CORAL GABLES, Fla., July 4 10, 2022 (GLOBE NEWSWIRE) — MSP Recovery, Inc. (NASDAQ: MSPR) (“MSPR” or the “Company”) announced today that the Company has entered into an agreement to monetize up to $250 million of the value of MSPR’s net salvage proceeds, as defined below, with Prudent Group.
“This agreement is part of a more strategic relationship aimed at providing our European investors with an attractive entry point to invest in the U.S. healthcare sector,” said Dennis Klemming, founder of The Prudent Group, a global management firm. of alternative assets looking for diverse and unique opportunities. across different industry sectors, asset classes and geographies, including the acquisition of receivables from healthcare entities.
As previously announced on June 13, 2022, MSPR began sending individual claim letters to insurers who have admitted that they were the primary payor responsible for the underlying federal accidents. As a result of these efforts, MSPR has seen an increase in the volume of payments received from these responsible parties. The agreement with Prudent Group relates specifically to these demand letters and gives MSPR the right to direct, at MSPR’s discretion, the Prudent Group to acquire a percentage of MSPR’s recovery rights in the individual claim demand letters. without recourse – up to an aggregate total of $250 million.
How it works?
MSPR acquires assignments of its recoveries from health insurance payers, healthcare providers and self-funded entities, and uses its proprietary multi-level data analytics system to secure recoveries from responsible parties. MSPR generally pays assignors 50% of such recoveries (the “Assignor’s Interest”) and retains the remainder (the “MSPR Collection Proceeds”). The MSPR Recovery Product is subject to a Legal Services Agreement whereby the MSP Recovery Law Firm retains a commission of forty percent (40%) on all of the MSPR Recovery Product, which commission is divided among various co-counsel. MSPR is entitled to thirty percent (30%) of MSPR’s collection proceeds from its collection efforts (“MSPR’s 30% Interest” or MSPR’s Net Collection Proceeds”), including those generated by letters of individual notice.
Pursuant to the agreement with Prudent Group, in MSPR’s sole and absolute discretion, Prudent Group will acquire, without recourse, MSPR’s net collection interest in the individual demand letters. Specifically, Prudent Group has agreed to acquire up to $250 million of MSPR’s 30% interest at a purchase price of 90% of the paid amount of this claim (i.e. 90 % of MSPR’s 30% interest). Individual demand letters are denominated at an invoiced amount, which is usually a multiple of the amount paid.
Alongside the agreement, MSPR will service and collect demand letters and retain all revenue generated beyond the amount received from Prudent Group, plus up to an 18% annual return on the amount paid by Prudent Group. for MSPR’s net recovery proceeds. .
For example, if the amount paid of a claim shown in the demand letters is $1,000, MSPR’s net recovery interest is $300. If led by MSPR, Prudent Group would acquire MSPR’s net salvage interest at a 90% rate of $300, for a total of $270 (the “Principal”). MSPR would then service the claims in exchange for rights to recoveries in excess of the principal and the return of Prudent Group. If a recovery is made within the first 90 days of Prudent Group’s acquisition of MSPR’s net recovery interest, then Prudent Group would receive its invested principal amount of $270 plus a yield of 4.5%, or $282.15, and MSPR would be entitled to the remainder of MSPR’s Net Recovery Interest. For each month after the first 90 days, Prudent Group would earn an additional 1.5% return on the amount of principal invested, and MSPR would be entitled to the remainder of MSPR’s recoupment net interest. For reference, MSPR’s settlement with Ocean Harbor resulted in recoveries of 3.5 times the amount paid for the claim.
“In addition to the long-term investment relationship with Virage Capital Management, this agreement with Prudent Group is one of many examples of the true value of MSPR’s assets and illustrates the many ways these assets can be monetized without recourse. .” said MSPR Founder and CEO John H. Ruiz. “More than 90% of the value related to the $87 billion in channeled claims held by MSPR as of December 2021 are property and accident cases. We are delighted to enter into this groundbreaking $250 million agreement with Prudent Group, which can monetize these claims at 90% of the amount paid.
About MSP Recovery
Founded in 2014, MSP Recovery has become a leader in reimbursement recovery from Medicare, Medicaid, commercial and secondary payers, disrupting the antiquated healthcare reimbursement system with data-driven solutions to secure recoveries from responsible parties. MSP Recovery provides the healthcare industry with comprehensive compliance solutions, while innovating technologies to help save lives. For more information visit: www.msprecovery.com
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements can generally be identified by the use of words such as “anticipate”, “believe”, “expect”, “intend”, “plan” and “will” or, in each case , their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Accordingly, these statements are not guarantees of future performance and actual events may differ materially from those expressed or implied by the forward-looking statements. Any forward-looking statements made by MSPR in this press release, its reports filed with the Securities and Exchange Commission (the “SEC”), and other public statements made from time to time speak only as of the date on which they are made. have been done. New risks and uncertainties arise from time to time, and it is impossible for MSPR to predict or identify all of these events or how they may affect it. MSPR is under no obligation and does not intend to update any forward-looking statements after the date hereof, except as required by federal securities laws. Factors that could cause these differences include, but are not limited to, MSPR’s ability to capitalize on its assignment agreements and recover amounts paid by assignors; the results of litigation; the validity of assignments of receivables to MSPR; the ability to successfully expand the scope of MSPR’s claims or obtain new data and claims from MSPR’s existing ceding base or otherwise; MSPR’s ability to innovate and develop new solutions, and whether such solutions will be adopted by existing and potential sellers of MSPR; negative publicity regarding the analysis of health data and the accuracy of payments; and other factors included in MSPR’s annual reports on Form 10-K, quarterly reports on Form 10-Q and other reports filed by MSPR with the SEC. These statements constitute the Company’s warnings under the Private Securities Litigation Reform Act of 1995.