MSP Recovery Announces Licensing Agreement With A New Client For A $7.5M Fee And Prospective Annual Fees Of $1M, As Well As An Amendment To An Existing Agreement And A New Warrant Agreement With Brickell Key Investments That Exchanges Debt For Equity

CORAL GABLES, Fla., Oct. 13, 2022 (GLOBE NEWSWIRE) -- MSP Recovery, Inc. (NASDAQ:MSPR) ("MSPR", "MSP Recovery" or the "Company"), a Medicare, Medicaid, commercial, and secondary payer reimbursement recovery and technology leader, today provided a business update.
 

• MSP Recovery, which powers LifeWallet, today announced that it has entered into a licensing agreement with a new client for a $7.5 million fee, as well as expected prospective fees of $1 million per year.
• The licensing agreement provides the Company's client with a license to utilize its proprietary LifeWallet platform for integration of health records, biometrics, intelligent infrastructure, and blockchain technology, among other things.
• The Company also announced that it has amended an existing contract and entered into a new Warrant Agreement with Brickell Key Investments LP – an entity that first provided funding for the Company in 2015 – immediately reducing an existing debt obligation by $63 million, and discontinuing the accrual of approximately $40 million per year in interest.
   

MSP Recovery, which powers LifeWallet, announced today that it has entered into a licensing agreement with a new client for a $7.5 million one-time fee, as well as expected prospective fees of $1 million per year. The licensing agreement provides the Company's client with a license to utilize its proprietary LifeWallet platform. LifeWallet launched its state-of-the-art technology in January 2022. LifeWallet provides real-time analytics at the point of care, helping identify the primary insurer, assisting providers in receiving reasonable and customary rates for accident-related treatment, shortening the company's collection time frame, and increasing revenue visibility and predictability. The platform will also avoid the improper documenting of medical claims that leads to improper billing, thereby preventing fraud, waste, and abuse. The LifeWallet platform also provides an Application Programming Interface ("API") that allows patients to gain immediate access to all of their medical records when seeking medical treatments.

The LifeWallet licensing agreement provides the Company's client with various software capabilities, including but not limited to:

• a provider portal, which is a web-based dashboard that allows the client to manage their patient population;
• bi-directional integration into Electronic Health Records ("EHR");
• universal patient intake forms to be received prior to appointments;
• biometric check-in capabilities, including a facial recognition check-in system and verification backed by government-issued Real ID codes (See prior, August 4, 2022 press release titled "MSP Recovery Announces LifeWallet Implementation Program at Cano Health Medical Centers");
• enhanced scheduling capabilities;
• intelligent infrastructure, including on-site data and navigation, and complete Internet of Things ("IOT") connectivity and asset tracking tools; and
• cutting-edge blockchain technology, which allows for the creation of an expansive ledger for all historical and real-time medical claims transactions in the MSP Recovery and LifeWallet ecosystems. (See prior, May 20, 2022 press release titled "Polygon Partners with Tokenology and MSP Recovery to Tokenize Healthcare Claims On-Chain").
   

"We are pleased, but not surprised, that the healthcare industry has taken a substantial liking to LifeWallet and that our team's hard work has started to generate fees from LifeWallet," said MSP Recovery Founder and CEO, John H. Ruiz. "LifeWallet is revolutionary and one of its kind, the result of many minds coming together to provide cutting-edge technology that will save lives, reduce labor costs and increase revenues. It provides patients, providers, and payers with a very unique ecosystem that was carefully designed to effectively eliminate the majority of the flaws that currently exist as it relates to health data and payer systems, including the processing of registration forms, data intake, data processing, data normalization, and claims adjudication, in addition to the quality of a patient's interaction with their provider. LifeWallet creates one unified ecosystem allowing us to achieve monetization from claims ingestion through adjudication. We are confident that, as we continue expanding, many of our more than 160 clients will want to implement these technologies in the future. And as LifeWallet expands its scope of services, the licensing fees allow users to gain access to the system, while yearly fees will also be generated for the continued use of the technology."

MSP Recovery also announced today that it has entered into new agreements with one of its original sources of funding in 2015 that will immediately result in existing debt forgiveness of $63 million, and discontinue the accrual of approximately $40 million per year in interest.

Specifically, the Company announced that it has finalized an Amendment to the Claim Proceeds Investment Agreement (the "Amendment") and a Warrant Agreement (the "Warrant Agreement") with Brickell Key Investments LP (the "Holder"), pursuant to which the parties have agreed to amend the original Claims Proceeds Investment Agreement ("CPIA") and required payment terms.

Pursuant to the agreements, the Company has granted the Holder the right to purchase Class A common shares in the Company (the "Class A Shares") in accordance with the terms and conditions of the Agreement. The maximum amount of Class A Shares that the Holder may purchase from the Company is 66,666,666 (the "Amount") for a purchase price equal to $6,666.67 ($0.0001 per Class A Share) (the "Exercise Price"), and is payable in cash. This Warrant (the "Warrant") will expire at 5:00 p.m. (Eastern Time), on September 30, 2027, and may be exercised in whole or in part by Holder at any time prior to such date. The Holder can only sell a maximum of 15% per month of the Class A Shares obtained through the Warrant.

In exchange for the Company issuing the Warrant, the amounts owed to the Holder pursuant to CPIA are reduced from approximately $143 million to equal $80 million (the "Reduced Obligation"), and no further interest will accrue. The Holder has the right to receive the $80 million owed through (1) proceeds as outlined in the CPIA, (2) cash paid by the Company or (3) monetization of the Warrant (through the sale of the Warrant or sale of the underlying Class A Shares). If the Holder monetizes the Warrant, the amount owed will be reduced at a measure of $1.20 per Class A Share (5 day volume weighted average price as of September 30, 2022).

In connection with the Amendment and Warrant Agreement, the Holder also executed a Stock Pledge Agreement (the "Pledge Agreement") with MSP Founders, John H. Ruiz and Frank Quesada (the "Founders"), whereby Up-C Units were pledged as collateral to further secure the Reduced Obligation. The Pledge Agreement also provides the option to the Founders to repurchase the Warrant from the Holder on or before June 30, 2023 for $80 million, and the Founders and the Company have agreed that such option will only be exercised at the direction of, and will ultimately be repurchased by, the Company.

"Brickell Key Investments was our first investor that believed in our vision and in MSP Recovery," said MSP Recovery Founder and CEO, John H. Ruiz. "I am honored and at the same time pleased that after 7 years of hard work we have proven ourselves to Brickell Key Investments to the point that they exchanged debt into an equity position. Brickell Key Investments is now an owner of MSP Recovery. At the same time, through negotiations, they determined that exchanging their debt for equity provided them with a better position for them as well as for MSP Recovery. In my opinion, this is a testament to a strong belief in our team."