Claims Recovery and Market Potential - The current claims portfolio includes approximately $1,546 billion in billed amounts and $368 billion in paid amounts, with $86 billion in paid value of potentially recoverable claims as of June 30, 2024[220]. - The total potentially serviceable market is estimated to exceed $150 billion annually, with Medicare expenditures around $944 billion and Medicaid expenditures approximately $805 billion in 2022[221]. - Approximately 95.6% of expected recoveries arise from claims under the Medicare Secondary Payer Act, indicating a significant dependency on this legislation for future revenue[223]. - The healthcare system incurs tens of billions of dollars annually in improper billing and lost recoveries due to the misidentification of responsible payers[215]. - The Centers for Medicare & Medicaid Services projects health spending to grow at an average rate of 5.4% annually from 2022 to 2031, impacting the number of claims available for recovery[222]. - The Company reached comprehensive settlements with 28 affiliated property and casualty insurers on March 1, 2024, and additional settlements on April 18, 2024, and July 16, 2024[238][239]. - As of June 30, 2024, the Company is entitled to pursue recovery rights associated with approximately $1,546 billion in Billed Amount and approximately $368 billion in Paid Amount, with $86.0 billion in Paid Value of Potentially Recoverable Claims[240]. - Approximately 86.8% of claims identified as potentially recoverable are already in the recovery process as of June 30, 2024[248]. Financial Performance - Claims recovery income decreased by $2.2 million to $0.3 million for the three months ended June 30, 2024, an 88% decline compared to the same period in the prior year[276]. - Total revenue for the three months ended June 30, 2024 was $337 thousand, down 87% from $2.54 million in the same period in 2023[276]. - Claims recovery income for the six months ended June 30, 2024 increased by $0.3 million to $6.3 million, a 4% increase compared to the same period in the prior year[287]. - Total revenue for the six months ended June 30, 2024 was $6.34 million, down 3% from $6.54 million in the same period in 2023[287]. - General and administrative expenses decreased by $1.5 million to $6.3 million for the three months ended June 30, 2024, a 19% reduction compared to the prior year[280]. - Professional fees decreased by $4.4 million to $8.8 million for the six months ended June 30, 2024, a 33% decline compared to the prior year[287]. - Net loss attributable to MSP Recovery, Inc. for the six months ended June 30, 2024 was $44.0 million, a 235% increase compared to the net loss of $13.1 million in the same period in 2023[287]. Expenses and Liabilities - Interest expense increased by $28.4 million to $102.0 million for the three months ended June 30, 2024, a 39% increase compared to the same period in 2023[283]. - Change in fair value of warrant and derivative liabilities increased by $72.4 million to $76.3 million for the six months ended June 30, 2024, a 1,857% increase compared to the same period in 2023[287]. - Claims amortization expense increased by $7.5 million to $242.0 million for the six months ended June 30, 2024, a 3% increase compared to the prior year[287]. - The present value of amounts owed under claims financing obligations and notes payable agreements was $605.3 million as of June 30, 2024, with a weighted average interest rate of 14.8%[352]. - The Company has $1.0 billion of guaranty obligations as of June 30, 2024, with maturity dates ranging from the date sufficient claims recoveries are received to cover required returns or by 2031[354]. Cash Flow and Liquidity - The Company had unrestricted cash totaling $7.1 million as of June 30, 2024, with an accumulated deficit of $129.6 million[300]. - The Company anticipates sources of liquidity to include the Working Capital Credit Facility and the Yorkville SEPA, with $10.5 million of available capacity under the Working Capital Credit Facility as of June 30, 2024[303]. - Net cash used in operating activities decreased by $13.4 million to $11.2 million for the six months ended June 30, 2024, compared to $24.6 million for the same period in 2023[349]. - Net cash provided by financing activities decreased to $7.0 million for the six months ended June 30, 2024, compared to $7.8 million for the same period in 2023[351]. Strategic Initiatives - The company utilizes proprietary algorithms and data analytics to identify waste, fraud, and abuse, enhancing recovery opportunities in the healthcare reimbursement system[216]. - The "Chase to Pay" model aims to prevent wrongful payments by identifying the correct primary insurer at the point of care, potentially improving recovery margins and reducing legal costs[231][232]. - The MSP Recovery Clearinghouse aggregates claims data to identify and resolve outstanding liens, addressing the issue of primary payers failing to report obligations[229]. - The Company has grown its Assignor base from 32 in 2015 to over 160 to date, indicating a strategy to expand its recovery efforts[242]. - The Company plans to implement new strategies to secure new Assignors, including educational platforms and strategic partnerships[242]. Accounting and Reporting - The company prepares its condensed consolidated financial statements in accordance with GAAP, requiring estimates and assumptions that may materially differ from actual results due to inherent uncertainties[355]. - There have been no material changes to the company's critical accounting policies and estimates during the three and six months ended June 30, 2024[356]. - The company qualifies as a smaller reporting company and is not required to provide additional market risk disclosures[357].
MSP RECOVERY(LIFWZ) - 2024 Q2 - Quarterly Report