Q3 2022 MSP Recovery Inc Earnings Call
Good day ladies.
And gentlemen, and welcome to M. S. P recovery 2022 third quarter earnings Conference call. You can view the video webcast presentation by accessing the link at the M. S. P recovery website under the Investor events section anyone who would like to participate in the Q&A portion after the presentation can register.
The link found there as well as a reminder, this call may be recorded I would now like to begin today's earnings presentation. Good morning, everyone and welcome to M. S. P recoveries third quarter 2022 earnings conference call. At this time all participants are in a listen only mode. Before we begin. Please note that statements made during this presentation.
Which state the companys or managements intentions beliefs expectations or predictions of the future are forward looking statements within the meaning of the private Securities Litigation Reform Act and actual results could differ in a material manner additional information about factors that could cause results to differ from those in the forward looking statements is contained in the company's SEC filings.
Includes but is not limited to risk factors contained MSP recoveries SEC filings and in the press release issued earlier today a copy of these materials can be found in the investors section of MSP recovery Dot Com non-GAAP financial measures are included in the comments today and in the presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures.
At the end of the presentation and can also be found in the investors section of the atmosphere recovery website. The participants on today's call will be founder and CEO of atmosphere recovery journey trees, Chief Information Officer, Chris Miranda and Chief Financial Officer, Calvin Hamstra I would like to turn the call over to Jonny truth. Good morning, everyone I'm John .
<unk> CEO of MSP recovery welcome to our earnings call today, we will share MSP Recovery's third quarter 2022 highlights earnings and an overview of recoveries I will provide some quarterly highlights while Chris Miranda our CIO will discuss data match.
King and Calvin Hamstra, our CFO will walk you through our quarterly financials now I'd like to discuss some of our third quarter highlights regarding msp's recovery efforts and the life wallet platform as announced on October 13th 2022 MSP negotiated.
A $63 million debt reduction with Brickell key investments by entering into a new warrant agreement. In addition, this transaction is expected to save about $40 million in interest expense year over year until such time as recoveries would have otherwise covered.
The debt on our recovery efforts, our paint value of potentially recoverable claims continues to grow as of September 30th we have $89 2 billion and paid value of potentially recoverable claims this balance of potential recoverable claims exceeds our projections.
By three and one half times, we continue to make progress in our recovery effort toward larger settlements, notably we recently settled an accident and related case in which we collected $1.75 million at two times the recovery multiple and a <unk>.
Group Health plan recovery for 1.15 million the accident related settlement is consistent with our projected recovery multiple and the group health plan recovery represents a recovery that was not identified within our PV P. Archie as mentioned previously we continually seek to.
Find new potential recovery paths and this represents a recovery that was never funneled are identified within our reported PV P. R. C, which is $89.2 billion unfunded recoveries are not included in our projection of potential recoveries. This represents an important opportunity.
City within our recovery rates, which can provide an upside to recoveries during our second quarter M. S. P announced the implementation of a new strategy that would enable primary payers to make the required payments prior to engaging in litigation. Thus far we have sent over 22000 demand letters.
<unk> and have received payment on approximately 130 of those demands.
At a recovery multiple of 2.1 times I will highlight responses and the process further and slide eight when I update on recoveries being soft this quarter. We had some notable court orders first the second circuit affirmed a district court order that granted summary judgment in favor of.
Now a Medicare advantage organization solidifying the right for a Medicare advantage organization to Sue primary bearish under the MSP Act in the second circuit MSP recovery filed an amicus brief in support of Aetna in that particular case further the 11th circuit ruled in favor of tower.
He'll Prime insurance company and found that Msp's claim in that case was barred by the statute of limitations in that case, the 11th circuit held that the applicable statute of limitations to a claim under the MSP private cause of action was four years from the date the primary payer violated the act lastly.
M S. B had a significant win before the 11th circuit and MSP versus Metropolitan Insurance company in which the court held that msp's allegations within the complaint were sufficient to survive motions to dismiss which are often followed by defendants in our cases this decision solidifies our legal strategy.
And has paved the way for us to file a significant amount of cases, and the remainder of 2020, two and going forward as it pertains to life wallet, we entered into a one time licensing agreement fee of $7.5 million and then a 1 million dollar fee per year in servicing for 'twenty two.
'twenty three we also announced the formation of life wallet legal referral services, we expect to roll out the legal referral services between the end of 2022 and the first quarter of 'twenty 'twenty three I want to take a moment to highlight some factors significant to our continued growth even though.
We started 2022, having exceeded our projected value of potentially recoverable claims by more than three times at a figure of $86.6 billion as opposed to the expected 21 billion. During 2022 we continue to grow with new Aston or clients as was new.
Recovery rights assigned by existing asset or clients.
During 'twenty 'twenty, 289% of our growth and potentially recoverable rights came from existing asset or clients. As we have stated previously we are engaged in data matching with over 10 auto insurance carriers through this process, we have identified over 5 billion.
And possible accentor related treatments paid by our asset owner clients during the quarter via litigation settlement, we received $1 9 million in recoveries at a 2.1 times recovery multiple Chris Miranda, our CIO will provide a presentation with an overview of.
Data matching we believe data matching as an important tool and developing recoveries to identify specific recovery rates in 'twenty 'twenty. Two we deployed a new strategy utilizing the man letters that will enable primary payers to make required payments outside of the purview of litigation.
To date, we have sent out over 22000 demand letters, we have already received over 130 payments at a recovery multiple of 2.1 times with the first party liability claims at one eight times and the third party liability claims at 4.4 times of the 'twenty.
2000 demand letters, we have only received 3342 responses. The remaining are still pending most of the rise simply requested additional information from MSP in order to process. These claims during the nine months ended September 30, 2022.
Through consolidated unconsolidated and affiliate entities of MSP MSP reported $7 9 million of claim recovery income of that 7.9, melon and claim recovery income, 51% or $4 million of those recoveries were from previously.
<unk> recovery opportunities as represented within our paid value of potentially recoverable claims the remaining 49% of our recoveries came from recoveries that had not been previously identified in the paid value of potentially recoverable claims. We believe this is significant as it highlights the upside.
In our recoveries as noted in this table. The initial recoveries are above our projected recovery multiple and including these unfunded recoveries. Our overall recovery multiple would be 3.7 times. The PV P. R. C. Although we have not yet publicized and overall recovery.
Multiple in our Kpis at this time, our initial recovery efforts are above our projected figures that 2022 guidance was developed as part of our business combination as of September 30th 2022 we surpassed our 2022 guidance as it relates to the paid value of port.
<unk> should be recoverable claims by three and a half times the previous projection our revenue guidance is dependent on the completion of data matching and achieving settlements in our cases, we feel comfortable that there is progress being made toward meaningful sediments and our recovery effort for our 2022 guidance with.
<unk> total gross recoveries, we expected total grocery coverage to be approximately $992 million, while we anticipate that the amount of those total gross recoveries will be achieved due to various factors, including but not limited to cases that had been appealed we expect that a portion of those recoveries may spill over onto 'twenty 'twenty.
However, unlike many other businesses because recovery rights are liquidated damages, which is an amount that is known as it relates to the amount that is being claimed these potential recoveries pursuant to law accrue interest because of the multiple being achieved the interest rate would likely be to one one times the legal right of inter.
Just as the interest is calculated from the collect that amount versus the PV P. Archie them up the guidance provided was and is an estimate based on management's current knowledge and various assumptions the nature of the company's business and the timing and amount of total gross recoveries that will be achieved are inherently unpredictable.
And the company cannot provide assurances regarding the timing of or the amount of total grocery covers that will ultimately be achieved now I'd like to turn things over to Chris Miranda our CIO to explain the process of data matching.
Thank you John MSP recovery regularly data matches with primary payers through both court orders and party agreements deposition testimony reveals that primary payers lack the data elements to comply with federally mandated section 111 reporting requirements MSP recoveries data and experience demonstrate that primary payers report less.
10% of the time, which is why data matching as a critical component and maximizing the identification of reimbursements data matching is the association of a record in one dataset with a record in another dataset when both sets have consistent unique identifiers, such as social security numbers certain techniques are used.
But oftentimes those key identifiers are missing in which case additional methods have to be employed.
MSP recovery has developed data matching techniques, which take into consideration missing or fragmented datasets and other variables, whether they be human error.
As typographical errors unknowns or other invalid entries or the differences in variations of data storage MSP utilizes numerous data matching techniques, both deterministic and probabilistic which have been tested including techniques utilized by the centers for Medicare and Medicaid services amongst others.
Unlike the data relied on by CMS data matching provides a direct pipeline two primary payers that is not reliant on voluntary reporting by responsible parties. This has allowed MSP to discover a significant amount of previously unidentified recoveries.
Process of data matching between two datasets at the highest level involves the following producing inspecting and cleaning prepping applying the algorithms and reviewing and exchanging the results all of the steps in this process, our automated allowing for maximize speed efficiency and scalability currently MSP utilizes said.
Six different data matching techniques, which have been developed in collaboration with primary payers through prior experience and testing that has improved over time the process for claim submission and review includes examination in which the parties evaluate the results and collect key data points of interest such as payments rendered and the policy limits there.
There's an exchange of valuable information a determination of the matches that issue and exchange of claims data a reconciliation of payments.
And the resolution of any disputes to date MSP recovery has engaged in data matching with over 13 different primary payers, representing approximately 28% of the addressable auto liability market. These primary payers includes some of the nation's largest auto insurers. This process has yielded hundreds of thousands of potentially recoverable instances pre.
Not identified through other methods, putting MSP in a unique position to facilitate meaningful and effective settlements on behalf of its health care clients.
I'll now turn it over to our Chief Financial Officer, Calvin Hamster. Thank you, Chris Good morning, everyone I'll be giving a brief overview of our quarter three 2022 financials to start I'd like to cover some highlights of our financials for the quarter. As noted previously our management team was able to renegotiate debt that resulted in a gain of 63 million.
For the quarter not only does this clean up our balance sheet, but also will reduce interest expense that would have been incurred by approximately $40 million per year on the asset side, we had noncash amortization on our $2.1 billion of intangible assets of 66 million for the quarter. This reduction to assets was offset.
Set by purchases of intangible assets of $48 million during the quarter. These purchases continue to build on our unique portfolio of claim assets and we'll continue to build our amount of potentially recoverable claims our income statement for the period again has the gain on debt extinguishment and we are also starting to see claims recovery income any.
Greece, while still minimal compared to our overall potential recoveries from our assets the recoveries from the quarter did show upside as the recovery multiple was above our projections and also noted previously we obtained recoveries that were outside of our funnel of potential recovery amounts many of the drivers on the expense side were noncash items. So.
Such as claims amortization and paid in kind interest, but for the interest as noted it will be reduced in the fourth quarter as part of the debt reduction in order to reiterate and better describe the impact of these assets. We are providing a breakdown of our revenue streams and how these would be recognized.
First for claims recovery income this is recognized through a S E $4 50, or the gained contingency model.
This means that the company doesn't recognize revenue on these recoveries until there is a settlement or cash has been received this method requires a known amount and timing before recognition we have outlined in the table. The amount recognized under this method for both the three and nine months ended September 32022, we have also outlined claims recover.
Income that has been achieved and portfolios that aren't recognized in the company's financial statements. As these are not currently held by MSP, but that MSP has rights to future recoveries of certain thresholds are met in addition, we have outlined the recoveries being sought under this recognition method. This includes the paid amount shown in slide eight for accident really.
<unk> claims of greater than $5.3 billion fraud, and misconduct claims of nearly $5 $3 billion and group Health plan claims of $2 million next the company also recognizes revenue through claims recovery service income. This is recognized through ASC 606 and is recognized as.
Performance obligations are completed for the quarter and year to date. This is equated to approximately $5 $7 million and $17 $8 million of revenue, we anticipate through a licensing agreement that has been executed to have an additional $7.5 million in revenue when the performance obligations are complete.
This agreement.
Emily are to the prior quarter in order to help look past some of the noise in the financials related to the business combination we have highlighted the onetime or noncash items that are flowing through the financial statements.
This is a non-GAAP measure, but we feel it is important in order to understand what we would anticipate in expenses going forward.
Within the income statement for the three months ended September 32022, there were onetime noncash items related to changes in the fair value warrants and derivative liabilities related to the Cantor facility, which was disclosed in previous filings of $2.7 million and noncash items for the period related to the claims amortization expense.
Gain on debt extinguishment and paid in kind interest.
For the nine months ended September 32022, there were onetime noncash items related to a share grant to non employees, a $21 million and changes in the fair value of warrants and derivative liabilities related to the Cantor facility, which was disclosed in previous filings of $11 7 million. These along with the one time item.
<unk> noted total $13 4 million for the three months and $95 7 million for the nine months, excluding these onetime and noncash items. Our net loss was approximately $13 $7 million for the three months and approximately $22 $4 million for the nine months.
Next I'd like to provide the overall balance sheet just to highlight here are non current liabilities decreased from $348 5 million as of June 32022 to $298 1 million as of September 32022, while we continue to see growth in the historical claims held within the intangible assets.
And investment in rights to claim recovery cash flows our management team continues to develop our chase to pay platform through life wallet that will allow us to address the issues and billing noted in our historical claims real time addressing these billing issues as they happen will not only reduce the expenses time and litigation costs require.
To collect on these claims but will also provide a revenue stream that is more consistent and predictable on the income statement. As previously noted the main drivers of our quarter and year to date losses are one time or noncash much of the continuing cost outside of these noncash items, our expenses related to maximizing the value and timing.
Of realization on our historical claims and as mentioned previously the development of the additional revenue sources, such as life wallet.
We continue to be laser focused on not only extracting the value from our historical portfolio, but growing these assets through acquisition of new data at the same time as we push these assets closer to realization of cash flows. We are complementing this effort with the chase to pay or life wallet platform that could be a true industry disruptor when it comes.
Health care data, we anticipate both of these revenue streams to begin to provide tangible returns and push strong cash flows from operations. As we reached the end of 2022 and into 2023. Thank you all for joining us today.
Thank you, ladies and gentlemen, if you would like to participate in the question and answer session.
A reminder to please register at the Investor events section of the MSP recovery website to ask a question at this time. Please press star one one on your Touchtone telephone we ask that you. Please limit to one question and one follow up one moment for our questions.
Our first question comes from Josh <unk> with Cantor Your line is open.
Yes, hi, good morning, Thanks for taking my question I'd Love some.
Color. Unlike wallet, specifically how is the adoption trended over the quarter and can you provide some more color around the recent new client win thank you.
Hey, Josh Good morning, This is John <unk> CEO .
Thank you for your question. So life wallet was developed because as we found all these recovery opportunities David back all the way to 2014.
We developed a system called claims to med, which essentially provides.
The transition from what I call somewhat of hieroglyphics very difficult to understand.
Claims data if anybody's ever received something from an insurance company that will tell you what the diagnosis code was and the CPT code and it was difficult for even our internal teams to read that so what we did is we transitioned and created our own system to be able to provide our.
Staff with the ability to read through these claim records quickly and identify what essentially provided to me that historical records of a person and what happened.
If you look at what we've done as it relates to our particular business. We've gone through all of the diagnosis codes they changed from ICD nine to ICD tens.
Couple of years ago, and what we do is that we sort of flag the ones that are <unk>.
Atypical or asymptomatic people that.
Don't normally have fractures unless there is an event and obviously, we carve out for our osteoarthritis and things like that but the bigger picture that life. While it provides us that theres a disconnect in the entire medical industry and we have very good doctors very good medications are very good medical devices.
But the healthcare system has a horrible way of ingesting data highlighting exactly what should be absorbed normalized and how that connects one way or the other so have you think sort of like more from a lay person perspective imagine getting a bill and that Bill has an invoice number was.
Line items on it that's the bill that a payer receive when that payer adjudicates that bill they have to adjudicate the number of the bill with the line items every line item represents a different reason why payment can and will.
Won't be made.
But life wallet does with our new biometric technology as well as blockchain technology is that we are able to and according to experts that we've discussed with specifically the polygon platform. We now have the fastest blockchain system in the world as it relates to medical bills and claims.
Of this nature, what life wallet does is in a real time process when a person goes to the doctor.
Because we connect through what's called the API as we are able to sort of intercept.
And counter by that patient immediately at the same time, we can identify who the proper pay or is supposed to be our business primarily focuses around proper payors. Obviously since we've indicated and prevailed that Medicare is a pair of last resort as well as Medicaid the real question.
Comes who is supposed to pay a bill at what rate and at what interval.
Life wallet does this sort of real time as opposed to this historical fashion of receiving flat files and what it does essentially is we intercept the 837% form that's probably a lot more technical than anybody who wants to listen to but if somebody is really taking down notes, we intercept the 835, we're able to.
Blockchain that we then received.
Yes.
The 837, I'm, sorry, and then.
Got the adjudication, which is the 835, we piece them together.
To put the smart contracts with payers, we're able to put the smart contracts of primary payers, which are the auto insurers as opposed to the Medicare advantage organizations and also this prevents fraud, because our biometric technology embeds.
The 2200 points that we capture of a patient together with the 837 Bill a lot of fraud that occurs in the United States of America as a result of.
Doctors or other medical facilities that submit bills when the patient actually haven't hasn't received the treatment.
You look at the details of Medicare they.
They review.
Two tenths of 1% of bills. So most bills go undetected.
So what <unk> does to kind of recapture and tell you why we know that this is so powerful is that the life wallet processing system does away with waste it does away with fraud and identifies a proper payer are much quicker and it allows for the providers.
Providers and payers to more quickly identify what their actual responsibility is and instead of going through this historical analysis, which is what we've been doing for many many years.
We now have that.
As a real time solution.
And then you asked another question so I have all of our clients.
We have many of them that are right now in the process of reviewing it some pilot programs have been established like Wisconsin health.
Some others have already paid licensing fees, we feel.
That this is a very powerful tool and moving forward.
We believe that our blockchain technology, because it's real time and everything gets captured it'll fix a lot of the data issues. So we feel that the block chain technology together with life wallet is a solution that would apply to patients providers as well as payers and accelerates the.
Ability of MSP to identify recoveries much quicker.
So that's essentially the.
The nuts and bolts of Lightwater, if you have any follow up I'm happy to respond.
Thanks, Tom.
Credibly helpful color I really do appreciate it.
Separately I know you touched on this in your prepared remarks and of course, it's still early stages, but I was curious if you're starting to see any initial signs that demand letter initiative is working as intended and how does that transform the business as far as it comes to predictable revenue stream. Thank you.
Okay. So that's a great question too so.
One of the nuances that I believe is important to capturing what we do.
And I'll give it to you as an example assume that you had 100 apples.
And that you claim that those 100 apples should be paid and you're dealing with an opposite party that you're claiming that other party owes you for those 100 apples.
Because of the accounting treatment that we have under our 606 and under a gain contingency we cannot show any.
Recoveries until such time as we have a complete resolution.
Of all of those particular apples that will or will not be paid and everything needs to have been signed off on.
That presents in our opinion.
Sort of a very unique situation, where we know that out of the 100 apples we've already solidified a certain number of those that are payable and even the corresponding party may as well this data matching process.
Which Chris Miranda spoke about.
<unk> made significant progress.
In fact, just yesterday, we received a lot of the information that we were waiting for some of the bigger bigger carriers.
This gives us a vantage point as to the future revenues anybody who's ever been involved in litigation knows that Mammoth cases take a long time a lot of times, you'll see these as bell curved recoveries. So I have been in litigation for 31 years. If you look at any litigation historically, whether it's us.
Bastos, whether it's now the Roundup case, a lot of these cases that historically we've seen.
Even opioids that you see now some of these cases take awhile before they settle.
Our ability to see and have the insight into what the connectivity is between the claims we've paid and those that are owned by primary payers has increased significantly.
That is the reason why we can.
Can give better projections and obviously, what we're looking for which I think we're making great strides in as to sort of smooth out how we receive revenue and make it more consistent and more predictable.
So management is well aware of the.
Sort of I'm, not going to say, it's a necessity, but something that the market would want to know to be able to establish a more consistent view and pattern as it relates to two you know revenues.
From our vantage point because of one of the particular data points that we described.
And I think this becomes very important and even the question that you asked.
Is that if you look at the recoveries we've made thus far.
51% of those recoveries were ones that we were able to identify and detect by reviewing data and using our protocols.
Alarming, 49% and a very good way, which was to my surprise where from recoveries that we had.
Not detect them and we are unable to detect and the reason why those are unable to be detected and the life wallet process may give us more clarity with that is because when we look at data we look at.
<unk> and we look at data are populated data ourselves within those fields only that which comes within the data can we then create rules and algorithms to detect so for example, if somebody was exposed to round up there is no claim line field that will provide us with.
The basis that somebody was exposed to roundup. However, there is a claim line field that somebody may have taken a particular medication. So if I compared a medication, causing cancer with roundup, causing cancer I would be able to detect the medication, but I would not be able to detect around the first time around and these are.
Cases for example.
With medical malpractice with smokers and in cases.
How come powder cases that we detect because people are pursuing them and then they come back to us for purposes of resolving those means.
Okay.
Thanks, John I appreciate the insight I hope you guys stay safe during this time.
Thank you I appreciate it.
Thank you and our next question comes from Kyle <unk> with Lake Street. Your line is open.
Hello. Good morning, Thank you for taking my question.
So maybe the first one on lifestyle.
Clearly they come in.
And important.
The intermediary.
Clearing house, if you will really help piece.
Primary repair.
How have you been driving adoption of the tool and how do you and kind of the commercialization teams.
Okay.
Great question and thank you and good morning, too. So that's a very interesting question because we have found.
That the understanding of life wallet is a much quicker process than explaining what MSP is.
Therefore, it's got an incredible incredible attention.
I don't think that there's any entity, whether it's a provider or a hospital or a payer that isn't essentially overwhelmed with positiveness as to what life wallet does.
We find that it's very unique in the marketplace and I think the reason for that is because we believe from.
From an MSP slash lifelong perspective that there's nobody in the country that unites the understanding of data and the understanding of health care together with legal components, we sit in a very unique position from the point that we're looking.
At health claim data, but we're matching it with legal liabilities together with data analysts that are looking to detect what the flows were.
When we look at the flaws like they always say garbage in garbage out many of the system is not most of the systems simply try to.
Correct some of what I would call garbage data instead of attacking the very.
Essence of it. So for example, we before would take flat files, we are now.
Changing that and asking for raw data.
Are these 837 and 835 is what that does is we're able to detect.
The health plans or anybody in the industry made a mistake and we have found an enormous number of mistakes from a statistical point of view, we know that coding is not being done properly.
Ironically, one of the ways that our system works is that it captures the diagnosis codes well the majority of the diagnosis codes are not captured property and one of the reasons for that is that the Medicare advantage world.
Their revenue stream comes from 80 different medical conditions. So to give you. An example, if somebody has a fractured ankle as a result of a slip and fall those types of diagnosis generally are pushed back because that is not one of the basis for which a Medicare advantage would collect more prime.
Liam for their beneficiary. So the system is sort of lopsided you would want to detect if there <unk>.
<unk> had an accident or not because your recovery multiple is going to be much higher but the industry has been trained to do it differently people have also been.
<unk> addressed in the nation and have just listened to the commercials of any auto insurer.
What is it that they push if you don't have a claim youre going to get a better rate. So when the Medicare beneficiary goes to use their insurance, they're going to pull out their Medicare card as opposed to their car insurance and that's where these situations occur.
That to us is understanding granularly, the entire process and an issue in the entire marketplace.
We believe that we've built the tools.
Between blockchain technology, and the life wallet process and there's actually a lot more that goes into the life wallet process. We've built.
A very unique ecosystem that is able to absorb police reports fire rescue report information on old T seems which as you know over the counter.
Medications or or natural.
Substances if people take so we're starting to grow that in a way that allows us to detect more we also now establish a life wallet legal referral systems we've.
We've applied to the different states that require approval before you can start with the life wallet a referral system in Florida, we've gotten approval, there's only about three or four states that require that the rest you can actually start marketing.
Towards that because we have very good.
Relationships in context with lawyers all over the country.
Our platform will be that lawyers will pay us to market process all of their cases.
And have a very unique system to resolve liens to get them information on their particular.
Accident, and cases, and that'll work for auto cases slip and falls workers' compensation medical devices.
Pharmaceutical products everything and anything.
Look because of my experience over 31 years practicing law and I used to do a huge amount of auto accident cases that I've been involved in just about every major case.
The last one was the tower collapsed cases here in Miami Beach, and very unfortunate situation I think most people know about that we've been able to understand with our collective team between medical team that we have with our chief medical officers with our data scientists and especially if we understand.
Everything that needs to happen the right way for all of this there'll be solved and I think we've made a huge impact on the market.
To go back I know it was a little long winded, but your initial question was how do I see life wallet panning out we have enormous enormous.
You know.
Mount of people and providers that want the product obviously, it takes a while to install it to be able to walk through all the HIPAA concerns with data and data breaches in AP is but we feel that.
This.
Rest of this quarter, we'll make some impact in our fourth quarter and then for next year I think that that's going to be a big part of what we do and that's just going to grow our <unk>.
Our new cases, or a new recoverability together with revenue from other streams.
Yeah.
Oh, that's great color.
Yeah.
And then my follow up more broadly I guess.
The possibility.
Session.
How might if at all the claims right.
Yeah.
I'm thinking in particular about collectability or any market turned out our downtime.
Do we anticipate.
It is changing.
All of that thank you.
Right, that's actually a great question.
You know, we've circulated that and turn it over the one thing about legal cases in health care.
That doesn't get better or worse, whether the economy is booming or doing better interest rates are higher or lower the one thing that it could do in a positive way when interest rates are higher the interest rate that states and or the federal government users.
Changes depending on the interest rate that's out in the marketplace. So I think that that would have a positive effect from a liquidity liquidated damages sort of claim that can grow by interest.
Our business is pretty much to the extent from our view.
Whether it's recession proof or approved versus you know a bull market and the market could be doing spectacular we're not gonna do any better the market could be doing terrible and were not going to do.
Do any better not from a share price perspective, because that's a different set of tools that people look into I'm talking about from a pure business League.
Legal claims our legal claims these claims it's black and white youre either owed it or you're not most of the claims that we have primarily deal with.
La meaning black letter law as opposed to factual differences, yes, there'll be discrepancies.
As to whether an insurer takes a position that a particular claim.
A patient is payable or not.
Could be but 99% of all claims in the United States of America got paid without contestation, if that wasn't the case you know that'd be bottleneck. So the truth of the matter is that as we look for these real time flows it gets better and better.
Which is the reason why we are very happy and comfortable with what we're doing and I think we really have an internal team.
And one of the things that I can say is that we've met.
I mean, probably just about everybody in the country that has systems similar to what we would have.
And you know this may sound, a little considered on our part, but our system blows every other system that I've ever seen and I think the reason why that's true is because.
We have that legal advantage of understanding having tried cases as it relates to what happens in a court of law and the level of detail.
That one would need and obviously, we've been very successful at the appellate court and being able to show that the law provides a support for all the claims that we've been pushing.
I don't know the exact records, but I think we may have.
Lost maybe two in one eight or nine I don't know the exact number but it's significantly higher than the ones that we've lost.
One of them was you can't use the MSP law to do what you're trying to do which doesn't really change the substantive nature of it and the other one was a statute of limitations, which we don't feel has a very big impact if any at all because statute of limitations has to do with when you file a lawsuit and our losses have been filed from way before so it doesn't really.
Impact our inventory of collectible approachable claims to a large degree.
Okay excellent well. Thank you for all the update and for taking my question.
Youre welcome.
Thank you again, if you have a question please.
Star one one on your telephone keypad.
Our next question comes from Ben Hayner with Alliance Global Your line is open.
Good morning, gentlemen, thanks for taking my question.
First for me on.
Lifeblood and the layer of referral information services offering can you give.
Give us a little bit more color there kind of a niche.
Because that's an example of what an agreement might look like the economics for you guys.
Who are the typical decision makers are selling two how long do they take to make a decision that kind of funnel.
Those sort of funnel type questions.
Okay. Great question. So we have Puerto Rico, and then we have all the states within the United States and obviously Theres lawyers everywhere I think people are probably well aware that lawyer advertising is very significant.
Every state.
And if anybody's been watching any TV at all you've probably heard a commercial one on <unk>.
<unk> June if not once 100 times these lawyers spend.
Probably you know over a billion dollars a year marketing.
Not more.
And the way that the market is still a very historical sort of old fashioned way.
Because of the tools that we have to be able to enjoy.
Ingest potential new cases, siphoned that information and the data we provide these lawyers with the ability to reduce their labor costs substantially we also provide a platform.
That we've been able to achieve an almost ironically because of the name image and likeness platform. We've received national recognition for the life wallet.
And that tool in specific so everybody in the country that followed follows college sports knows what life. While it is so we think we've done a fantastic job in branding.
So much so that I think that was one of the pivotal points in getting some of these agreements that we've gotten for people to actually pay licensing fees for life wallet. The way, there's a life wallet referral services system works is we are dividing Puerto Rico, we're dividing the entire states.
Within and obviously, all 50 states to have different.
Sort of areas of concentration of lawyers were starting off with the personal injury side car accident slip and falls workers' compensation medical devices and pharmaceuticals antitrust cases, and all of these laws that are currently advertising.
We're pretty confident we can raise.
A million or more per state per month.
In revenue once this is all up and running.
We have a significant number of lawyers that we already work with because all of these major multi district litigation cases are all these lawyers ended up receiving thousands and thousands of cases.
And those cases are received because of the marketing because we're able to market and brand as one brand.
Were already experiencing an influx of calls and contacts for cases.
We also opened up some channels already well worry answer legal questions for individuals of all different types and sizes.
Historically I did.
Spanish speaking program for 13 years life.
And at the <unk>.
Top of the market in 2009, we did $2 8 million calls that was only in Dade and Broward County.
We know that we can expand that substantially so I think it's going to take.
Some time in terms of getting all these law firms onboard.
Law firms if you got them, a result, which we have the inventory to bring in they'll pay because you'll give them marketing you're giving them the tools and we also have.
A system that we created that's about 20 years old now it's them away from before MSP that lets you.
Really processed the cases in a way that no other system exists from a litigation standpoint from lean resolution from being able to understand medical records of medical claims everything that one would need to try to be able to resolve the case you know a lot of these larger cases.
Require playing a fact sheets right and then the resolution of that that requires many many times for law firms to have hundreds of employees and.
And we can reduce that labor cost substantially.
Increase efficiency and resolve a lot of the issues that people have which you know the clients that have these types of cases become anxious and getting information and that's what we strive to do process information and have it up people's fingertips with dashboards and other ways.
You all may know already that we were working closely with commentary, we're working off of a foundry platform, which we feed them the information and they're probably the most revolutionary in the marketplace from what we've found.
So we have all these connections a gentleman that's the piece together a blockchain technology is markle Demello he comes from Microsoft He.
He was one of the core people, creating hotmail.
And he has one of the most downloaded security ops.
Probably ever which is over $60 million. So we feel we have the right people in place and we keep building upon that.
Okay, and then on the <unk>.
I saw that.
Are you charging.
Monthly CE.
Plus.
The advertising that gets done or how.
The contract structure.
It is so we're looking at some major firms.
You know these firms will pay upwards of 100000, a month per firm.
To be on this platform because it provides a lot of tools, but mainly.
When I was doing this with my own law firm.
Back 12, 13 years ago, I was spending six 700000, a month in marketing.
So it's not foreign to any of these companies or these law firms.
To spend hundreds of thousands of dollars a month I mean, that's that's within their budget already.
So we don't think that's hard.
Sale.
Comes an easy sale for us because we give them a lot more than what they otherwise got by doing it in the way that they're doing it.
And not only do they get a lot more but I think the the spread right between their overhead and what they bring in from a gross revenue perspective becomes bigger because we're going to be able to really save them on the expense side substantially.
Okay that makes sense.
Lastly from me on the mechanics of intercept and 837 four.
Where do you guys need to plug in there I mean do you need to be connected to the.
The health care provider as well as the insurers.
You should have in the.
Yes.
Plugged into their provider, how does that mechanically work and what access you need there.
Intercept that form.
So that's a great question, a very technical one, but I can answer it because together with our CIO, we pretty much talk about this every day and develop strategies around it whether the rest of our.
<unk> team. So the goal obviously is to get the raw data right. We don't want something that was processed by somebody else because that's where we have found that when you do that and this is the best way to describe it if you had a bunch of ingredients to cook something we don't want it cooked we want the raw ingredients. So that we can cook at ours.
So we're going to intercept that either before it gets to the.
Pay or.
And then the $8 35, which is what comes as the adjudication and from the payers. So we can tap into either the provider who's our provider, sending and receiving the payers receiving and sending but at the end of the day is the same information the beauty of it is that as it grows if you get the provider and you get the Payor you can actually.
Intercept issues that they either have when they are sending stuff out.
And obviously this is very beneficial for patients.
Does one of the laws that was developed recently was transparency for the patient as it relates to what am I being billed for what drove my.
Policy cover those kinds of things you know why am I paying X a.
Co pay and those things also become very transparent for the patient it.
It is not a difficult thing to do.
You just need to obviously you have the right documentation like you know N D A's.
<unk>, which is business associated with them. So that we have the protection of the health care data and then as this continues to occur.
Comes easier also for people that are trying to utilize their health records from the portability point of view. So we can transport information from payer to provider and patient and otherwise in a much quicker way then that is happening right now in the industry. We also have tackled the registration process all.
All of us have sought either ourselves or with a loved one or with a friend at the Doctor's office filling out these forms and handwriting them the transition between.
That process and taking it to the people that are entering that into our system is where a lot of data errors occur.
So if I ask anybody.
Information about themselves. It is our view that the person knows more about themselves as far as first name last name date of birth, social security, where I live and where I've lived before but they know less and the doctor about their health care if.
If you ask the Doctor they know more about your health care, but I didn't know as much as they have the right information where they have the right social somebody might have taken it in the wrong way did you have on aliases and that's the bigger problem in the not just the health care industry, but in the data industry as a whole, which you have all these different databases with no relational tie in.
We have fixed that because the biometrics is like you know like DNA or a fingerprint that's the.
We're transitioning all of our systems. So that everybody uses biometrics, we have very unique biometrics and that means that it's not a picture. So people don't get scared, it's 2200 points that we store and the system captures those 2200 points and it knows of your a live person or you're faking this system with some other identification.
That is the solution to data in general, but it is definitely the solution to health care, when you're able to walk into the Doctor's office and where the 10 80.
Camera it will detect who you are right away and it knows who you are and it can bring to medical records that you have to that doctor. So that the doctor knows right away. That's the reason why we develop this for first responders so that if somebody is.
<unk> 911, and rescue goes to you. They don't know who you are right now we take away that 20 to 25 minute gap in what we call the Golden hour to provide.
<unk> medical information for first responders to save lives or help reduce other injuries that may occur by not attending to that person quickly enough.
Okay.
Great.
We appreciate them.
Hello there.
That's it for me gentlemen, thanks for taking the questions.
Youre welcome.
Thank you I'm not showing any further questions ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may now disconnect everyone have a great day.
Thank you.
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