Recovery Rights and Claims - The company is entitled to recovery rights associated with approximately $1,574 billion in Billed Amount and approximately $375 billion in Paid Amount, with about $89.6 billion in Paid Value of Potentially Recoverable Claims as of December 31, 2022[337]. - The company has identified approximately $1,574 billion in Billed Amount, with $375 billion in Paid Amount and $89.6 billion in Paid Value of Potentially Recoverable Claims as of December 31, 2022[362]. - The Billed Value of Potentially Recoverable Claims reached $377.8 billion as of December 31, 2022[375]. - Approximately 86% of the identified potentially recoverable Claims are already in the recovery process as of December 31, 2022[367]. - The company estimates that at least 10% of Medicare's annual expenditures were improperly paid by private Medicare plans, indicating potential recovery opportunities[377]. Financial Performance - Claims recovery income increased by $4.8 million to $4.9 million for the year ended December 31, 2022, driven by an increase in settlements during the period[399]. - Claims recovery service income rose by $4.0 million, or 28%, to $18.5 million for the year ended December 31, 2022, primarily due to a $5.0 million servicing contract completed during the year[400]. - Total Claims Recovery increased by $8.8 million, or 60%, to $23.4 million for the year ended December 31, 2022[399]. - Cost of Claims recoveries surged by $2.0 million to $2.1 million for the year ended December 31, 2022, primarily due to payments to assignors and the Law Firm[401]. - Claims amortization expense increased by $266.8 million to $266.9 million for the year ended December 31, 2022, driven by increased amortization from the acquisition of CCRAs[402]. - General and administrative expenses rose by $11.3 million, or 90%, to $24.0 million for the year ended December 31, 2022, primarily due to increased wages and advertising expenses[403]. - Professional fees increased by $10.0 million, or 118%, to $18.5 million for the year ended December 31, 2022, mainly due to higher accounting and consulting fees[404]. - Interest expense increased by $94.0 million, or 347%, to $121.0 million for the year ended December 31, 2022, primarily due to increased obligations and interest on Claims Financing Obligations[406]. - Other income increased by $61.9 million to $63.1 million for the year ended December 31, 2022, driven by a gain from the settlement of the Brickell Key Investment debt[407]. Cash Flow and Liquidity - The company had $3.7 million in cash and cash equivalents and loan payables of $198.5 million as of December 31, 2022[410]. - As of December 31, 2022, the Company had unrestricted cash and cash equivalents totaling $3.7 million and an accumulated deficit of $29.2 million[411]. - For the year ended December 31, 2022, the Company used approximately $80.6 million of cash in operations, a significant increase from a net cash provided of $2.2 million in 2021[431]. - Net cash provided by financing activities increased to $99.7 million for the year ended December 31, 2022, compared to a net cash used of $10.5 million in 2021[433]. - The Company has incurred recurring losses and negative cash flows since inception, with a principal liquidity need for capital expenditures and working capital[411]. Strategic Initiatives - The company plans to pivot to the "Chase to Pay" model, which aims to identify the proper primary insurer at the point of care, potentially increasing recovery margins by reducing legal costs[343][344]. - The company plans to implement new strategies to secure new Assignors, including educational platforms and strategic partnerships[364]. - The company launched LifeWallet in January 2022, a platform designed to organize users' medical records and improve patient care through data analytics[345]. - The company has grown its Assignor base from 32 in 2015 to over 160 to date, indicating a strategy for market expansion[364]. Debt and Obligations - The Working Capital Credit Facility includes an $80 million term loan, with a maturity date of March 31, 2026, and interest accruing at a rate of 10% per annum[351][352]. - The company has payment obligations to Virage amounting to $825 million as of March 31, 2023, with a payment date extended to September 30, 2024[356]. - The Company entered into a Working Capital Credit Facility on March 29, 2023, providing for up to $80 million, with an initial $10 million drawn on March 6, 2023[413]. - The Company has the right to sell up to $1 billion in Class A common stock shares under the Yorkville Purchase Agreement, subject to certain conditions[419]. - The minimum required payments on agreements as of December 31, 2022, totaled $354.9 million, with some commitments maturing by 2031[436]. Accounting and Reporting - The company recognizes claims recovery income on a gross basis, typically upon reaching a binding settlement or resolution of legal proceedings[439]. - Claims recovery service income is recognized over time based on a time-based progress measure, with amounts owed recognized as accounts receivable[440]. - There were no impairment indicators or charges for long-lived assets or finite-lived intangibles in the years ended December 31, 2022, and 2021[441]. - The company evaluates long-lived assets for impairment whenever events indicate that the carrying value may not be recoverable[441]. - The company’s accounting policies involve significant judgment and complexity, impacting the understanding of its financial condition[438].
MSP RECOVERY(LIFWZ) - 2022 Q4 - Annual Report