECOVERY, INC. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

		For the three months ended June 30,								For the six months ended June 30,
(In thousands except per share amounts)		2022				2021				2022				2021
Claims recovery income		$	1,319			$	—			$	1,428			$	15
Claims recovery service income			3,971				3,360				12,047				6,774
Total Claims Recovery		$	5,290			$	3,360			$	13,475			$	6,789
Operating expenses
Cost of claim recoveries			694				-				701				8
Claims amortization expense			23,818				36				26,535				67
General and administrative			5,982				2,723				10,428				5,336
Professional fees			3,118				1,970				5,056				3,067
Professional fees - legal			23,765				8				26,237				30
Depreciation and amortization			72				135				151				167
Total operating expenses			57,449				4,872				69,108				8,675
Operating Loss		$	(52,159	)		$	(1,512	)		$	(55,633	)		$	(1,886	)
Interest expense			(10,977	)			(6,667	)			(21,392	)			(12,589	)
Other (expense) income, net			39				899				37				1,323
Change in fair value of warrant and derivative liabilities			(14,353	)			-				(14,353	)			-
Net loss before provision for income taxes		$	(77,450	)		$	(7,280	)		$	(91,341	)		$	(13,152	)
Provision for income tax benefit (expense)			326				-				326				-
Net loss		$	(77,124	)		$	(7,280	)		$	(91,015	)		$	(13,152	)
Less: Net (income) loss attributable to non-controlling members			75,836				-				89,727				-
Net loss attributable to controlling members		$	(1,288	)		$	(7,280	)		$	(1,288	)		$	(13,152	)
Basic and diluted weighted average shares outstanding, Class A Common Stock			13,607,255			N/A					13,607,255			N/A
Basic and diluted net income per share, Class A Common Stock		$	(0.09	)		N/A				$	(0.09	)		N/A

 

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Non-GAAP Financial Measures

MSP RECOVERY, INC. and Subsidiaries

Non-GAAP Reconciliation

(Unaudited)

 

	Three months ended
(In thousands)	June 30, 2022
GAAP Operating Loss		(52,159	)
Share based compensation		20,055
Claims amortization expense		23,818
Operating Loss excluding non-cash or one time items	$	(8,286	)
GAAP Net Loss		(77,124	)
Share based compensation		20,055
Claims amortization expense		23,818
Paid-in-kind Interest		10,977
Change in fair value of warrant and derivative liabilities		14,353
Net Loss excluding non-cash or one time items	$	(7,921	)

 

In addition to the financial measures prepared in accordance with GAAP, this press release also contains Non-GAAP financial measures. We consider "Net loss excluding non-cash and one-time expenses" and "Operating loss excluding non-cash or one-time items" as non-GAAP financial measures and important indicators of performance and useful metrics for management and investors to evaluate our business's ongoing operating performance on a consistent basis across reporting periods. Net loss excluding non-cash and one-time expenses represents Net loss adjusted for certain non-cash and non-recurring expenses, and Operating loss excluding non-cash or one-time items represents Operating loss adjusted for certain non-cash and non-recurring expenses. These measures provide useful information to investors, and a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these Non-GAAP measures will be included in Management's Discussion and Analysis in the Form 10-Q.

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