MSP Recovery Announces Licensing Agreement With a New Client for a $7.5 Million Fee and Prospective Annual Fees of $1 Million, as Well as an Amendment to an Existing Agreement and a New Warrant Agreement With Brickell Key Investments LP That Exchanges Debt for Equity, Resulting in Debt Forgiveness of $63 Million

Rhea-AI Summary

MSP Recovery, Inc. (NASDAQ: MSPR) announced a licensing agreement generating an initial $7.5 million fee and annual fees of $1 million from a new client utilizing its LifeWallet platform. The platform integrates health records, biometrics, and blockchain technology. Additionally, MSPR amended a contract with Brickell Key Investments, reducing debt by $63 million and halting $40 million in annual interest accrual. This move signifies a strategic shift towards enhancing liquidity and supporting ongoing technology deployment in healthcare.

Positive

• Secured a $7.5 million licensing agreement and $1 million annual fees.
• Reduced debt obligations by $63 million, improving financial stability.
• Discontinued $40 million annual interest accrual, enhancing cash flow.

Negative

• None.

CORAL GABLES, Fla., Oct. 13, 2022 (GLOBE NEWSWIRE) -- MSP Recovery, Inc. (NASDAQ: MSPR) (“MSPR”, “MSP Recovery” or the “Company”), a Medicare, Medicaid, commercial, and secondary payer reimbursement recovery and technology leader, today provided a business update.

• MSP Recovery, which powers LifeWallet, today announced that it has entered into a licensing agreement with a new client for a $7.5 million fee, as well as expected prospective fees of $1 million per year.
• The licensing agreement provides the Company’s client with a license to utilize its proprietary LifeWallet platform for integration of health records, biometrics, intelligent infrastructure, and blockchain technology, among other things.
• The Company also announced that it has amended an existing contract and entered into a new Warrant Agreement with Brickell Key Investments LP – an entity that first provided funding for the Company in 2015 – immediately reducing an existing debt obligation by $63 million, and discontinuing the accrual of approximately $40 million per year in interest.
  

MSP Recovery, which powers LifeWallet, announced today that it has entered into a licensing agreement with a new client for a $7.5 million one-time fee, as well as expected prospective fees of $1 million per year. The licensing agreement provides the Company’s client with a license to utilize its proprietary LifeWallet platform. LifeWallet launched its state-of-the-art technology in January 2022. LifeWallet provides real-time analytics at the point of care, helping identify the primary insurer, assisting providers in receiving reasonable and customary rates for accident-related treatment, shortening the company’s collection time frame, and increasing revenue visibility and predictability. The platform will also avoid the improper documenting of medical claims that leads to improper billing, thereby preventing fraud, waste, and abuse. The LifeWallet platform also provides an Application Programming Interface (“API”) that allows patients to gain immediate access to all of their medical records when seeking medical treatments.

The LifeWallet licensing agreement provides the Company’s client with various software capabilities, including but not limited to:

• a provider portal, which is a web-based dashboard that allows the client to manage their patient population;
• bi-directional integration into Electronic Health Records (“EHR”);
• universal patient intake forms to be received prior to appointments;
• biometric check-in capabilities, including a facial recognition check-in system and verification backed by government-issued Real ID codes (See prior, August 4, 2022 press release titled “MSP Recovery Announces LifeWallet Implementation Program at Cano Health Medical Centers”);
• enhanced scheduling capabilities;
• intelligent infrastructure, including on-site data and navigation, and complete Internet of Things (“IOT”) connectivity and asset tracking tools; and
• cutting-edge blockchain technology, which allows for the creation of an expansive ledger for all historical and real-time medical claims transactions in the MSP Recovery and LifeWallet ecosystems. (See prior, May 20, 2022 press release titled “Polygon Partners with Tokenology and MSP Recovery to Tokenize Healthcare Claims On-Chain”).
  

“We are pleased, but not surprised, that the healthcare industry has taken a substantial liking to LifeWallet and that our team’s hard work has started to generate fees from LifeWallet,” said MSP Recovery Founder and CEO, John H. Ruiz. “LifeWallet is revolutionary and one of its kind, the result of many minds coming together to provide cutting-edge technology that will save lives, reduce labor costs and increase revenues. It provides patients, providers, and payers with a very unique ecosystem that was carefully designed to effectively eliminate the majority of the flaws that currently exist as it relates to health data and payer systems, including the processing of registration forms, data intake, data processing, data normalization, and claims adjudication, in addition to the quality of a patient’s interaction with their provider. LifeWallet creates one unified ecosystem allowing us to achieve monetization from claims ingestion through adjudication. We are confident that, as we continue expanding, many of our more than 160 clients will want to implement these technologies in the future. And as LifeWallet expands its scope of services, the licensing fees allow users to gain access to the system, while yearly fees will also be generated for the continued use of the technology.”

MSP Recovery also announced today that it has entered into new agreements with one of its original sources of funding in 2015 that will immediately result in existing debt forgiveness of $63 million, and discontinue the accrual of approximately $40 million per year in interest.

Specifically, the Company announced that it has finalized an Amendment to the Claim Proceeds Investment Agreement (the “Amendment”) and a Warrant Agreement (the “Warrant Agreement”) with Brickell Key Investments LP (the “Holder”), pursuant to which the parties have agreed to amend the original Claims Proceeds Investment Agreement ("CPIA") and required payment terms.

Pursuant to the agreements, the Company has granted the Holder the right to purchase Class A common shares in the Company (the "Class A Shares") in accordance with the terms and conditions of the Agreement. The maximum amount of Class A Shares that the Holder may purchase from the Company is 66,666,666 (the “Amount”) for a purchase price equal to $6,666.67 ($0.0001 per Class A Share) (the “Exercise Price”), and is payable in cash. This Warrant (the “Warrant”) will expire at 5:00 p.m. (Eastern Time), on September 30, 2027, and may be exercised in whole or in part by Holder at any time prior to such date. The Holder can only sell a maximum of 15% per month of the Class A Shares obtained through the Warrant.

In exchange for the Company issuing the Warrant, the amounts owed to the Holder pursuant to CPIA are reduced from approximately $143 million to equal $80 million (the "Reduced Obligation"), and no further interest will accrue. The Holder has the right to receive the $80 million owed through (1) proceeds as outlined in the CPIA, (2) cash paid by the Company or (3) monetization of the Warrant (through the sale of the Warrant or sale of the underlying Class A Shares). If the Holder monetizes the Warrant, the amount owed will be reduced at a measure of $1.20 per Class A Share (5 day volume weighted average price as of September 30, 2022).

In connection with the Amendment and Warrant Agreement, the Holder also executed a Stock Pledge Agreement (the "Pledge Agreement") with MSP Founders, John H. Ruiz and Frank Quesada (the "Founders"), whereby Up-C Units were pledged as collateral to further secure the Reduced Obligation. The Pledge Agreement also provides the option to the Founders to repurchase the Warrant from the Holder on or before June 30, 2023 for $80 million, and the Founders and the Company have agreed that such option will only be exercised at the direction of, and will ultimately be repurchased by, the Company.

“Brickell Key Investments was our first investor that believed in our vision and in MSP Recovery,” said MSP Recovery Founder and CEO, John H. Ruiz. “I am honored and at the same time pleased that after 7 years of hard work we have proven ourselves to Brickell Key Investments to the point that they exchanged debt into an equity position. Brickell Key Investments is now an owner of MSP Recovery. At the same time, through negotiations, they determined that exchanging their debt for equity provided them with a better position for them as well as for MSP Recovery. In my opinion, this is a testament to a strong belief in our team."

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

Forward Looking Statement
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. 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 and actual events may differ materially from those expressed in or suggested by the forward-looking statements. Any forward-looking statement made by MSPR in this press release, its reports filed with the Securities and Exchange Commission (the "SEC") and other public statements made from time-to-time speak 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; MSPR's ability to continue to deliver its products and services, such as LifeWallet; litigation results; the validity of the assignments of claims to MSPR; the inability 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 failure to innovate and develop new solutions, or the failure of those solutions to be adopted by MSPR’s existing and potential assignors; negative publicity concerning healthcare data analytics and payment accuracy; the ability of LifeWallet powered by MSPR to implement its Health Safety Technology and school security technology, and those other factors included in MSPR’s Annual reports on Form 10-K, 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.

For Media:
ICR, Inc.
MSP@icrinc.com

For Investors:
ICR, Inc.
Marc Griffin
Marc.Griffin@icrinc.com

FAQ

What is the significance of the recent licensing agreement for MSPR?

The licensing agreement provides MSPR with an initial fee of $7.5 million and annual fees of $1 million, enhancing revenue from its LifeWallet platform.

How much debt did MSPR reduce with Brickell Key Investments?

MSPR reduced its debt by $63 million due to the amendments made with Brickell Key Investments.

What impact does discontinuing interest accrual have on MSPR?

Discontinuing the $40 million annual interest accrual significantly improves MSPR's cash flow and financial health.

What technologies does the LifeWallet platform integrate?

LifeWallet integrates health records, biometrics, intelligent infrastructure, and blockchain technology.

How does the LifeWallet platform benefit healthcare providers?

LifeWallet helps providers manage patient populations, integrates with Electronic Health Records, and streamlines claim processes, increasing revenue predictability.