NEW
YORK, Aug. 3, 2023 /PRNewswire/ -- Marpai, Inc.
("Marpai" or the "Company") (Nasdaq: MRAI), a technology company
transforming the $22 billion
Third-Party Administrator (TPA) market supporting self-funded
employer health plans, today reported financial results for the
second quarter ended June 30,
2023.
The Company's consolidated results of operations include the
results of operations of Marpai and its wholly owned
subsidiaries, Marpai Health, Inc. and Marpai Administrators, LLC
(formerly Continental Benefits, LLC) for all periods presented, and
the results of Maestro Health, LLC ("Maestro Health") since
its acquisition on November 1,
2022.
Financial Highlights
- Net revenue of approximately $10.04
million for the three months ended June 30, 2023, compared to net revenue of
approximately $9.67 million for the
three months ended March 31, 2023,
representing a sequential increase of approximately $0.37 million or 3.8%. This increase was caused
primarily by higher revenues from some of our ancillary
products.
- The number of our customers' employees covered under the
Company's administered health plans was 40,793, 41,571 and 42,107
as of June 30, 2023, March 31, 2023, and December 31, 2022, respectively.
- Operating expenses (including cost of revenues but excluding
loss on disposal of asset) were approximately $17.3 million for the three months ended
June 30, 2023, as compared to
approximately $18.2 million for the
three months ended March 31, 2023.
This decrease was caused primarily by our cost cutting efforts in
connection with the integration of Maestro Health.
- Operating loss was approximately $7.3
million for the three months ended June 30, 2023 compared to an operating loss of
approximately $8.5 million for the
three months ended March, 31, 2023.
- Our second quarter 2023 operating expenses included; (i)
approximately $1.1 million related to
the Value Based Care Platform and (ii) approximately $1.7 million related to unused facilities,
related loss on disposal of assets and severance costs, as compared
to the first quarter 2023 expenses of (i) approximately
$1.5 million related to the Value
Based Care Platform and (ii) approximately $0.8 million related to unused facilities and
severance costs.
- Our operating loss net of the Value Based Care costs and the
costs related to unused facilities and the related loss on disposal
of asset as well as net of severance costs was approximately
$4.5 million in the second quarter of
2023 compared to approximately $6.2
million in the first quarter of 2023. This improvement
is primarily the result of our cost cutting efforts in connection
with the integration of Maestro Health.
- Net loss was approximately $7.6
million for the three months ended June 30, 2023, compared to net loss of
approximately $8.9 million for the
three months ended March 31,
2023.
- Adjusted negative EBITDA was approximately $5.5 million for the three months ended
June 30, 2023 compared to adjusted
negative EBITDA of approximately $6.7
million for the three months ended March 31, 2023. A reconciliation of GAAP to
non-GAAP measures has been provided in the financial statement
tables included in this press release. An explanation of these
measures is also included below under the heading "Non-GAAP
Financial Measures."
Other Highlights
- On April 19, 2023, we announced
the closing of a public offering of 1,850,000 shares of our common
stock at a public offering price of $4.00 per share, for gross proceeds of
$7.4 million. After deducting
underwriting discounts and offering expenses, net proceeds were
approximately $6.4 million. The
Company intends to use the proceeds from the offering for the
repayment of debt relating to the Company's acquisition of Maestro
Health (in an amount equal to 35% of the net funds raised in the
offering) and the remainder for general corporate purposes.
Based on a July 18, 2023
agreement with the seller of Maestro Health, to satisfy its
obligations, the Company made a payment of approximately
$1.15 million to the seller on
July 19, 2023 and the Company will
make an additional payment of approximately $1.15 million to the seller no later than
September 18, 2023.
"I am happy to report that we are starting to see the sequential
quarterly improvement in our operating results that I told
you about when we reported our first quarter results. " said
Edmundo Gonzalez, Chief Executive
Officer of Marpai. "We continue to focus on further improving our
operating performance in the second half of 2023 and our goal is
for our TPA to reach break-even by the middle of next year. In
addition, we are also continuing to invest in our Value Based Care
Platform which I believe will contribute to long term success."
Financial Guidance
The Company is increasing its 2023 annual revenues guidance from
its previous guidance of between $34
million and $35 million to its
new guidance of between $35 million
and $36 million and expects third
quarter 2023 revenues to be in a range of $8.0 million to $8.5
million.
The foregoing forward-looking statements reflect our
expectations as of today's date. Given the number of risk factors,
uncertainties and assumptions discussed below, actual results may
differ materially. We do not intend to update our financial outlook
until our next quarterly results announcement.
Webcast and Conference Call Information
Marpai will host a conference call and webcast today,
August 3, 2023 at 8:30
a.m. ET to answer questions about the Company's
operational and financial highlights for its second
quarter of 2023.
Investors interested in listening to the conference call may do
so by dialing 1-833-816-1368 for domestic callers or
+1-412-317-0463 for international callers.
Investors can also listen via webcast:
https://app.webinar.net/aEPkjZaM6K5
For interested individuals unable to join the conference call, a
recording of the webcast will also be available on the
Marpai, Inc. investor relations
website: https://ir.marpaihealth.com.
About Marpai, Inc.
Marpai, Inc. (Nasdaq: MRAI) is a technology company bringing
health plan services to employers that directly pay for
employee health benefits. Primarily competing in the $22 billion TPA (Third Party Administrator)
sector serving self-funded employer health plans representing over
$1 trillion in annual claims, Marpai
maximizes the value of the health plan as measured in health
outcomes. Marpai takes a member-centric approach that uses
technology to connect members to health solutions predicted to have
a high probability of positive outcomes, and aims to bring
value-based care to the self-insured market. With effective early
intervention, disease management, claims processing and proactive
member outreach, Marpai works to deliver the healthiest member
population for the health plan budget. Operating nationwide, Marpai
offers access to provider networks including Aetna and Cigna and
all TPA services. For more information,
visit www.marpaihealth.com, the content of which is not
incorporated by reference into this press release.
Forward-Looking Statement Disclaimer
This press release contains forward-looking statements, as that
term is defined in the Private Litigation Reform Act of 1995, that
involve significant risks and uncertainties, including statements
regarding anticipated 2023 and third quarter 2023 results.
Forward-looking statements can be identified through the use of
words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates," "guidance," "may," "can,"
"could", "will", "potential", "should," "goal" and variations of
these words or similar expressions. For example, the Company is
using forward looking statements when it discusses that it expects
to focus on improving its operating performance in the second half
of 2023, its belief that its TPA may reach break-even by the
middle of 2024 and its belief that its investment in the Value
Based Care Platform will contribute to long term success. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which reflect Marpai's current expectations and speak
only as of the date of this release. Actual results may differ
materially from Marpai's current expectations depending upon a
number of factors. These factors include, among others, adverse
changes in general economic and market conditions, competitive
factors including but not limited to pricing pressures and new
product introductions, uncertainty of customer acceptance of new
product offerings and market changes, risks associated with
managing the growth of the business. Except as required by law,
Marpai does not undertake any responsibility to revise or update
any forward-looking statements whether as a result of new
information, future events or otherwise.
More detailed information about Marpai and the risk factors that
may affect the realization of forward-looking statements is set
forth in Marpai's filings with the Securities and Exchange
Commission. Investors and security holders are urged to read these
documents free of charge on the SEC's web site
at http://www.sec.gov.
Use of Non-GAAP Financial Measures and Their
Limitations
In addition to our results and measures of performance
determined in accordance with U.S. GAAP presented in this press
release, we believe that certain non-GAAP financial measures are
useful in evaluating and comparing our financial and operational
performance over multiple periods, identifying trends affecting our
business, formulating business plans and making strategic
decisions.
Adjusted EBITDA is a key performance measure that our management
uses to assess our financial performance and is also used for
internal planning and forecasting purposes.
We believe that Adjusted EBITDA, together with a reconciliation
to net loss, helps identify underlying trends in our business and
helps investors make comparisons between our company and other
companies that may have different capital structures, tax rates, or
different forms of employee compensation. Accordingly, we believe
that Adjusted EBITDA provides useful information to investors and
others in understanding and evaluating our operating results,
enhancing the overall understanding of our past performance and
future prospects, and allowing for greater transparency with
respect to a key financial metric used by our management in its
financial and operational decision-making. Our use of Adjusted
EBITDA has limitations as an analytical tool, and you should not
consider these measures in isolation or as a substitute for
analysis of our financial results as reported under U.S. GAAP. Some
of these potential limitations include:
- other companies, including companies in our industry which have
similar business arrangements, may report Adjusted EBITDA, or
similarly titled measures but calculate them differently, which
reduces their usefulness as comparative measures;
- although depreciation and amortization expenses are non-cash
charges, the assets being depreciated and amortized may have to be
replaced in the future, and Adjusted EBITDA does not reflect cash
capital expenditures for such replacements or for new capital
expenditure requirements;
- Adjusted EBITDA also does not reflect changes in, or cash
requirements for, our working capital needs or the potentially
dilutive impact of stock-based compensation; and
- Adjusted EBITDA does not reflect the interest expense, or the
cash requirements necessary to service interest or principal
payments, on our debt that we may incur.
Because of these and other limitations, you should consider our
non-GAAP measures only as supplemental to other GAAP-based
financial measures.
MARPAI, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(UNAUDITED)
|
|
|
|
June 30, 2023
|
|
December 31, 2022
|
|
|
(Unaudited)
|
|
|
ASSETS:
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
8,726
|
|
$
13,765
|
Restricted
cash
|
|
12,102
|
|
9,353
|
Accounts receivable,
net of allowance for credit losses of $23,458 and
$23,458
|
|
1,009
|
|
1,438
|
Unbilled
receivable
|
|
705
|
|
350
|
Prepaid expenses and
other current assets
|
|
1,163
|
|
1,602
|
Other
receivables
|
|
44
|
|
31
|
Total current assets
|
|
23,749
|
|
26,538
|
|
|
|
|
|
Property and
equipment, net
|
|
716
|
|
1,506
|
Capitalized software,
net
|
|
3,358
|
|
4,589
|
Operating lease
right-of-use assets
|
|
2,760
|
|
3,842
|
Goodwill
|
|
6,035
|
|
5,837
|
Intangible assets,
net
|
|
5,776
|
|
6,323
|
Security
deposits
|
|
1,307
|
|
1,293
|
Other long-term
asset
|
|
22
|
|
22
|
Total assets
|
|
$
43,724
|
|
$
49,950
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
2,147
|
|
$
1,458
|
Accrued
expenses
|
|
4,953
|
|
5,275
|
Accrued fiduciary
obligations
|
|
10,737
|
|
9,024
|
Deferred
revenue
|
|
1,316
|
|
288
|
Current portion of
operating lease liabilities
|
|
785
|
|
1,311
|
Other short-term
liabilities
|
|
2,295
|
|
—
|
Due to related
party
|
|
0
|
|
3
|
Total current liabilities
|
|
22,233
|
|
17,360
|
|
|
|
|
|
Other long-term
liabilities
|
|
18,725
|
|
20,204
|
Operating lease
liabilities, net of current portion
|
|
3,955
|
|
4,772
|
Deferred tax
liabilities
|
|
1,480
|
|
1,480
|
Total liabilities
|
|
46,393
|
|
43,815
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' (DEFICIT) EQUITY
|
|
|
|
|
Common stock, $0.0001
par value, 227,791,050 shares authorized; 7,255,818
and 5,319,758 issued and outstanding at June 30, 2023
and
December 31, 2022, respectively (1)
|
|
1
|
|
1
|
Additional paid-in
capital
|
|
61,754
|
|
54,128
|
Accumulated
deficit
|
|
(64,424)
|
|
(47,994)
|
Total stockholders' (deficit)
equity
|
|
(2,669)
|
|
6,134
|
Total liabilities and stockholders' (deficit)
equity
|
|
$
43,724
|
|
$
49,950
|
|
|
|
|
|
|
|
|
|
|
|
|
$
—
|
|
$
—
|
|
|
|
|
|
(1) Reflects 1-for-4
reverse stock split that became effective June 29, 2023. See Note 1
to the unaudited condensed consolidated financial
statements.
|
MARPAI, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)
|
|
|
|
Three Months Ended
|
|
|
June 30, 2023
|
|
June 30, 2022
|
Revenue
|
|
$
10,047
|
|
$
5,557
|
Costs and expenses
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization
shown separately below)
|
|
6,430
|
|
4,152
|
General and
administrative
|
|
5,725
|
|
2,320
|
Sales and
marketing
|
|
1,473
|
|
2,217
|
Information
technology
|
|
1,319
|
|
1,190
|
Research and
development
|
|
523
|
|
1,309
|
Depreciation and
amortization
|
|
1,003
|
|
776
|
Loss on disposal of
assets
|
|
344
|
|
60
|
Facilities
|
|
500
|
|
196
|
Total costs and expenses
|
|
17,318
|
|
12,220
|
Operating loss
|
|
(7,271)
|
|
(6,663)
|
Other income (expenses)
|
|
|
|
|
Other
income
|
|
50
|
|
(10)
|
Interest expense,
net
|
|
(333)
|
|
(1)
|
Foreign exchange
(loss) gain
|
|
(3)
|
|
9
|
Loss before provision for income
taxes
|
|
(7,557)
|
|
(6,664)
|
Income tax
expense
|
|
—
|
|
—
|
Net loss
|
|
$
(7,557)
|
|
$
(6,664)
|
Net loss per share, basic & fully diluted
(1)
|
|
$
(1.10)
|
|
$
(1.34)
|
Weighted average common shares outstanding, basic
and
diluted (1)
|
|
6,844,778
|
|
4,961,836
|
|
(1) Reflects 1-for-4
reverse stock split that became effective June 29, 2023. See Note 1
to the unaudited condensed consolidated financial
statements.
|
MARPAI, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)
|
|
|
|
Six Months Ended
|
|
|
June 30, 2023
|
|
June 30, 2022
|
Revenue
|
|
$ 19,719
|
|
$
11,775
|
Costs and expenses
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization
shown separately below)
|
|
12,838
|
|
8,698
|
General and
administrative
|
|
10,951
|
|
5,222
|
Sales and
marketing
|
|
3,652
|
|
3,776
|
Information
technology
|
|
3,506
|
|
2,324
|
Research and
development
|
|
1,024
|
|
1,902
|
Depreciation and
amortization
|
|
2,047
|
|
1,602
|
Loss on disposal of
assets
|
|
344
|
|
60
|
Facilities
|
|
1,150
|
|
393
|
Total costs and expenses
|
|
35,512
|
|
23,978
|
Operating loss
|
|
(15,793)
|
|
(12,203)
|
Other income (expenses)
|
|
|
|
|
Other
income
|
|
101
|
|
39
|
Interest expense,
net
|
|
(718)
|
|
(5)
|
Foreign exchange
(loss) gain
|
|
(19)
|
|
13
|
Loss before provision for income
taxes
|
|
(16,429)
|
|
(12,154)
|
Income tax
expense
|
|
—
|
|
—
|
Net loss
|
|
$
(16,429)
|
|
$ (12,154)
|
Net loss per share, basic & fully diluted
(1)
|
|
$
(2.70)
|
|
$ (2.46)
|
Weighted average common shares outstanding, basic
and
diluted (1)
|
|
6,080,200
|
|
4,947,691
|
|
(1) Reflects 1-for-4
reverse stock split that became effective June 29, 2023. See Note 1
to the unaudited condensed consolidated financial
statements.
|
MARPAI, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
Six Months Ended
|
|
|
June 30, 2023
|
|
June 30, 2022
|
Cash flows from operating
activities:
|
|
|
|
|
Net loss
|
|
$
(16,429)
|
|
$
(12,154)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
2,047
|
|
1,602
|
Loss on disposal of
assets
|
|
344
|
|
60
|
Share-based
compensation
|
|
990
|
|
1,743
|
Shares issued to
vendors in exchange for services
|
|
79
|
|
23
|
Amortization of
right-of-use asset
|
|
1,049
|
|
68
|
Gain on termination of
lease
|
|
33
|
|
—
|
Non-cash
interest
|
|
776
|
|
—
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable
and unbilled receivable
|
|
74
|
|
239
|
Prepaid expense and
other assets
|
|
439
|
|
197
|
Other
receivables
|
|
(14)
|
|
64
|
Security
deposit
|
|
(14)
|
|
—
|
Accounts
payable
|
|
729
|
|
(636)
|
Accrued
expenses
|
|
(235)
|
|
(454)
|
Accrued fiduciary
obligations
|
|
1,713
|
|
(478)
|
Operating lease
liabilities
|
|
(1,343)
|
|
(61)
|
Due To related
party
|
|
(3)
|
|
—
|
Other
liabilities
|
|
1,028
|
|
(337)
|
Net cash used in
operating activities
|
|
(8,739)
|
|
(10,123)
|
Cash flows from investing
activities:
|
|
|
|
|
Capitalization of
software development costs
|
|
—
|
|
(608)
|
Disposal of property
and equipment
|
|
18
|
|
—
|
Purchase of property
and equipment
|
|
—
|
|
(12)
|
Net cash provided by
(used in) investing activities
|
|
18
|
|
(620)
|
Cash flows from financing
activities:
|
|
|
|
|
Proceeds from stock
options exercises
|
|
0
|
|
—
|
Proceeds from issuance
of common stock in a public offering, net
|
|
6,432
|
|
—
|
Net cash provided by
financing activities
|
|
6,432
|
|
—
|
|
|
|
|
|
Net decrease in cash, cash equivalents and restricted
cash
|
|
(2,289)
|
|
(10,743)
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at
beginning of period
|
|
23,117
|
|
25,934
|
Cash, cash equivalents and restricted cash at end of
period
|
|
$
20,828
|
|
$
15,191
|
|
|
|
|
|
Reconciliation of cash, cash equivalents, and
restricted cash reported in
the condensed consolidated balance
sheet
|
|
|
|
|
Cash and cash
equivalents
|
|
$
8,726
|
|
$
9,085
|
Restricted
cash
|
|
12,102
|
|
6,106
|
Total cash, cash equivalents and restricted cash
shown in the condensed
consolidated statement of cash
flows
|
|
$
20,828
|
|
$
15,191
|
Supplemental disclosure of non-cash
activity
|
|
|
|
|
Measurement period
adjustment to Goodwill
|
|
$
198
|
|
$
—
|
MARPAI, INC. AND
SUBSIDIARIES
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
|
|
|
|
Three Months Ended
|
|
|
June 30, 2023
|
|
June 30, 2022
|
Net Loss
|
|
(7,557)
|
|
$
(6,664)
|
Interest Expense and
Foreign Exchange loss, net
|
|
336
|
|
9
|
Loss on disposal of
assets
|
|
344
|
|
60
|
Depreciation and
amortization expense
|
|
1,003
|
|
776
|
Stock based
compensation expense
|
|
367
|
|
1,101
|
Adjusted EBITDA
|
|
(5,507)
|
|
(4,718)
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
June 30, 2023
|
|
June 30, 2022
|
Net Loss
|
|
(16,429)
|
|
$
(12,154)
|
Interest Expense and
Foreign Exchange loss, net
|
|
737
|
|
9
|
Loss on disposal of
assets
|
|
344
|
|
60
|
Depreciation and
amortization expense
|
|
2,047
|
|
1,602
|
Stock based
compensation expense
|
|
1,070
|
|
1,767
|
Adjusted EBITDA
|
|
(12,232)
|
|
(8,716)
|
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SOURCE Marpai