Financial Position - As of June 30, 2025, the company has an accumulated deficit of $710.8 million and used approximately $15.7 million of cash in operations for the six months ended June 30, 2025[203]. - The company has unrestricted cash totaling $4.0 million as of June 30, 2025, with $1.1 million due to assignors and $1.1 million due to a law firm for collected legal fees and litigation costs[200]. - The company has no remaining funding capacity under the Working Capital Credit Facility or Operational Collection Floor as of the date of the filing[202]. - The company has incurred substantial net losses since inception and is seeking to address liquidity concerns to continue operations[200]. - The company has $1,234.5 million of guaranty obligations as of June 30, 2025, with a maturity date of November 30, 2026[340]. - The present value of amounts owed under claims financing obligations was $736.3 million, with a weighted average interest rate of 15.4%[338]. Revenue and Income - The company has not recognized any Claims recovery service income during the six months ended June 30, 2025 or 2024[216]. - The company has not yet generated substantial revenue from its Claims portfolio, which is critical for future profitability[241]. - Total revenue for the three months ended June 30, 2025, was $536 thousand, up 59% from $337 thousand in the same period in 2024[277]. - Total revenue for the six months ended June 30, 2025, was $1.373 million, down 78% from $6.338 million in the same period in 2024[287]. - Claims recovery income increased by $0.2 million to $0.5 million for the three months ended June 30, 2025, representing a 78% increase compared to the same period in the prior year[277]. - For the six months ended June 30, 2025, claims recovery income decreased by $4.9 million to $1.4 million, a 78% decline compared to the same period in the prior year[287]. Claims and Recoveries - The company is entitled to a portion of recovery rights associated with approximately $1,592 billion in billed amounts and approximately $381 billion in paid amounts, including approximately $87.8 billion in paid value of potentially recoverable claims as of June 30, 2025[209]. - Approximately 95.9% of expected recoveries arise from claims under the Medicare Secondary Payer Act, indicating significant dependence on this legislation for future revenue[212]. - The Paid Value of Potentially Recoverable Claims (PVPRC) was $87.8 billion for the six months ended June 30, 2025, compared to $87.7 billion in 2024 and $88.9 billion in 2023[257]. - The Billed Value of Potentially Recoverable Claims (BVPRC) reached $375.4 billion as of June 30, 2025, slightly up from $375.3 billion in 2024 and $373.5 billion in 2023[257]. - The Recovery Multiple for the six months ended June 30, 2025, was 0.10, an increase from 0.08 in 2024, with recoveries of $1.4 million reported[257]. - The company has received total recoveries of $1.4 million in the first half of 2025, with a Recovery Multiple of 0.80 for MSP Law recoveries and 0.06 for non-MSP Law recoveries[257]. Operational Strategies - The company has developed algorithms to identify waste, fraud, and abuse in the healthcare sector, leveraging large volumes of data and advanced technology for recovery efforts[206]. - The company plans to implement new strategies to secure new Assignors, including educational platforms and strategic business partnerships[242]. - The Chase to Pay platform is expected to improve payment accuracy and decrease legal costs of recovery, enhancing the net recovery margin[220]. - The clearinghouse platform aims to address systemic issues in healthcare reimbursement by integrating AI, NLP, and ML for better data management and claims processing[224]. - The EHR platform went live in Q2 2024, although revenue generated from it has not been significant[227]. Financing and Capital Structure - The Company has entered into a standby equity purchase agreement (Yorkville SEPA) allowing for the purchase of up to $250 million in Class A Common Stock, which is crucial for liquidity[301]. - During the first half of 2025, the Company sold 700,000 shares of Class A Common Stock to Yorkville at prices ranging from $1.33 to $2.51 per share, generating proceeds for operational funding[315]. - The Company has issued Convertible Notes to Yorkville totaling $15 million, with terms allowing for conversion into shares at a price not lower than $0.50 per share[305]. - The Working Capital Credit Facility provides funding of up to $80 million, with a 40% original issue discount, including a Term Loan A commitment of up to $30 million and a Term Loan B commitment of up to $18 million[318]. - The Company entered into a letter agreement to amend the Working Capital Credit Facility, allowing for an additional $23.3 million draw under Term Loan B until September 2025[320]. Losses and Expenses - Operating loss decreased by $10.2 million to $124.8 million for the three months ended June 30, 2025, an 8% improvement compared to the prior year[277]. - Operating loss for the six months ended June 30, 2025, improved by $13.4 million to $251.8 million, a 5% improvement year-over-year[287]. - Interest expense increased by $22.8 million to $124.7 million for the three months ended June 30, 2025, a 22% increase year-over-year[283]. - Interest expense for the six months ended June 30, 2025, increased by $43.6 million to $243.5 million, a 22% increase compared to the prior year[293]. - Claims amortization expense decreased by $2.4 million to $118.6 million for the three months ended June 30, 2025, a 2% decrease compared to the same period in 2024[279]. Regulatory and Compliance - Federal law allows the company to pursue double damages and statutory interest from primary payers on amounts owed, enhancing potential recovery income[243]. - The company is classified as a smaller reporting company under Rule 12b-2 of the Exchange Act and is not obligated to provide the detailed disclosures typically required for market risk[343]. - A reverse stock split proposal is under consideration to comply with Nasdaq's minimum bid price requirement of $1.00 per share[298]. - The Special Meeting to vote on the reverse stock split proposal is scheduled for August 18, 2025[299].
MSP RECOVERY(LIFWZ) - 2025 Q2 - Quarterly Report