Claims Portfolio and Recovery - The current Claims portfolio includes approximately $1,597 billion in Billed Amount and $380 billion in Paid Amount, with about $91 billion in Paid Value of Potentially Recoverable Claims as of March 31, 2023[159]. - The company is entitled to 50% of recovery rights under Claims Cost Recovery Agreements (CCRA), and in some cases, has purchased rights to 100% of the recovery[159]. - The company plans to transition to a "Chase to Pay" model, which aims to identify the correct primary insurer at the point of care, potentially increasing recovery margins and reducing legal costs[164][165]. - The company has yet to generate substantial revenue from the Recovery Model, primarily relying on performance-based or fee-for-service arrangements[163]. - The company provides Claims recovery services to assist other entities in identifying recoverable Claims, charging fees based on budgeted expenses[167]. - The company has established a basis for future recoveries through statutory law and case law, enhancing its position in the market[157]. - The Company is entitled to pursue double damages and statutory interest under the Medicare Secondary Payer Act, which may enhance recovery amounts[194]. - As of March 31, 2023, approximately 86% of claims identified as potentially recoverable are already in the recovery process[195]. - Claims recovery income increased by $3.4 million to $3.5 million for the three months ended March 31, 2023, driven by increased settlements during the period[230]. - Claims recovery service income decreased by $7.6 million to $498,000, primarily due to a decrease in third-party service fees, with no significant recovery service income anticipated for 2023[231]. Financial Performance and Expenses - Total Paid Amount for the three months ended March 31, 2023, is $379.9 million, an increase from $374.8 million in the previous quarter[203]. - Paid Value of Potentially Recoverable Claims (PVPRC) for the same period is $91.3 million, up from $89.6 million in the prior quarter[203]. - Billed Value of Potentially Recoverable Claims (BVPRC) reached $385.6 million, compared to $377.8 million in the previous quarter[203]. - The Recovery Multiple for the three months ended March 31, 2023, is 1.2x, with total recoveries of $3.8 million[203]. - The Penetration Status of Portfolio remains at 85.8% for the three months ended March 31, 2023, unchanged from the previous quarter[203]. - Total operating expenses surged by 1,141% to $144.6 million, largely due to a $110.8 million increase in claims amortization expense related to acquisitions[230]. - Interest expense rose by $31.6 million to $42.4 million, driven by increased interest on Claims Financing Obligations and related party loans[238]. - The Company incurred a net loss of $174.1 million for the three months ended March 31, 2023, compared to a net loss of $13.9 million for the same period in 2022[230]. - Adjusted net loss for the three months ended March 31, 2023, was $7.985 million, reflecting adjustments for non-cash and non-recurring expenses[241]. - The Company has an accumulated deficit of $34.1 million as of March 31, 2023, with approximately $22.1 million used in operations during the quarter[243]. Compliance and Regulatory Issues - On April 24, 2023, the company was notified of non-compliance with Nasdaq Listing Rule 5250(c)(1) due to late filing of its 2022 Form 10-K and a closing bid price below $1.00 per share for 30 consecutive business days[170]. - The company is currently evaluating actions to regain compliance with Nasdaq's Bid Price Requirement, including a potential reverse stock split[170]. Financing and Capital Structure - The Working Capital Credit Facility provides for up to $80 million, with an initial $20.5 million drawn, and an increase in Term Loan B commitment from $18 million to $27.5 million, funded at $2.25 million per month until December 2023[175][178]. - The Company issued 199,000,001 shares of Class A common stock to Cano Health, LLC as payment for $61.7 million in deferred compensation[186]. - The amended Nomura promissory note increased the principal amount to approximately $26.3 million and extended the maturity date to September 30, 2024, with an interest rate of 16% per annum[185]. - The Company has established a reserve for a $5.0 million receivable from Cano due to concerns about Cano's ability to continue as a going concern[187]. - The Working Capital Credit Facility has a stated maturity date of March 31, 2026, with the possibility of a one-year extension at HPH's discretion[175]. - The Company has the right to sell up to $1 billion in Class A common stock shares to Yorkville under the Yorkville Purchase Agreement, which will not be operational until a Registration Statement is effective[253]. - The Company has $825.0 million of guaranty obligations, with a payment date extended to September 30, 2024, and does not currently have available liquidity to satisfy such obligations[267]. - Minimum required payments on agreements as of March 31, 2023, total $631.0 million, with maturities ranging from the date sufficient claims recoveries are received to cover the required return or by 2031[268]. Market and Growth Potential - The total addressable market for the company is estimated to be over $150 billion annually, primarily focused on Medicare and Medicaid segments[205]. - Approximately 93% of expected recoveries arise from claims under the Medicare Secondary Payer Act, indicating a significant dependency on this legislation[208]. - The company anticipates that health spending will grow at an average rate of 5.4% annually between 2019 and 2028, impacting the number of claims available[206]. - A ruling by the United States Court of Appeals may potentially reduce PVPRC by approximately $8.9 billion, affecting future recoveries[204]. - The Company plans to implement new strategies to secure new Assignors, having grown from 32 Assignors in 2015 to over 160 to date[192].
MSP RECOVERY(LIFWZ) - 2023 Q1 - Quarterly Report