Financial Position - As of September 30, 2025, the company has an accumulated deficit of $878.6 million and used approximately $19.1 million of cash in operations for the nine months ended September 30, 2025[244]. - The company has unrestricted cash totaling $1.8 million as of September 30, 2025, with $1.1 million due to assignors and $0.8 million owed to a law firm for legal fees[239]. - The present value of amounts owed under claims financing obligations and notes payable agreements was $764.6 million as of September 30, 2025, with a weighted average interest rate of 15.6%[392]. - The minimum required payments on these agreements totaled $897.1 million as of September 30, 2025, with maturities ranging until 2031[393]. - Cash at the end of the period was $1.8 million, down from $4.7 million at the end of the same period in 2024[388]. - The Company has $9.5 million of advances from Yorkville as of September 30, 2025[392]. - The Company experienced a net loss of $723.3 million during the nine months ended September 30, 2025, which significantly impacted cash flows[389]. Revenue and Income - The Company has not yet generated substantial revenue from the recovery model, with no Claims recovery service income recognized during the nine months ended September 30, 2025 or 2024[258]. - Total revenue for the three months ended September 30, 2025, was $198 thousand, a 95% decrease compared to $3.7 million in the same period of 2024[328]. - Claims recovery income decreased by $8.3 million to $1.6 million for the nine months ended September 30, 2025, representing an 84% decline compared to the prior year[339]. - Total revenue fell by $8.4 million to $1.6 million, also an 84% decrease year-over-year[339]. - Claims recovery income decreased by $3.4 million to $0.2 million for the three months ended September 30, 2025, driven by decreased settlements during the period[328]. Operational Challenges - The company has incurred substantial net losses since inception and has limited liquidity, raising concerns about its ability to continue as a going concern without additional funding[239]. - The Company has assessed its ability to continue as a going concern, indicating potential liquidity challenges[270]. - The Yorkville SEPA is the Company's sole source of liquidity for short-term obligations, and failure to secure funding may lead to insolvency proceedings[371]. - The Company is expected to repay obligations from cash flows generated from claim recovery income[392]. Funding and Financing - The company has entered into agreements with Yorkville for funding, including a supplemental agreement for up to $3.0 million in convertible promissory notes, with a total working capital funding of $2.1 million received by August 2025[241]. - A term sheet was entered into for a potential first lien secured delayed draw term loan facility of up to $55.0 million, maturing 36 months after closing[272]. - The Company entered into a standby equity purchase agreement with Yorkville to purchase up to $250 million in shares of Class A Common Stock[353]. - The Company sold 2,353,238 shares of Class A Common Stock to Yorkville at prices between $1.60 and $17.55 per share, using proceeds to reduce amounts owed by $6.2 million and fund operations by $0.7 million[367]. - Yorkville has agreed to increase pre-paid advances by up to $3.0 million, with multiple tranches funded in 2025, indicating ongoing financial support[281]. Market and Claims Recovery - The total potentially serviceable market for the company is estimated to be over $161.5 billion annually, with Medicare expenditures in 2023 at approximately $1,029.8 billion and Medicaid at approximately $871.7 billion[252]. - Approximately 95.9% of expected recoveries arise from claims under the Medicare Secondary Payer Act, indicating a significant dependency on this legislation for future revenue[254]. - The Recovery Multiple is a key metric, with the potential for future recoveries to exceed the Paid Amount, which is expected to become more meaningful in the next 12 months[304][305]. - Approximately 86.5% of identified potentially recoverable claims are already in the recovery process as of September 30, 2025[297]. - The Paid Value of Potentially Recoverable Claims is a measure of the Paid Amount paid to providers, which is essential for future claims recovery income[300]. Expenses and Losses - Operating loss for the three months ended September 30, 2025, was $123.8 million, a slight improvement of $6.1 million compared to a loss of $129.9 million in the prior year[328]. - Interest expense increased by $23.8 million to $130.5 million in the three months ended September 30, 2025, primarily due to increased obligations related to financing[334]. - General and administrative expenses decreased by $1.4 million to $4.0 million for the three months ended September 30, 2025, primarily driven by payroll and marketing expense reductions[331]. - Professional fees decreased by $2.3 million to $1.0 million for the three months ended September 30, 2025, mainly due to lower corporate legal and consulting fees[332]. - Claims amortization expense decreased by $2.4 million to $118.6 million for the three months ended September 30, 2025, due to a lower amortizable asset base[330]. Strategic Developments - The company utilizes proprietary data analytics platforms to identify recoverable healthcare claims, differentiating itself from competitors by receiving irrevocable assignments of claims[250]. - The clearinghouse platform, developed in collaboration with Palantir, integrates AI, NLP, and ML to improve healthcare reimbursement processes and address systemic issues with primary payer reporting[264][266]. - The Chase to Pay platform aims to improve payment accuracy and is expected to enhance the net recovery margin as recovery multiples grow and legal costs decline[261][262]. - The Company has grown its Assignor base from 32 in 2015 to over 160 to date, indicating a strategy to expand its claims portfolio[294]. - The EHR Platform went live in Q2 2024, but revenue generated from it has not been significant, indicating challenges in monetization[269].
MSP RECOVERY(LIFWZ) - 2025 Q3 - Quarterly Report