MARPAI REPORTS FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS
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Insights
The recent financial results of Marpai, Inc. reflect a notable year-over-year improvement in both quarterly and annual figures. From a financial analysis perspective, the 14% increase in net revenues and the 6.5% increase in gross profit for Q4 2023 indicate a positive trajectory in the company's earnings capability. However, the company still reports an operating loss, which, despite a 42.3% improvement, suggests ongoing challenges in achieving profitability.
Investors may find the 52.6% increase in annual net revenues and 79.2% increase in annual gross profit compelling, as these metrics often serve as indicators of a company's growth and efficiency in generating income relative to costs. The reported increase in operating expenses by 19.7% year over year could raise concerns about the company's cost management strategies. However, the reclassification of goodwill impairment and gain on sale of a non-core business as contributing factors offers context to these figures.
The improvement in basic and diluted earnings per share (EPS) suggests a reduced loss per share, which may be viewed favorably by shareholders. However, the overall net loss increase of 8.6% year over year warrants scrutiny. While the EPS improvement is a positive signal, the absolute figures indicate that the company is still in a loss-making position.
The Third-Party Administration (TPA) sector is a competitive space within the healthcare industry and Marpai's focus on affordable, intelligent healthcare for self-funded employer health plans is a strategic move to capture market share in the $22 billion TPA market. The acquisition of Maestro Health is a strategic initiative that appears to be driving financial improvement, as highlighted by the CEO.
From an industry standpoint, the ability to reduce costs for clients and improve the quality of care is a strong value proposition in the TPA market. Marpai's emphasis on operational and financial improvements could resonate well with potential clients looking for cost-effective healthcare solutions. The company's performance should be continuously monitored to assess whether these improvements translate into sustained profitability and market expansion.
Long-term, the integration of the Maestro Health acquisition and the effectiveness of corrective actions taken in Q4 will be important to Marpai's ability to compete effectively. The healthcare industry is highly regulated and subject to changes in policy, which could impact Marpai's operations and financial performance. Investors should consider these factors when evaluating the company's future prospects.
While Marpai's financial results show promise in revenue growth, the market will likely focus on the company's ability to turn around its net loss situation. The operational efficiencies and strategic acquisitions are positive steps, but the market will look for evidence of sustainable profitability. The goodwill impairment reclassification indicates a non-cash accounting adjustment, which, while significant for financial reporting, may not directly affect the company's cash flow position.
The TPA market's demand is influenced by trends in employer-funded healthcare plans, which are subject to economic cycles and policy changes. Marpai's performance in the upcoming quarters will be critical in assessing whether the company can leverage its technology and service offerings to gain a competitive edge and achieve a positive net income.
Overall, the company's stock performance will likely be influenced by its ability to demonstrate continued revenue growth coupled with cost containment. The investor community will be keen to analyze the upcoming webcast for insights into management's strategy for the next fiscal year and beyond.
Full Year Benefit of Maestro Acquisition and Q4 Corrective Actions Driving Financial Improvement
Q4 2023 Financial Highlights:
- Net revenues were
$8.7 million $1.1 million 14% higher year over year, for the three months ended December 31, 2022. - Gross profit was
$3.0 million $0.2 million 6.5% higher year over year for the three months ended December 31, 2022. - Operating expenses were
$8.2 million $3.6 million 30.6% lower year over year for the three months ended December 31, 2022. - Operating loss was
$5.2 million $3.8 million 42.3% lower year over year for the three months ended December 31, 2022. - Net loss was
$5.0 million $3.5 million 41.1% lower year over year for the three months ended December 31, 2022. - Basic and diluted earnings per share were (
$0.65 $1.00
Full Year 2023 Highlights:
- Net revenues were
$37.2 million $12.8 million 52.6% higher year over year compared to the year ended December 31, 2022. - Gross profit was
$12.9 million $5.7 million 79.2% higher year over year compared to the year ended December 31, 2022. - Operating expenses were
$40.9 million $6.7 million 19.7% higher year over year compared to the year ended December 31, 2022. The$1.3 million $3.0 million $1.7 million - Operating loss was
$28.0 million $1.0 million 3.8% higher year over year compared to the year ended December 31, 2022. - Net loss was
$28.8 million $2.3 million 8.6% higher, compared to the year ended December 31, 2022. - Basic and diluted earnings per share were (
$4.14 $1.09
"The Company delivered on several actions identified when the new executive team joined in early November 2023," said Damien Lamendola, Chief Executive Officer of Marpai. "We are starting to gain the benefits of the Maestro Health acquisition. We remain committed to our overall vision that Marpai Saves, through operational and financial improvements, reduces costs for our clients and improves the quality of care for our members."
Webcast and Conference Call Information
Marpai expects to host a conference call and webcast on Wednesday, March 27, 2024, at 8:30 a.m. ET to answer questions about the Company's operational and financial highlights for its fourth quarter and year ended December 31, 2023.
Investors interested in listening to the conference call may do so by dialing (800)-836-8184 for domestic callers or +1-646-357-8785 for international callers, or via webcast: https://app.webinar.net/8OgAYdJmbd9
About Marpai, Inc.
Marpai, Inc. (Nasdaq: MRAI) is a leading, national TPA company bringing value-oriented health plan services to employers that directly pay for employee health benefits. Primarily competing in the
Forward-Looking Statement Disclaimer
This press release contains forward-looking statements, as that term is defined in the Private Litigation Reform Act of 1995, that involve significant risks and uncertainties. Forward-looking statements can be identified through the use of words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "guidance," "may," "can," "could", "will", "potential", "should," "goal" and variations of these words or similar expressions. For example, the Company is using forward looking statements when it discusses its financial results and that it remains committed to its overall vision that Marpai Saves, through operational and financial improvements, reduces cost for its clients and improving the quality of care for its members. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect Marpai's current expectations and speak only as of the date of this release. Actual results may differ materially from Marpai's current expectations depending upon a number of factors. These factors include, among others, adverse changes in general economic and market conditions, competitive factors including but not limited to pricing pressures and new product introductions, uncertainty of customer acceptance of new product offerings and market changes, risks associated with managing the growth of the business. Except as required by law, Marpai does not undertake any responsibility to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.
More detailed information about Marpai and the risk factors that may affect the realization of forward-looking statements is set forth in Marpai's filings with the Securities and Exchange Commission. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov.
MARPAI, INC. AND SUBSIDIARIES | ||||
December 31, 2023 | December 31, 2022 | |||
ASSETS: | ||||
Current assets: | ||||
Cash and cash equivalents | $ 1,147 | $ 13,765 | ||
Restricted cash | 12,345 | 9,353 | ||
Accounts receivable, net of allowance for credit losses of | 1,125 | 1,438 | ||
Unbilled receivable | 768 | 350 | ||
Due from buyer for sale of business unit | 800 | |||
Prepaid expenses and other current assets | 892 | 1,602 | ||
Other receivables | 8 | 31 | ||
Total current assets | 17,085 | 26,538 | ||
Property and equipment, net | 611 | 1,506 | ||
Capitalized software, net | 2,128 | 4,589 | ||
Operating lease right-of-use assets | 2,373 | 3,842 | ||
Goodwill | 3,017 | 5,837 | ||
Intangible assets, net | 5,177 | 6,323 | ||
Security deposits | 1,267 | 1,293 | ||
Other long-term asset | 21 | 22 | ||
Total assets | $ 31,679 | $ 49,950 | ||
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 4,649 | $ 1,458 | ||
Accrued expenses | 2,816 | 5,275 | ||
Accrued fiduciary obligations | 11,573 | 9,024 | ||
Deferred revenue | 661 | 288 | ||
Current portion of operating lease liabilities | 512 | 1,311 | ||
Other short-term liabilities | 632 | — | ||
Due to related party | — | 3 | ||
Total current liabilities | 20,843 | 17,360 | ||
Other long-term liabilities | 19,401 | 20,204 | ||
Operating lease liabilities, net of current portion | 3,684 | 4,772 | ||
Deferred tax liabilities | 1,189 | 1,480 | ||
Total liabilities | 45,117 | 43,815 | ||
COMMITMENTS AND CONTINGENCIES | ||||
STOCKHOLDERS' (DEFICIT) EQUITY | ||||
Common stock, | 1 | 1 | ||
Additional paid-in capital | 63,307 | 54,128 | ||
Accumulated deficit | (76,746) | (47,994) | ||
Total stockholders' (deficit) equity | (13,438) | 6,134 | ||
Total liabilities and stockholders' (deficit) equity | $ 31,679 | $ 49,950 | ||
MARPAI, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(in thousands) | ||||
Twelve Months Ended | ||||
December 31, 2023 | December 31, 2022 | |||
Revenue | $ 37,155 | $ 24,342 | ||
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization | 24,239 | 17,136 | ||
General and administrative | 19,177 | 12,319 | ||
Sales and marketing | 6,597 | 6,939 | ||
Information technology | 5,834 | 6,373 | ||
Research and development | 1,312 | 3,708 | ||
Depreciation and amortization | 3,897 | 3,538 | ||
Impairment of goodwill | 3,018 | - | ||
Facilities | 2,472 | 1,013 | ||
Loss on disposal of assets | 335 | 273 | ||
Gain on sale of business unit | (1,749) | - | ||
Total costs and expenses | 65,132 | 51,299 | ||
Operating loss | (27,977) | (26,957) | ||
Other expenses | ||||
Other income | 489 | 235 | ||
Interest expense, net | (1,527) | (267) | ||
Foreign exchange loss | (27) | — | ||
Loss before provision for income taxes | (29,042) | (26,989) | ||
Income tax benefit | (290) | (521) | ||
Net loss | $ (28,752) | $ (26,468) | ||
Net loss per share, basic & fully diluted | $ (4.14) | $ (5.23) | ||
Weighted average common shares outstanding, basic and | 6,951,669 | 5,059,959 | ||
MARPAI, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(in thousands) | ||||
Three Months Ended | ||||
December 31, 2023 | December 31, 2022 | |||
Revenue | $ 8,707 | $ 7,628 | ||
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization | 5,709 | 4,813 | ||
General and administrative | 3,239 | 4,379 | ||
Sales and marketing | 1,103 | 2,109 | ||
Information technology | 1,059 | 2,510 | ||
Research and development | 21 | 1,024 | ||
Depreciation and amortization | 923 | 1,034 | ||
Impairment of goodwill | 3,018 | — | ||
Facilities | 554 | 426 | ||
Loss on disposal of assets | (15) | 213 | ||
Gain on sale of business unit | (1,749) | - | ||
Total costs and expenses | 13,862 | 16,508 | ||
Operating loss | (5,155) | (8,880) | ||
Other expenses | ||||
Other income | 258 | 107 | ||
Interest expense, net | (425) | (226) | ||
Foreign exchange loss | 6 | 5 | ||
Loss before provision for income taxes | (5,316) | (8,994) | ||
Income tax benefit | (290) | (521) | ||
Net loss | $ (5,026) | $ (8,473) | ||
Net loss per share, basic & fully diluted | $ 0.65 | $ 1.63 | ||
Weighted average common shares outstanding, basic and | 7,738,879 | 5,186,573 | ||
MARPAI, INC. AND SUBSIDIARIES | ||||
Twelve Months Ended | ||||
December 31, 2023 | December 31, 2022 | |||
Cash flows from operating activities: | ||||
Net loss | $ (28,752) | $ (26,468) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 3,897 | 3,538 | ||
Loss on disposal of assets | 335 | 273 | ||
Share-based compensation | 2,099 | 3,105 | ||
Warrant expense | 242 | — | ||
Shares issued to vendors in exchange for services | 79 | 39 | ||
Amortization of right-of-use asset | 1,502 | 599 | ||
Goodwill impairment | 3,018 | — | ||
Gain on sale of business unit | (1,749) | — | ||
Non-cash interest | 1,527 | 259 | ||
Deferred taxes | (290) | (521) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable and unbilled receivable | (105) | (597) | ||
Prepaid expense and other assets | 710 | 893 | ||
Other receivables | 22 | 60 | ||
Security deposit | 26 | — | ||
Accounts payable | 3,191 | 181 | ||
Accrued expenses | (2,496) | (2,052) | ||
Accrued fiduciary obligations | 2,548 | (12,823) | ||
Operating lease liabilities | (1,887) | (661) | ||
Due To related party | (3) | (3) | ||
Other liabilities | 337 | (1,068) | ||
Other asset | — | 7 | ||
Net cash used in operating activities | (15,749) | (35,239) | ||
Cash flows from investing activities: | ||||
Cash and restricted cash acquired as part of acquisitions | — | 33,388 | ||
Capitalization of software development costs | — | (603) | ||
Proceeds from sale of business unit | 1,000 | — | ||
Disposal of property and equipment | 27 | — | ||
Purchase of property and equipment | — | (363) | ||
Net cash provided by (used in) investing activities | 1,027 | 32,422 | ||
Cash flows from financing activities: | ||||
Proceeds from issuance of common stock in a public offering, net | 6,432 | — | ||
Payments to seller for acquisition | (1,663) | — | ||
Proceeds from issuance of warrants | 32 | — | ||
Proceeds from issuance of common stock in a private offering, net | 295 | — | ||
Proceeds from stock option exercises | — | — | ||
Net cash provided by financing activities | 5,096 | — | ||
Net decrease in cash, cash equivalents and restricted cash | (9,626) | (2,817) | ||
Cash, cash equivalents and restricted cash at beginning of period | 23,117 | 25,934 | ||
Cash, cash equivalents and restricted cash at end of period | $ 13,491 | $ 23,117 | ||
Reconciliation of cash, cash equivalents, and restricted cash reported in | ||||
Cash and cash equivalents | $ 1,147 | $ 13,764 | ||
Restricted cash | 12,344 | 9,353 | ||
Total cash, cash equivalents and restricted cash shown in the condensed | $ 13,491 | $ 23,117 | ||
Supplemental disclosure of non-cash activity | ||||
Measurement period adjustment to Goodwill | $ 198 | $ — | ||
Long term liability incurred in connection with the acquisition of Maestro Health, LLC | $ — | $ 19,900 | ||
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SOURCE Marpai
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