MSP Recovery, Inc. Q2 FY2022 earnings call

John Ruiz introduced the company's mission evolution since 2014, highlighting owned recovery rights valued at $88.3 billion as of June 30, 2022, and $370.2 billion in paid and $1.553 trillion in build amounts of owned claims. Second quarter highlights included growing paid value of potentially recoverable claims, deploying strategies for accident-related recoveries, agreement with Prudent Group, alliances with Milberg Bryson Phillips Grossman and Rivero Mestre law firms, progress with LifeWallet including agreement with SeguriTech and partnerships with Cano Health and La Colonia Medical Centers, and growth from few assignors in 2014 to over 150 assignors with $370 billion paid amounts now. Frank Quesada discussed surpassing 2022 guidance for paid value of potentially recoverable claims by 3.2x, data matching progress with 27% of auto liability market, use of sampling models for settlements, and development of real-time recovery platform. Calvin Hamstra covered financials as a public company, balance sheet items, income statement noise from business combination, and strategic alliances increasing expenses but expected to drive recoveries.

The balance sheet consists mostly of intangible assets or claims recovery rights assets of $2.1 billion and investments in rights to claim recovery cash flows of $3.7 billion. Cash increased to $25.0 million, restricted cash to $11.4 million and prepaids to $36.9 million. Liabilities outside of the related party loan increased related to mark-to-market of warrants, derivative liability, and liabilities payable and stock related to purchase of claims recovery assets.

Frank Quesada mentioned surpassing 2022 guidance for paid value of potentially recoverable claims by 3.2x. Total gross recoverable revenue guidance depends on data matching and settlements. Believes if settlement achieved in 2022, projected revenue can be hit, with past settlements exceeding projected multiples.

No specific detailed risks discussed in the provided transcript.

Q: Is there any way of getting a little bit more insight into the $1.3 million of claims recovery income in the quarter in terms of how long those were being litigated and the sources of income?

A: Yes. There are claims in litigation, claims where insurer ensures Medicare beneficiary directly, claims with settled Medicare beneficiaries but liens not extinguished, and claims in process. Half of the $1.3 million were claims paid by primary payer for batches where they acknowledged primary responsibility, with upside in getting difference. Other half are from established settlements with 4x to 6x differences.

Q: When we talk about the relationships and partnerships with other law firms, is that should we assume that there's a particular percentage of the recoveries that they're going to collect?

A: The numbers projected don't change. Adding more lawyers is like adding more soldiers, doesn't cost MSPR more. Major court cases established rights of downstream providers, judges now pressuring primary payers, and sending demand letters to lead to less litigation and more automatic payments.